Valuetainment - Banking Crisis In America - How It Affects YOU

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00:00:39.680 This is going to be a different kind of a transfer.

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00:01:47.400 Let's get right into it.

00:01:48.820 A couple things here.

00:01:49.640 Silicon Valley Bank, what really happened there?

00:01:53.980 If you look at this chart, if you look at this chart, you'll see the blue, the light blue,

00:01:59.580 not the dark blue on the bottom, the blue, light blue is showing assets.

00:02:04.540 And just five years ago, Silicon Valley Bank was a $50 billion company in assets.

00:02:11.640 And it was $50 billion in 17, in 18, in 19, in 20 it went up, and then all of a sudden

00:02:18.540 it went from being a $50 billion bank to 2022 being a $200 billion bank.

00:02:26.260 And then deposits followed as well.

00:02:28.940 But the number you want to look at there is that orange color that all of a sudden goes

00:02:35.140 up.

00:02:35.520 What is the orange graph that we're looking at?

00:02:38.640 What is the orange color that we're looking at?

00:02:40.400 So a few things happen here.

00:02:42.040 COVID stimulus, influx of tech startups, okay?

00:02:45.420 Silicon Valley Bank buys a $100 billion three-year bond at an average of 1.7% interest rate.

00:02:53.180 So here's how this works.

00:02:55.600 They buy a $100 billion bond from the government.

00:02:58.500 It's safe.

00:02:59.000 It's going to give them 1.7%.

00:03:00.340 They're thinking they're doing great because everything is a lot lower than that.

00:03:03.980 Remember, interest rates were super low.

00:03:05.380 So like, oh, this is great.

00:03:06.380 We'll be selling it back to customers that are coming to us.

00:03:09.420 It's going to be fine.

00:03:10.400 All of a sudden it goes to 2.7%, 2.5%, you know, 3%, 4%, 5% because we can't do this.

00:03:18.180 We can't sustain this year.

00:03:19.160 What do we do here?

00:03:19.840 So next thing you know, the chart right here is loan assets and deposits in 2022, but look

00:03:28.800 what happens here with their interest rates of the bonds that they bought.

00:03:33.300 You see the orange?

00:03:34.160 That's the bonds that they bought at $100 billion in 2022.

00:03:37.620 March 2022, a little bit before March 2022.

00:03:40.960 That's three years.

00:03:41.880 Next thing you know, Fed rapidly and unexpectedly raises rates to 5% in one year.

00:03:47.980 We're going to look at history on how many times this has ever happened in our economy.

00:03:52.480 I'll show you the history of it.

00:03:54.200 Two, cash inflows slow down and withdrawals increase as tech startups are crushed by higher rates.

00:04:02.980 Suddenly, people are running to Silicon Valley Bank.

00:04:06.800 Word spreads about Silicon Valley Bank vulnerable position.

00:04:09.560 When deposits withdrawals escalate, they're forced to sell $21 billion of bonds at a $1.8 billion loss to meet withdrawals.

00:04:21.960 Once they sell the loss, this becomes realized, it's official, and then the FDIC is forced to intervene.

00:04:28.420 The next thing you know is when we hear about Silicon Valley Bank is about to go out of business.

00:04:33.020 One of the 27 regional banks that we have in America.

00:04:35.160 And then that fear starts going into people saying, could it happen to me?

00:04:40.600 Could it happen to my bank?

00:04:42.140 Could it happen to a community bank?

00:04:43.860 And next thing you know, people lose their minds on Twitter.

00:04:46.540 The government needs to come and bail them out.

00:04:48.820 This is not good.

00:04:49.840 If you keep listening, what if the next bank?

00:04:51.980 What if this?

00:04:52.440 What if that?

00:04:53.060 And everybody's now calling each other.

00:04:55.600 Next thing you know, Chase, JPMorgan Chase is coming.

00:04:58.980 And those clients from Silicon Valley banks are moving their billions of dollars of money to Chase.

00:05:04.980 B of A got $20 billion.

00:05:06.980 Everybody's trying to get these clients at the same time.

00:05:09.360 But what people are thinking about is these families are sitting there saying, if they only save, you know, protect up to a quarter million dollars,

00:05:15.760 babe, maybe we need to save, move some of our money.

00:05:17.740 So watch what happens.

00:05:18.900 $42 billion in one day.

00:05:20.440 One day, Silicon Valley Bank runs the run biggest in more than a decade when this happened.

00:05:26.380 $42 billion went out in one day, most in a decade.

00:05:31.000 So how did this happen?

00:05:32.520 COVID pandemic put people out of work.

00:05:34.660 At first, we're like, this is not a big deal.

00:05:36.280 The government's sending us money.

00:05:37.480 We're going to be fine.

00:05:38.680 This whole, you know, $1,000 a month, $1,400 a month, this is great.

00:05:42.420 Andrew Yang was right.

00:05:43.340 We should send money to people.

00:05:44.620 We can't afford to do it.

00:05:46.340 Well, guess what?

00:05:47.220 We printed around $6 trillion in the last three years, the Federal Reserve and the government.

00:05:52.880 $6 trillion.

00:05:54.020 That's a lot in three years.

00:05:56.160 Here's what happened to us.

00:05:57.720 The last time our national debt, GDP to national debt ratio, when you look at this year, was 100%, was 1945, right after World War II.

00:06:10.320 That's catastrophic when you go back and have to go to that number to see when's the last time we were there.

00:06:14.080 So the government is sitting, there's like a car driving at an 8,000 RPM, and boom, engine blows up.

00:06:23.940 You can't do this for too long.

00:06:25.440 So we're looking at this saying, wait a minute, 98.2% during COVID 2020?

00:06:30.720 Yeah, it went close to 130% at some point.

00:06:33.160 And if this thing continues with the debt to GDP ratio, look what it can go to next in 2030, 2040.

00:06:38.920 So the Fed is sitting there concerned.

00:06:41.560 What are we going to do about this?

00:06:42.540 The government's sitting there concerned.

00:06:44.700 President's sitting there concerned.

00:06:46.240 Wall Street's sitting there concerned.

00:06:47.900 Everybody's sitting there concerned saying, how are we going to handle this?

00:06:49.980 What are we going to do about this?

00:06:51.380 Well, government regulation intensified.

00:06:54.280 Fracking permits cut and oil pipelines canceled.

00:06:58.580 Cancellation of Keystone pipelines resulted in thousands of construction jobs lost.

00:07:03.160 Billions in financial impact.

00:07:04.720 All of this is going on.

00:07:06.180 Then you got the Russia-Ukraine war, created additional supply issues.

00:07:09.320 Some said oil, you know, the North Stream pipeline.

00:07:12.740 Who did it?

00:07:13.300 Was it U.S.?

00:07:14.020 Was it Russia?

00:07:15.080 Was it NATO?

00:07:15.720 Who was involved in this thing here?

00:07:17.140 We don't know.

00:07:17.920 But that created a bunch of ruckus.

00:07:19.900 Bottom line, money supply went up and available goods went down.

00:07:23.880 Okay?

00:07:24.460 What happens when this takes place?

00:07:26.340 People have money, but we don't have available goods.

00:07:28.080 Inflation goes wild.

00:07:29.580 Prices start going up.

00:07:30.620 Too slow, too fast for us to respond.

00:07:33.120 The Fed held 0% interest rates and purchased $120 billion per month of treasuries and mortgage-backed securities, which is called quantitative easing.

00:07:44.740 They buy from banks, right?

00:07:47.120 They're buying.

00:07:47.660 Instead of taking money out, they're putting money in, right?

00:07:50.740 Quantitative tightening.

00:07:51.700 Let's take money out of the market. 0.82

00:07:53.420 Quantitative easing.

00:07:54.400 Let's put money in the market.

00:07:55.860 This is what we're doing during COVID.

00:07:57.140 Print some more money.

00:07:58.440 Put the money in there.

00:07:59.360 Put the money in the economy.

00:08:00.480 Okay.

00:08:00.680 Okay, look how much.

00:08:02.220 Man, the rich are getting richer and the poor are getting poorer. 0.99

00:08:04.640 But, damn, this is awesome. 0.99

00:08:06.400 Look at all these policies. 0.99

00:08:07.860 How great are they, man?

00:08:09.580 And then why are the rich are getting richer?

00:08:12.040 Because bad policies have consequences.

00:08:14.540 And no matter how much money you print and put into the economy, guess what the rich know how to do?

00:08:19.000 Save, invest, and grow their money.

00:08:21.220 Guess what the poor know how to do? 0.97

00:08:22.840 Spend and waste their money.

00:08:24.340 And when they spend and waste their money, who does it go to?

00:08:26.800 Companies owned by the rich.

00:08:27.880 So, as much as it was a noble thing to do, the disparity between the rich and the poor got wider and wider and wider.

00:08:34.460 Even though the intentions were noble, it became catastrophic.

00:08:38.160 Let me continue.

00:08:40.120 Jerome Powell says, well, you know, we believe inflation is going to be transitory and nobody's worried about it.

