Lance Gets Inside Scoop on Bank Crisis

Lance: Where do you go when you need to find out what’s exactly the truth about the banking system? I have a lot of friends of mine that are already saying, hey, they’re trying to go for a digital currency. The banks are going to start to collapse. You watch how they push that digital currency lands. It’s all a conspiracy. I understand that. But I always go to the experts. The people that have sound minded individuals. I talked to Milton Friedman trained economists like MarcNuttle who is been predicting this financial crisis, since I’ve known him for 10 years. He has been on the trail of this. We’re going to interview and bring to you right now live Marc Nuttlegiving me the analysis what’s happening. And when we’re done, you’ll have peace of mind.Something you’re not going to get from reading any of the other judge reports and sensational clickbait news headlines. America isn’t going down right now. But he explains the dynamics of what is happening and educates us in the most interesting way on what economics really is and how you can interpret the headlines and stay free from getting hooked by the paranoia. Because we are in a terrible shaking but there is daylight at the end of this tunnel. Let’s go into that broadcast right now, but first go to “Lancewallnau.com/Birch” and download the 21-pageanalysis there. Many of you have not read it yet. I keep talking you about it, do you see why I’m telling you to do it? Because, “The silver is mine and the gold is mine”. Haggai said you got tounderstand how these commodities can store value it’ll give you peace of mind it’ll protect you in the storm. “Lancewallnau.com/birch” and we’ll see you with Marc Nuttle on the other side. 

Welcome, welcome to the Lance Wallnau Show and, in every broadcast, those of you that helped us land over 10-million of these out there. You are the reason why we do what we do, because we believe that the common sense and the decency and the goodness and the spirituality of the American people is the secret sauce that can withstand even the greatest shakings that will happen. I’m a firm believer in broadcast like this that by hearing me and you working together. We are forming a coalition if you will, of enlightened warriors that can handle what’s coming because we don’t deny the reality of the problem, nor do we sugarcoat what we’re about to see. Remember what Churchill said? I have nothing to offer you but blood, sweat, and tears. But Churchill’s realism, his grit, and his commitment to victory, saw them through. We’re going to see America come through this.

But folks, I’ve got a special guest today. He was so kind to make himself available. I called him today because this is a man who was a peer and, in a sense, a direct I would say protege and student of the great economist Milton Friedman. Man who had served with historic impact during the Reagan and the Bush administrations. Someone who was it was a legacy of stories himself that I love to talk about. Right now we need his economic breakdown explaining to us what in the world is happening. I’m going to give you what right now let’s bring on Marc Nuttle.Marc, would you please join us for the show? Thank you, my friend.

Marc Nuttle: Well, Lance great to be here. Great to see your thanks.

Lance: Now Marc we’ve got these headlines here. I went to the Drudge Report just because they are the secular version of what is going on out there in the secular world of cynicism. But we’re looking at Griffin talking about capitalism is breaking down. It’s the first Twitter fuel bank run. Washington’s rescue of Silicon Valley is not easing and erasing doubts. Credit Swiss are they next to fall? Who did it? The DOJ and the SEC is investigating the SVB collapse and now Moody is warning of a rapidly deteriorating situation. I don’t understand fully what’s happening. I simplify it to my audience by saying when you engage in quantitative easing and the constant printing of money at some point that money circulates and creates a problem and it’s going to show up in various ways and woke policies with banks such as with the Silicon Valley Bank. Oh,this is the Charlie Kirk yesterday. They listed all the companies that were at the top of their queue for investment and they were all Marxist type companies with woke profiles not economics but social values being a filter for investment, doomed the failure in an economic world. But Marc, I’m going to stop talking educate me and my audience on what in the world is happening.

Marc Nuttle: Well, first let’s talk about what happened to this bank and put this in the context because it is critical Lance and I’ll get to the point why here in just a minute. But maybe not for what some sensationalists are saying. There been over 500 bank failures since 2009 2010, the last financial crisis. In fact, the average number of failures the last two years was 2 a month and you didn’t hear about any of them, did you? It certainly wasn’t headlines and that’s because most of those were insolvent. They had bad loans. They may have been too concentrated in one industry or made bad decisions, but this isn’t what happened to SVP. They were illiquid. There’s a difference between being illiquid and being insolvent. Now, they made some bad bets. It is isolated in this context. They’re not attached to any other banks. They didn’t have an upstream bank that guaranteed the loans like in the failure of Penn Square in Oklahoma that took down some larger banks, regional banks at the time on oil and gas is this wasn’t derivative driven.

