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The breadth of the American market has only been this low twice in the last 100 years. In both cases, the S&P index fell by almost 50%. 86% of S&P 500 stocks are in a bearish trend. Rates will reach 8%. I don't know what fantasy world people live in if they think the consumer is in such good shape. This is the type of inflationary psychology that can lead to a spiral, because now the accumulation of goods begins.
The shelves will be empty, sellers will see this and will raise prices even faster , noticing such demand. This has already happened twice, why not a third time? Remember: the most dangerous words in investing are “this time it’s different,” because everyone says that, but it’s never true. "The Peter Schiff Show." I'll start today's podcast much the same way I did the last one: by talking about the continued rise in long-term interest rates, as reflected in bond yields , particularly U.S.
Treasury bonds. Again, this is no surprise to my audience. This is not something we didn't expect. I've been talking about this for years because I knew it was inevitable. But something else is surprising : what happens in the bond market has no effect at all on the stock market as a whole. And it's not that stock market investors are oblivious to events in the bond market.
In fact, they discuss it every day. That is, it doesn't happen somewhere behind the scenes, which no one sees. They see it, but they don't seem to care. They keep making excuses for why this time is different and why rising bond yields aren't bad for stocks. They say they don't compete with stocks. Therefore, the stock market can continue to rise even if interest rates are high or continue to rise .
People believe that the economy is somehow immune to the impact of rising rates, or even if they believe it will slow the economy down a bit...They don't care that it will slow the stock market down. I believe these thoughts are, at best, wishful thinking . But most likely , this is either sheer ignorance, or people are simply defending their own interests and trying to present any negative news in a positive light.
Looking at yields, the 10- year Treasury note closed at 5.16% on Friday. So this is the highest closing rate in the last 19 or 20 years. The intraday high on Friday was 5.22%. And that was the highest figure for the week. So, bonds were practically falling and yields were rising all week. And the only reason the yield stopped rising was because the week was over.
It was Friday. And you know, I'm sure that if the markets were open on Saturday, when I record this podcast, bond yields would be rising again. And it would be higher than 5.16, at which the 10-year bond closed. The 30-year-old closed at 5.49. The intraday high was 5.53. Again, this is roughly a 22-year high in returns.
And in fact, even the 5- year bond now closed the week at 5%, exactly at 5%, but during the week I saw a yield of maybe 5.05, I forget what the exact high was, but it went up a little bit above 5% before it kind of pulled back on Friday afternoon . The 2- year bond yield has risen above 4.9, I think I saw 4.91, maybe 4.92.
It has now retreated to 4.85 at the close, but I don't think it will be long before the 2-year bond is also above 5%, so we will have 2- year, 5-year, 10-year and 30-year bonds, all yielding above 5%. If you are serious about preparation like I am, you should head over to preparewithpeter.com immediately.
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Visit preparewithpeter.com and ensure yourself days of true food security . And again, it's not just the US that is seeing rising yields. Profitability is increasing worldwide. Look at Japan again. This is a particularly important market that I have been talking about for years and predicting will happen.
10-year Japanese government bonds ended the week above 3%, at 3.05. This is the highest closing I can remember. And the yield on 30- year bonds is 4.13. Again, this is a maximum and a historical record, because Japan has not been issuing 30-year bonds for that long. What is it, 20 years or so ? But this is the highest return I have ever seen.
However, these are still low figures. Even 2-year bonds in Japan are approaching 2%. Now it is 1.91. And 5-year-olds — 2.38. So, profitability is increasing worldwide. And this is a serious problem for economies and the stock market. And, of course, for the housing market. Mortgage rates are already above 7%.
I think it's about 7.2, 7 and a quarter percent. And the only reason they're not much higher, the only reason the 30- year fixed-rate mortgage has n't hit 8% yet, is because the Trump administration ordered the GSEs, Fannie and Freddie, to buy up long-term mortgages. And they did it. Of course, they lost money on these purchases , because as mortgage rates rose, the value of the Fannie and Freddie mortgages they had already purchased fell.
This is one reason why these stocks continue to refresh 52-week lows. Look how they are collapsing now. They rose sharply in price after Trump was elected because he promised to privatize them, and all his friends bought these shares before and immediately after the election. Then he stoked interest in the early months to inflate the market, but of course nothing happened, because nothing could have happened for the reasons I outlined at the beginning of Trump's presidency : he couldn't possibly pull this trick.
Moreover, ordering state-owned enterprises to buy mortgages, knowingly incurring losses to support the housing market, only confirmed that privatization of these companies is impossible as long as they are used for political purposes, when they deliberately lose money to influence housing prices, which is beneficial to politicians trying to win the votes of homeowners or prevent a market crash.
But rates will reach 8%, even despite purchases by state-owned enterprises. Interestingly, this week, as bond yields rose, oil prices fell: they were around $100 per barrel, and ended somewhere around $ 92. There was hope that perhaps the war would end, peace would come, the straits would open, although none of this is likely to happen.
There's been a lot of talk about this, of course, we've heard it before, but the markets buy into it every time . However, it is interesting that bond yields continued to rise, even though there had long been a strong correlation between oil prices and bond yields, they went hand in hand. So, if you saw oil prices fall, you would expect a similar fall in bond yields, because it all depended on what the market thought the Fed would do.
Rising oil prices would push up the consumer price index, putting more pressure on the Fed to raise rates, so bond prices fell and yields rose. Conversely, if oil prices were going down, they say, inflationary pressure was weakening. Maybe they would n't have to raise rates, and then bond yields would fall.
