This is a free preview of a paid episode. To hear more, visit radixjournal.substack.comWith special guest Charles Johnson, the gang discusses the Silicon Valley Bank disaster and what we can learn from it. Topics include: fractional reserve banking and group psychology; Biden’s response and the legacy of the 2008 crash; and the geopolitical players, including Israel, involved in financing SVB. Finall…
| Time | Text |
|---|---|
| This is Charles. | |
| Hey, Charles. | |
| No problem. | |
| Yeah, I think we need to really ask the question of whether or not Silicon Valley Bank is in fact a bank or really has much at all to do with Silicon Valley altogether. | |
| Obviously, there's a lot of connections of the bank with the Israelis and the Chinese. | |
| John Peters, the former auditor there, the chief auditor there, worked for an Israeli company beforehand. | |
| Lots of the money that's come in over the years has come in from Chinese-connected venture funds. | |
| So there's a national security International relations, sort of a geopolitics connection here as well. | |
| I've written about some of that stuff on my Substack and elsewhere and sort of talking about it, but it's very much a thing. | |
| And I think while it's true that there were some basically issues with a lot of the VCs not wanting to mark down their investments, the other side of it too is to understand that a lot of these loans, particularly the personal loans in real estate, commercial real estate, that sort of thing. | |
| A lot of these loans were given at very preferable terms, and that kind of led to an explosion in prices in the Bay Area. | |
| And there's the other sort of angle here of the wineries, lots of money going into the wineries, loans for wineries, which a lot of banks don't touch with a 10-foot pole. | |
| And wineries, of course, can be used for all kinds of things, laundering money, having illegal aliens work there, and the like. | |
| And then there's also the sort of compromise issue here, which is, you know, the governor of the state of California has a lot of money with Silicon Valley Bank, you know, Gavin Newsom in this particular case. | |
| So there's a lot of very interesting detail here. | |
| You know, my friend Ken Clippenstein did some work there. | |
| There's some other stuff I've been working on here. | |
| I was called by the Justice Department today because of some of the things I've written about. | |
| Secretary White to the call about this whole situation. | |
| And we're going to discover that, in fact, a lot of the money that was in these banks was money that was either stolen in some cases from overseas and then put into venture funds as a means of laundering it. | |
| Because to really do a proper laundering, to do a real proper money laundering, you need a willing bank. | |
| And this is why a lot of the major banks have a lot of rules, right? | |
| They have these suspicious activity reports, or SARs. | |
| And you can sometimes be doing something totally innocuous and still be hit with an SAR, particularly if you're a business that deals a lot in cash. | |
| And so what happens is that a lot of people are forced into these smaller regional banks. | |
| But a lot of the regional banks, in order for them to be able to make money, they want to be regulated as smaller banks. | |
| But what ends up happening is they end up getting large amounts of deposits, particularly during the 2020 period, where the U.S. debt went way up. | |
| China gets all of our dollars. | |
| They then take those dollars and they do things like commercial real estate with Jared Kushner or venture capital. | |
| That's how this money flow works. | |
| And to me, what's interesting about this, we have this company Circle, $3 billion sitting in an account, basically. | |
| In Silicon Valley Bank, and nobody can tell me what the health circle actually does as a business. | |
| There's a lot of things like this, where you just go through this with a fine-tooth comb, and you're like, "Hmm, what's up with this bank? | |
| What's up with that bank?" In the geopolitics angle, America and China are breaking up. | |
| And Israel is sort of, you know, going into freefall. | |
| Like, it's not a coincidence that Signature Bank also got hurt, right? | |
| Signature Bank being a sort of very Israeli bank, where Ivanka Trump was on the board, where Bernie Frank was on the board. | |
| By the way, it's a very common technique for some of these smaller banks to use social proof by having former members of Congress or by having, you know, basically celebrities lend their sort of cachet to it. | |
| Elizabeth Holmes was the master. | |
| Elizabeth Holmes was the grand master of this technique. | |
| Three Kissingers on the board. | |
| She was a good example of this. | |
| So that's sort of the backdrop there. | |
| Just so people kind of understand what's going on here. | |
| I went through this sort of history of Silicon Valley Bank. | |
| You know, they were backing weird, you know, weird secret societies from Andorra of all places, which is a sort of global hub of money laundering in Europe. | |