00:08:44.920 It's a couple years ago.

00:08:45.680 We're like, ah, it's fine.

00:08:46.300 It's going to be, no, not a big deal.

00:08:47.540 It's good.

00:08:48.480 Suddenly pivots and starts aggressively raising rates like never before.

00:08:52.880 Before, and here's what it looks like.

00:08:55.660 Zero percent interest rate hikes for two years.

00:08:57.980 If you look at the bottom left, it says July 2020.

00:09:01.640 Up until January 2022.

00:09:03.800 We're not doing anything.

00:09:05.200 Then all of a sudden we raise five percent in one year.

00:09:10.020 What happens when you raise rates five percent in one year?

00:09:14.160 Well, let's see how many times we've done this before, but before we do so, what happens here?

00:09:19.600 So, Fed hiking rates achieved price stability, caused a shock to the banking sector, like ways we've never seen before.

00:09:29.120 Okay?

00:09:29.600 You don't see it, but behind closed doors, it's like, oh, my God.

00:09:33.140 These banks are about to have a heart attack.

00:09:34.900 On the outside, they're walking.

00:09:36.360 They're fine.

00:09:37.080 On the inside, this heart is having to pump so hard and it can't keep up.

00:09:41.600 Boom.

00:09:42.460 Then you got a heart attack.

00:09:43.380 So, unprecedented action they have to take.

00:09:46.420 Normally, FDIC only insures deposits up to 250.

00:09:48.820 That's what the number is.

00:09:50.140 Government guaranteed all Silicon Valley bank depositors.

00:09:53.200 We've not done this before.

00:09:54.920 Ninety percent of Silicon Valley bank deposits were over a quarter of a million dollars.

00:09:58.720 This is Silicon Valley, so the clientele is slightly different.

00:10:01.660 So, it's not like it's, everybody's going to be fine.

00:10:04.040 No, 90% is not going to be fine because they have more than a quarter of a million dollars in it.

00:10:07.920 So, who's paying for this?

00:10:09.440 You know, is it going to be taxpayers?

00:10:10.760 No, it's not going to be taxpayers.

00:10:12.360 It's the FDIC.

00:10:13.160 See, you don't have to worry about it.

00:10:14.820 Biden said the taxpayers are not going to pay for it, but did not explain how the taxpayers are not going to pay for it.

00:10:22.020 What are you going to do?

00:10:22.980 Are you going to print some more money and not tell us about it and just put it on the balance sheet?

00:10:27.360 I mean, you would never do that, right?

00:10:29.000 That would never happen with the Fed.

00:10:30.520 Well, maybe we'll see what actually happens.

00:10:34.640 So, are more banks at risk?

00:10:37.080 This is the question everybody's been asking the last two weeks, okay?

00:10:41.500 Is Charles Schwab about to go down?

00:10:45.040 Is the next band?

00:10:46.360 You know, Credit Suisse, what happened there?

00:10:48.600 $10 billion, 12 days.

00:10:50.500 You know, if companies like this, well, they've been bad for four years.

00:10:53.040 It's not a new thing.

00:10:53.820 Well, Schwab's been irresponsible.

00:10:54.840 It would never happen to Schwab.

00:10:57.740 All these names.

00:10:58.580 And I'm not just telling you Schwab's one of them.

00:11:00.120 There's a lot of lists that people are talking about behind closed doors.

00:11:03.040 So, what is this chart here?

00:11:04.420 Here's what this chart shows us here.

00:11:05.820 When the moment everybody looked at Silicon Valley Bank to see what percentage of their

00:11:11.360 asset under management was under bonds, was allocated to bonds, everybody started looking

00:11:19.540 at this chart.

00:11:20.280 So, Silicon Valley Bank, 63% of their assets was in bonds.

00:11:25.180 You know how they bought a $100 billion bond over a three-year period at 1.7%?

00:11:29.340 So, that $100 billion, and they're worth $200 billion, including on another $30 billion,

00:11:34.240 and they have about 63% of all their assets is tied to bonds.

00:11:38.280 So, who looks safe here?

00:11:40.460 Who looks risky here?

00:11:42.040 JPMorgan Chase is the safest bank out there, what everybody started talking about.

00:11:45.880 Only 15% is tied to bonds.

00:11:48.360 Then it's B of A, 26%.

00:11:50.220 Then it's Citi, 34%.

00:11:51.880 Then it's Wells.

00:11:53.100 Then you got U.S. Bank.

00:11:54.520 Then you got PNC.

00:11:55.580 Then you got some of these other names.

00:11:56.800 Goldman Sachs sitting at 52%.

00:11:59.940 TD Waterhouse, Capital One.

00:12:02.180 And then you got Morgan Stanley, Private, at 63%.

00:12:06.920 But then some of the other names, they're like, wait a minute, I know these banks.

00:12:10.200 What's going to happen with HSBC?

00:12:12.200 If you look at HSBC, 70%.

00:12:14.700 What's going to happen with Comerica Bank?

00:12:17.180 I know Comerica Bank.

00:12:18.580 How about First Horizon?

00:12:19.620 How about Frost?

00:12:20.540 How about CIBC?

00:12:22.120 79% is long-term bonds or bonds.

00:12:26.840 What are we talking about here?

00:12:28.520 Should we be worried?

00:12:30.180 Is this going to happen to my bank?

00:12:32.000 Odds are, if you're watching this, one of those is your bank that you're banking with.

00:12:37.720 Odds are, if you're watching this, one of those is a bank you're banking with.

00:12:42.140 If some of you are saying, nope, I don't bank with any of those, you may be banking with a community bank.

00:12:47.120 And a community bank is for cities with less than 50,000 people of population.

00:12:51.580 It's a smaller community banks.

00:12:53.320 It's smaller cities that have banks that size.

00:12:56.360 You may be with one of those.

00:12:57.580 But everybody started looking at banks to the right of Silicon Valley.

00:13:01.740 And that's a lot of names.

00:13:02.800 Could they be next?

00:13:04.060 And talk starts.

00:13:05.620 Well, if it can happen to them, it can happen to others as well.

00:13:07.800 So then, all of the stuff they're talking about, the FDIC says, no, you don't need to worry about it.

00:13:13.560 We got it covered.

00:13:14.620 We're going to be fine.

00:13:15.720 This is the FDIC.

00:13:16.740 We got plenty of money.

00:13:17.540 We're sitting there.

00:13:18.980 And then some people became curious and they said, well, how much is the FDIC insuring?

00:13:23.300 How much deposits?

00:13:24.060 All the stuff that says up to $250,000 of deposits insured at the banks, how much are you trying to insure?

00:13:35.020 Oh, it's only $9.9 trillion of deposits.

00:13:39.360 How much do you currently have available to you that in case something were to happen, can you cover the $9.9 trillion?

00:13:47.820 It's going to be fine.

00:13:49.100 Can you show us the balance sheet?

00:13:50.400 So some people post this on Twitter and it went viral to protect the $9.9 trillion.

00:13:56.300 You see, it says insured deposits.

00:13:58.480 This is their balance sheet.

00:14:00.340 The FDIC's balance sheet.

00:14:02.020 You see how much the fund balance has?

00:14:04.160 Only $125 billion.

00:14:07.800 Only $125 billion they have.

00:14:11.180 How are you going to protect everybody with only $125 billion at $9.9 trillion?

00:14:15.660 How are you going to do it, FDIC?

00:14:17.460 And they're like, oh, my God.

00:14:19.240 People are panicking.

00:14:20.740 Phone call, phone call, phone call.

00:14:22.040 I'm assuming they're having conference calls.

00:14:24.400 You cannot let this happen.

00:14:25.920 We have to get people to relax.

00:14:27.620 Unemployment is low.

00:14:28.300 We got to keep it low.

00:14:29.520 We can't get people to panic.

00:14:30.760 What if they start all of a sudden taking their monies out of banks and we cannot.

00:14:33.740 Everybody has to cover these stories.

00:14:35.120 This is not good.

00:14:35.720 This is tragic.

00:14:36.320 This is scary.

00:14:37.580 Okay.

00:14:38.840 What people are learning now, a little bit of the FDIC situation.

00:14:42.080 So then, you know the money, the stimulus that we did in COVID?

00:14:46.840 Look at the right and look at the left.

00:14:49.080 In 2008, the TARP program that they did, which was roughly $800 billion.

00:14:54.100 Do you see when you zoom in where it says January 2009, between January 2009?

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00:15:14.560 And in January 2008, in that the glass that it's had that's looking at where we're at, that's $800 billion.

00:15:24.760 Can you even see the subtle increase?

00:15:26.900 Look how subtle it is, right?

00:15:28.360 Now go to the right.

00:15:29.740 Look what COVID stimulus look like.

00:15:32.080 Skyrocketed.

00:15:32.600 Look at the angle, what it looks like, okay, when we did this.

00:15:36.520 So now, this man here has got a tough job, okay?

00:15:40.660 There are a lot of jobs you can have.