Well, now the bond market has come out of this cycle, and bond yields are rising regardless of what happens to the price of oil. That's how weak the bond market is. And remember, until the last Fed rate hike, the prevailing view was that this hike would be good for bonds. That this will finally convince the bond market that the Fed is serious about fighting inflation.
These are not just talks, these are actions. Therefore, raising rates should solve the problem of rising bond yields. They would start to fall as there would now be confidence that the Fed would curb inflation. Well, this train has already left. The Fed raised rates, and interest rates continued to rise.
Bond yields show no signs of stopping their rise, even though the Fed made that symbolic rate hike that everyone expected. But now, if you look at the probabilities, the chances of two or three rate hikes in a week have also increased, because obviously one hike won't do, because as I said, one hike is not enough, especially when it's only 25 basis points.
However, again, investors in the stock market ignore all of this. This deep weakness in the bond market— in fact, some stock market investors have already acknowledged that yields will likely continue to rise regardless of Fed action. Right now they don't realize how high it can go. Maybe they're thinking, "Okay, maybe 5.5% or maybe 6%, something like that ." I don't think they have a realistic idea of how high these stakes will be.
But they agree that rates are likely to rise, and they don't care because they think everything is great, the economy is in such good shape that we can afford it. We'll just pay the higher rates, no problem. I even hear talk about consumers being in such great shape. You know , unemployment is very low, consumers have a lot of cash, so they can afford to pay higher interest rates, no problem.
I mean, I don't know what kind of fantasy world people live in if they think consumers are in such good shape. Look at the consumer confidence figures that came out this week. We got the final numbers for the month from the University of Michigan: consumer sentiment fell from 51.7 to 48.1, inflation expectations for the year increased from 4% to 4.6%, for five years they rose to 3.4%, and an interesting point of the survey is that now even Republicans are becoming more pessimistic .
Democrats used to be extremely pessimistic, but Republicans still maintained a lot of optimism because of their confidence in President Trump. Well, that confidence is now fading, because now even Republicans are starting to worry. And actually, one of the interesting things about the Michigan numbers is that they show that consumers are buying up goods now because they're afraid that if they wait, prices will go even higher.
So, expenses that would normally occur later are postponed to now because consumers are afraid that if they wait and buy things when they actually need them, it will cost much more. So they buy things before they need them because they worry that they will become more expensive later. This is exactly the type of inflationary psychology that can trigger a real spiral, as panic buying begins.
And what have I been recommending people do on my podcast for years? That's exactly what I advised people to do: stock up, buy the things you need, even if you don't need them now, because you know you'll need them in the future. So, if they're not perishable, if you can store them and they don't go bad or anything like that.
I said buy because I knew that the returns on such investments would likely exceed what you would get in the stock market, and certainly in the bond market. After all, if you need to buy something, but not today, but next year, and next year the price will be 10% higher than this year, then by buying now, you will receive a 10% tax-free return on your investment.
And you won't have to pay taxes if the toothpaste you bought a year before using it has increased in price by 10% between purchase and use. So, this is non-taxable income. So stockpiling makes sense, but it creates a self-perpetuating spiral . When only listeners of Peter Schiff's podcast do it, it's not a problem, but when the entire country adopts this "I'd rather buy now, I'd better fill my closets with things" mentality, store shelves will be empty.
And then the merchants will see all this and will raise prices even faster when they see such demand. It's impossible to look at these numbers and conclude that the consumer is so wealthy that they can afford higher prices, partly because current spending figures are actually distorted by spending that people have postponed for fear that if they wait it will become too expensive.
So they buy everything now. But it also means that future purchase volumes will decrease because people have already purchased what they were going to buy later, they have done so earlier. So future consumer spending figures will be much weaker. And the prices, of course, will be much higher. But look what happened to the stock market this week.
The S&P , despite this rise in interest rates, rose 0.63%, while the Dow fell 0.15%. But the Nasdaq, with all technology stocks, rose 1.2% for the week. Despite the rout, it was one of the worst weeks in the bond market. Only the Russell 2000 really reacted. This index fell 1.3%, and that's because it doesn't have all those big tech stocks in it.
So, these are more conventional companies that will definitely be affected by rising interest rates. Every investor understands counterparty risk. When you put money in the bank, it's not really your money anymore. This is a requirement for the bank. Most people never apply this logic to their passwords.
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Gold closed down 1.4% at around 4,284, with silver down about 3% to 64.17 at the close. The reason, again, and this is very important for you to understand, rising bond yields are good for gold and silver. They will hurt the economy, lead to larger budget deficits, more money printing, and higher inflation, which is good for gold and silver.
And of course, if you're a sovereign and you have a bunch of U.S. Treasury bonds in your reserves, and you want to sell those bonds and dollars, what do you buy to replace that asset? You will buy gold. So if people are losing money on Treasuries, and, you know, central banks are losing money, and they want to get rid of their bonds so they don't lose more, what are they going to do as an alternative?
They will buy gold. Gold is a way to hedge a weak bond market because gold is the best inflation hedge. Inflation is a destroyer of fixed income. This is a bond destroyer. Gold is your savior in such an environment. I've always said that gold will remain the last safe haven because Treasuries are not a safe haven if you're afraid of inflation.
Because when it comes to inflation, Treasuries are right under the gun. It is they who will be hit hardest. So, if you want a safe haven from inflation, you can't buy US Treasuries. You should buy gold. If you were a central bank, you could buy stocks, you know, if they're not too overvalued, you could buy real estate, but foreign central banks won't buy real estate.
They will not buy US stocks. So what will they buy? Their only real alternative is to buy gold, and they will continue to do so. So, all of this is very bullish for gold and silver. Traders will eventually figure this out, but in the meantime, this is an opportunity for investors who understand this to accumulate more.