| As a lot of these smaller principalities or nation states are, oftentimes they sort of look the other way on a lot of questionable things that take place as a way of making fees and propping up their economy. | |
| And so that's sort of one cut on it. | |
| And then the other sort of cut on it was... | |
| They had issues in the 1990s. | |
| They were under federal supervision in the 1990s, precisely because they lent way too much out for housing issues and for real estate loans. | |
| I agree with the previous speaker who was pointing out the issues of, as the Fed raised interest rates, these assets ended up being worth a lot less. | |
| But I think we're waiting for a lot of the loans to go belly up too, because obviously, You know, when you borrow money from a bank, you usually don't have the money, right? | |
| And it's not like the material condition for a lot of these Silicon Valley types got richer, you know, in the last bit here. | |
| I think the other aspect here that people should consider is, you know, I've written about Jason Calacanis and David Sachs and how they are, you know, fronts for the mob. | |
| Now, that's like, that's not my opinion, right? | |
| Like, I know Tom has just shared an article of mine. | |
| I'm about to drive, so forgive me if I'm a little whatever. | |
| Helter Skelter today, because it's sort of been a lot of news going on. | |
| But basically, what happened with Jason Calacanis and David Sachs, Jason Calacanis' father ran a mob bar for many years. | |
| By his own admission, his father was raided several times by the feds. | |
| If you go and look on his Wikipedia page, you can't get a precise date for when he married his Chinese wife, which is very strange. | |
| He's a manic depressive, self-admitted, you know, talks about it often. | |
| Oftentimes you'll see in the cases of money laundering, they use people who are sexual eccentrics or people who are sort of strange people who you just can't understand the man because they're geniuses, right? | |
| And so that's sort of a common technique, you know, that they use, remind you of anyone, say Elon Musk, right? | |
| So, and then the other sort of one is on David Sachs. | |
| Now, I have been on pretty good authority from the Stanford world that Sachs was a kind of closet case. | |
| You know, couldn't get, basically couldn't get fucked while he was at Stanford, hated women, sort of let a lot of his hatred of women come out on the pages of the Stanford Review. | |
| He, of course, writes the book The Diversity Myth with Teal. | |
| I've met both Teal and Sachs. | |
| The passages that people like to quote that are, like, particularly noxious and wicked that are, you know, that are sort of anti-women and sort of, like, frankly racist. | |
| I've never heard those sentiments from Teal ever. | |
| Now, I have my criticisms of Teal. | |
| I think Teal was tipped off by Likud intelligence, given that the Likud people in Israel were sort of taking their money out of Silicon Valley Bank, right? | |
| So that was a very common thing that we saw. | |
| And of course, Founders Fund has all kinds of Likud-friendly people around it. | |
| Keith Raboi worked for many years for... | |
| You know, a number of sort of Israeli Likud interests. | |
| I've written about that, too, if people want to search it, Raboi, R-A-B-O-I-S. | |
| So, you know, in fact, by the way, marries this young woman. | |
| So he's a Stanford graduate, a Jew. | |
| He marries this Italian woman, much younger than him. | |
| I'm no, you know, I'm no prude, whatever. | |
| People do what they got to do. | |
| But she went to Chapman University, and her father was heavily implicated in a number of mob businesses over the years. | |
| So he marries into the mob. | |
| That's sort of the backdrop there. | |
| So yeah, anyway, that's sort of the players in the game. | |
| I think we oftentimes get lost in the kind of economic minutia of what's going on. | |
| Obviously, if you're a money launderer, you want the money to continue so that you can take your fees, which you find a lot of times with money launderers is that they tend to not have that much money because usually they're pressured into money laundering, either through personal compromise or through... | |
| You know, through family ties or intelligence ties, that's a very common one that you'll see. | |
| So yeah, I think we need to be sort of mindful of this question. | |
| Now, if Silicon Valley Bank is not a bank and is not a Silicon Valley property, so that raises all sorts of other questions, because if it's a mob front, then perhaps maybe it shouldn't be bailed out by the other banks, right? | |
| Now, maybe in the case of this bailout of the other banks, what Biden is doing is he's putting them all on notice. | |
| That they themselves are going to be harmed if there's other bank runs. | |
| Because historically, what tends to happen in some of these runs is that the banks basically are like, oh, can't do anything, can't fix the problem, right? | |
| And so they try to dump it onto the public writ large. | |
| And that's indeed what we saw in the Great Depression. | |
| It was a sort of way of attacking the policies of FDR, certainly of Hoover to some extent, but really to FDR, because that's really when it got going. | |
