Mitch Vexler warns of a cascading debt collapse where interconnected defaults trigger global civil war within nine meals, driven by equity stripping and bond fraud. He argues the U.S. AI bubble will burst as China's open-source models render expensive infrastructure like the $875 billion Stargate project worthless, noting AI revenue remains merely 1.2% of capital expenditures. Vexler predicts a market crash via derivative exposures and bank bail-ins, urging listeners to hold hard assets outside institutions while avoiding debt. The episode concludes by framing these economic and technological failures as precursors to supply chain disruptions requiring immediate survival preparation. [Automatically generated summary]
I mean, the amount of housing defaults, the amount of housing loan defaults, the car defaults, these things are all connected because the money simply doesn't exist.
So people have to have a car, but if they can't have a car, then they don't have a job.
More and more people don't have jobs, the more and more civil unrest that occurs.
And I want to point out that we're only nine meals away, anywhere on this globe, doesn't matter where, nine meals away from civil war.
All right, welcome to the interview today.
This is part two with Mitch Vexler, who has been sounding the alarm on the absolutely catastrophic risk of a cascading debt market failure, derivatives market failure, cascading across our Western civilization with devastating effects that could wipe out pensions and much more, affecting hundreds of millions of people in just Western Europe and the United States and Canada alone.
So welcome back, Mitch.
It's always good to have you.
Thanks for staying with us here for part two.
Thank you very much again for allowing me to help get this out and help mom and pop as best we can.
Absolutely.
I'm thrilled to have you on, and I appreciate your courage and your intelligence in the analysis that you offer and trying to wake people up to what's happening.
As I promised at the end of part one, we want to talk about AI job replacement here right now because we just saw Amazon, I believe, laid off 2,800 people from their Amazon Prime Video department automating all of those jobs with AI.
And we're seeing this across many, many different companies, firing thousands of coders and even getting into some middle manager positions.
And also the so-called AI bubble, which people describe as overinvestment in the AI infrastructure with companies like OpenAI.
Here's my question.
China is about to release DeepSeek version 4.
This is anticipated to be a major breakthrough in AI open source models that can run locally that will be competitive with OpenAI and Google and Microsoft, et cetera, but they're free.
Is it possible, because DeepSeek has a history of shocking the world like they did a year ago with DeepSeek R1?
Is it possible that when DeepSeek is released, if it's seen to be very impressive, that everybody could realize, holy cow, all this investment in U.S. AI infrastructure is not worth it because China's already won this race.
And could that pop the so-called AI bubble?
Is that a factor?
What do you think?
The AI revenue is really interesting because it's virtually non-existent.
It's 1.2% of all capital expenditures spent in building these data centers.
It's virtually non-existent.
And when you get into this idea that, okay, we're going to have AI as an open source, I think we have to dig down a little bit deeper.
So mathematically speaking, the Federal Reserve is supposed to have something that's called Mahalanobis report.
And it's a mathematical formula that says if I pull this lever, X, Y, and Z are going to happen.
If I pull this lever, A, B, and C are going to happen.
It's a fairly short data set.
So if you have data set A, data set B, data set C, data set D, and data set E, five data sets.
And if you're relying to get an answer off of data set A, except in order to feed data set A, you need the other four data sets.
But let's just stick with data set B for a second so I can make the point.
If data set B is corrupted either by human emotion or by lack of programming to determine the correct input, then by definition, data set A is corrupted.
You have this exact same thing playing out, lo and behold, at the central appraisal districts.
What they're calling comparisons are not comparisons.
They're fraud.
You have this exact same thing.
What people say, well, but AI is going to be self-thinking.
Maybe.
More than likely, no.
And the reason why is no matter how you look at it, it is dependent.
If your output is dependent on the prospect of any one of these data sets having bad programming or inaccurate data, then the answer you get out will be wrong.
And that's part of the problem.
Do you really want somebody relying on AI while you're about to go into surgery?
If you're looking for a cure for cancer and you say, okay, fine, we have all this data and we're going to use AI to correlate this data to help generate an idea, a thesis, amen.
There's nothing wrong with that.
But the problem is when all these entities are saying, well, we're going to be dependent on this and it's going to be worth X dollars, based on what evidence?
The growth revenue right now is 1.2 percent.
Let me adjust the question a little bit here, taking advantage of what you just said there.
I am convinced that AI is very capable because I'm using it for AI development, writing code, and it's very successful in that role in my applications.
But my point is that the cost of AI is just about zero.
So the cost of cognition is just about zero when you're using the open source Chinese models, for example.