00:15:43.180 You can be a president.

00:15:44.520 You can be a lot of different jobs today.

00:15:45.960 It's very hard to have this guy's job.

00:15:47.720 He does not have an easy job.

00:15:49.160 Because what he's going through today, no Fed chair has ever gone through because the current climate is very unique.

00:15:55.680 And I'll explain to you why.

00:15:57.100 So there's two ways he can take this.

00:15:59.380 He can take the Ben Bernanke route and be dovish.

00:16:02.820 Or he can take the Paul Volcker route and be hawkish.

00:16:06.220 So Ben Bernanke was a Fed chair from 2006 to 2014.

00:16:10.380 It was under President Bush and Obama.

00:16:13.180 And the biggest problem he was facing was the 2008 crisis during his eight years of being in office.

00:16:18.420 So interest rates, height, was 5%.

00:16:21.040 Low, 0%.

00:16:22.840 It's a pretty decent time to do what he did.

00:16:25.760 And his problem was 2008, okay?

00:16:27.740 So now Volcker on the right, look at him.

00:16:30.080 Fed chair from 79 to 87.

00:16:32.100 It was Jimmy Carter and Ronald Reagan.

00:16:34.120 Biggest problem was inflation.

00:16:35.220 And it was the worst in a long time.

00:16:38.500 Height, 19%.

00:16:40.280 And the low was 6%.

00:16:42.160 Height, 19% is where it was at.

00:16:46.680 So Powell, if you had the job, you would say, I want to see the data of what the guys before me did and how they handled this.

00:16:54.140 Some of them you can call to ask for advice.

00:16:56.180 Some of them you can't call, right?

00:16:57.940 So let me see the case study.

00:16:59.000 What do they do here?

00:16:59.800 What do they do now?

00:17:00.480 What should we do here?

00:17:01.880 And here's what we saw.

00:17:03.060 Ben Bernanke, similar to 2020, 2021.

00:17:06.200 Powell, Powell used Bernanke's strategy in 2020, 2021.

00:17:10.060 But Powell used Volcker's strategy in 2022 to now.

00:17:15.580 So on the left, the Bernanke strategy was trading comfort today for paying tomorrow.

00:17:20.500 Hey, let's lower interest rates.

00:17:22.640 Let's make sure we're good now.

00:17:23.920 But, man, the next generation, our kids and grandkids will pay a price for it.

00:17:27.540 But, come on, let's at least us be good right now.

00:17:29.600 We can't lose all our money right now versus the Paul Volcker style.

00:17:33.300 It's like, no, no, we can't give this inheritance to our kids.

00:17:37.020 We got to take a hit in the economy now so we can have a better economy for them.

00:17:41.640 It's unfair for us to give them our screw up of what we did, which is kind of noble.

00:17:48.760 So then Bernanke, middle and lower class priced out of real estate, can't afford it.

00:17:55.140 2006, houses, I can't afford to buy a million dollars.

00:17:58.320 This thing was $400,000 just six years ago.

00:18:00.600 Well, it's a million dollars now.

00:18:01.960 But I can't afford to buy it.

00:18:02.980 I can't make a payment like that.

00:18:04.360 I get it.

00:18:04.980 But other people are.

00:18:06.280 No income, no assets.

00:18:07.780 Just tell us what income you got.

00:18:09.280 Finance it anyways.

00:18:11.140 You know, and get a low interest rate.

00:18:13.380 Get two-year interest only.

00:18:14.400 It's going to be great.

00:18:15.120 I was just talking to my guy about buying commercial real estate.

00:18:17.580 I'm looking at this building that we're wanting to make an offer on from $89 million to $69 million to $59 million to $46 million.

00:18:26.740 Okay?

00:18:27.180 And to $46 million, the people that are in it right now that we were talking to, we had a meeting with them two, three months ago, they can't get the financing completed.

00:18:36.000 Why?

00:18:36.960 Because of what's going on right now.

00:18:38.580 Okay?

00:18:39.320 People cannot.

00:18:40.160 So the funding, the interest rates, all of a sudden, all the loans that they got on short-term interest rates, we can get it.

00:18:45.840 Get it.

00:18:46.420 Interest rates are going to stay low forever.

00:18:48.820 Boom.

00:18:49.580 Hello.

00:18:50.380 Rates are no longer 2.9%.

00:18:52.100 It's six and a half.

00:18:53.340 Your payment is officially this.

00:18:54.620 Can you make it?

00:18:56.560 Can you give us 30 more days?

00:18:58.180 I'll give you 30 more days.

00:19:00.260 What do we do now?

00:19:01.300 You got to sell some of your assets.

00:19:02.880 We got to figure something out.

00:19:03.920 And then boom.

00:19:04.980 Next one.

00:19:05.560 The Paul Walker route is asset prices goes down.

00:19:09.160 And unemployment goes up.

00:19:11.020 Either way, this one pain is a different kind of a pain than this.

00:19:15.420 Powell has used both strategies, which is kind of off and a little bit weird.

00:19:20.460 So what do we do next?

00:19:21.900 So when you look at this here, this tells you a story here.

00:19:24.660 The Volcker years, you see from 79 to 87, this is what he was dealing with.

00:19:30.140 You see inflation all the way at the top, 19%.

00:19:32.740 And if you go to the bottom, you don't see anything below 6% pretty much.

00:19:36.680 Not unemployment interest rates is what you see.

00:19:39.280 19 at the high, 6% at the bottom.

00:19:42.000 Okay.

00:19:42.500 These numbers today, people would panic if we got to 19%.

00:19:46.000 So this is more Bernanke.

00:19:48.020 It was the high of five and a quarter.

00:19:50.560 And then he brought it down and kept it less than half a point for 128 months.

00:19:56.100 That's why they call it the 128-month economic expansion.

00:19:58.900 People making money left and right.

00:20:00.520 Fake success left and right.

00:20:02.000 Oh, let me get another $50 million line.

00:20:03.860 Let me get another $10 million line at such and such interest rate.

00:20:06.780 Money is free.

00:20:07.420 Get it as much as you want.

00:20:08.340 We're going to be like this forever.

00:20:09.660 What they don't realize is they screwed it up for their kids and grandkids because it

00:20:15.800 can't be this easy.

00:20:17.120 Money can't be this cheap.

00:20:19.020 It's fake if it's this cheap.

00:20:20.920 But they said, keep doing it.

00:20:22.360 It's working.

00:20:23.520 Don't tell anybody.

00:20:24.620 We're going to have to pay price 10 years from now.

00:20:26.480 Keep rolling the dice.

00:20:27.500 It's cool.

00:20:28.460 A little bit more, a little bit more, a little bit more.

00:20:30.820 And then boom.

00:20:32.120 Here's what happens.

00:20:33.460 Powell used the old strategy the last two years.

00:20:36.560 And now he's using the new strategy the last 12 months.

00:20:41.420 Okay.

00:20:41.740 So what's the difference?

00:20:43.000 Here's what you got to look at.

00:20:43.960 The challenge he's got is the following.

00:20:45.820 Bernanke had a crisis with low inflation, 2% to 4%.

00:20:49.060 Volcker had inflation with a low debt to GDP ratio, 30% to 40% debt to GDP ratio.

00:20:55.620 That was his.

00:20:56.460 You know what Powell's is?

00:20:57.720 Powell is dealing with high inflation and high debt to GDP.

00:21:01.400 He's got both of their problems at the same time happening.

00:21:07.320 What do you do?

00:21:08.600 6% to 9% inflation and 100% to 130% debt to GDP ratio.

00:21:14.480 What do you do with that?

00:21:15.700 So this is what I'm telling you.

00:21:16.760 This guy's got a tough job.

00:21:18.380 One minute, everyone's telling him, hey, let's go to Bernanke route.

00:21:21.780 Another minute, he's like, no, no, no.

00:21:23.220 Let's go to Volcker route.

00:21:24.440 No, no, no.

00:21:24.860 Let's go this route.

00:21:25.480 What are we going to do here?

00:21:26.420 I can't make up my mind.

00:21:27.520 So he's like flip-flopping.

00:21:28.580 I go this route.

00:21:29.220 I go that.

00:21:29.620 I go this route.

00:21:30.020 Rather than sticking to his guns, to one philosophy, people behind closed doors are constantly

00:21:37.000 influencing him to change his approach and watch what just recently happened, which a

00:21:43.280 lot of people are not talking about.

00:21:44.500 You see this right here?

00:21:45.880 The Fed made a huge move last week that no one is talking about.

00:21:49.220 Look at the top right.

00:21:50.780 Do you see the top right?

00:21:52.080 Okay.

00:21:52.940 That magnifying glass shows you a small little tick up above that 8 million.

00:21:58.560 Do you see that?

00:21:59.100 It doesn't look like a big number.

00:22:01.560 How big of a deal is that?

00:22:02.620 It's not really that big of a deal.

00:22:04.220 Here's what they just did last week.

00:22:05.940 Okay.

00:22:06.540 They added $300 billion.

00:22:09.800 Okay.