You hear about a lot of that about contracts for swaps and guarantees that somebody went bankrupt and there was a teetering of the of what other structure was. This was simply a matter of a bank got caught short on its liquid capital on long-term investments that couldn’t dump to get the liquidity it needed to manage its accounts. This was a large failure. 16th largest bank, 42 billion in capital somewhere around 200 billion in exposure on deposits, but it was healthy otherwise and basically 30-year-old bank. So, right now it looks like poor management made a bet on interest rates that they wouldn’t go up and they did. They continue to go up and they got caught short in the medium. They also made some mistakes on how they raised capital, had they not raised, they had some capital the night that they needed it. And some of the capital they raised was convertible stock which couldn’t be booked till the next day and overnight it failed.

Now this is unique and that it is a bank run and it is the first bank since the digital age to collapse because of a run on the bank. People wanting their money out now which they had an obligation to do and the FDIC had to come in and shut it down and provide common and come in as a receiver. Now, okay. So, what’s different about it? Okay, let’s take that sequence. Now, you got financial analysts now saying, okay, it’s isolated. They made mistakes. It’s been taken care of. FDICs in charge. The banking system’s safe. Go about your business. And count this as one of the other 500 banks that failed in the last 10 years. But that’s not quite what happened. Number one the FDI well the Treasury and the Federal Reserve particularly Janet Yellen another caught off guard. They didn’t see this coming. And so, over the weekend they scrambled. Almost like they did during the financial crisis and the collapse of Lehman liquidation. And they first put out an edict on Friday and for the talk shows and we’re on the talk shows. Meet the press and this week saying we’re going to cover deposits it which is our protocol up to $250,000 but nothing more. Because they want to avoid the term bailout where stock holders and others got their money back. But by Sunday afternoon, what happened? They had they reconvened issued an official statement that we will cover all deposits.

Now it’s not clear yet where that includes stockholders and other investors, which would be a bailout. We’ll see in the coming days when we get the fine print and the definition on that. But that did calm at least the panic. But why did they even have to do that, Lance? And that to be said there’s something about this this Twitter age. I think when you get into an investigation, it’ll take weeks if not months to determine exactly what happened behind the scenes the last 48 hours. But somebody who had access to the restructuring, knew there was going to be a crisis tonight within 24 hours. Tweeted out this has been probably a venture capitalist. And what this bank was highly invested in tech startups. And a lot of companies that some 400,000 employeesjust they’re just managing payroll accounts. Well, over $250,000.

And so, what happened though you’ve got in that industry Lance you’ve got venture capitalist who put in equity in startups. Then there’s a debt component usually less than 10 or 20% of that company startup that’s it’s in a commercial bank and this is what SVB specialized in. But the venture capitalist work very closely with the bank and then how they structure these deals. So,they obviously whether on the board or otherwise, that’ll be what’s the investigations about. Does somebody on the board know what was coming. Tweet something they shouldn’t have tweeted that went viral that caused the run without the run. They probably wouldn’t have collapsed.Okay, so now it’s isolated in that context. However, it’s not. If it had been isolated the FDIC the Federal Reserve and Treasury would not have had to convene over the weekend to change their policy by Sunday afternoon at 11 well actually Sunday morning 11 o’clock DC time is when they issued that.

So, what happened? Well, there’s this lack of confidence in institutions generally. There’s this lack of confidence that the federal government is telling them the truth. There’s a lot of analysts out there saying this is going to come. Didn’t know it was going to be SVB but this is coming by this summer. What’s it based on? It’s other factors other than the just the banking system. It’s the debt, the debt.