And since the cost of cognition is zero, and since there's no revenue model for OpenAI or Google to have to put ads in their AI engines, it just doesn't work, you know, then what revenue is going to justify all of the investment and the borrowing by these AI companies?
And the only revenue it seems that they can count on is the Pentagon revenue, U.S. government revenue to build autonomous weapons systems, you know, using AI thinking, right?
But Anthropic just sued the Trump administration for being placed on the blacklist because Anthropic doesn't want to build Terminator Skynet extermination machines.
But Google's happy to do that.
So maybe they'll get the government contracts or maybe OpenAI will.
But ultimately, I don't see any revenue that can justify the investment dollars here.
Do you?
No.
No, that's part of the problem.
But the other side is we looked at different AIs and frankly, we figure about 60% of them are biased.
I asked a very simple question just yesterday and AI's response was no answer.
But the question was, what is the percentage of school district bonds as compared to municipal bonds?
The most simple question for an AI response, no answer.
Other times, the biasness comes through.
So not only is there a legitimate revenue demand, and it's not to say that certain programs aren't good.
I'm not saying that.
What I am saying is it's all dependent on how the programming has occurred.
Absolutely.
And this idea of a black box, years ago, there was a company called RealBase in Canada, and I was developing mixed-use, pretty large projects, and I needed RealBase because I had a issue having to do with lease rollovers.
Is that like a off-the-shelf database engine?
An off-the-shelf solution, kind of like an Excel spreadsheet.
Okay.
But then I get my hands on it and I realize, well, it really isn't very good at least rollovers, and it certainly can't handle multiple buildings on one large project.
So I worked with them in order to fix their problems.
They ended up getting bought out by an accounting company, and the accounting company shut them down because they didn't want the competition.
I come to the United States and I find a company called Argus doing the same thing as RealBase.
Lo and behold, Argus has the exact same problem.
So I call them up, said, look, this is what I need.
They recognize the problem.
I worked with them and I used that program for several years.
But as time progressed, I realized that I now need a waterfall.
I need a better, more powerful solution to the waterfall of profits.
They didn't have it.
So I went right back to my original spreadsheet program with my accountant, and we rebuilt the thing, including the waterfall.
The advantage of doing that is that I know that this is not a black box.
I know what's in those cells.
I can trace those cells.
That's right.
It's programmatic.
Right.
It's traceable.
You can't do that with AI.
That's right.
You don't know what's under the hood.
That's right.
100%.
And we know that they're being programmed by.
Well, let me add this.
I've done extensive testing on AI models, just like you have with bias detection and so on.
The U.S. models are the most biased.
They have the most guardrails.
They have the most refusals.
And for example, Alibaba's engines called Quinn, they just released their new version 3.5, a whole series of different size models like last week.
And the models are very capable, very good, and also very free, right?
So if you're a corporation and you need to do something internally like automate customer service email responses, that's something that can be automated relatively reliably and quickly for about 90% of the emails.
Why would you use OpenAI and pay per token when you can download Quinn for free and install it on a workstation for less than 10 grand and it's going to power your customer service system?
You know what I mean?
It's like there's no economic model for US AI companies, and yet they're taking on billions of dollars in investment and loans from even from companies like Amazon and investment houses.
I don't see that those investments are ever going to pan out.
I just don't see it.
I think it's a little bit worse than that because when you add in the data centers themselves in Abilene, Texas is Stargate.
Stargate initial cost, the budget, 500 billion.
Right now, today, somewhere around 875 billion.
I don't know if this is true, but here's the underlying point.
You're talking trillions of dollars worth of data centers for which there is no revenue stream.
So what's going to be the ultimate comeback?
Well, we, the developers who built these data centers that are utilitarian by nature, meaning there is no inherent value in them.
They've got their one purpose.
We're going to have to go to the U.S. government and hold our hand out for a bailout.
Right.
Which OpenAI is already hinting they're going to ask for that.
Yeah.
Yeah.
Mitch, I've got something very special to show you here.
Okay.
This is this is a blast from the past.
All right.
I might be the only person that has this.
An original mint set of Lotus 123 floppy disks on five and a quarter floppy disks.
Look at that.
Zoom in on that.
Lotus one, two, three, folks.
There you go on floppy disk.
Half our audience doesn't even know what that is.
That's pretty good.
I'm telling you.
So you talk about like the history of finance and spreadsheets.
This was the original one.
This was in the 1980s.
And these floppy disks cost like $600 in the 80s.
And then today, like you said, it's a black box.