Fool's Gold also fell a bit over the week, but it is around 84,000. So, Bitcoin still holds onto a significant portion of the large gains made the previous week. And again, he was in the black on Monday. But look at MicroStrategy, which is giving away a lot of gains, down 5.6%. By the way, Stretch, despite the fact that they have been buying Stretch shares every week, it is still not at par.
It closed at 98.54, down 0.3 % for the week, and has a yield of 12.2%, but while I started the podcast talking about how the stock market is ignoring rising bond yields, that's not really the case. Only the major indexes are ignoring this growth, and that hides what is happening to the vast majority of stocks in the S&P 500.
In fact , the S&P 500 is only 0.7% below its all-time high. So, it is now almost at a record high. But the vast majority of stocks didn't even come close to their all-time highs. In fact, the average stock in the S&P 500 is 19% below its record high. And , of course, this indicator includes all those stocks that reach new records.
In fact, if you exclude the top 70 stocks from the S&P and look at the other 430, the average of those 430 stocks is 21.7% below the highs. So, on average, 86% of the S& P 500 is in a bear market. But if we look at individual stocks in more detail, 60% of all stocks in the S&P 500 are more than 20% below their highs.
So, 60% of your shares are in the "bear " market territory. And in fact, look at the highs and lows for the week in the S&P 500. Last week alone, 14 stocks in the 500 hit new highs, while 41 stocks hit 52- week lows. You actually have a ratio of new lows to new highs of three to one in a “bull” market, where the market is almost at an all-time high.
You usually won't see a three-to- one ratio of new lows to highs unless the entire market is in bearish territory . Actually, the breadth of the market—that's how you compare the performance of all stocks to the averages and the leaders to everyone else, right? Generals compared to privates. Market breadth in the US has only been this bad twice in the last 100 years.
The first time was in January 1973. This was the real peak period of the Nifty Fifty stock bubble of the 1960s. After that 1973 high, the S&P fell 48.2%, nearly 50%, and the market didn't reach new highs until the early 1980s. So, it was a brutal bear market, and the warning sign was just as bad market width as we have now.
So the only other time in the last 100 years when market breadth was as bad as it is now was late 1999 and early 2000. This was the peak of the " dot-com bubble." And after that peak, the S&P index fell by 49.2%. Of course, the Nasdaq fell even more—almost 80%. So, what we are observing now has only two precedents.
And in both cases, the S&P fell by almost 50%. So, why can't this happen again? Well, you'll have to prove that this time is different. That it's normal when the breadth of the market is so terrible, even though it wasn't normal in 1973 or 2000, because this time it's different . Well, if things are different this time , it's probably because things have only gotten worse.
After all, the fundamental indicators of the economy are much worse now than they were then. The only potential “wild card” is AI, but we don’t know how quickly its benefits will be felt by the economy and whether it will save us from repeating history. It has already been repeated twice. Why not a third time?
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Go to pplx.ai/gold. This is pplx.ai/gold to try the computer today. Most AI tools still answer questions, while the Perplexity computer executes full-fledged projects. In fact, one of the people who is promoting their own interests this week, in my opinion , is Bill Ekman. He is one of those who plays very actively in the Fannie and Freddie market, so of course he has his own incentives here.
But he criticizes the Fed for raising interest rates because he says things are different this time . He argues that because of the incredible returns that can be made from investing in AI and building data centers, the returns are so high that no one cares about interest rates. That companies will continue to borrow money no matter how much rates rise, so it won't curb borrowing and the Fed shouldn't even try.
That in reality all these rate increases will not only not reduce inflation, but will actually make it worse, as it will only create a higher cost structure that will be passed on to the consumer. Well, that part is true, but it's always true. Higher interest rates are a cost. I already said that. I've been saying this for years.
This is not something Ekman is discovering for the first time. I said that the cost of interest, what a business pays for capital to borrow money, is the same as wages, raw materials, insurance, and rent. These are costs of doing business, and all costs of doing business are ultimately passed on to the consumer.
Because if a business can't cover all its expenses, well, it's no longer in business. Companies need to make a profit, which means they need to sell their goods for more than they cost to produce. And if part of the production process is paying interest on money borrowed for capital equipment or anything else needed to make the goods you sell, you must recoup those costs.
And the only way to reimburse them is through the consumer. But the way that rising interest rates will slow inflation is to stop the consumer from borrowing, not the businessman. If a business takes out a loan for production, that's normal. What we don't want is for the consumer to borrow to spend, because that's just demand, right?
This is what leads to rising prices. We need businesses to invest in increasing supply, that's good. We need to curb consumer spending, which means consumers and governments need to stop borrowing, because government and consumer spending is what fuels inflation. Investment expenditures , capital expenditures —no, if these capital expenditures will lead to an increase in production.
So the Fed can't just do what Ackman says and not raise rates, because then what would the Fed do? According to Ackman, nothing. What is Ackman's recommendation? Increase the inflation target. Just give up. Ackman says, “Listen, stop raising rates and get inflation to 2.5%? Because it is convenient, because according to the Fed, it is at this level now.
Although the overall figure is higher than that, perhaps the basic figures are roughly the same. So Ackman just wants to move the goal because we can't score where it is, so we need to move it. But, of course, if the Fed had heeded Ackman's advice, inflation would have been well above 3%. It would reach 4% or 5%.
What then? Will we move the gate again? Because if Ackman was now afraid of raising rates when the Fed was supposed to curb inflation at 2.5-3%, how much higher would those increases be to curb inflation at 4 or 5%? This is the problem with Ackman's advice. And another big difference: you know, Ackman gives advice because it benefits his investments.
