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In this episode we dive into Larry Fink, who is he and how did he become so powerful. We also covered his creation of Black Rock and the Aladdin software that has a hold on the world. Resources to follow Visit our website www.vidabroadcastnetwork.com https://www.youtube.com/watch?v=pB4bZIDS9Qc
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In this episode we dive into Larry Fink, who is he and how did he become so powerful. We also covered his creation of Black Rock and the Aladdin software that has a hold on the world. Resources to follow Visit our website www.vidabroadcastnetwork.com https://www.youtube.com/watch?v=pB4bZIDS9Qc
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Larry Fink, the current chairman and CEO of BlackRock, is a powerful figure in the financial industry. He started his career at First Boston Corporation and was involved in the creation of mortgage-backed securities. These securities, along with other factors such as deregulation, contributed to the 2008 financial crisis. After being fired from Credit Suisse, Fink co-founded BlackRock, one of the largest asset management firms in the world. His success and connections make him an influential player in the financial world. You're listening to the Vida Broadcast Network, discussions that matter. Thank you for listening. Beyond the Brink is partnered with Swan Bitcoin. We chose Swan Bitcoin because it's easy and inexpensive, and the best form of financial protection if you're hit with a disaster. It's perfect for both new and experienced Bitcoiners. Set up a Bitcoin savings plan and never miss out on the dips. Get a free book in vetting Bitcoin, the technology behind the first truly scarce and decentralized money, and $10 of Bitcoin when you use our affiliate link, VidaBroadcastNetwork.com forward slash beyond. That's VidaBroadcastNetwork.com forward slash beyond. The shows on the Vida Broadcast Network are those of the host, guest, and callers only, and do not necessarily reflect those of the staff, management, or advertisers of Vida Media or the Vida Broadcast Network. Oh, welcome back to Beyond the Brink. I'm your host, Melissa. I'm flying solo today. Christy is off doing a deep dive on a couple of, well, Vanguard and BlackRock, or Vanguard and State Street Bank, as we promised you last show that we would dive a little deeper into who some of these big players are in the World Economic Forum. So I chose to go over Larry Fink, and who is he, and how did he become so powerful, and also BlackRock and the software that they developed many years ago called Aladdin, which is a software that's been controlling our financial system for many years now. And so I have a couple of clips to share with you and a couple of articles and just a little presentation, so to speak, of the things that I've discovered as I've gone through this. And I just want to say from the start here is that I haven't even touched the surface. There is so much. The more that I research, the more information I got, and I thought I have to stop at some point to mush it all into one show. But I'm going to do my best to share with you what I've learned and hopefully give you a little bit of guidance, maybe some terms or things that you can look up yourself and that will spark some interest in you digging a little deeper on your own time. So let's begin then. Let's see here. So like I said in our last episode, we lightly touched on the World Economic Forum, and we promised to provide you guys a little more detail on who some of the big players are in the world of the Economic Forum. And the one that I chose, obviously, is Larry Fink. Who is he and how did he become so, so powerful? Larry Fink is the current chairman and CEO of BlackRock, and he's had a long and varied career in the financial industry. At the age of 24, he started working at the First Boston Corporation in 1976 after he graduated from UCLA with a degree in political science. He helped pioneer the mortgage-backed securities in the early 1980s while working at the First Boston Corporation. Now, I want to take a moment here to explain who the First Boston Corporation is. This is not your average bank. First Boston was a New York-based bulge bracket investment bank founded in 1932. What is a bulge bracket bank, you ask? Bulge bracket banks are the world's largest multinational investment banks, serving mostly large corporations and institutional investors and governments. So, clearly, Larry's been running with the big dogs for most of his career. Anyway, First Boston was acquired by Credit Suisse in 1988, and it operated as an independent investment bank known as CS First Boston until 2006 when the company was fully integrated into Credit Suisse. Who's Credit Suisse? Well, it's now called Credit Suisse Group AG, and there's a global investment bank and financial services firm founded and based in Switzerland. They're headquartered in Zurich, and they maintain offices in all major financial centers around the world. And it's one of the nine global bulge bracket banks providing services in investment banking, private banking, asset management, and shared services. It's known for its strict bank client confidentiality and banking secrecy. The Financial Stability Board considers it to be a globally systemically important bank. Credit Suisse is also a primary dealer and Forex counterparty of the Federal Reserve in the United States of America. So, in 2022, Credit Suisse revived the First Boston brand as part of an effort to