So we don't know what's going to happen.
But we do know, Mitch, getting back to what you mentioned in part one, we do know that jobs are being replaced by some level of automation in certain areas, like customer service, let's say.
So that seems like it's going to be a feedback loop of cascading job losses because then those people lose their discretionary income.
They reduce their purchases of goods and services from other corporations that then have lower revenues and they have to make cuts.
The Cash Flow Vortex00:14:27
And so they tend to cut, et cetera.
Ultimately, this ends up in a very bad place where how does our modern economy function if we hit 25% job replacements in the white-collar jobs, let's say?
It doesn't.
It will implode.
And it'll implode based on, I actually wrote a few weeks ago a model on socialist policies.
So it doesn't mean anything.
It's just my math and just formulas.
But the bottom line is when you take money from somebody who earned it and you transfer it to somebody who didn't earn it and you take a fee in the middle, that is socialism.
That is a socialist policy as distinct from a social policy.
A social policy would be, we don't want hunger in our community.
We're going to eradicate it.
That's a social policy.
That's good.
A socialist policy says we're going to take your money to pay for it.
And we that are creating this law in the middle are going to get paid.
That's a socialist policy.
The point of the matter is what you end up with is civil war.
And this has happened throughout society.
You cannot steal money from the population and think you are untouchable.
That will not happen.
People have to have a reason to get up in the morning.
People like to go to work.
People like to be able to feed their family.
But when you equity strip them, which is what's happening with regard to the property taxes, everybody's got most people an amortization schedule on your house.
And every year you get principal back on your amortization schedule.
However, every year your property taxes are going up to cover off the bond fraud.
Ergo, you're being equity stripped while you sleep.
The money doesn't exist to allow this to happen.
How are people going to retire if they don't end up owning the house that they've been spending 30 years paying off?
All that money has been transferred out in the form of property tax.
So this is just another massive looting scheme to pillage the people.
100%.
And concentrate money in money.
These two items, right?
These two items being the equity stripping and what's happening with AI, it's the kiss of death.
Those two items could be exactly what creates the crisis of confidence.
Because in all the gigabytes worth of data that we have, all the criminal complaints, all the filings, not a single person, not a single entity has said, you're wrong.
Here's how you're wrong.
They can't do it because the math is just simple math.
And my comeback would be, fine, here's a pen and a piece of paper.
You explain to me how an $80,000 average income is going to pay a $257,000 second mortgage that that property owner doesn't even know exists in the form of compound cumulative school district bond fraud.
Here's a pen and a piece of paper.
Nobody can do it.
No, and speaking of that, no one also has an answer for this question, which is, as you know, the AI data centers are causing local electricity prices to rise dramatically, especially for the Eastern states, the 13 states that are on the Eastern grid.
Trump, I believe, extracted a pledge from the tech companies recently where they said, well, we pledge that when we build our data centers, it won't raise your electricity prices.
Okay, great.
That's a pledge.
Tell me how that works.
Because just you saying that doesn't make it happen.
Tell me, how does that work?
It's just, you know what I mean?
It's just a pledge.
It doesn't, where are the economics behind it?
If you're using more data, they're going to have to build out more infrastructure.
They're going to charge that to all of the electricity customers, and that includes residential customers.
You see what I mean?
It's worse.
So the electric companies don't charge based on what they're spending.
There's no transparency.
And that's just like the insurance companies.
See, what insurance companies are doing now is saying, okay, we have to hedge this risk, not having anything to do with the property department itself.
We have other problems such as derivatives.
Therefore, we have to increase the amount of money, our revenue, to cover our float.
So what do they do?
Well, they just simply say, okay, we're going to increase the insurance cost from 2% to 4%.
But the actual risk is only the probability of getting hit on an insurance claim is only 15%.
So they've actually gone 10X to cover off their derivatives on other items that have nothing to do with real estate.
You have that exact same problem with regard to the electric companies.
They'll tell you, well, we're going to have to fix this infrastructure and that infrastructure.
Okay, great.
And where's the performa?
Where's the budget?
Please explain to me exactly.
We're right back to the same problem.
The median household income for a family of four is living off of credit cards, they're short $20,000.
The average utility housing expense and maintenance for an average house is like $10,900 and some odd dollars.
Okay.
And they're $20,000 upside down after all the expenses.
So if you've got, let's call it $11,000 and you're still upside down, where is the money going to come from to cover off the utility company?
You can't get blood out of a stone.
That's the point.
So as all of this begins to unravel, I want to ask you, well, first of all, let me give out your website again, mockingbirdproperties.com slash DCAD.