Lance: Marc, let me just interject for a second here to, because here like you, what I love about you is I can ask you any question. I never feel dumb for asking it. I always feel smarter when I get the answer from you. But it is like drinking from a fire hose. So let me pause the professor and talk to my class here about what I’m getting out of this. Is that this is the update. That’s why I like going to Marc Nuttle. And by the way, you can go to Marc Nuttle every week and get this update. Marc right now in the middle of the broadcast. Not at the end. Tell people about the Nuttle Report. How can they get a hold of your brilliant weekly gems on what’s going on in the world? How do they do that?

Marc Nuttle: It’s found at “MarcNuttle.com”. Get a 30-day free trial. It’s just $25 a year. I only do that because I think that’s what gets people to read it. But you can subscribe or give us your email, we’ll send it to you and then you can if you like it, fine if you don’t.

Lance: Absolutely. And it’s invaluable to me. I love it. It’s a great resource and a lot of my smartest friends read it too. But here’s what I want to say. The SVB Bank failure then is like you know mister Wonderful I’m listening to him with Neil Caputo the other day. He said, look, this is mismanagement. This is not anything but incompetence in the management team, and like and like you said they were banking on interest rates being like 0-1% forever and that’s a bad strategy. And they were investing in companies and projects that were going to be too high a risk if that interest structure changed. So he said it’s a management failure. However he’s also telling all of his CEOs to diversify across the board and hold no more than 20% of any of their assets in any one banking, because of the threat of the instability and the unpredictability of these balance sheets in these different banks.

So, now you’re about to transition into another point, which is it may be the Silicon Valley is an isolated incident of mismanagement. I’d say we need to look at how the woke filter help prioritize who and where they invested in that they shouldn’t have with the current economic environment. But beyond that there’s something about human instincts in the United States. I remember like always say like sheep aren’t dumb. They have a sense of something and the American people based on your research have a historic all-time low confidence and the integrity of the institutions other than the family. The media and government is flatten its face in terms of people trusting it. So, they don’t, they’re already primed with anxiety that these institutions are not telling the truth and that they are potentially capable of falling and failing. Am I reading that correctly?

Marc Nuttle: Absolutely. And it’s worse than that they don’t trust them. They think they’re corrupt. That’s what’s scary. They think they have a hidden agenda for their personal purposes that is not their own. This is different than I don’t agree with their policies or I even think they’re incompetent. They think they’re corrupt and so what and then you hear all this chatter Lance,haven’t asked me yet now but a digital currency and that this is a precursor to that they’re going to have to issue a digital currency that then all the ramifications of what that is and in the transferof your cash digital currency. What does that do and how they going to control you? People are worried about this and the government never gives them clear, concise answers. They talk in conundrums if you will that you can’t understand and then expect you to just accept their word when there’s no trust there. So, when something like this happens, that’s what happened on Sunday.

The chatter on the social media was extraordinary enough that it was jeopardizing the future markets. As you know, the stock market on Friday afternoon, but the future’s markets is vibrant over the weekend preparing for Monday morning. And you’re buying futures are not tradable that they’re not cashable assets other than in the future’s market. But here’s my point. They started to tank Saturday night and if they hadn’t come out whenever the Federal Reserve or anybody likes it convenes on a Sunday, you know something’s going on. That’s what they’re and they weren’t really clear on that other than we had to do something to reassure the American public. Well, of course they because of this lack of trust. Now, when you’re ready, I’ll tell you where I think that’s going.

Lance: Do you think that this is going to lead to overturning or exposing the mismanagement or vulnerability of other banks now? Do you think this is going to be the beginning of a sequence of bank failures or bank disclosures, or what do you expect?

Marc Nuttle: One of the questions I get a lot in the last two, 3 days. Well, does the FDIC have enough money to do this if another 5 or 10 banks fail? Well, are there other banks that have probably also made the wrong bets? Yes. Where are they? Nobody knows. Obviously, the examiners haven’t been going into their investment portfolio and had didn’t check SVV’s liquid assets of their capital base close enough to be able to do a risk analysis of their capital and they’re supposed to do that by the way. I don’t know if we got lax or if it’s too complicated and not to get into this but there’s also a derivatives problem. It’s hard for some examiners to even know what the risk are.

Lance: Explain to our people what the derivatives means?