00:22:10.320 To their balance sheet.

00:22:11.580 Just one day.

00:22:12.800 The Fed just decided to add $300 billion to their balance sheet in one day.

00:22:16.360 So what does this mean?

00:22:17.780 Let me kind of undo this to show you what he did for the last six months.

00:22:22.200 If you look at this, look at the chart of where it went, where it says 8.639.

00:22:28.220 Obviously, that's in billions.

00:22:29.720 Okay.

00:22:30.200 In millions.

00:22:31.200 So if you look at that $300 billion they just added to now 8.69 trillion.

00:22:37.500 Okay.

00:22:37.800 That's what the $300 billion is.

00:22:39.920 You go back five months ago or six months ago to November, we were the same.

00:22:44.660 So whatever he's done the last five or six months, they just undid.

00:22:49.100 All of these increasing the rates, increasing the rates, increasing the rates, they just undid

00:22:53.420 by adding $300 billion to the balance sheet.

00:22:55.880 Pat, what are you saying?

00:22:58.540 They undid the Volcker strategy he was taking.

00:23:02.780 Now he went back to the Bernanke strategy.

00:23:05.700 So that's what it looks like.

00:23:07.100 Okay.

00:23:07.760 $300 billion added.

00:23:09.260 No one's talking about it.

00:23:10.880 No one's talking about it.

00:23:11.980 And, you know, the bigger bank CEOs are coming out and saying, yo, you know, we got $2 trillion.

00:23:16.580 If we're not going to let these regional banks go out of business in the communities, they're

00:23:20.320 going to be safe.

00:23:21.040 And they got another $2 trillion added into it that in case something happens, I know my

00:23:26.120 friends at the big five banks, they're not going to tap into that.

00:23:28.640 It's going to be the regional and the community ones.

00:23:30.860 We're not going to let these banks go out of business.

00:23:32.760 What does that sound like?

00:23:33.980 Putting more money into the economy.

00:23:35.760 That's what you call quantitative easing.

00:23:40.060 Where do you think that money goes to?

00:23:41.380 To the big banks.

00:23:42.620 Okay.

00:23:42.920 That money's going to roll back to them is what's going to happen.

00:23:45.420 The bigger banks don't care.

00:23:46.500 The bigger banks benefit from something like this.

00:23:48.700 Okay.

00:23:48.900 When this happens.

00:23:49.560 But you and I, we kind of have to pay for this.

00:23:52.860 Okay.

00:23:53.140 The price goes back to you.

00:23:54.580 And matter of fact, low and middle income, they pay the biggest price because that whole

00:23:59.040 concept, these guys get up on stage, sound so noble, like Robin Hood.

00:24:04.540 You know, it's like, let me tell you, it's not fair that the rich getting richer and the

00:24:08.280 poor getting poor.

00:24:09.820 You just added $300 billion to the balance sheet that if you have to build these guys that

00:24:14.340 that money's going to who?

00:24:16.200 Who's that money going to?

00:24:17.260 If you decide to bail out these other regional and communities, where's that money going

00:24:22.640 to?

00:24:23.240 Tell me.

00:24:24.120 Is that money going to go in the hands of the small guy?

00:24:27.140 Is it going to go to the middle income guys?

00:24:28.840 Who's that money going to go to?

00:24:30.220 How about the guy that's making small money?

00:24:32.360 And all of a sudden, we got a new guy that's rich.

00:24:34.620 And look at all this money that they're making.

00:24:35.960 Look how awesome this is.

00:24:37.520 They sound noble, but they're catastrophic.

00:24:40.680 Powell was this close of going through what he was going through.

00:24:43.840 Maybe he increased 5% in 12 months.

00:24:46.120 Maybe that was a little bit too dramatic because when you see what happens here next, it'll

00:24:49.600 tell you a story.

00:24:50.440 But we were so close in taking the Volcker route, which was the Reagan side, to come out of what

00:24:55.260 Carter did.

00:24:56.220 But we went back to the Bernanke route.

00:24:57.960 So now, bank term funding program.

00:25:01.300 After Silicon Valley, the Fed set up a program to prevent another event like it from happening.

00:25:07.520 Silicon Valley Bank lost money selling bonds before maturity.

00:25:10.500 The Fed has guaranteed credit for bank bonds at 100% of the bond value.

00:25:16.860 You know what that means?

00:25:18.140 Don't worry about it.

00:25:19.360 Take all the risk.

00:25:20.240 We'll bail you out at 100%, at 100% of your bond value.

00:25:24.920 What if it's not worth that?

00:25:26.300 Don't worry.

00:25:26.920 We got you.

00:25:28.060 It's going to be cool.

00:25:29.360 Okay, let me go back to being reckless again.

00:25:32.460 That's what kind of happens.

00:25:34.160 Because it's like the kid that no matter every time he gets in trouble, mommy and daddy bail

00:25:38.440 him out.

00:25:38.820 So that kid becomes a spoiled, rotten kid. 0.85

00:25:43.000 And it's because of mommy and daddy.

00:25:45.620 And in this situation, mommy and daddy is the government and the Fed.

00:25:50.640 That's what happens.

00:25:51.860 And these bankers at the top become spoiled because every time they go out of their way

00:25:56.560 to bail these guys out, and they become spoiled little brats without letting any one of these 1.00

00:26:02.240 guys go out of business.

00:26:03.500 I've made a lot of mistakes in my life.

00:26:05.300 And I paid a price for it. 0.94

00:26:06.520 And it sucked. 0.67

00:26:07.300 Some of it took me a year to recover from my mistake. 0.95

00:26:10.580 Some of it took me five years to recover from a mistake.

00:26:13.380 Okay?

00:26:13.740 Five years.

00:26:14.760 One of it took me seven years to recover from my mistake. 0.98

00:26:17.580 It's supposed to suck.

00:26:19.240 When you take a risk and you're reckless and you're not responsible, there's a price to 0.95

00:26:23.320 be paid for it.

00:26:24.040 Right?

00:26:24.260 This is going on in front of our eyes.

00:26:27.720 And a lot of people are sitting around saying, are we going to be okay with this?

00:26:31.660 We're about to find out what happens next.

00:26:33.180 Watch this.

00:26:34.380 BT FP is a game changer.

00:26:36.960 Bank term funding program they just launched.

00:26:39.120 The margin will be 100% of par value.

00:26:42.100 You know what this means?

00:26:43.280 They're going to protect the banks no matter what it is with the bonds.

00:26:45.640 It's lost money.

00:26:46.480 It's no longer worth what it was before.

00:26:47.940 Don't worry about it.

00:26:49.220 We're going to protect that at 100% of par value.

00:26:51.920 Okay?

00:26:52.780 It's so funny.

00:26:53.740 I mean, if the average investor is like going to the casino, playing roulette, playing any

00:27:00.780 game you want to play, and the boss of the casino comes to you and says, listen, don't

00:27:06.820 worry about it.

00:27:07.420 You want to play $100,000?

00:27:08.840 Don't worry.

00:27:09.340 Play reckless.

00:27:10.500 Put $100,000 on 36.

00:27:12.300 Boom.

00:27:12.740 I didn't get it.

00:27:13.860 Another $100,000.

00:27:14.700 Don't worry.

00:27:15.220 22.

00:27:16.020 I lost it all.

00:27:17.020 Oh, my.

00:27:17.720 Another $100,000.

00:27:18.400 What a noble guy this is.

00:27:20.700 Where's that money coming from?

00:27:22.840 Where's that money coming from?

00:27:23.980 It's coming from somewhere.

00:27:25.760 It is coming from somewhere.

00:27:27.120 So where is the risk?

00:27:28.820 There is no risk for these guys.

00:27:31.320 There is no risk.

00:27:32.480 The risk is for you, but there is no risk for these guys.

00:27:35.440 So at least inflation is going down, right?

00:27:38.580 A lot of people are saying, well, inflation is going down.

00:27:40.220 It's great.

00:27:40.720 Look at the numbers.

00:27:41.580 We are below what we were before and from a year ago.

00:27:43.880 It's fantastic.

00:27:44.460 Everybody should be happy.

00:27:45.520 Really?

00:27:46.200 Is that really the case?

00:27:47.420 Have we always measured success of inflation going down on a 12-month marker or a 24-month

00:27:53.880 marker?

00:27:54.400 Meaning, isn't it supposed to be where inflation is at today versus two years ago to say if

00:28:01.200 we're higher or if we're lower?

00:28:03.080 Huh.

00:28:03.800 Because if that's the case, inflation is still very high.

00:28:07.440 But they're not selling it that way because I think they just changed something.

00:28:11.020 So let's take a look at this.

00:28:12.520 This is kind of interesting.

00:28:13.720 Every year on February 14th, there is a celebration of love.

00:28:18.620 This February, BLS, which is the U.S. Bureau of Labor Statistics, Government, the Consumer

00:28:24.040 Price Index, which we hope you will love, beginning with January 2023 index, scheduled for publication

00:28:32.020 of February 14th, 2023, BLS plans to update the spending weights in the calculation of CPI

00:28:39.440 every year instead of every two years.