spin out the business. And I had to look this up. I wasn't familiar with the term spin out business. But basically, a spin out is a corporate acquisition or a corporate action in which a new company emerges from an existing one and begins to operate independently. So, it makes me think that they got big plans, obviously. So, they're going to do something with that. I'm not sure what it is. But anyway, okay, back to think. As I said, Larry was involved in the creation of the mortgage-backed securities, the MBS market, early in his career. And let me explain what these are. Mortgage-backed securities, they are securities that are backed by a pool of mortgage loans. The loans are packaged together and the cash flows from the underlying mortgages are used to pay interest and principal to the investors who hold the mortgage-backed securities. At First Boston, Fink was responsible for the firm's bond trading and mortgage security businesses. And he was involved in the creation of the first collateralized mortgage obligation, a CMO, in 1983. Now, CMOs are a type of mortgage-backed securities that are backed by pools of mortgage loans and are structured into different classes with varying levels of risk and return. And these became very popular in the 1980s and 1990s. So as First Boston became fully integrated with Credit Suisse, Fink continued to work in the mortgage market. And his team was involved in the development of new mortgage-backed products, including the adjustable rate mortgages and interest-only mortgages. I personally have known several people that got terribly burned by those products. These products were designed to meet the demand of the investors for higher-yielding assets. So they weren't created for the little guy. They were created for the big guys to make money off of people, and they did. Anyway, things were going great for Larry until he lost Credit Suisse $100 million from a bad bet on interest rates, and they fired him in 1988. Well, there's a debate on whether or not he was fired. They said he – it's said that he was fired, but he says he started another business, which he did. So who knows? But before I move on, I want to point out that from what I can tell, Larry created the products, or at minimum assisted in creating the products, that basically caused the 2008 financial crisis. And so for those of you who aren't familiar with the 2008 financial crisis, this was a major economic event that affected countries around the world. It was triggered by a number of factors, including the housing market bubble. So in the years leading up to the crisis, the U.S. housing market experienced a rapid increase in home prices, which led to an increase in mortgage lending. So many people could not afford to repay their mortgage, but they were given loans anyway, and this led to a bubble in the housing market. And they also had the subprime mortgages, and so many of the loans that were given to borrowers with poor credit histories, these were called subprime mortgages, and these loans were packaged together and sold as mortgage-backed securities, which were then sold to investors around the world. And there was a lot, a lot of people that got just, it was just not a good situation for so many, so very sad. Another factor of the 2008 financial crisis was deregulation. So for some reason, the financial industry was deregulated in the 1990s, and this led to the development of complex financial instruments, such as credit default swaps and collateralized debt obligations. Now, these instruments allowed investors to bet on the housing market and other assets, and they were often highly leveraged, which meant that even small changes in the value of the underlying assets could have a large impact on the investors. And then, finally, the financial institutions themselves had failures. Many financial institutions were so heavily invested in mortgage-backed securities, and when the housing market bubble burst, the value of these securities declined, and many of these institutions faced severe financial difficulties. This included the major investment banks like Lehman Brothers and Bear Stearns, which failed or were forced to merge with other institutions. Actually, they were both acquired by J.P. Morgan Chase, who I'm sure you guys are familiar with, who is also a big player in this whole game. Anyway, the combination of these factors led to a significant decline in the value of many financial assets and a freeze in the credit markets, and it had a ripple effect through the economy, leading to job losses, reduced economic growth, and other negative effects. So it was horrible. Back to Larry. So what does Larry do after getting fired? Somehow, he was able to secure a $5 million line of credit, and he co-founded BlackRock with seven others, including Susan Wagner, Robert Capito, Barbara Novick, Ben Golub, Hugh Freider, Ralph Schlossstein, and Keith Anderson. And we may at some point in later episodes, we may talk about these folks later, but my focus right now is on Larry. Although I will say, as you're researching things, any of these names, you put their name in, you start searching, you start looking for connections, and it begins to paint a bigger picture for you, at least it has for me. And so, you know, have at it. Look these people up. Who are they associated with? You know, what circles do they run in? Very important to pay attention to this kind of stuff. So anyway, Larry must have been very determined to claw his way back to the limelight after being fired because he created