Marc Nuttle: Well, it’s a bet. It is a hedge against what’s going to happen and I don’t think SVB had any. So, it’s the way I explain it. I mean, you loan money on oil and gas and you buy a derivative that it that it won’t fall below a certain price. And if there’s an upside, you make it and you share some of your cost of the upside by ensuring that it can’t drop below a certain level. In other word you hedge, and it’s a bet and it’s off the books and it’s unregulated. And to put it maybe in the common vernacular, it’s like Las Vegas. You go bet on the Super Bowl and the guy who keeps the book is the bookie or the legally they’re in Vegas, maybe it’s Caesars Palace. They got a billion dollars bet on the Kansas City Chiefs and billion dollars bet on the Eagles and it’s in the middle like this and they’re not taking the risk on either side. They’re taking a cut in the middle they’ve got a spread that they’re working with and they’re minimizing it and they’re going to do fine. The bookies do okay and the Banks who book these and then buy hedges to protect their assets do the same.

If it gets too heavy on one side, the Kansas City Chiefs then you change the point spread to bring the Eagles back up. They get more points and you know that’s kind of how it works in the betting where you’re trying to hit parody all the time. And when you look at that stuff, they don’t miss it by much. They don’t miss those spreads by much. Some of us computer-driven analysis but back in the old days, it was instinct, but you get back to the banks. They’re doing the same thing and then you got contracts on top of contracts and it gets leveraged. They’re $600 trillion dollars of derivatives that we know of on the books that have come out of exams. The speculation is that it’s a quadrillion trillion which is 1000 trillion which is a number not any of us can really get our arms around.

Now, is there a threat on that? Like the Denmark Carlisle Fund that was the first one called that exposed the toxic assets that led to the financial crisis in 2008 and 2009. Which then started the domino effect. Yeah, in the derivatives world, there is. The wrong insurance contract that goes bankrupt and can’t pay its bets, then who pays them. Well, the bank and the guy in the middle and the two guys that made the bets don’t know each other. They put the guy in the middle keeping the book make the payments and he’s got to collect he’s got to pay. And if he can’t get his collection, how does he pay and that’s when it starts to unravel. That’s the derivatives sphere.But this was not a derivative problem. This wasn’t amount of somebody, they didn’t have it probably should have because of the risk they took on that where they were T bills they had about I ain’t paying 1.8, 1.9 when interest rates went up they lost a third of the value in those bonds and they sold them. They sold some at a loss but it wasn’t enough to cover their capital base they got caught in liquidity. Let me tell you this other thing about the FDIC this is the crisis that’s in front of us.

Lance: Okay.

Marc Nuttle: The FDIC is capitalized at about 1.7, 1.8% of the assets they cover is the cash they have on hand. There’re trillions of dollars in bank deposits in the United States that have FDIC protection but only less than $200 billion in assets inside the FDC which are fees the banks pay to cover these bad loans. Basically bad loans. But in this case a collapse of a bank due to a run. Okay, so what would happen? This is the question I get a lot now. What would happen if another 10 banks failed that exceeded the capital of available in the accounts of the FIC to cover. Well, there’s a process for that. I call it a speak it but congress can turn on a spick it without having to vote on it to replenish it and loan the banking system the money through the insurance company, the FDIC to pay for these loans. But to do it Lance, it’s got to go on somebody’s books as a debt. Probably using the Federal Reserve, or the FDIC but it’s got to be a debt. You can’t just put the cash in and give it away.

And now we have a debt ceiling and there’s no capacity to do that. So, if this happened in the next week or two and there wasn’t enough money in the FDIC to cover the accounts, what would Congress do? They have to call emergency session and do something quickly and the problem with that is would it be quick enough? Would they sit down and call a meeting, understand how they did this once in the tarp bills and it happened. Back in 2008 and 2009 and in 48-hour alert, they passed a $700- and $80 billion-dollar tarp bill to re-liquefy the banks and save the banking system. And if you want to see the documentary right there’s very few HBO documentaries. I think they got right but they got that one right it’s called too big to fail. I mean we were that close the world’s financial markets collapsing and congress passed it the rest is history.

Now so he did bipartisan bill that everybody understood the consequences. Now you’d have to do something if there were more bank failures immediately. We don’t know that though. You wouldn’t know what bets these guys.