00:28:43.180 What?

00:28:44.620 Yeah, every year instead of every two years.

00:28:46.360 Why are you doing that?

00:28:47.640 Well, we're just changing it.

00:28:49.480 Isn't that great?

00:28:50.160 Because it's the power of positive thinking.

00:28:52.380 You don't have to know the negative stuff.

00:28:54.300 Let's just stay positive.

00:28:55.400 And that's how we're going to fix the economy by us staying positive.

00:28:58.700 Isn't that kind of cool?

00:28:59.800 I don't understand what you're saying here.

00:29:01.840 Yes.

00:29:02.680 So they changed the way they measure it.

00:29:05.060 Here's what it means.

00:29:06.080 The typical way we've always measured inflation is two years, meaning where is inflation at today

00:29:12.080 versus where we were two years ago.

00:29:14.120 If we measure where inflation is at today versus two years ago, which is 1.7%, the numbers are real scary

00:29:21.680 versus if you measure where inflation is at today versus where inflation was at a year ago, 7.9%,

00:29:27.000 they get to say inflation is down.

00:29:30.040 So here's how it looks.

00:29:31.180 Old way.

00:29:32.380 Measurement of two years, new way.

00:29:34.580 Measurement of one year, old way.

00:29:36.820 CPI February was 2021 and 2021 was 1.7, new way.

00:29:41.100 Let's go back to February of 2022, it was 7.9%.

00:29:44.800 We're getting better.

00:29:46.260 Old way, current inflation is 6%.

00:29:48.820 New way, current inflation is 6%.

00:29:50.860 Old way, inflation is up still 4.3%.

00:29:55.400 In a new measurement, inflation is down 1.9%.

00:29:59.460 Do you see what they're doing?

00:30:01.820 Do you see how this whole, by the way, everything I'm sharing with you, go do your own due diligence

00:30:04.960 and research and all that stuff for yourself.

00:30:07.740 We're just giving you stuff off the government website.

00:30:09.420 We're not giving you stuff that is off blogs.

00:30:12.080 This is off the Bureau of Labor Statistics website, stuff that you can go look up yourself as well.

00:30:17.900 So now let's continue.

00:30:19.260 The Fed also just raised interest rates, quarter of a basis point, which, by the way,

00:30:22.600 I kind of like the fact that they did that.

00:30:24.320 They stuck to their guns.

00:30:25.340 Some people were afraid he was going to do half a point, but he went up only a quarter of a basis point.

00:30:29.540 Everyone's wondering what he's going to do next.

00:30:31.300 Is he going to do quarter, quarter?

00:30:32.420 Is he going to do half quarter?

00:30:34.020 Is he going to do nothing?

00:30:35.080 Then he's going to go half quarter?

00:30:36.080 We don't know.

00:30:36.560 Obviously, we will see what happens because if there is another bank or two or three that this happens to, like Silicon Valley Bank,

00:30:42.860 they may not do anything for a couple months and go back to the Bernanke way of managing the crisis that we have today.

00:30:49.080 So this is all new, and the outcome is very uncertain.

00:30:53.320 Nobody really knows what they're talking about, including myself.

00:30:56.880 I'm just stating you what's going on today in the marketplace.

00:30:58.960 Everybody I talk to at Goldman, at Morgan, you watch the guys on television.

00:31:04.280 Everybody's telling you, nobody's been here before.

00:31:09.000 We're all playing it by ears to see what's going to happen.

00:31:13.820 Part of it is control what you can control.

00:31:16.620 Part of it is there are certain things we have zero control over.

00:31:19.860 Remember, if your name's not Yellen, if your name's not Powell, if your name's not Biden, if your name's not one of the five CEOs of major banks in America,

00:31:27.280 Jamie Dimon and some of these other guys, you're probably not going to be involved in much of this decision-making process.

00:31:34.800 This is what is going on today, and they're all trying to learn how to get out of this mess while they're learning and they're doing,

00:31:43.200 and they have to sound confident and optimistic with you and I.

00:31:46.960 This is all happening at the same time.

00:31:48.180 So now, remember how I told you we increased 5% in one year?

00:31:52.880 In 2008, 2004 to 2008, they raised interest rates 4%, but they did it in two years.

00:32:01.040 That's going to affect the economy.

00:32:02.940 This time we did 5% in one year.

00:32:06.820 That's a lot in a year.

00:32:07.800 That's what a lot of people are talking about.

00:32:09.040 This is kind of why we're facing what we're facing right now with banks sitting there saying,

00:32:12.440 I can't afford to make my payments right now.

00:32:13.860 What are we going to do?

00:32:15.220 So, unemployment.

00:32:16.060 If you look at this, unemployment will skyrocket, is what a lot of people are talking about.

00:32:20.940 In 2005 to 2010, if you look at this, 2005 to 2019, unemployment was below 6%.

00:32:26.900 It was below 4.5% in around 2007.

00:32:30.520 And then all of a sudden went up to 6%, 7.5%, 9%, 10%.

00:32:34.800 They're afraid of this.

00:32:36.720 This is what they're afraid of.

00:32:37.740 Because when this happened in 2008, and we haven't experienced, by the way, COVID has got nothing to do with this.

00:32:43.020 Well, COVID kind of, COVID had nothing to do with the economy.

00:32:46.200 COVID was COVID.

00:32:47.340 It had nothing to do with the economy.

00:32:48.700 This is the real economy we're talking about here.

00:32:50.800 The last time when this happened in 2008, when unemployment went the race that it went,

00:32:56.460 here's what happened to suicide rate in America.

00:32:58.380 From 2007, 8, 9, 10.

00:33:02.640 Do you see the numbers exceeding?

00:33:05.100 That's what it was like.

00:33:06.480 4,750 excess death that took place.

00:33:11.560 It's scary.

00:33:12.600 I remember I was in that economy.

00:33:15.300 That's what they're doing to the economy right now. 0.91

00:33:18.040 So, for me, I make a lot of calls and I talk to a lot of business owners, small business owners, entrepreneurs.

00:33:22.900 Two years ago, when I'm talking to them, they were afraid of what COVID is going to do to their business.

00:33:28.620 In 2021, a lot of them are making more money than ever before.

00:33:32.540 2022, they were uncertain.

00:33:34.400 People I'm talking to right now who are sitting on a few million dollars, they're not as confident as they were a year ago.

00:33:40.160 I'm having different kind of conversations with people today.

00:33:42.480 This is reality of what's coming right now.

00:33:45.680 New startups vanished in 2008 when they took this approach.

00:33:48.940 Look at the 2007 to 2009 chart.

00:33:51.560 Look what happened with the number of startups.

00:33:53.340 It went all the way down to numbers we had in 1994, even lower than the numbers we had in 1994.

00:33:58.680 We all know small business owners employ nearly 49% of people in America have a job because of a small business owner.

00:34:04.500 What happens when we lose small startups?

00:34:06.620 They're not getting funding anymore.

00:34:08.060 What happens with those guys?

00:34:09.000 Because, you know, the banks tighten and they don't lend the way that they typically do.

00:34:12.980 Startups pay a price for it.

00:34:14.480 So, now here is the number of births and debts after 2008.

00:34:18.240 Look at this.

00:34:18.960 Birth went up, 2002, 3, 4.

00:34:21.580 We're having a lot of babies.

00:34:23.060 We're on fire from 93.

00:34:25.700 Having babies.

00:34:26.580 94, 95, 96, 97.

00:34:28.180 We're having babies, babies, babies, babies, babies.

00:34:30.540 2008.

00:34:32.060 All of a sudden, boom.

00:34:34.400 It flips on us.

00:34:36.120 Births goes down.

00:34:37.420 Death goes up.

00:34:38.600 People are scared with what they're doing.

00:34:40.700 Now, I'm not trying to scare the crap out of you right now.

00:34:42.300 Trust me.

00:34:42.960 I was in that economy and it was scary.

00:34:44.920 I got involved in this business in the 2001 economy, 9-11.

00:34:48.540 My first day was 9-10, okay?

00:34:50.740 Day before 9-11.

00:34:51.760 I started off being scared about this industry and having to be paranoid because I was in

00:34:56.740 a bad market for a few years.

00:34:58.660 I never thought this thing was going to work out for me.

00:35:00.880 I thought I was going to go back to the military because I didn't think this was going to happen

00:35:04.260 for me, being in the financial industry.

00:35:06.320 Got involved by possibly the worst time you could have gotten involved in the financial

00:35:10.760 industry the last 40 years, 9-10-2001, okay?

00:35:14.020 A day before 9-11.

00:35:15.120 Let's take a quick time out.

00:35:16.100 If you're going through it right now, a couple of things I want you to be thinking about.

00:35:18.920 Don't make any irresponsible decisions right now.

00:35:21.760 Delay them till next year.

00:35:23.340 I'm talking a lot of weird decisions right now people want to make.

