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Your Safety Is Not Their Concern

Blog Dec 8, 2023

Uncover the Truth About Debt! 💸 In a world dominated by debt, the authorities want you to believe it’s all safe. 🤔 Many swear by treasuries as the ultimate safety net in government debt, but surprise! It’s not as secure as you think. 🚨 Municipal bonds are often hailed as super safe, especially for tax purposes. 🏦💼 However, the booming municipal bond market hides some lurking dangers you need to know about! Don’t be in the dark! 🔦

CHAPTERS:

0:00 Municipal Bonds
1:25 Rent-A-Muni
3:11 No Employees?
4:18 BofA More Muni Defaults
5:26 Municipal Bond Blowup
8:19 Burned Muni Holders For Cash
12:51 NYC’s 7 Billion Deficit
15:35 Boosting Trading Volume
17:54 Spot Gold Market
20:20 Get Your Strategy Now

SLIDES FROM VIDEO:

TRANSCRIPT FROM VIDEO:

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You know, in an all-debt-based system, the powers

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that be want you to think that debt is safe.

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And a lot of people happen to think treasuries are the safest thing you can do

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because they are the largest and most liquid pool of government debt.

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Well, that’s turning out not to be true.

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But they’d also like you to think that municipal bonds are really, really safe.

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Plus, you get a lot of tax advantages with that You need to be aware of it.

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You need to know about it.

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And that’s what we’re going to talk about today.

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Coming up,

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I’m Lynnette

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Zang, chief market analyst here at ITB, trading, a full service

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physical gold and silver dealer specializing in custom strategies.

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And if you don’t have one, click that cowardly link below.

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Set up a time to talk to one of our specialists

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and get that in place because time is running short.

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But what I really want to focus on is a lot of people for

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tax purposes have turned to the municipal bond market.

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And in reality, the New York Fed did a study years ago that showed that,

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no, they weren’t really as safe as the perception that people had.

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And now we need to really talk about it because that market is exploding

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and you might not be aware of the hidden dangers.

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So let’s just jump right into it and let’s have that conversation,

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because there are issuers rent to muni issuers scored

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market access for bonds that came out

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at $1 and are now at $0.11.

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Now you have to add a few zeros on there to make that more accurate.

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But the PSA in Wisconsin has issued debt

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and businesses nationwide.

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So you still have advantages in the federal level,

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but not on the state level as far as tax taxation is concerned.

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Okay.

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Let’s take a look at this, because that was back in 2020.

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Now, who is the PFA?

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Well, the Public finance authority, the PFA is a political subdivision

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of the state of Wisconsin, created for the purpose of issuing tax exempt

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and taxable conduit bonds for public

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and private entities nationwide.

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So again, this was an agency that was specifically created

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to generate an issue more debt for the state of Wisconsin.

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That’s their sole goal.

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And they can go anywhere in the country to do it.

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The PFA was set up a decade ago with the sole purpose of renting out

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its power to issue municipal debt to businesses all over the country

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from real estate developers and colleges to nursing homes.

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So you’re buying a municipal bond that you think is safe,

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But these are revenue bonds.

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These are conduit bonds.

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And personally, this is an accident waiting to happen, in my opinion,

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and also possibly in reality, because they are

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one of the biggest bond markets and they have no employees.

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Last year, 17 of its bond issues or more than half didn’t have credit ratings.

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So it’s just about generating income for the state.

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They don’t really care how safe it is for the investor.

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It is a step frequently used by borrowers

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that are are unlikely to receive an investment grade.

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According to data block, only qualified

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institutional buyers, those are buyers that buy on your behalf.

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That’s what institutional buyers are, or accredited investors

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who have to have a certain level of wealth and income

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can buy these securities and those rated below triple B-minus.

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So you can see and I got news for you, junk is always junk.

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My mother always said it’s better to have one of the best than ten of the cheapest.

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And junk, frankly, is always junk.

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So what in the world can go wrong?

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Lots of

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things, especially if you’re the holders of those bonds.