Lance: Well, okay so in my neck of the woods which is keeping one ear open to the conspiracies. Because we find that there’s been a conspiracy and breaking news is 6 months. So, like and some of us are looking at this and saying, they’re pushing for this digital currency. Do you think the failure of the banks and the anxiety over banking stability, etcetera? Does that serve the those that are looking for the digital currency or does it create Problems for the digital currency? It’s one question but even more directly, how do you think this is going to play out with McCarthy and the debt-ceiling debate that is happening now? Does this help Republicans on managing fiscal responsibility in Washington or does it help Democrats on we’ve got to be more flexible to help bail out these situations? How is this going to affect the debt ceiling debate?

Marc Nuttle: Well, it there several questions there because vast. Let’s talk about does this bank failure enhance and move the needle for digital currency or not. They’re really unrelated but then when I get through the debt, if you want to talk about the debt, the debt ceiling and how it all comes out of the next. Well, 90 days roughly or by the no later than the end of June. It is related because there are pressure points on other things that do react. But here’s the point, the Digital currency is to control cryptocurrencies and the black market so that there is an off-book transactions that the government can’t control. That’s what it’s all about. It is so that there can’t be an alternative economy out there that the government can’t track and when you see the first country to do it which is China, you understand what drove that. I mean, they’re a command economy, they have to control things.

If it’s out of their control, they start to collapse themselves, because activity that they haven’t designed in their communist 5-year plan will destroy their own plan. But here here’s why Lance.No country can survive without taxes and all taxes right now are based upon current GDP transactions in various industries a very complicated tax formula that projects what the revenue will be for the next fiscal year. And it’s getting to the point or at least there are those that advocate a digital currency that there you know where every dollar is, where it’s spent and can’t use any other currency. I think I believe that the current legislation that the outline or test the digital currency outlaws Bitcoin. Same way China did. So, you can’t have any you and I can’t do a deal off of book that the United States doesn’t know about. That’s the idea of it. And the purpose is to be able to control their piece of the cash. The cash flow. Because if their revenue of their tax base is jeopardized, a government any government but the United States will collapse ultimately. You just can’t keep printing money without revenue.

So, that’s somewhat unrelated to this bank failure, but it is related in this context. We still are deficit spending. The budget that President Biden proposed for a starting point of the debate was about 6.8, 6.9 trillion in deficit by 1.75 something trillion. I mean we’re collecting somewhere around 5.4–trillion revenue right now and our budget’s about 6.7, 6.9. We’re currently spending over trillion dollars in a heated economy and what Biden would the president would at least boast is almost full of unemployment. You can’t do much better than that. And you can’t continue to run these kinds of deficits with the $31 trillion dollar debt.

Now by the way that debt ceiling that government owns is much higher than 31 trillion. I always feel a need to point that. It’s closer to 40 trillion or 40, 37, 38–trillion, and that’s because the government doesn’t list money it owes itself. It has swept your Social Security account. It has swept every other account that anybody’s paid into from transportation to environmental protection whatever your tax was. They’ve swept it and spent it in general revenue and put in place of it in the Social Security and IOU, which is a debt no different than a T bill with a coupon punch on it and a due date. They don’t list it because they owe themselves. So, that the debt is greater than 31 trillion, but that’s public debt. That’s who they owe somebody else other than themselves.

Now and we’re at that ceiling and so there’s the public starts to think that, wait a minute, are you going to raise the debt? Okay, now let’s get to the debt debate. Neither the president, the president’s budget is outrageous and to say that it’s going to create growth and therefore cut the deficit by 3 trillion over 10 years. There’s a CBO report I think just today. That says, his budget will add 21 trillion dollars in debt to the federal debt in 10 years. Another 21 trillion. Now and but he says well that’s 3 trillion less that would have been if he didn’t have my budget. I mean what gobbledygook and then for the president of the United States to say, “I’ve got to raise taxes to pay for part of this on billionaires and that a billionaire should pay the same thing as a fireman”. He knows better than that a fireman is a wage earner and a billionaire is an investor.He gets capital investments. He gets write offs. Maybe it should be adjusted somewhat, but the comparison’s not fair. He knows better and he’s not telling the truth.