one of the largest asset management firms in the world. I find it curious that the FDIC was one of his initial clients. The industry was on the edge of collapse due to certain bad decisions made by the savings and loans, and Fink's BlackRock was actually recruited by the FDIC to oversee the savings and loan holdings after the government took control. So BlackRock's influence and control extend way beyond direct ownership. They have built a global financial web of control and data analysis that extends beyond borders, regulators, and even governments. Whether indirectly owning a stake or indirectly influencing them, it's difficult to find a company untouched by BlackRock's reach. They invest in every market, every continent, almost every asset class, including the companies that manufacture the parts in your car, fuel, or the energy that powers it, the government bonds that finance roads, and mortgages that secure your home. They have a stake in thousands of global companies, including ExxonMobil, Apple, Bank of America, and more. Owning at least 6% in each of them. Now, while that might not sound like a majority stake to you, earning that much from companies of this size still amounts to billions of dollars per holding, making BlackRock one of the largest shareholders in each of these companies. You couple that with their strategic partners, Vanguard and State Street, who Christy's doing a deep dive on, they own much more than that. They have so much power that even the presidents, the Federal Reserve, and the World Banks all have this company on speed dial. So, we touched on the 2008 financial crisis earlier. Do you know who they call to help navigate that? Yes, Larry Fink. In fact, BlackRock's expertise in risk management and its ability to navigate the crisis successfully helped to establish its reputation as a leader in the asset management industry. So, following the 2008 crisis, BlackRock was selected by the U.S. government to manage some of the troubled assets acquired as part of the bailout of financial institutions, which further enhanced its reputation as a trusted partner in the financial industry. Similarly, during the COVID-19 pandemic, BlackRock just so happened to be consulted for advice on how best to use the massive stimulus and debt buyback schemes to save the economy. Once again, we see problem, reaction, solution with all the same parties involved in every step of the way. So now, Larry is a well-respected, well-connected, sought-after problem solver. Many of you may be unaware, I know I was, but Larry and his company, BlackRock, they also created a little-known tool, a new financial model called Aladdin. Aladdin is BlackRock's own black box. It's the beating heart of the global financial risk management system. It's an AI portfolio management software, and the name stands for Asset, Liability, and Debt Derivative Investment Network. Over decades, this AI has been fed data and models used to evaluate and predict the risk of every outcome in the financial system. This risk evaluation and risk management system, including 5,000 computers that work 24-7, are monitored by a group of engineers, mathematicians, and developers. The BlackRock software could track millions of daily deals and analyze each asset in this client's stock holdings to understand how they might be influenced by even slight economic developments. Basically, this AI acquires knowledge from outside sources, feeds it into already existing data, and the more it absorbs, the smarter it gets. Kind of like ChapGPT is doing right now. That's another thing. For example, if you load it up with data on 1,000 mortgages, and it'll tell you which are most likely to default and how their value affects the set and applies risk scores to each one, it's kind of the exact same risk scores that you and I get when we apply for credit. So it'll do the same thing for almost any asset or financial instrument you can think of, given enough data and time. On the surface, eh, this seems like a useful tool and one that could benefit many, but if you realize what kind of data is being fed, you may see it may not be the best for privacy or security to have all this data housed in a central location or being controlled by a few. This thing has been honed and fine-tuned for over 30 years. That's a lot of data. Now, it would have been bad enough for just BlackRock to use the Aladdin software, but after holding all of this power to themselves for 11 years, they decided to share it by selling their system to other competitors in 1999. And now every company that accepts its analytical benefits also feeds their data into the insatiable AI, increasing its total access to more information. For BlackRock, they got to make more money from their competition, force the entire market to rely on their system, and make it more powerful than it ever could have been alone. Very quickly, Aladdin became the silent backbone of risk management systems in America. If you've ever seen the movie Margin Call, there are a few scenes that talk about the models being wrong and how if a few parameters were changed, everything goes under. Well, they're essentially talking about Aladdin. This fictional movie highlights one of the biggest risks of Aladdin, and that is that everybody is using the same system. The issue with everyone using the same system is that if something's wrong, nobody will know until it's too late, because there's no subjective or competitive analysis being done. I mean, if Aladdin says 2 plus 2 is 5, and every other major bank