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Because Bank of America and many others see more muni bond defaults.

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And part of that is because the revenues

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on a statewide county wide, city wise level

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are declining in many areas, particularly in places like Chicago, etc..

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So they have a lot of expenses via their pension plans,

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their defined benefit pension plans, but their income is declining.

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And guess what?

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We’re seeing that even in the in the U.S.

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markets, first time payment defaults rose 122%

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in January from a year ago.

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Not for profit sector has led the defaults,

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but there’s been defaults in not just not for profit but nursing homes,

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senior living hospitals, as well as the not for profit sector.

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So bond defaults in the muni area are going up.

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What do you think about that?

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And if you’re sitting in them, how would you feel about that?

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Because a muni bond blowup exposes flaws

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in that particular 600 billion corner of the market.

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And what we don’t know, because they don’t talk about

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it, is how many derivatives.

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So those big speculative leveraged bets,

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how many of those derivatives are written against these muni bonds.

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So it may talk about a 600 billion corner of the market, but in reality,

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this is just the tip of the iceberg that we can see.

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It’s all the stuff that’s below the surface that we can’t see

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that is really the danger to investors and actually to all of us,

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because this is going to have an impact

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on all of us, whether we’re prepared for it or not.

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But sports complex went bust less than three years after its debt sale.

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Guess what that means?

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That means those muni bond holders,

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they’re taking all those losses.

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That money is not there.

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And there’s little vetting by agency with the history of rubber stamping deals.

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Why would that be?

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Well, let’s talk about that.

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Each year, billions of dollars in high risk projects are financed

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with little vetting or government oversight,

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all because they piggyback on the names of state and local municipalities.

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But there are few checks and balances,

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largely because the agencies aren’t responsible for the debt.

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If a project fails.

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No, it’s the project that’s responsible for it.

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Those are revenue bonds.

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Those are conduit bonds.

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Are you holding any?

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You might not know because they could be buried so deeply

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in your pension plan that you can’t see it.

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The securities are often unrated, and when interest rates were at rock

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bottom levels, some of the highest yields in the industry

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made it easy to attract money market money market managers

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or attract money managers in droves.

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I mean, have you forgotten?

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As the Federal Reserve held interest

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rates as zero or even negative rates, how?

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Didn’t matter how risky the asset was, it was paying a yield.

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It was a reach for yield.

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But that means that all of those bonds are vulnerable.

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Remember, interest rates, market value of the bonds

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as the interest rates have gone up, the not only have

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the price action of the bonds declined because of that,

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but also because of the increase in defaults.

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So it’s really like a double, triple whammy.

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We’ve set ourselves up for a decent

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pipeline of four defaults.

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Well, who’s going to pay for those defaults?

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The investors are meaning you, whether you realize it or not.

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Here’s a great example.

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Defaulted California plant turns to burned

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muni holders for cash.

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The venture firm that once that turns rice

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straw into panels needs another $18 million.

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So this was a muni bond. It defaulted.

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And then surging demand for junk

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muni debt paves the way.

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Because of that little pickup of interest, you are risking your principal.

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Is it worth it? No, it’s not.

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You want to keep your principal intact

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so that you can live to fight another day.

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Having bonds, having stocks, having cash

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that is not diversification, because all of those are dollar

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denominated, having physical gold and even physical silver outside of the system.

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That’s diversified because you have a tangible as well as an intangible.

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Intangibles are so easy to to rob you of because you don’t hold it.

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But the reality is, is if you don’t hold it, you don’t own it.

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That’s simple.

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Okay.

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Still, the plant, which started making panels in November,

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needs about 18 million more to fully scale up to commercial operations.

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Bondholders appear to have faith.

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Despite the missing debt payments, the company is poised to win

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final approval from California officials

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to sell that amount of new securities, most of which

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will likely go to the existing investors.

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This was roughly a little bit more than a couple of three years ago.

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Two years ago. Right.

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Do you get that?

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So California had to approve additional debt sales

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after this bond, this municipal bond defaulted.