He needs interest rates to stop rising because rising rates are hurting his portfolio. So, he wants the government to pursue policies that will enrich him. I advocate for the government to implement policies that will be detrimental to my investment strategy. Why am I doing this? Because I advise the government and the Fed to do what is right for the country.
My investment portfolio is based on what I know: they will ignore my advice. I know that no matter what I say, it won't matter. So I'll still tell the truth. I will still recommend that the Fed raise rates substantially, by hundreds of basis points, shrink the balance sheet, reduce the money supply, cause stocks to fall, bonds to fall, including those I own, and gold and silver to fall.
So, I'm pushing a policy that will be bad for my portfolio because I know it's the right one. I know it will work. Instead, Ackman is promoting policies that will benefit his portfolio. Of course , these measures will also benefit my portfolio. If the government, if the Fed does exactly what Bill Ackman wants, I'll probably make more than he does.
Maybe not in total, because he has a larger base than I do, but my investments could yield even better returns than his if the government is foolish enough to listen to his advice. But he gives advice that will help his own interests. Maybe he thinks it will help the economy too. I don't know. I'm not sure if Bill Ackman understands what I understand.
Maybe he is really sincere. Maybe he really believes that what's good for Bill Ackman is good for the country, like he's General Motors or something. I don't know. Another high-profile event this week, or much ado about nothing, is the president's meeting with Chairman Xi of China. Lots of pomp, lots of photo shoots, but really much ado about nothing.
I mean, they have n't really accomplished anything. None of the important things. I know the president is trying to get China to stop buying oil from Iran, and there have been no commitments on that issue . The only thing the president actually got from Xi was a statement that he didn't want Iran to have nuclear weapons .
Well, who the hell wants Iran to have nuclear weapons ? I don't think there's anyone who wants that. So getting China to adopt a policy that they don't want nuclear weapons in Iran is nothing special. The key question: what is China going to do to stop Iran from obtaining nuclear weapons? Probably nothing.
Because they will continue to buy oil from Iran. And not only that, they will continue to buy oil from Russia. Because they received no commitments, nothing at all regarding Russia. And this is despite the fact that Congress, by a bipartisan vote, effectively gave Trump permission to impose 100% tariffs on countries that continue to do business with Russia.
Which obviously includes China. However, during this summit or meetings, whatever they call it, nothing was achieved regarding China's business with Russia. But of course, again, why would Congress even authorize something so absurd? Because why should we punish Americans? If China is going to do business with Russia, how does punishing Americans solve that problem?
China has already proven that it does not need the United States. China's trade surplus was a record high last year, and it will break it this year—over a trillion dollars in surplus, a mirror image of our trillion-dollar deficit. But our trade deficit with China is decreasing, but that has n't solved our problem, as the overall deficit is still huge.
Because now we simply buy in other countries at higher prices what we used to buy in China. And China is doing well without us, because they are simply selling the goods that they used to sell to Americans, to other people. And they still have a huge trade surplus. So none of this hurts China. None of our trade tariffs hurt our partners, they hurt Americans.
They are hurting the US economy. This is one reason why higher interest rates will be particularly problematic for Americans, because they are already suffering from higher prices, partly due to tariffs. And speaking of tariffs, nothing has changed on the northern front in our trade war against Canada .
Canada is our largest trading partner , and everything we import from Canada will become more expensive. And, of course, some American companies will suffer, individual companies, because they lose their Canadian customers. So yes, that will be harmful too. And of course, yes, there will be Canadian companies that will lose American customers, but there are many others in the world with whom Canada can trade.
We have huge trade deficits . We don't have a lot of excess merchandise for sale. We have a shortage of things we need to buy. So making more expensive all the things that we cannot produce ourselves and are forced to import is harmful. I want to move on in the podcast and focus a little more on the long-running saga regarding my bank and my lawsuit against the Internal Revenue Service for violating the Freedom of Information Act ( FOIA).
So, if you remember my podcast from a few years ago, I was asking the IRS for all the information regarding correspondence between various IRS agents and regulators in Puerto Rico, OSFI, themselves, and other J5 members, including the Australian Taxation Office. I wanted to see correspondence regarding my bank and find out why my bank was closed .
Because I knew the bank wasn't doing anything illegal. So yes, they had minor technical glitches that shouldn't have been a big problem. Violations that were only discovered when the bank finally underwent its first audit after the 60 Minutes story and the New York Times article, and in fact, it was this article that convinced regulators to finally audit us.
We had been working in Puerto Rico for several years, about three or four, and we asked the Puerto Rican regulators to audit us because we wanted to get an initial check to correct any errors in our work. Ultimately, we moved the bank from St. Vincent and the Grenadines to Puerto Rico and started operating in 2017 in a completely new jurisdiction, so we wanted the authorities to come in, review everything we were doing, and tell us what we were doing right and what we were not doing right so we could fix it.
And we kept asking for an audit. They just didn't want to check us. Although they were supposed to conduct an audit every year, they didn't care. But as soon as the media got our attention, as soon as we were accused of serving the mafia and helping criminals launder money to evade taxes, they were pressured to finally conduct an audit.
And they did it. The audit must have been much stricter because now they were under the microscope and had to find something. So they found a bunch of little things that they blew up into a big problem. But what they didn't find was any evidence that the bank facilitated tax evasion, money laundering, or any financial crimes, or anything like what was alleged in the 60 Minutes program or the New York Times article.
Of course, I won my defamation lawsuit against 60 Minutes Australia, Nick McKenzie, Charlotte Grieve, and The Age because they had no evidence that my bank had done anything illegal. However, they lied and pretended that this was the case . The pressure was great, but I knew they hadn't found any violations.