and investment computer says the same thing, and then there's this one lone guy that says, no, no, no, 2 plus 2 is 4, nobody's going to listen to that guy. Most likely, he'll quickly be shut out, shut up, fired. Can you imagine the impact of a more complex calculation being wrong? Your life savings being affected, destroyed? It happened before when Larry miscalculated, and that was just $100 million lost. Compare that to what he's controlling now. And again, this system is developed and controlled by BlackRock and all the major competitors that use it. They have the final say on what gets changed, how the data gets used, and they have unprecedented access to critical global information that not even the most secretive of government institutions could dream of. They have it all. They have it all. They have it all. Today, Aladdin is directly involved with the management of trading of 50% of all ETFs, 17% of bonds, and over 10% of all stocks traded worldwide. Over $21.6 trillion, the last time I checked, of value controlled and managed by a single AI, which means an AI controls more wealth than the entire GDP of the United States of America. BlackRock has been a strategic partner of the WEF, hence why I looked them up, because I said I'd do a deep dive. They've been a strategic partner of the WEF for many years, and they collaborate on various initiatives and events. Larry Fink is also a champion for many of the WEF's initiatives, and he's spoken about topics such as sustainable investing, ESG policies, and climate change. I want people to realize that BlackRock is a company that owns a significant portion of the world's wealth and has enormous influence and power over the world's financial systems. Its ability to vote on the boards of large corporations and its control over Aladdin makes it a significant player in the global financial system. While this company prefers to remain unheard of and in the shadows, ironically, it's a company that hides in plain sight. It's been here a long time. Many of us weren't paying attention. We allowed this to happen. We paid them with our money and with our data. The good news is, now we know, and we can start turning the ship around by educating ourselves and sharing this information with others. Oh, by the way, their tagline they use is, Investing for a New World. So that's my presentation on Larry Fink and BlackRock and Aladdin. I have a video that I want to share, a quick little video on BlackRock. Well, actually I think I can show that and then we're going to take a quick break and then we'll come back and continue talking about this subject. So we will be back. Actually, I'm going to show this video now. I'll be back in a sec. There's a good chance you've never heard of BlackRock. Founded in only 1988, in less than 30 years, this American financial firm would grow to become the company that owns the world, managing assets worth $6.3 trillion. These are assets that belong to their clients, mainly the pension funds of ordinary people, teachers, police officers, nurses and many more. And that's just the beginning. BlackRock has also developed a software platform called Aladdin to perform risk analysis for its clients. It receives sensitive data from banks, insurance companies and other important institutions. Through Aladdin, BlackRock has insights about the management of financial assets worth another $20 trillion. BlackRock also has shares and voting rights in many of the biggest European companies, in sectors such as energy, oil and gas, transportation, food and, of course, finance. The company holds public debt in the form of bonds and has real estate interests. And still, there's more. Our Rock, you see, wears many hats. Aside from being an investor, it is also an auditor and an advisor. Governments and central banks invite a BlackRock subsidiary called BlackRock Solutions to audit them and to provide advice about the management and rescue of banks. Yet at the same time, BlackRock is often a major shareholder in these same banks. In other words, the company often sits on both sides of the table. BlackRock Solutions gets privileged access to highly sensitive information, information that could be valuable to BlackRock itself. Does this constitute a conflict of interest? No, says BlackRock, which claims that the company has established Chinese walls between its different subsidiaries. In January 2018, BlackRock's founder and chairman, Larry Fink, sent a letter to all of the CEOs of the companies BlackRock has invested in, asking them to do more than deliver financial performance and make a positive contribution to society. So, BlackRock not only owns the world, it also wants to save it? Right? They're saving the world. Huh? I can't believe how much control that one company, and I mean, this is just one slice of the pack of the control over the world. They've won over the world. They've won over the world. They've won over the world. They've won over the world. They've won over the world. They've won over the world. They've woven themselves tightly, and their tentacles reach far. So, it's a frustrating situation for me, and the more that I was researching this and looked in and understood, and when I learned about Aladdin, I thought to myself, wow, you know, initially you think, this sounds like kind of a cool idea, they can predict, you know, you put the data in, and they can give you, you know, a bunch of useful information to help you, but it's so much data, because all the companies that they sold that software to, that are feeding