00:35:26.400 Delay till next year.

00:35:27.660 Just because you're in this place right now doesn't mean it'll remain like this forever,

00:35:32.140 okay?

00:35:33.100 Keep yourself busy with as many positive distractions as possible and avoid having too much time on your

00:35:39.640 hands.

00:35:39.940 Let me give you a couple of things here about this message I'm giving to you.

00:35:43.760 Alcohol.

00:35:44.780 Don't touch it right now.

00:35:46.200 Try to avoid it.

00:35:47.540 Any kind of sleep medication, any of that stuff.

00:35:50.120 My recommendation, I'm not a doctor.

00:35:51.540 I'm not giving you.

00:35:51.980 I'm just telling you like you see a lot of this stuff happening to people right now and

00:35:56.160 they kind of want to numb themselves to not go through this pain.

00:35:59.260 You were a real estate guy making 100 grand a month.

00:36:01.300 You're not now.

00:36:01.800 You're making 7 grand a month and you and your wife and family are going through a lot of issues.

00:36:05.960 You had to give away that car of yours, the Lambo, the Rolls.

00:36:08.320 You were going to sushi spots.

00:36:09.860 Now you're eating at Chipotle and you're eating the Chipotle bowls is what you're doing with

00:36:14.440 that red dressing that they have.

00:36:15.760 But it ain't sushi.

00:36:17.800 It ain't Maestros.

00:36:19.420 It ain't Flemings.

00:36:21.000 It ain't that sushi spot you were going to and having Sea Urchin anymore.

00:36:24.260 Okay?

00:36:24.400 Now you're going back to ghetto California Roll out of Kroger's or Publix or Albertson's or 1.00

00:36:30.400 Ralph's.

00:36:30.740 I don't know where you live in.

00:36:31.700 That's what you're kind of going back to.

00:36:33.000 And it's embarrassing because you went from the rock star going to parties with a nice

00:36:37.460 three-piece suit on and a nice watch and now you're going out there and it's the same clothes

00:36:42.160 and you're kind of embarrassed and afraid because people are looking at you and people can sense

00:36:45.860 fear, right?

00:36:46.440 If you're thinking about getting a divorce, wait two years.

00:36:51.000 If you still feel like getting a divorce in two years, do it.

00:36:54.120 If you're thinking about throwing the towel in right now, wait two years.

00:36:57.380 If you feel like that, then consider it then, but not right now.

00:37:00.980 No major crazy life making decisions today.

00:37:05.800 None.

00:37:06.800 Just go through this season and a couple of things that I'll share with you here to help

00:37:11.140 you out.

00:37:11.660 Idle time.

00:37:12.660 Scary right now if you've got too much idle time.

00:37:14.320 Nobody can think straight who does not work.

00:37:17.580 Idleness warps the mind.

00:37:19.780 Henry Ford. 0.99

00:37:20.960 Anytime I've ever done anything stupid in my life, I had too much time on my hand. 0.98

00:37:25.100 I was a young guy. 0.91

00:37:25.720 I got out of the military.

00:37:26.880 I didn't have a job for about a month.

00:37:28.740 My hair color was orange because it had peroxide in it and I was going to Zuma Beach in LA,

00:37:33.760 you know, Malibu, and I was putting peroxide.

00:37:36.480 If you know what I'm talking about, you know what I'm talking about.

00:37:37.860 If you don't know what I'm talking about, why would you put peroxide in this hair?

00:37:40.160 Trust me, don't go try this at home and go put peroxide in here saying,

00:37:42.760 hey, how come this happened to my hair?

00:37:44.660 I had nothing to do.

00:37:45.980 I had way too much time on my hands. 0.90

00:37:47.720 I was doing the dumbest things at that time because I had too much time on my hands. 0.90

00:37:52.040 Okay? 0.97

00:37:52.420 Number two, purge your mind of all aimless and idle thoughts, especially those that pry into

00:37:58.140 the affairs of others or wish them ill.

00:38:01.020 This is a wrong time to be thinking about.

00:38:02.840 I hope that guy goes out of business.

00:38:04.340 I hope that guy goes bankrupt.

00:38:05.680 I hope that guy does this.

00:38:06.720 I hope that don't even let your mind consume any of those thoughts.

00:38:09.500 I had somebody come to our house the other day, and this person was talking about, let

00:38:13.560 me tell you, those people are evil, and that person is this, and that person is this, and 0.76

00:38:17.320 these people.

00:38:18.200 I'm like, I don't even want to put those thoughts in my head right now.

00:38:21.100 Everybody's dealing with something right now.

00:38:22.580 Okay?

00:38:22.860 Everybody is.

00:38:23.780 I am.

00:38:24.560 You are.

00:38:25.340 We all are.

00:38:26.360 The wealthy people are.

00:38:27.680 The politicians are.

00:38:29.260 Jerome Powell is.

00:38:30.500 Trust me.

00:38:30.920 Everybody's dealing with something right now.

00:38:32.720 I want everybody to have a good life, and I want everybody to do their parts and have

00:38:36.140 their dreams become a reality, because my focus is really my life and doing what I can

00:38:39.860 do with my life.

00:38:40.700 Don't be thinking about hoping other things, you know, bad things happen to other people.

00:38:45.000 They got to also go through it just like you're going through it right now.

00:38:47.720 Trouble springs from idleness and grievous toil from needless ease.

00:38:53.420 Benjamin Franklin.

00:38:54.560 Next, Thomas Jefferson.

00:38:55.920 Determine never to be idle.

00:38:57.560 No person will have occasion to complain of the want of time who never loses any.

00:39:03.180 It is wonderful how much can be done if we are always doing.

00:39:07.840 This is a season to be doing.

00:39:10.540 This is not a season to be sitting around.

00:39:12.940 This is by far the worst time to be sitting around, not doing, in idle time, worried about

00:39:17.540 how this economy is going to affect you.

00:39:19.600 So, things to keep in mind during turbulent times.

00:39:22.640 First, you need to write emotional response, especially if you're in a leadership position.

00:39:28.860 You're a father, you're a parent, you're a CEO, you're a boss, you're a sales leader,

00:39:32.500 you're a manager, you're a supervisor.

00:39:34.540 People are looking at you to show poise.

00:39:37.260 It doesn't mean you're a robot.

00:39:38.360 It doesn't mean you're a machine.

00:39:39.320 It doesn't mean you have to be perfect.

00:39:40.680 But they're leaning on you to be able to hold yourself together and stay strong.

00:39:44.380 Okay?

00:39:45.000 You need to write strategies at a time like this.

00:39:47.860 When I went through this, I was not the best salesperson.

00:39:50.740 I had no clue what I was doing.

00:39:52.360 Every time I was working on Morgan Stanley Dean Witter and I was doing what I was doing,

00:39:56.180 not knowing if I'm going to make it or not, every day, all I kept telling myself,

00:40:00.240 Pat, why are you putting yourself through this?

00:40:02.060 Just go back in the Army, man.

00:40:03.100 You were great in the Army.

00:40:04.460 Go do 20 years.

00:40:05.820 You were 63 Bravo, Hummer Mechanic, Fort Campbell, Kentucky.

00:40:09.220 You still got a bunch of friends.

00:40:10.360 You know the streets.

00:40:11.160 You know what to do.

00:40:11.800 You know the formation.

00:40:12.660 You know the acronyms.

00:40:14.220 You know all this stuff.

00:40:15.060 You were good at it, man.

00:40:15.880 Just go back.

00:40:17.040 Just go back.

00:40:17.560 You're going to get a bonus if you join.

00:40:18.900 You'll pay off your debt.

00:40:20.440 You know, do 20 years.

00:40:21.420 You'll get out at 38 years old.

00:40:22.780 You'll have a pension to pay you for the rest of your life, maybe 50%.

00:40:25.700 If you do 30 years, maybe you'll get 75% or 100%.

00:40:28.680 If you get disability, get 100%. 0.99

00:40:30.640 Just go do that. 0.90

00:40:31.800 Why aren't you not doing that?

00:40:32.500 That's all I was thinking about.

00:40:33.800 Okay, while I'm going through 9-11, I'm like, dude, this is the worst position I could have

00:40:36.680 been in, getting my Series 7 license right after 9-11 takes place.

00:40:40.000 You could have joined this four years ago.

00:40:41.920 You wouldn't have made some kind of money, at least without some in savings.

00:40:44.240 No, you got involved in the worst time.

00:40:45.260 Just go in the Army.

00:40:46.380 So I needed the right strategies because I was not making it in selling.

00:40:49.320 I was not a good salesperson in the high-ticket items.

00:40:52.860 I could sell $5, $10 products, maybe $100 products, maybe even $1,000 products.

00:40:57.180 I did not know how to sit down with millionaires at Morgan Stanley selling a million-dollar fund

00:41:00.900 or roll over $400,000 in their 401k in 2001.

00:41:04.080 I didn't know how to do that.

00:41:05.600 You need to maintain a level of poise.

00:41:07.740 This is very valuable right now, to be able to stay poised in a time like this, okay?