That's DCAD, where people can find your materials involving largely the property tax fraud and confiscation of equity from property holders county by county.
But if this begins to really unravel, what are the first signs that we will notice?
You're seeing it now.
I mean, the amount of housing defaults, the amount of housing loan defaults, the car defaults, these things are all connected because the money simply doesn't exist.
So people have to have a car, but if they can't have a car, then they don't have a job.
More and more people don't have jobs, the more and more civil unrest that occurs.
And I want to point out that we're only nine meals away, anywhere on this globe, doesn't matter where, nine meals away from civil war.
These problems that have been created are causing people not to eat.
And that's here in Texas as well.
Harvest Food, which is here in Texas, feeds over 4 million meals at one entity alone here in Texas.
Many of those people don't have houses.
They don't have a roof over their head.
Many of those people are living in cars.
As I've said, you cannot steal people's money and think you will not be held accountable.
These things have solutions, but in order to get to the solution, one must admit the truth.
And that's what we have asked the Supreme Court here in Texas to say, look, prove us wrong.
It's real simple.
So let's assume that the courts will never side with rationality on this because that's a pretty reliable conclusion.
Let's assume that this only gets worse and that at the state and federal level, the governments just try to paper over this, cover it up, and deny it.
What does America look like a year from now or two years from now or by 2030?
About 40 days ago, looking at the charts as a chartist, I had figured out that NASDAQ was going to hit about 24,000.
It bounced off of it to the tick yesterday.
The problem is that the PE ratios, on average, right now today are still at 43.
And if you wanted to stretch it, the price to earnings ratios legitimately should be around 16 or 15.
That's if you want to stretch it.
We have a long way to go to the downside.
And any one of these items can force us to go to the downside the second a true crisis of confidence kicks in.
Now, it'll be some big firm that gets smacked over the head because their derivatives exposure is so great, they get taken down.
And that's the start of the big snowball going downhill.
And it'll just gain steam.
If the market has to make the decision for the government, things get bad real fast.
If the government steps in and says, we recognize the problem, and this is how we're going to deal with it, then there is a hybrid where a good chunk of these problems can be made to go away, i.e., the bond fraud is quantifiable.
The derivatives, on the other hand, I actually believe that even the U.S. government can't track this stuff.
Allegedly, there's 600 trillion worth of derivatives floating around out there with a real notional value of somewhere around 20 trillion.
The cross-collateralization and the unwind, if they don't get involved and try to let this go on its own, it'll blow, but not just in the United States.
That's the underlying point.
It will blow globally.
And I believe there's an opportunity here to work with the other countries that bid off on the same garbage that our Federal Reserve has been selling.
The Federal Reserve exists to backstop the banks.
It doesn't exist for the benefit of mom and pop.
Well, other countries copy that exact same model.
And the problem is, on one hand, and good news on the other hand, other countries are in it up to their eyeballs, just like the United States.
Therefore, how is this for an idea?
Let's globally figure out exactly how big this debt load is and start cross-collateralizing the undo of these derivatives.
Because from country to country, you can track it.
All these countries that have weakened their currency, well, i.e. China, China's got the same problem.
Their debt to GDP is hovering around 300.
We're 128.
So it makes us look good.
But in truth, yeah, neither was good.
They're both bad.
So let's undo it simultaneously because it's a target.
We can hit the target.
We can quantify it.
But you can't do that if you can't articulate it.
But, okay, yeah.
What you say makes sense, but we can count on governments of the world not doing anything that makes sense because they would have to give up some amount of power and control probably in order to do anything rational.
So what should the people watching this do to prepare for the total unraveling of this?
Whether it happens in 2027 or 2030 or whatever, what's the best defense?
No debt, number one.
Number two, hard assets.
So coincidentally, 19, let's see, 2007, 2008, I had a loan at a bank and that banker called me and said, you know, the bank's got some trouble.
So me being out of Canada, not necessarily understanding exactly what he said, I called my attorney and my attorney said, where are you?
I said, I'm over here at the office.
He said, I'm coming to get you, get Catherine, get a checkbook.
I said, okay, fine.
So, you know, we got a checkbook.
We went down.
We saw the banker.
I bought the note back.
The following morning, the FDIC walks in and seizes the bank.
Whoa.
Had I have not had the cash and the ability to pay off that mortgage, even though it turns out I was worth more than the bank, but had I not had that cash, my loan would have been tainted, even though it was solid.
Payments were always made, no problem.