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And and investors are trying to save

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what equity they have by throwing good money after bad.

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The company has equity backing from entities, including a subsidiary.

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How do you like this?

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Teachers in California include being a subsidiary

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of the Teachers Insurance and Annuity Association of America.

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See what I’m saying?

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You might not even know that you are sitting in this garbage, but

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you are from those institutional investors that invest your money.

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What’s their risk?

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It’s your risk they’re taking on your behalf.

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Thank you so much.

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Not me. Not me.

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Let’s see.

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Let’s see.

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So the Teachers Insurance and Annuity Association of America

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has already borrowed 344

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million since 2000 and seventeenths through sales of unrated

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tax free debt, most of which is in default.

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But let’s just keep going because guess what?

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That was 2021, right?

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Wasn’t that 2021?

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Yeah, nine for 2021.

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Here you are.

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A couple of years later, October 5th, 2023.

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Right. With bankruptcy completed.

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500 million cal plant sustainable building

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products factory in willows is to be liquidated.

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The equipment, land and other assets

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of the groundbreaking Cal plant factory and willows,

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which saw investment of more than 500 million, are to be liquidated.

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Where were they before with that?

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Let’s see.

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18 million more tied to the to them.

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344 million.

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Plus another 18 million.

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And what is getting defaulted on?

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yeah, that’s right. 500.

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500 million.

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So how do you feel about that?

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And how do you think you would feel about that if you owned them?

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And by the way, would you even know that if they’re buried inside of your pension,

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are you really getting all the data and the facts?

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Because they probably have sent you

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a little email about it, which you probably ignored,

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or maybe they even did a little glossy one sheet.

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If they send you a hard copy of anything but nothing to worry here

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until this really ratchets up.

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And then we’ve got something huge to worry about.

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Bond investors largely ignored New York City’s 7 billion deficit.

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There you go.

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This was just done November 21st.

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Demand is high for bonds that yield more than 3% tax free.

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So you are risking your principal

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for 3% tax free.

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Well, Evercore is wealth management.

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Howard cured the risk of holding Citi Debt outweighs the reward.

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I 100% agree with that.

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100 zillion percent.

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He points to the city’s looming 7

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billion budget deficit, exacerbated in part

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by spiraling costs of sheltering asylum seekers and other migrants.

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Blah, blah, blah.

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Declining Wall Street profits and job cuts at major investment

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banks will put pressure on city tax revenue.

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Your revenue.

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If you’re taking on more debt, your revenue has to grow,

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at least at the same level

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as your debt repayment grows.

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And that is not what’s happening.

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And we’re not in that environment on a federal level.

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We’re a municipal level. Can you see that?

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So all of these muni bonds that you might think are safe, maybe not so safe.

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General obligation bonds are a little bit safer because

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that comes out of the general fund.

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But when you’re looking at conduit bonds or you’re looking at bonds

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that are specific to, you know, a

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revenue bond, you better look again.

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You better think about it hard.

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You better see where it’s at on this spectrum

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of market values and the risk that is associated with it.

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Because you certainly saw what happened to the Cal Bond investors that ended up

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putting 500 million in the buy 500 million.

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Don’t risk your principal for a little bit of interest.

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The risk is not worth the reward.

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And, hey,

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it also suggests, let’s say, declining Wall Street profits and job

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cuts at major investment banks will put pressure on city tax revenue.

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Dimming New York’s fiscal outlook that suggests

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the city’s general obligation bonds.

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So even the gio bonds aren’t particularly attractive

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at current valuations.

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Insanity is doing the same thing

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over and over again and expecting different results.

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And we’ve got a lot of history on these results.

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So does it really matter because investors dive into 4 trillion

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muni bond market boosting trading volume?

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Are you kidding me?

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Look at the volume right there.

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Highest well, at least the highest

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since they started tracking this in 2020.

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And it’s all about demand and supply.

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But who’s really the investor?

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Is that mom and pop?

00:16:03:28 – 00:16:10:00
Or is that your retirement funds, your pension funds, etc.?