And I knew that when the bank was closed, even the APRA Commissioner had to reluctantly admit in response to a reporter's question that there was no evidence that the bank had done anything wrong or committed any crimes, and that the bank was simply being closed due to critical insolvency, which I knew was a lie.
I knew we were not insolvent at all , let alone in a critical condition. We had enough cash. Technically, we didn't have as much money as we needed, and we found out about it during the audit, but the APRA Commissioner gave me time to raise additional capital . In fact, I offered to put up capital, but she said there was no need because she knew I was trying to sell the bank, and told me and the bank's lawyer that we could wait until the new buyers added new capital.
And she said, you know, we could work safely with the capital we had. And part of the reason was that my bank wasn't giving out any loans. So, capital requirements existed for banks that had loans that could become problematic. We were a bank with 100% reserves. So no one risked anything. My bank was fine.
And yes, my bank was losing money because of all this negative publicity, but I personally covered those losses. I signed the agreement and the auditors approved it. Every month I wrote a check for $250,000 to $300,000 to the bank to cover losses, so that the bank's capital remained about two to three million dollars higher than its liabilities.
So, I made sure that there was a reliable " cushion" between what was owed to depositors and what was in the bank. So everyone knew that the customers were safe. I defended them and looked for a buyer who could run the bank without the stigma I had received from all this bad press. So, I wanted to find out: okay, I want to get to the truth.
I want to know what was really said inside about closing my bank. So I filed FOIA requests, but the IRS would n't give me the information. They only gave me crumbs, but even those crumbs were extremely revealing. You can see all of these materials, obtained under the FOIA law, on the website 9fraud.com.
Go to 9fraud.com and read all this. These are incredible things. In addition, I received all the investigative materials from my won defamation lawsuit against the Australian program "60 Minutes." All of this is there too. I mean, this is truly explosive information, and it's worth spending the time reading everything I've gathered on 9fraud.com.
But much of what the IRS provided was redacted ( blacked out). So they gave me hundreds and hundreds of pages that I couldn't even read because every word on the page was blacked out and I had no idea what was there. I believed these redactions were illegal because the IRS cited exemptions that did not apply to the documents they were redacting.
So I had to sue, and it took me a few years to win the case because the IRS dragged it out. We finally settled the lawsuit after I won it, right? Because they threatened to appeal even after I won in district court, then the IRS filed a motion for review, but the district court judge denied it. So, they were going to appeal to the Court of Appeal.
This would delay the case for another year. So I agreed to go to the peace conference with them. There are a few things I agreed not to ask them for, and they swear it does n't involve my bank or anything else, but because of this settlement they will now turn over thousands of pages that they have n't given me yet because they didn't respond to one of my Freedom of Information Act (FOIA) requests at all, claiming it was too broad, even though the judge disagreed and said it was n't broad at all, but very specific.
How can you say it is wide? They made up all sorts of excuses, but in the meantime, thanks to the victory in that lawsuit, most of what was originally redacted was declassified, and I was finally able to read it. And what I want to just mention in today's podcast is the latest materials that I received from my first FOIA request.
Now I will receive much more, because the very first email I have seen so far is dated mid-April 2022 . And you know that my bank was closed on June 30, 2022. But judging by the emails I saw, the US Internal Revenue Service started working with OCIF back in December 2021. I don't have any of those letters.
And these will probably be some of the most revealing letters to date. I haven't seen any of it yet, but the court ordered the IRS to do so and they have now agreed to provide all of this information. One of the things I had to agree to was paying for it. I have to pay to copy all this and other materials.
So I agreed to it. Rather than pay even more in legal fees for an appeal, I said, okay. You want to bill me for a larger amount. Now they owe me for my legal fees. I mean, I spent over a hundred thousand dollars trying to get them to do what they were supposed to do anyway. Eventually, they will have to pay my legal bills, but as my lawyers say, I have to wait until everything is over and I get all the materials because it could happen that when the IRS provides these documents, they can redact them again .
And now I will have to go to court again to get the edit removed. Because the tax office really doesn't want me to see this, because it really exposes these top tax agents , ATO and OCIF agents. But I want to look at one specific case, and you can read it for yourself . I will bring the evidence to the screen.
So, former IRS Chairman Jim Lee gave a press conference to announce the closure of my bank. And this entire press conference is on YouTube. It is also embedded on the 9 fraud website. He came to Puerto Rico to speak at a press conference about the closure of my bank. Oh, by the way, I just read this yesterday, I think.
Former CEO of Nodus Bank, another Puerto Rican bank that was also closed by OCIF, like my bank. This former CEO was just sentenced to nine years in federal prison plus two or three years of probation for fraud and conspiracy to evade U.S. sanctions. So here's a Puerto Rican bank that closed around the same time as mine, which was actually involved in criminal activity , where the bank manager actually went to prison for those crimes.
However, there was no press conference when Nodus Bank was closed. There was no press conference regarding this verdict. That is, you wouldn't even know about it if you weren't specifically looking for it. At the same time, they held a press conference for my bank, announcing the closure, although my bank did nothing .
There wasn't even an indictment, let alone a conviction. Here the government actually convicted the person who ran Nodus Bank. I wasn't even accused. They did not press charges against anyone at my bank. And indictment is a much lower threshold than conviction . You know, you need to have reasonable suspicion to accuse someone, but to convict, you need to prove guilt beyond a reasonable doubt.
So, they were able to do it with Nodus Bank, but they couldn't with my bank. However, it was my bank that got all the publicity. I got this press conference. I got all the press coverage. My bank is the one that everyone knows about: "Oh, Euro Pacific Bank was a bad bank that did all these terrible things." “No, that's not true.