00:41:14.180 Everybody is watching you if you're a leader.

00:41:17.300 And if you're not, if you are a regular guy, you're not a leader.

00:41:22.420 You're a person that may be a potential future superstar.

00:41:25.780 This is when people will identify.

00:41:27.580 Let me tell you, I'm really impressed by that guy.

00:41:29.280 Look how poised he is.

00:41:30.700 Look how poised she is.

00:41:31.920 In the family, look how poised that person is.

00:41:34.520 Look how poised this person is.

00:41:35.560 You show signs of future leadership in seasons like this.

00:41:40.840 Unfortunately, times of crisis is a great filtering system to identify who's a real leader and who's not.

00:41:46.680 You can never tell who's a real leader in good times.

00:41:49.040 You can only tell who's a real leader with poise during bad times only.

00:41:53.960 Good times, fake.

00:41:55.560 Bad times, real leadership is exposed.

00:41:58.880 You need to have the right level of urgency to find a solution.

00:42:01.260 It's not a time to sit around and be thinking about what about this and what about that and what about this.

00:42:04.460 Buffett said something very powerful years ago.

00:42:08.060 He says, it takes 20 years to build a reputation and five minutes to ruin it.

00:42:10.900 If you think about what, you'll do things differently.

00:42:13.960 If you think about that, you'll do things differently, right?

00:42:16.560 You got 20 years.

00:42:17.340 You've done the right things.

00:42:18.160 Five minutes to ruin it.

00:42:19.100 That's why I said if you're about to make a bad decision, marriage, kids, finances, all this stuff, take two years before you make a big decision.

00:42:27.080 Because even though times may be hard, if you were good at what you were doing a year ago, two years ago, three years ago, you've learned a lot.

00:42:33.740 This is just a bad time you're in right now.

00:42:35.520 And it's a time that none of us have ever experienced in the history of America before that all things are hitting at the same time to the economy.

00:42:44.380 You ain't been through this before.

00:42:45.620 Okay, and partially you're not at fault, but it is your responsibility and my responsibility to do the best with whatever hands that we've been dealt right now.

00:42:53.900 That's the moves we got to make, okay?

00:42:55.680 You and I, especially if you consider yourself a leader.

00:42:58.300 And by the way, if you're on a podcast like this, you're on a show like this, you're watching this webinar right now, a lot of people are not on this.

00:43:05.220 Think about how many people could have been on this.

00:43:06.840 They're not on this.

00:43:07.440 Why not?

00:43:08.340 They're watching a show.

00:43:09.920 They're probably watching a Netflix show.

00:43:12.360 They're probably listening to music right now.

00:43:14.120 They're watching YouTube videos.

00:43:15.780 They don't have time for this.

00:43:17.440 They're sitting around worried, stressed out, idle time, checking Instagram stories, checking TikTok stories.

00:43:23.180 You chose to take the time to get on something like this.

00:43:25.680 This means you're showing leadership qualities yourself.

00:43:28.840 Kudos to you.

00:43:29.740 Not a lot of people are doing it right now.

00:43:31.720 They're trying to go through this in a way to eliminate the pressure and what's really going on.

00:43:37.800 But you're saying, I want to face the reality and I want to get some strategies that can work for me.

00:43:41.860 I applaud you for it.

00:43:42.660 So how to approach a crisis like this.

00:43:44.600 What caused it?

00:43:45.880 Is it in your control or out of your control?

00:43:49.360 Quantifying the risk of crisis.

00:43:51.080 Worst case scenario.

00:43:51.800 What's the worst thing that's going to happen here?

00:43:53.400 Really, let's think about what's the worst thing that's going to happen here.

00:43:55.860 A market crash?

00:43:57.420 You know, a bad one?

00:43:58.820 20%, 30%?

00:43:59.940 Could depression really take place?

00:44:01.780 Could a war take place?

00:44:03.200 How bad can this thing get?

00:44:04.900 Can it get very bad to the point that it could cause me to lose my job, lose my clients?

00:44:09.800 Okay.

00:44:10.700 Am I the first person that's going through this?

00:44:12.540 No.

00:44:12.660 How long do you think this will last?

00:44:14.140 You think this will last for 10 years?

00:44:15.600 No.

00:44:16.340 You think it's a five-year deal?

00:44:17.840 No.

00:44:18.540 You think it's a one-year, two-year deal?

00:44:20.040 Most likely.

00:44:21.060 Okay.

00:44:21.640 I can kind of go through that, but I want to come out of it a winner.

00:44:24.280 This is what I want to come.

00:44:24.980 I don't want to just come out worse than what I am today.

00:44:27.420 I want to be able to come out with a higher market value than before.

00:44:29.640 Great.

00:44:30.400 That's the right way of thinking.

00:44:31.640 Three, confront the crisis with the right level of urgency.

00:44:35.500 Sometimes when issues happen in our lives, we're kind of like, ah, I got time.

00:44:38.300 It's okay.

00:44:38.780 Next month.

00:44:39.280 Next week.

00:44:39.820 Next this.

00:44:40.340 Yeah, you can't afford to do that right now.

00:44:43.280 You can afford to do that in good times.

00:44:45.060 You cannot afford to not have urgency in bad times like this.

00:44:49.120 Zero.

00:44:49.660 You cannot afford to have it.

00:44:50.580 Find the roots of the crisis to eliminate future repetition of the event.

00:44:54.200 Maybe the industry you're a part of.

00:44:55.460 Maybe a product you're selling.

00:44:56.560 Maybe you didn't save enough money.

00:44:57.580 Maybe you bought one too many exotics.

00:44:59.300 Maybe you bought one too many watches.

00:45:00.600 Maybe you didn't take advantage of the market when it was doing very good and you sat on

00:45:04.080 the sidelines.

00:45:04.660 You're like, man, I didn't even make any money, Pat.

00:45:06.140 I've never even experienced making money.

00:45:07.840 Maybe you need to get into the market.

00:45:09.520 Maybe you need to play ball.

00:45:10.980 Maybe you need to stop sitting on the sidelines.

00:45:12.960 That's not working for you.

00:45:14.020 What we do not-

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00:45:39.440 With all of the stuff that's going on in the marketplace right now, making six figures

00:45:44.200 today, you got to get your income to a whole different level.

00:45:46.760 You got to position yourself in a place with a company that upside is big long-term for you.

00:45:51.440 You have to be starting to think about those thoughts depending on your age.

00:45:54.340 You may be 35 right now with two kids saying, hey, man, I got to kind of start thinking about

00:45:58.080 long-term for myself.

00:45:58.860 Exactly.

00:45:59.940 But find the roots of the crisis to eliminate future repetition of the event.

00:46:04.520 Create a battle plan, both defensive and offensive.

00:46:08.120 So now, timeline of crisis.

00:46:10.980 Okay, one hour.

00:46:12.460 Don't turn a issue that you need to resolve in an hour and let it last a day.

00:46:17.980 Don't let an issue that's supposed to last only a day and let it linger for a week.

00:46:22.140 You're wasting your time.

00:46:23.520 Don't let a crisis that a one-week-long crisis take a month of your life.

00:46:27.780 Don't let a month crisis take a quarter.

00:46:30.040 Don't let a quarter take a year.

00:46:32.060 Don't let a year take a decade away from you.

00:46:35.020 Learn to condense timeframes in times like this while you're going through this crisis.

00:46:39.400 Don't be overthinking your decision.

00:46:41.160 We got to go.

00:46:42.100 We got to go.

00:46:43.000 We got to be decisive in a time like this.

00:46:45.440 You know what's the book I recommended this last podcast that we talked about?

00:46:49.120 How to make decisive decisions.

00:46:50.480 The book's title, the book's entire premise was around how to make decisive decisions now in this climate.

00:46:58.760 Because it's important to make.

00:47:00.260 That's a very valuable skill set today to make.

00:47:03.240 So now let me show you this.

00:47:05.220 Kai, we came out with this chart, what, two years ago, three years ago?

00:47:08.040 I think it was two years ago.

00:47:08.860 Two or three years ago when we were in Boca.

00:47:10.220 And this is what the whole concept was.

00:47:12.600 The last 20-some years, ever since I got out of the military and I've been working in free market, free enterprise, financial industry,

00:47:19.080 I've watched a lot of my peers and my competitors, and here's what I noticed.

00:47:22.760 If you look at the bottom right, the red represents the 1%.

00:47:27.340 The orange represents the 10% of your industry.

00:47:32.140 Yellow represents 20%. 0.99

00:47:33.720 And the green represents 80% of people in your field.

00:47:38.400 Here's what I learned.

00:47:41.400 I learned that almost everybody can work just as hard as anybody on any given day.

00:47:49.860 Almost everybody can work as hard as anybody on any given week.

00:47:55.840 But they can't do it over a month's span, over a quarter, over a year, over a decade.

00:48:01.480 That's when they get exposed.

00:48:03.080 See, if you look at the difference between the red, it's all the way at the top.