lots of different companies, they're feeding that data into the Aladdin software as well. And so, when they say that, and so, when they say they have it all, well, they don't say they have it all, I'm saying they have it all. Lots of other people are saying they have it all too. It's so much, and nothing is safe. So, anyway, we're going to pick up this conversation when we come back. I'm going to take a quick break, and then when we come back, I have a couple of articles that I want to go through. I have a, Larry Fink spoke at a deal book summit recently, so I wanted you to listen to some of his comments, just so you, you just got to listen to it. And then there, also, Senator Lankford was questioning, what do I say, Janet Yellen, sorry, he was questioning Janet Yellen on the bailout, or the protection that they're offering the SVB bank, and the signature banks of the recent failure, and her criteria for that, and all of that. So, we'll be back shortly. Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Welcome back. Thanks for sticking around. This is Melissa, flying solo today. Christy is deep diving into Vanguard and State Street Bank. I have been going over my findings on Larry Fink and BlackRock and the Aladdin software, and I have a couple of videos and a couple of articles I want to talk about in this next half hour. So, I'm sure a lot of you realize there's a financial situation going on right now. Bank collapsing. The latest bank, the SVB bank and signature bank, and it said Credit Suisse. And when I heard Credit Suisse, I was like, I'm researching about Credit Suisse. And they did say it was a systemically important bank, right? So, anyway, the things that happened then are happening right now. Just how they took down those other two banks back in the earlier financial crisis and they got acquired by JPMorgan Chase. They're doing the same thing right now to these other banks. And these two banks, or the one at least, they're the kind of supporters of the crypto industry. And the crypto industry is up and coming. It is going to be the replacement for the financial system. We have bankers fighting one another right now. Different sides of the coin, but they're in a battle and we are caught in the middle of that battle. And so, I've been paying attention to this stuff for quite a while now. And once you see it, they talk to each other. They talk to each other in like little signals and it's wild. But I've been paying attention to all this kind of stuff. And then when I did this deep dive on BlackRock and Larry Fink, I'm like, wow, this is so, they're so tied into everything that happens in our world. And so, it's just frustrating to me. I want to share this article where they're asking Larry Fink, because you know he's special and everybody wants to know what his opinion is on things. And so, I just want to kind of look over this real quick. And then I will play, I have a couple of, they're longer clips, but I feel like they're very important. I don't think the average person is not hearing these things for themselves. So, I thought it would be helpful to take a couple of clips. One is Larry Fink speaking and it's about five minutes long. And then the other one's from Janet Yellen being questioned by Senator Langford. But it's very important to hear what they have to say. And I will put a link in the description box of our YouTube channel. And then we'll put some resources on our website also that I used to come up with this presentation. But alright, so this is my first time trying to use this web article thing. For those of you listening on the radio, I'm filming also, so I'm trying to, I taught myself OBS Studio. But anyway, so I'm going to share a web article right now. And let's see, let's go to here and there hopefully, hopefully it's up there. Okay, so this is from Fortune Magazine. And it's BlackRock's Larry Fink thinks the SVB fallout could be a slow rolling crisis. Really, you think so? There remains a threat or contagion to the broader financial system according to Larry Fink, CEO and asset manager of the giant BlackRock and one of the most influential voices in the financial world and his company's management of trillions, trillions, trillions of dollars in assets. The regulatory response has been, so far has been swift and decisive actions have helped stave off contagion risk. But markets remain on edge, Fink said in a much awaited Wednesday letter to stakeholders. Are the dominoes starting to fall? The first domino dropped when the Federal Reserve rapidly raised interest rates to fight inflation according to Larry Fink. Since last year, the Federal Reserve has increased rates eight times for a total of nearly 500 basis points, ending what's known as the era of easy money. Oh, okay. The SVB implosion could lead to a second domino to fall due to an asset liability imbalance. Where am I? It subsequently announced it would raise $2.25 billion in French equity to beef up its balance sheet. There yet could be a third domino to fall, Fink said. He alluded to past periods when financial systems faced tight conditions and eventually led to flameouts. He gave an example. Oh, that sounds familiar. He gave an example of the savings and loan crisis in the 1980s when inflation and interest rates increased sharply and its impact unfolded The failure of over 3,000 savings and loans ultimately cost taxpayers $132 billion. We don't know whether the consequences of easy money and regulatory changes will cascade through the U.S. regional banking sector akin to the savings and