We didn't do anything wrong. That's why no charges were filed against anyone . But, whatever, Jim Lee is coming to Puerto Rico to speak at this conference. And now it's the morning of the conference, right? He performs at approximately 2:00. That day, he sends an email to IRS spokesperson Justin Cole, head of public relations.
And he writes: “Hey Justin, I have a few questions. I know I will be holding a press conference regarding Euro Pacific Bank. Can you answer these questions so that I, you know, stay informed and can communicate with the press? "Okay. So the questions themselves suggest that Jim Lee had no idea what was going on with this investigation and truly believed that the bank was guilty of tax evasion and money laundering.
You see, he didn't know that it was all just a show. It was just a PR stunt, because the bank was innocent, and they were just pretending that he was guilty because this email proves that he wasn't involved in this scam. He really expected to go to Puerto Rico to shut down a bank that was guilty of tax evasion and money laundering, even though officially that had nothing to do with the reason the bank was shut down.
The bank was shut down because, apparently, it had insufficient capital and other regulatory violations that had nothing to do with the criminal activity that he thought he was going to expose and take credit for stopping. But anyway, I'll read the first question, it's the longest. He says, " Do we have an agreement to cooperate and share resources to assist the local regulator in its investigations, especially in cases like Euro Pacific where the organization operates and/or holds assets outside the local jurisdiction?
"The OAG press release indicates that. Now he's reading the press release before it's even been released, right ? Because they haven't even announced the bank closure yet, and he's reviewing their press release in advance because they've agreed to all of that. And now here's the answer to that question.
Now, as for the questions themselves, I finally got those questions in my FOIA response before the one I just got. So, the first time I got those questions was a few months ago. Because before that, the whole email with the questions was redacted. So I finally got the email with the questions, but the answers were redacted.
What I just got in this last response is the unredacted answers. So there were seven questions, five were answered. One of them was redacted. And I agreed to let them redact that answer because they said it was about an individual who was under investigation and had nothing to do with my bank. So somehow it got in there, and they didn't wanted me to see who it was.
So I agreed that they shouldn't reveal it. But I know that the questions were answered. Because if there was a blank, there would be no reason to edit the blank . So I know for a fact that five of the seven questions were answered. I can read four questions and see a blank, or I can see that the other two are not answered.
And those are really the most important ones. But anyway, the answer to the first question was, "Yes, there is an approved Memorandum of Understanding between CI, which is the IRS Criminal Investigations Division, and OSFI ." The first time I found out was this week that there was a memorandum of understanding between OSFI and the IRS to close my bank.
Again, both former Commissioner Natalia Zechariah and former IRS Chairman Jim Lee lied at the press conference that OSFI acted independently in its investigation. Well, how can you act independently if you have a memorandum of understanding understanding of the joint action, right? And I've already seen evidence that they were working together.
They admitted that they were working together. They just admitted it to each other. And they lied to the public about it. Anyway, I want that memorandum, and I will get it when they give me those previous emails. I'll get the memorandum, the drafts, the correspondence, the working versions. I'll get all the dirt that they're still hiding.
Here's the second question. What's happening with the owners of the bank? No answer. No answer to that question. It was just ignored. Question three. Do we expect any more criminal or civil investigations in the United States? Answer. Unknown. Since the bank served non-US residents, it's difficult to find them in the bank.
So, the person in the active criminal case used a fake Belizean passport to open an account. So that shows you that in order for an American to open an account at my bank, he had to defraud our bank with a Belizean passport. Now I I'm not sure what that case is, because as far as I know, nothing happened.
I don't know of any criminal convictions or prosecutions of anyone, an American, who was in my bank with a Belizean passport. But, in essence, he answers that question. Another question. Can I say with confidence that the five countries combined are conducting hundreds of civil or criminal investigations related to customers who used the bank's services?
His answer was, definitely over 100 civil/ criminal cases worldwide. That's where I doubt it. And when he says civil/ criminal, he means civil, because I mean there are no criminal cases. And now, in another letter that you see in these materials, they mentioned how many cases there are in Australia.
And according to these documents, there were two civil cases and one criminal case, possibly under investigation, right? Two. Remember, 60 Minutes Australia said that my bank was helping hundreds Australians to evade taxes. However, according to official figures, the Australian tax authorities have only found two civil cases that they were investigating and one possible criminal case.
And that was it. That's it. It's nothing. Isn't it? There you have it, the elephant in the room. Now here's the question, the answer to which has been edited. This is question five: " What is our one target, a US citizen, involved in right now, and what office is he from?" It turns out that the person from the United States that they were talking about wasn't me, because at first I thought maybe it was me.
It wasn't me, and it wasn't anyone associated with my bank. And the reason they wanted to hide it is because they didn't want to reveal the identity of this person to me. So I agreed to let them redact it. But here's the thing. There are two questions that they didn't answer. One I mentioned is what happens to the owner of the bank?
Well, " owners," he said "owners," right? Because he doesn't know how many, he's assuming there's more than one owner. No, it's me. In the letter, when Jim Lee sent this to Justin Cole, Justin Cole forwarded it to another IRS agent, Shapley. And it was Shapley who answered the questions, sent the answer to Cole, and then Cole forwarded the answers to Lee.
But in his reply, he wrote, "Here are some quick answers. The rest is better left to discussion." That is, the other two questions that he refused to answer, he did not want to write an answer in writing. He said: "We need to talk about this." And now, why? Well, obviously, because of the answer itself.
So the question: "What will happen to the owner of the bank?" The answer is nothing. And of course, why did n't he just write that? I mean, some of the answers were much longer. He could have just said that nothing is happening to the owners . Well, how can nothing be happening to the owners? If a bank is guilty of tax evasion and money laundering, if Jim Lee is flying to Puerto Rico to shut down a bank that facilitated it on a large scale, even requiring him to personally go to a press conference to announce the closure, then how can you say that nothing will happen to the owner of the bank?