And it won’t solve the problem even. You couldn’t take all their money and solve a trillion-dollardeficit and so until and the public understands this instinctively that they’re. But basically lying.Okay, what Republicans doing? Where’s their budget? Where’s they going to cut it? How they going to do it? Here’s what I would suggest and I’ll get to this and I’ll stop. This would be easy for both the speaker and the president to say, we’re going to start what is necessary by balancing the budget, by cutting our administrative cost by 10%. We’re going to cut committees. We’re going to cut travel. We’re going to cut basic things that are not necessary to run government by 10% and pay the same price you are as Americans and the sacrifices that you’re making and the cuts that you have to make. Before you cut any or anything else. Just it is more than symbolic. It’s actually billions of dollars that they could get by worth. That and if the president would say that about agencies, we could actually get the 400 maybe $500 billion dollars in savings just by making the government do the same thing with less duplicitousness and payroll. And you say, well, why can’t they do that or why can’t they do a mandate to look into it? It’s not hard Lance. It just takes leadership and will.

Now, we can get into what those and the agencies like the energy department and partner of education that are billions of dollars that we don’t need the states are doing anyway. It really getit even more than that. But just think about this. During COVID all the money that was spent the $12 trillion dollars that we know that was printed that of the people who had to make sacrifices, the businesses that were shuttered, the small businesses that sacrificed. Not one single solitary level of government from the federal state to the county to the city was asked to make any cuts or sacrifices. And a lot and during that two-year period a lot of things they were doing they weren’t doing their job anywhere.

Lance: They were shut down. I mean like you know so they were shut down. They didn’t need,they got their salaries but I mean they didn’t need it.

Marc Nuttle: Not one cut.

Lance: Well Marc, we have I can’t believe we run out of time here. Do you have any final thoughts? Gonna take one more minute to wrap up. What would you say is the believers are going to pray? I got a great praying audience. How should we pray about the present financial Christ Are we praying for McCarthy and for these guys to stand strong and for the American mind to become awakened to the debt and to push back on it. What would you like to see happen and how would you recommend Christians pray?

Marc Nuttle: Well, there are three elements to that. Number one, the America banking system is sound unless we lose confidence in it. Most banks are well run. Most banks are well capitalized. Most banks are doing the job they need to do. That’s number one and pray that those who have problems will admit them, get help, and isolate their errors. It’s number one. Number two, that the American public will continue to trust United States over any other government system and working with the elected officials that will make some sacrifices if you will. Number three is that the leaders will stop this politicizing the debate, like the president’s doing right now. And without offering anything tangible to the American people to re–instill confidence in who are and the government that they represent. That they will be humbled before the people and say, I’m here to serve, this is the truth. How can we work together to get this done? And I’ll start telling you the truth. Pray that everybody will not fear the truth.

Lance: I love that ladies and gentleman what you heard in that last segment there within the last two minutes is why Marc Nuttle‘s report is so important. Because Marc gives you what is almost the way I look at Marc is he’s like one of those revolutionary characters who comes in he reminds me of one of the guys who’s informing the nation. He’s got this historic sense of principle with insight and he sounds like a sensible father founding father type. Doesn’t he? So,Marc thank you very much ladies and gentlemen. That’s all the time we have. And so, I want to encourage you again. Marc Donald we’re going to put the information here from Marc Donald’s report. “MarcNuttle.com”. Get the Marc Donald report. Get 30 days free. And I also want to encourage you to take action as we do. If you haven’t done it yet in the instability of these markets, go to “Lancewallnau.com/Birch”. Download the 21-page report and at least know what is knowable about gold and silver and how it becomes a store of value and what it’s role can be and how it can provide you some peace of mind. I don’t care how little money you’ve got. You’ve got an IRA; you’ve got some retirement. Protect what you’ve got, leverage what you’ve got, and we’re going to be back again tomorrow with more. God bless you. There’s a brighter day coming. Peace. Shalom. See you tomorrow.

Closing: Did you enjoy this latest episode? Please remember to share it with your friends.Because the more knowledge you have, the better equipped you are to navigate the world.