| And so that's sort of the backdrop there. | |
| Most of the sort of like crazy stuff and bank runs and everything in the 1930s happened basically right in between the period of the 32 election and the sort of swearing in of FDR, which people tend to forget this sort of history here. | |
| Obviously, you had a lot of foreign connections of Henry Ford too. | |
| You know, Adolf Hitler said that he would have supported him for president in 1924. | |
| Which is a rather crazy thing that people often forget. | |
| And, you know, a car company guy who has all these weird foreign connections, I don't know, sounds like somebody else in the public discourse today. | |
| And, of course, his lieutenant is David Sachs and Jason Calacanis, who have longstanding relationships there. | |
| And one final point, I should mention that Jason Calacanis is a scout for Sequoia, Sequoia being a venture fund that's heavily backed by the Chinese. | |
| And its head is a guy named Roloff Botha. | |
| Roloff Botha is of the Botha family, a very famous family in South Africa. | |
| And he's married to the daughter of a Chinese intelligence officer. | |
| Anyway, those are the players in the game. | |
| And it's a very interesting dynamic. | |
| I'll certainly be writing a lot more about this and talking more about it to the extent I can. | |
| I think the interesting question is what happens with Teal now? | |
| Because obviously a number of these tech investments are dogshit and fake. | |
| If you're trying to move money, by the way, like let's say you're trying to move money into the U.S. from China, a lot of the Chinese saw what was going on in China vis-a-vis Jack Ma, and they were like, fuck this, we need to get out of here. | |
| So there was a lot of money, particularly Hong Kong money, particularly South China money, that was moved into the U.S. And my view of what should happen in these cases is that every depositor should be audited to see if they're actual companies or actual foreign fronts. | |
| going through one by one by one. | |
| That would be sort of what I would do were I doing it. | |
| I would be like, hey, what's the hurry? | |
| Oh, your business can't survive that long? | |
| I would play it much slower than has been done. | |
| Well, the Biden administration has an opportunity to invest each and every one of these companies now. | |
| The books are open. | |
| They're in charge. | |
| Yeah, what I would do personally is I would freeze a lot of this money. | |
| China has frozen a lot of money belonging to the United States investors in China. | |
| Turnabout is fair play. | |
| Let's go about it that way. | |
| That would be how I would answer it. | |
| Hey, Richard, can I chime in here? | |
| Sure. | |
| Hey, good evening, everyone. | |
| Well, good evening here. | |
| Yeah, in terms of SVP, it's sort of interesting, though, how everyone's a libertarian until the Federal Reserve raises rates. | |
| David, I mean, the David Sachs thing has been hilarious, basically. | |
| I'll just tell you, I've always been in favor of raising rates as somebody, you know, because if you raise rates, you essentially move in an anti-mob direction, right? | |
| And so my view is that most of the problems we have in the country come from basically not taking on the mob. | |
| You know, we can spend as much money as we want on infrastructure, but if the mobsters steal all the money, what's the point, right? | |
| We might as well just stay home. | |
| So, yeah. | |
| I have to support zero-rate policy. | |
| Just as long as you regulate the liability and assets side of the banking industry, you could get rid of a lot of these problems. | |
| As long as you had a regulatory structure in place, you could leave rates at zero. | |
| I don't think that would ever work. | |
| Just in practice, as somebody who's dealt with banking regulators in the past, they get compromised very fast. | |
| I've seen this in the state of Texas where they... | |
| They figure they're on the same charity boards. | |
| There's all sorts of fringe benefits, golf memberships, the like. | |
| Yeah, there's the moral hazard of that. | |
| And I've seen that personally in banks that I've been involved with. | |
| I should mention, I personally bank. | |
| So I have 91 investments now. | |
| I personally bank at eight different banks, regional banks of different forms and variety. | |
| And this was a systemic risk that people knew about. | |
| Some things that people talked about. | |
| I've had dealings with Silicon Valley Bank people in the past. | |
| They didn't vibe as bankers. | |
| They vibed as kind of weird, like, we're the cool banker, man, kind of attitude. | |
| And they were offering all kinds of weird terms to me that were very friendly in different ways. | |
| But then what would happen is the fees would go drastically up in year three or four. | |
| And that was sort of a way of locking you into the relationship. | |
| And I was like, whoa, whoa, whoa. | |
| I just got out of a terrible marriage. | |
| I don't know that I want to get, you know, I don't want to get an ear. | |
| Anyway, go ahead. |