Because the bank is not doing tax evasion and money laundering on its own. Someone has to run it. I mean, obviously the owner of the bank is the mastermind behind all the criminal activity. So, when you ask what's going to happen to the owner, you expect the answer to be, well, he's going to be indicted soon.
You know, we're going to announce indictments any day now. The real answer is, nothing will happen to the owner. And then you ask, well, how is that not happening? will the owner? Why won't the owner ? Well, the owner didn't do anything wrong. What does " did nothing wrong" mean? Well, he didn't do anything wrong because the bank didn't do anything wrong.
There was no tax evasion or money laundering involved. You see, all of that would have come out if he had just told the truth. So he couldn't answer that question. I don't know if they actually had a conversation or not. But obviously he did n't want to put in writing the bank owner's innocence, because if the owner is innocent, then the bank is innocent.
But the other question that they didn't answer is even more telling. Both the fact that Jim Lee didn't realize that this was all a scam and the fact that it was a scam. So here's another question from Jim Lee. Give me two short examples, typologies of what the bank did for its customers to evade taxes and launder money.
Obviously, right? He wants those examples. He's going to to hold a press conference. He's here to announce the closure of a bank that he believes is being closed for tax evasion and money laundering. So he wants to get some examples. He wants to be able to tell the press, "Yes, this is what the bank did." Here are the bad things.
That's why we shut them down." There's no answer. He's not answering that. Why not? I mean, how hard is that? Just give him two examples. The reason he couldn't do that is because there are no examples. So he couldn't just say, " We don't have any examples ." How do you mean— you don't have any examples?
How can you not have any examples? On what basis do you shut them down? I mean, he must have thought we had hundreds of examples. He only wanted two. And they couldn't even give him two. They couldn't even give him one. So, I don't know what these guys said. They must have sat him down and said, "Listen, Jim, I have something to tell you.
This is all a show." Right? The bank... the bank is actually innocent. That's what we're doing. We're shutting it down to make it look like it's guilty. You know, so you're going to have to be very careful in this press conference. Don't blurt it out. We have to make sure that everyone thinks the bank really did all this, right?
That's what happened. And actually, even in the latest FOIA report, there's something else in there that says that it was all just a PR stunt, that OSFI and even the governor and the Treasury Secretary -- they all thought that sacrificing this innocent bank was worth it for the PR. Because there was a stigma attached to Puerto Rico.
People thought Puerto Rico was a tax haven, a place where money laundering, tax evasion, and weak regulatory oversight flourished. That was the stigma. This was supposed to solve the problem by closing Euro Pacific Bank, allowing the IRS and J5 to claim that it was because of tax evasion and money laundering -- it was proof that Puerto Rico is not a tax haven.
It's not a haven for money launderers and evaders, because look, they closed Euro Pacific Bank. That proves it. They won't tolerate money laundering. and tax evasion. Of course, they couldn't let anyone know that it was actually the case. In fact, one of the problems with the liquidation of my bank, which I'm going to talk about now, the thing that initially made it difficult was the Portuguese government: after my bank was closed, because of all the publicity that was falsely claiming that it was closed for tax evasion and money laundering, the Portuguese government froze the bank's account at Novo in Portugal, where most of the deposits were held.
That froze everything for over eight months, which really hampered the whole liquidation, because at the very beginning we had about 500 client transfers ready to go, and we couldn't make them because Novo Bank refused to process them because the Portuguese government was blocking them. Well, the freeze was because they didn't want all this illegal money, all this money that was obtained through tax evasion and money laundering, to go back into general circulation, into the legal economy.
And I tried to get the OSEP commissioner to make a public statement: "Hey, Portuguese government, you made a mistake. Don't believe what you read in the newspapers. We are regulators and can assure you that the bank is not guilty of money laundering and tax evasion. That's not why we closed it." But she refused to do that because she didn't want to go against the public narrative that that was the reason the bank closed.
So she sat back and just let the freeze happen. But ultimately, the last thing I want to talk about in this regard is the trustee that was put in charge of my bank. And again , they appointed the trustee many months before the bank closed, you know, when we still thought everything was fine, although the OC Commissioner assured me many, many months before she even started talking to the IRS, because I had talked to her about the problems that I was having with the bank and the losses that we were taking because of the bad publicity, and that I was trying to sell it, but if I didn't find a buyer, I would just close it, and I got an assurance from her, which is documented in my conversations with my lawyers, that she guaranteed me that if it comes to the point where the bank has to be closed, she will not appoint a trustee, a manager for this, but will allow me to conduct self-liquidation of the bank , which is quite logical, because when a manager is appointed, there is an immediate conflict of interest, because now the manager has no incentive to quickly return the money to the customers, he has an incentive to delay the process and not give the customers their money so that he can continue to pay himself to carry out the liquidation.
So, here are the numbers. So, first of all , my bank was transferred to external management 4 years and almost 3 months ago. In those 4 years and 3 months, 78 customers got their money back. Only 78. At the time of the transfer of the bank to external management, we had about 3,500 customers. So, about 2% of the customers got their money back.
The rest got nothing. Now, so that you understand the scale: when the 60 Minutes and The New York Times stories came out in the fall of 2020, we had over 8,000 customers. In less than 2 years, 4,500 customers closed their accounts, and we paid them back in less than 2 years. In over 4 years, which is twice as long, the government was only able to pay back 78 customers.