loan crisis with more seizures and shutdowns coming, Fink wrote. It's too early to know how widespread the damage is. The next worry for investors is the Federal Open Market Committee meeting next week. Inflation in the U.S. is still raging, and February prices were up 6% compared to a year earlier, which was lower than a 6.4 year-over-year increase in January. But it was still well above the Fed's 2% target. Yeah, okay. There are widely different viewpoints on whether the Fed will continue its rate heist given the latest banking crisis. Some think it's a planned rate kite in March due to the SVB fallout, while others think that hitting the brakes on interest rate hikes now would send a negative signal to the market. Economist Mohamed Elrian also sees a more modest interest rate hike on the horizon instead of a total halt. So in his letter, Fink said that since inflation is still high, the Fed will continue increasing interest rates. And while the financial system was in 2008, the monetary and fiscal tools available to policymakers and regulators to address the current crisis are limited, especially with a divided government in the United States. Fink said in reference to the troubled SVB failure posed to the financial system at a time of heightened inflation. And then apparently Fortune tried to reach out to BlackRock, but Larry turned them down, and they weren't immediately able to reach out to BlackRock. So I go back here. Yeah. I mean, similar issues going on. I think that these issues have been created by them. They, you know, problem, reaction, solution. Problem, reaction, solution. It happens over and over and over again. Now they have this software. They've had it for 30 years. I don't know about you, but I wasn't aware of it until recently. And, you know, they talk about this AI stuff is like up and coming, and we've been talking about, you know, all these new things, and people are like thinking this stuff is new. It's not new. It's been being used. It's been quietly used for 30 plus years by one of us. We have no, I don't think that, I don't think I would have made some of the same decisions I've made if I would have known this kind of stuff. So I think it's really important to have some discussion about these types of things. And, you know, I just really hope that anything that I bring out, that it'll inspire somebody to start looking into some of this stuff for themselves. Some people, you know, I just want to live my life and everything's all good. You know, I just want to, I like my shows, and I like my music, and I like this stuff, but I'm telling you guys, the financial system's about ready to go. We're in a battle. They're battling. They're going to burn this down to the ground, and they're building the new system, and they're going to swoop in to be the saviors. They've been working on it, and they're creating the disaster scenario, which was expected because the financial system was never built to last. This was expected to fail. It's failed over the history of the world. Fiat currencies have never succeeded, and so, you know, that's a whole other show, but they control everything, and they don't want you to know about it. They don't want you to know what they're building, so they put all this stuff out there for the fear so that you won't, like cryptocurrency, decentralized peer-to-peer banking. They make it sound very scary, and people don't want to do it because it's the fear of unknown, and meanwhile, they've got all your stuff housed in a central location. Now, you tell me if it's better to have information decentralized where it's spread out, or if it's in one central location so that anybody that gets access to your private information can do with what they want, whatever they want with it. They can target you. They can target your company, and the fact that we didn't know. We didn't know. We weren't told that they have all this information on us, and they're using the information to see the future, right? They see the future. They know what you buy. They know how you feel. They know so much stuff, and what is money? Money is the keystone, so they follow your purchases. They follow, and it's worldwide. This is not just United States of America. This is worldwide. A worldwide battle. Anyway, I'm on a rant. I apologize. I want to go share this. I have it named Larry Fink's Big Mouth, so I am going to share this interview that was done at the Dealbook Summit. It was recently, and it's about five minutes long, but I think you will find it very interesting what he has to say. For those of you that are listening on the radio, if you go to our website or you go to our YouTube channel at Vida Broadcast, I think it'd be cool for you to go to the video and watch it, and just so you can see this guy's face when he's talking in his body language. It's telling. Anyway, here it is. I'm with you. In large part, because I would argue that you have been a real pioneer on a lot of these issues that we talk about, ESG and the like, and that's why I wanted to have you here, especially this year, because there has been, as you know so very well, a backlash about ESG and the like, and what it means, what capitalism is about, and all of that. I want to get to that, and I want us to have a bit of a rager of a conversation if we could about it, but I want to start, because we had the Treasury Secretary here earlier, just to get your sense, also because you've been right more times than not, about where you think we actually are in the economy right now. I hope you invite