00:48:06.240 When they're running and gunning, they're running at 9.5.

00:48:10.580 But their low only gets as low as 8.

00:48:14.040 If you look at the top 10%, when they're running and gunning, they can compete with the 1% at 9.5.

00:48:19.620 But when they're cruising, they drop all the way down to 6.

00:48:22.320 When you look at the top 20%, at the top, they can compete with the 1% at 9.5.

00:48:28.540 But when they're chilling, their low drops to 4.

00:48:31.780 And if you look at the green, the green will get to an 8.5.

00:48:34.660 They'll never work as hard as everybody else.

00:48:36.880 But with their bottom, when they're cruising, when times are hard, man, they truly disappear.

00:48:41.000 And it takes them years to recover from it.

00:48:43.460 I don't know which one you are.

00:48:44.820 Just by being on this here, I'm assuming you're automatically probably in the 20% or higher.

00:48:50.480 But whichever one you are, remember when people lap you or they get past you or they beat you.

00:48:58.460 It's typically during scary times while a lot of people are in idle, not doing anything.

00:49:06.300 It's just kind of like, well, you know, my God, you know, the times are very hard.

00:49:09.260 I can't find a job.

00:49:10.000 I can't do this.

00:49:10.500 I can't do that.

00:49:11.940 They make urgent decisions and move.

00:49:13.540 Do not be the person that you use a bad season like this to say,

00:49:18.160 this is why I'm not working as hard because there's just not any business out there.

00:49:22.020 There's just not any clients out there.

00:49:23.660 There's plenty of business out there to do for the people that are going above and beyond

00:49:28.200 and doing what others are not willing to do.

00:49:30.960 Next, skills dictates your value in the marketplace today.

00:49:34.040 We're hiring a bunch of people right now.

00:49:36.560 In this building right now, we have, what is the number?

00:49:39.460 65 full-time employees.

00:49:40.760 We have 65 full-time employees.

00:49:42.080 Now, a year ago, we were at 25.

00:49:43.860 A year prior to that, we were at 8, okay?

00:49:46.280 So we went from 8 to 25 to now 65, and we can't fit in this building.

00:49:52.680 If I open that door and you come into this building, people are sitting on top of each other, literally.

00:49:57.000 We bought another building that we turned into a comedy club and a cigar lounge.

00:50:00.540 Now, people are going to be working at it there.

00:50:02.160 We've made multiple offers to buy different buildings and community because we need more space.

00:50:07.220 People are hiring today.

00:50:10.680 We currently have 18 job openings today, positions right now, whether it's sales, editor-in-chief, VP of studios, president of studios.

00:50:18.580 We have so many different, managing director of our consulting firm.

00:50:21.160 We got so many job openings today that we're looking, okay, ourselves.

00:50:27.000 So what are people looking for?

00:50:29.480 I did a training this week just to talk to my guys to see how good they are at sales and negotiation because my job is to train the trainers to make sure all my guys know how to negotiate.

00:50:38.100 All my guys know how to sell.

00:50:39.540 How good are you at selling yourself?

00:50:42.340 How good are your people at selling?

00:50:44.760 How good are the people you're working with at negotiating?

00:50:47.520 What skill sets are you adding in an economy like this to separate yourself from everybody else in the marketplace?

00:50:52.760 Well, this is me.

00:50:56.160 In the picture to the right, if you look, it says 2001.

00:51:00.560 That's exactly right after 9-11.

00:51:02.340 The girl in the back right behind that white flash, that's a girl named Soul. 1.00

00:51:07.820 We were sharing the same desk at Morgan Stanley Dean Witter Building in Glendale.

00:51:11.940 I am in that picture 22 years old.

00:51:14.980 In that picture, I'm 22 years old, okay?

00:51:18.240 The picture to the left, I'm in my office in Northridge.

00:51:21.720 I'm sitting on my computer looking at what's going on with those old earpieces.

00:51:25.460 Look at that old earpiece.

00:51:26.520 Before Apple came out with their earpiece, the earpod, what did they call it?

00:51:29.740 Earpods? Is that what it's called, the earpods?

00:51:31.600 That's the ghetto ones. 0.99

00:51:32.480 I don't even know what they called it back in the days, but that's what the Nextel combination.

00:51:36.660 I got my CDs in the corner.

00:51:38.120 You see that CD box at the top?

00:51:39.800 I'm listening to CDs.

00:51:40.840 I'm constantly trying to figure out ways to improve with that camel hair jacket of mine who was so hot, 1.00

00:51:47.700 I'm wearing it in LA while it's 100 degrees, right?

00:51:50.080 Trying to look like I know what I'm doing.

00:51:51.880 But I am in the hunt.

00:51:54.440 I'm in the office early.

00:51:56.140 I'm in the office late.

00:51:57.580 I'm extremely paranoid.

00:51:59.160 I'm extremely concerned about what's going on.

00:52:01.180 But at the same time, I am so optimistic because I'm smelling opportunity.

00:52:06.940 That kid right there, I call him kid.

00:52:08.640 He was 28 years old.

00:52:10.000 That guy right there is so flipping hungry.

00:52:14.180 He sees an opportunity and he knows this is his chance to become the hero to his family.

00:52:19.660 I, at 44, I'm grateful to both of these guys.

00:52:24.260 I look at this right now and I say thank you to both of them because the guy on the right, 22 years old, he was a little too good at partying.

00:52:30.420 So the fact that he kind of put it on pause, I'm proud of him.

00:52:32.700 And the guy right there, while he was having some success, he did not slow down to celebrate, oh my God, look how special you are.

00:52:41.240 He kept saying, I can do a little bit more at the next phase because I'm going to be able to have my family's dreams become a reality.

00:52:47.260 And I was in recreation mode.

00:52:49.020 It's not easy to do.

00:52:49.900 Because what recreation mode is to tell yourself, I'm not good enough for the next phase.

00:52:54.900 So I learned the skill set of sales.

00:52:56.400 Then I learned how to become a sales leader.

00:52:58.180 By the way, learning how to be a sales leader, this helps you in everything you do in life.

00:53:01.540 Just so you know, Trump is a salesperson and he's a sales leader.

00:53:04.900 Okay.

00:53:06.460 Obama is a salesperson and a sales leader.

00:53:09.020 Just so you know this, by the way.

00:53:10.900 Bill Clinton, for sure, he's a salesperson and a sales leader.

00:53:15.180 Even Bush, even Reagan, Kennedy, Nixon.

00:53:18.600 Again, these guys learned how to sell and how to drive people.

00:53:23.300 Sales leaders know how to move people.

00:53:26.000 I knew how to sell, but I hadn't learned how to drive salespeople myself.

00:53:31.340 So then I became a CEO.

00:53:33.880 Each time I learned new skill set that increased my market value.

00:53:37.300 I didn't know what it was to be a CEO.

00:53:38.420 I was a business owner, but I was not a good CEO.

00:53:40.360 I spent $50,000 and went and lived in Boston for three weeks at Harvard Business School at their OPM program to learn how to become a CEO.

00:53:46.980 So I was a terrible CEO.

00:53:47.820 I was a good business owner.

00:53:49.260 I was not a good CEO.

00:53:49.980 I didn't know what to track.

00:53:51.180 I didn't know what to do on a daily basis.

00:53:52.880 I knew at each phase I had to recreate myself.

00:53:56.480 Just like this iPhone, which system are we on right now?

00:53:59.120 Is it iOS 14 or 15, whatever it is?

00:54:01.460 Just like this thing has upgrades, you need to have your own upgrades.

00:54:05.100 Maybe you were good for the last level, but you ain't good for the next level.

00:54:08.400 So what are you doing to recreate yourself in a season like this?

00:54:11.080 Sales is a skill that changed my life.

00:54:14.380 If you got value out of this video, give it a thumbs up.

00:54:16.300 Subscribe to the channel.

00:54:17.120 I got two other things I want you to think about as well.

00:54:19.180 One, if you want to know what drives you, your personality, during a time like this, are you scared?

00:54:24.960 What gets you to move in a time like this?

00:54:27.000 We created this quiz for you to learn about yourself.

00:54:29.260 If you've never taken this quiz before to see which one of the four you fall under, click here, take the quiz.

00:54:33.720 The other one is how to make tough decisions.

00:54:35.900 A video we did four years ago.

00:54:37.060 If you've never seen it, click here to watch it.

00:54:38.940 Take care, everybody.

00:54:39.440 Bye-bye.

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00:54:45.880 Bye-bye.

00:54:48.080 Bye-bye.

00:54:48.680 Bye-bye.

00:54:48.800 Bye-bye.

00:54:49.640 Bye-bye.

00:54:50.860 Bye-bye.

00:54:51.120 Bye-bye.

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00:54:53.680 Bye-bye.

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00:55:05.140 Bye-bye.

00:55:05.420 Bye-bye.

00:55:05.540 Bye-bye.

00:55:07.760 Bye-bye.

Valuetainment - April 11, 2023

Banking Crisis In America - How It Affects YOU

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