78. That's the difference between a free market and a government. We easily paid back 4,500 customers in less than 2 years, while the government was only able to pay back 78 customers in over 4 years. And remember, the rationale for putting my bank in receivership was to protect the customers. Yes. The only protection they need is protection from the manager himself.
He's the one who's ripping them off. They didn't need any protection from me. I protected them. The bank's balance sheet protected them. We had 100% reserves. There was no risk, no need to put the bank in receivership. The documents show that it was done for show, to make the bank look bad. Look how Was this bank bad?
We put it in administration. It had no place in administration and no competent regulator would ever put my bank in administration . Why inconvenience customers for no reason when the bank had no debt? When the bank was not making any loans? In fact, no competent and incorruptible regulator would even close this bank.
Why close it? Let it run. If more capital is needed, let it be raised. Let it be sold. Why kill all the jobs? Why do all this ? The FOIA evidence shows that they discussed job losses and called it an acceptable price for PR. I have already declassified over 500 pages of emails and not one of them indicates that closing the bank would stop crime, money laundering or tax evasion.
The sole purpose of closing the bank was to create PR for the IRS, J5, ATO and OSEP. That was it. Pure PR move. But, going back to those numbers. So, 78 people received payments in 4 years and 3 months. However, in those 4 years, the manager spent $2.2 million of the bank's capital. Spent. Bills and checks that he paid.
$2.2 million. And of that, over $850,000 was money that he paid to himself. To himself. Now, if you look at it per claim paid, the bank paid the liquidator $28,000 for every claim satisfied. $28,000. Of course, the process was slow at the beginning. That may have been beyond his control. But that problem was solved a few years ago.
Now it all depends on him. Absolutely everything. Actually , his last quarterly report—and that's why I'm talking about it , because I only got these numbers yesterday. His last quarterly report, which, by the way, was delayed by almost 2 months, but he finally filed. And in the last quarter he paid 27 claims.
Those 27 are out of a total of 78 claims paid, right? So he paid 27 claims. That's an average of two claims per week. That's all. It's just a transfer of money to a customer. He only does two a week. I told you before that my bank had 3,500 customers. I don't know what happened, but according to the liquidator, there are only 679 official claims that he's even processing, including the 78 that he's already paid.
Apparently the other customers couldn't even figure out these crazy forms . They couldn't even file their claims, so they lost everything. Obviously, those people are not going to get anything. So the vast majority of customers who were supposed to be protected by the liquidation are losing everything because of it.
There was no need for it. But if you look at the claims paid this quarter, and how much he spent. He spent $170,000 in a quarter. And again , I don't understand what that money is for, because the bank is n't even doing anything. It's not doing anything. And he's doing almost nothing himself. He paid himself about $110,000.
Right? The liquidator is now making over $400,000 a year doing work that I could do myself in a couple of weeks for free. But anyway, the cost of a claim: if you take the $170,000 spent last quarter or the second quarter, each claim paid out cost $6,200. Listen, this is a complete fiasco. At the current payout rate, if he just pays out all the claims that he admits exist, it's going to take another 5 and a half years.
And he's going to keep paying himself. Forget about how much it's going to cost the bank. He's going to pay himself more $2.2 million . So why would he stop this feeding frenzy? Right? That's why customers are being made to suffer even 4 years after their money was unnecessarily frozen for PR. So look, this is the government.
This is an example of how governments work. Governments don't give a damn. They don't care about people. They only care about themselves. The greediest people are the ones who work for the government. I've always said that. The most dishonest people are the ones who work for the government. And it's really ironic that so many people are afraid of businessmen and capitalists and hope that the government will protect them.
In fact, it's the opposite. It's the capitalist. It's the entrepreneurs, the businessmen. These are the people who will take care of you. They will protect you because they want to earn your trust. They want a good reputation. Businessmen always put the customer first because it's their bread and butter.
The government doesn't give a damn . You're just a sacrificial lambs. They only need you so they can make money off of you. The clients who are in receivership have no choice. They don't want to be there. They did n't want the government to do this liquidation, but the government is doing it, and that's why it's taking so long.
If they had let me do this, everyone would have gotten their money back 4 years ago. And of course, if the government hadn't been corrupt, there would have been no reason to liquidate the bank. There would have been no reason to sell the bank. The bank would still be there. In fact, it would be thriving.
It would be successful. It would be very valuable. It would have had many happy customers . The reason it's not there is because corrupt politicians destroyed it. Anyway, all the evidence of that is on my fraud website. I encourage everyone to go there and look, because I'm going to add a lot more evidence as I start getting all this new, previously hidden material that the government is revealing to me just because the court finally ordered them to do it, proving that the IRS had been breaking the law all these years by refusing to provide them.
Because the IRS not only committed crimes, but it committed even more crimes by trying to cover them up. And the most unfortunate thing now is that the Republicans in Congress—and of course they won't control Congress much longer—but they have controlled it since Trump won. We had a Republican House of Representatives and a Republican Senate.
And despite my efforts and all the talk about how Republicans don't like the IRS being weaponized, don't like the way the IRS is going after conservatives, and they're going to take it on , there's no interest on Capitol Hill in doing anything about it. Nobody even wants to get into it. Nobody in the Republican Party cares what the IRS is doing.
It's just a campaign issue. They want to talk about it , right? Just like they do about the Fed, right? They're not really going to fight the inflation. So the Republicans are not going to do anything about the IRS. They don't care, but they know it's a great topic. Yes, they can talk big. Oh, we hate it when the IRS harasses our citizens, but when it comes to actual action to stop this harassment, they're all talk, not action.
Anyway, don't forget, if you like the podcast, give it a like. Don't forget to subscribe to my YouTube channel. If you're not watching this on YouTube , that's fine.
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