me Hi, everyone. I think there are many great things going on in the world and the economy. Obviously, it's being hidden in the narrative, and obviously the reality of really elevated inflation. Markets that are down 18% in equities, down pretty close to 18% in bonds, the appreciation of the dollar, so there's a whole reset in the marketplace, and the reality, I think, of the dollar appreciation and other issues. But, I actually believe inflation will be abating very rapidly. It will abate rapidly. Yeah, I mean, is it going to go back down to 2%, which is their objective? That's going to be hard, and that's going to be the fundamental issue. Where is an acceptable level of inflation? I mean, in my 40-something years of being in markets, you would have dreamed for 3% or 4% inflation, but we set this target now at 2%, which can be debated why, too, and I've had conversations on that. My biggest worry is not that we're not going to see a falling of inflation back to 3% or 4%. My biggest worry is the world is losing hope. We have seen a collapse in birth rates and demographics. We're actually going to enter a period of more what I would call malaise. We are all seeing the transformation of China, China going from what I would have called a very economic-minded economy to a more ideological economy. We're seeing the attended effects on that, and we're seeing the Chinese economy slowing down to a 3%. We have the European economy that has really fundamentally changed right now related to the Russian gas and the cost of energy and the fiscal support by governments, and so I believe after we get out of this real spike in inflation, we're going to be waking up to a world that's going to be a 2-ish, 3% world with maybe 3% or 4% inflation, and I think that's going to be the fundamental issue that we're going to be facing, and because of the situation that we saw just six, eight weeks ago in the UK, there is a limit on how much fiscal stimulus governments can rationally do without having the marketplace rebel, and that's what happened in the UK. So after we get out of this burst of inflation, it is my fear that we are not going to have the abilities for any fiscal stimulus for any time soon. You know, deficits do matter, and at the same time, the central banks are going to take years in which they're going to have to unwind all their quantitative easing, all their bond purchases that they did over the last 10 years and aggressively the last few years. They're not going to be as fully equipped to re-stimulate the economy. So we believe we're going to have rates fundamentally higher maybe where they are today. They're not going to go down and at the same time, we're just not going to have an economy that is based on a real growth that we are accustomed to. So what does that mean for everybody here who has a 401k or money in the stock market? I would say for long-term investors, this is a great paradigm because, but if the other side of it is some kind of malaise, Andrew, if you look at what it took to over 50% of our assets are retirement assets and all I do is focus on how do we get to a long-term outcome and all my letters are based on that long-term ideal. It is actually easier to meet your long-term liability, which everybody assumes about a 7% or 8% return over 20, 30 years. You're going to have a nice pool of money. It is actually safer to invest to get that return today because you have two years trading at a four and a quarter, you have 10-year credit you could buy at a 5%, 6% return. I actually believe we're going to go from this hyper interest in growth stocks, we're going to have this hyper interest at earning coupon, hyper interest in investing. Secretary Yellen talked about the IRA, which we are very bullish on and what that impact will do. Those types of subsidies that are coming from the government to invest in decarbonization, it's going to produce 12, 13, 14% returns very easily. We've done investments like that already. I think it is actually going to be easier to meet your investment targets today than it was a year ago. To meet your investment targets years ago, a couple of years ago, you needed to invest heavily in private equity. You had a short liquidity to get to the return. Now you're able to more safely invest in other things that are providing you a coupon to get to your return. Despite all the doom and gloom, there is more opportunities to invest in the markets today than it was a year ago. We talked to the Treasury Secretary about crypto. As you know very well, we're going to talk later to Sam Bankman-Fried, or so we think. BlackRock had an investment in FTX, $24 million in a fund-to-fund. So BlackRock was invested in FTX, huh? I bet that's a shocker to everybody. So I thought that was important because basically, the way I see it, Larry is telling you what's coming. He's telling you how things are going to be, how things are going to go down. And he's telling you, you know, you invest over, you know, 30 years or whatever, you're going to make 7%. When they've been, they've been just robbing us blind of our money. So, in the way that they've been able to specifically target us, I just, I think that, well, you can hear how much he's looked to for information and his opinion. And him being part of the World Economic Forum and their new policies, the climate change and what is it, the ESG policies, it's, they're painting a new road or paving a new road that we're going to go down. And you can either start paying attention now and start investing in some of these