But the second the FDIC walks in and seizes something, you're tainted.
So by the skin of my teeth, I get out of this mess.
Can you imagine the unwind and the damage to mom and pop when they have no idea how to handle any of this?
They don't have the infrastructure.
They don't have the attorneys.
They don't have the accounting.
Yet the debt is owed.
So they get dragged into a vortex with no cash on the side, no emergency money to be able to get themselves out of this mess.
First thing.
Second thing is, what are you going to do if the banks, your particular bank, not all of them, but your particular bank shuts down and says we're bankrupt.
So we're going to seize your cash and hand you back a share in our bankrupt bank.
As time has progressed, these problems are floating to the surface.
That's what you're seeing in BlackRock right now.
It's the exact same thing.
Well, we're just not going to give you back your money until we decide it's okay.
And when's that going to be?
We don't know.
I mean, that's a bail-in.
That's effectively a bail-in.
Yep.
So what you're saying is perhaps bail-ins will occur across more commercial banks.
And I mean, in the United States.
Everywhere.
So if you're JP Morgan and J.P. Morgan decides to do a bail-in or you're Wells Fargo and they decide to do a bail-in, not that they will, but just follow me for a second.
Look at how many millions of people are affected because they can't get their cash out of the bank.
Right.
So the point is, having cash on the side outside of the bank, having precious metals outside of the bank, not having any debt that you can't get out of is the way to go.
And then you don't get dragged into this vortex.
But clearly, everybody must admit that that vortex exists today.
Loans are defaulting.
Car loans are defaulting.
House loans are defaulting.
Student loans are defaulting.
Beware Your AI Clone00:02:32
These things are all real.
That's the vortex.
And these people can't get out of this.
Give or take, 42 million households across the United States are in harm's way of bankruptcy and are losing the roof over their head.
This is serious numbers, all because they're upside down, anywhere between 9,000 and 20,000 per household.
But do you realize out of that $9,000, $7,000 of which is property tax?
So the only thing stopping these people from going broke right now today is $9,000, of which $7,000 is property tax.
You want people not to go broke?
Get rid of the property tax.
Kill off the bonds.
If that's what you have to do, that's what you do.
Job one, you protect mom and pop.
Nobody gives a damn about the bondholders, even though mom and pop are part of the bondholders.
But what would you rather have, mom and pop?
Would you rather have 100% ownership and no taxes on your property or be stuck in bonds that are probably worth somewhere around 13 cents on the dollar?
Trade-offs.
Get your house, own your property.
And if your society doesn't consist of people who own their own homes, then you're in trouble.
You know, just as a society, you're going to have uprisings and so on, like you said.
So Mitch, we're almost at the end here of part two.
And I just have a curious question for you on a different topic.
You speak almost without error, which is very unusual for humans.
And some people might think that you are an AI avatar because you speak with perfection, right?
So I'm just wondering, have you seen any AI avatar copies of you?
Because I've seen it of many people online, AI copies of like, what's his name, Professor Jiang or Colonel Douglas McGregor or David Morgan?
He's had AI avatar clones of him, not with his permission.
But has that happened to you?
No, but if something like that showed up, I guess I'd have to start speaking in Canadian, eh?
You know, throw him off the track.
Yeah, yeah, you'd have to start like introducing hesitation errors or something into your speech just to be a little more human.
Well, Mitch, I would imagine just watch out for the Mitch Vexler AI clones that they will clone your voice and your face and they will have the clone say something that you didn't say, maybe even something you disagree with.
So, you know, be aware of that.
That's coming.
It's happened to a lot of people that I've interviewed.
Yeah.
One would hope not.
Survival Gear for Disruption00:04:13
I mean, the reality is these topics are pretty deep and they're pretty tough.
But we do what we do to warn mom and pop this is an extreme probability.
It's just the mass.
The median household income doesn't exist.
Mom and pop are feeling it every day.
They see the inflation.
They go to the grocery store.
It gets complex when you understand that you're being defrauded by your school district and by your central appraisal district.
And there is no CAD in the United States that is obtaining money on behalf of its school districts that is not defrauding their constituents.
None.
Okay.
Well, we'll wrap it up there.
Thank you so much, Mitch.
It's always good to have you on.
And again, mockingbirdproperties.com slash DCAD is the website.
And thank you so much, Mitch, for spending time with us today as a real human being.
We appreciate you very much.
And for those of you who missed part one of this interview, part one is available at brightvideos.com.
So thank you all for watching today.
Thank you, Mitch.
And until next time, take care.
Great.
Thank you.
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