things, start looking into, you know, the cryptocurrency industry it's not just about bad money or, you know, like, trying to steal from people and, you know, all that crazy stuff. There's really exciting technologies that are, they are going to change the world. But there's a decentralized side to it. There's a bunch of people like you and I that are fighting to educate others on how to invest in cryptocurrency and to educate others on that so that we can fight against the black rocks of this world. And hopefully, if you start paying attention to what's going on with the banking system right now, you can protect yourself. These banks, there's so many banks, you've got to start paying attention. At least diversify where you have your money. I did a, I did some, I researched on the FDIC insurance and, you know, the $250,000 and everybody thinks that, you know, well, I don't have that much in the bank, it's no big deal. It is a big deal because there's a possibility of a bank bail-in where they can, they can literally just take some of your money. Like, it's just not, you're not going to, you might have $100,000 in your bank account and they're going to, they're going to save the bank by, you know, taking some of that. And you have to look into that further and that's not what this show is about. But I just really, I want, I really want to encourage people to start looking into these types of things. Start putting your money in different places. Don't have it all in one bank. Maybe look at some of the banks that are out there who they're tied to and see if they have potential for being a failure because I just wouldn't want to see anybody be a fall victim to this. One day they go to withdraw money and the bank is filing chapter 11. So, anyway, we only have about, I don't know, six or seven minutes left and I did want to play this clip of Janet Yellen, kind of, Senator Langford, asked her some really pointed questions and, as far as I'm concerned, she was babbling, well, I'll let you be the judge of what you think. Here you go. I need to be able to drill on a couple things. Let me start with some of the banking issues we're dealing with on it. Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now? Are they fully recovered? Every bank, every community bank in Oklahoma, regardless of the size of the deposit, will they get the same treatment that SBBP just got or Signature Bank just got? A bank only gets that treatment if a majority of the FDIC board, a supermajority, a supermajority of the Fed board, and I, in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences. So what is your plan? I'm with that determination. Right. So what is your plan to keep large depositors from moving their funds out of community banks into the big banks? We have seen the mergers of banks over the past decade. I'm concerned you're about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, we're not going to make you whole, but if you go to one of our preferred banks, we will make you whole at that point. Um, look, I mean, we're, that's certainly not something that we're encouraging. That is happening right now. That is happening because depositors are concerned about the bank failures that have happened and whether or not other banks could also fail. No, it's happening because you're fully insured no matter what the amount is. If you're in a big bank, you're not fully insured if you're in a community bank. Well, you're not fully insured. You were at Signature, and it just barely met that threshold. You were at Signature. Well, we felt that there was a serious risk of contagion that could have brought down and triggered runs on many banks. Um, and that's something given that our judgment is that the banking system overall is safe and sound. Um, depositors should have confidence in the system, and we took these actions. So there's a special assessment that's been done on community banks in my state and all banks across the country. Was there any discussion that that special assessment would only apply to private banks? I'm not certain what the rules are around that. That's up to the FDIC to determine. It has been reported publicly that SVB had a large number of Chinese investors that are there, including some that were companies directly connected to the Chinese Communist Party. That's a special assessment based on assessments in my banks in Oklahoma. So what I'm asking is, will my banks in Oklahoma pay a special assessment to be able to make Chinese investors whole from Silicon Valley Bank? Uninsured investors will be made whole in that bank, and I don't know what the rules are around that. I'm not sure what the rules are around that. I'm not sure what the rules are around that. I'm not sure what the rules are around that. I'm not sure what the rules are around that. And that is, if you're a chosen bank, if you're a big bank, they're going to be protected, but the small banks, the community banks, they might not. So what happens when your small community bank, you as a person that deposits into that bank, if you start fearing that you're not going to be protected, that is a bully tactic, and these people, the FDIC and the Fed Board and Janet Yellen and the President of the United States is going to decide who's going to get saved and who's not. That is what we're dealing with, people. That is what we're dealing with. And I wish I had more time. An hour goes by a minute. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more time. I wish I had more
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