00:16:10:02 – 00:16:15:02
401 KS, IRAs, annuities, all that stuff.

00:16:15:04 – 00:16:18:29
Investors rush into the market as yields rose,

00:16:19:04 – 00:16:23:29
and now we’re being sold that this is a great time to buy and put out duration.

00:16:24:04 – 00:16:25:26
In other words, go longer.

00:16:25:26 – 00:16:28:20
But this is what happens. Okay.

00:16:28:22 – 00:16:30:09
Interest rates

00:16:30:09 – 00:16:33:12
will current market value when they issue it.

00:16:33:12 – 00:16:35:26
This is when issued, right, right there.

00:16:35:26 – 00:16:38:23
So when they issue it, when interest rates

00:16:38:23 – 00:16:41:23
go up, the principal value goes down.

00:16:41:26 – 00:16:43:14
This is maturity.

00:16:43:14 – 00:16:49:01
You can see how much more the principal declines the longer out you are.

00:16:49:03 – 00:16:49:24
So that’s what

00:16:49:24 – 00:16:53:25
they’re wanting you to do right now, because the reverse is true as well.

00:16:53:25 – 00:16:56:23
Right. So they’re counting on the Fed pivot.

00:16:56:23 – 00:16:59:29
You have to understand what’s happening when we get that Fed pivot.

00:17:00:06 – 00:17:02:10
But they’re counting on the Fed pivot.

00:17:02:10 – 00:17:07:08
So then if the Fed put pivots and starts to push those interest rates down,

00:17:07:14 – 00:17:10:25
you can see what happens to the market value of the bond.

00:17:10:27 – 00:17:15:06
As long as the bond doesn’t default.

00:17:15:09 – 00:17:18:14
Then if you hold it to maturity,

00:17:18:17 – 00:17:21:09
you may get your principal back.

00:17:21:09 – 00:17:26:04
The purchasing power is another story, and that’s what inflation erodes.

00:17:26:10 – 00:17:29:21
And we know that we’ve talked about it a long time.

00:17:29:23 – 00:17:33:10
But, you know, again, I have to ask this question.

00:17:33:10 – 00:17:36:01
You know, this is not the first time I’ve asked it.

00:17:36:01 – 00:17:38:23
Why would you risk your principal

00:17:38:23 – 00:17:43:23
for a little bit of interest when you can hold your principal,

00:17:43:23 – 00:17:47:03
your purchasing power intact right here

00:17:47:03 – 00:17:53:13
in an undervalued asset that has full global demand?

00:17:53:15 – 00:17:54:15
Just a thought.

00:17:54:15 – 00:17:58:09
Let’s take a look at that, because what you’re looking at here

00:17:58:11 – 00:18:01:11
is the spot gold market.

00:18:01:12 – 00:18:03:19
And it’s easy to control it

00:18:03:19 – 00:18:08:00
while the controlled market yet waits for the ultimate breakout.

00:18:08:00 – 00:18:11:19
So it’s got to go above here and it very well could do that

00:18:11:22 – 00:18:15:01
even between now and the first of the year.

00:18:15:03 – 00:18:20:01
But let’s take a look at what’s happening in the key dates and rarities.

00:18:20:06 – 00:18:23:06
This is only the only physical market.

00:18:23:11 – 00:18:26:06
There’s no paper contracts written against that.

00:18:26:06 – 00:18:29:21
So as I’ve shown you many times, it is easy

00:18:29:26 – 00:18:32:26
to manipulate the visible price of a contract.

00:18:33:03 – 00:18:35:19
But only gold.

00:18:35:19 – 00:18:38:25
Only gold is money.

00:18:38:27 – 00:18:41:27
Everything else is credit.

00:18:42:02 – 00:18:44:12
Everything else is a contract.

00:18:44:12 – 00:18:47:12
And any time you have a contract,

00:18:47:14 – 00:18:50:01
you are running counterparty risk.

00:18:50:01 – 00:18:54:23
And that’s the risk of default from the other entity.

00:18:54:25 – 00:18:57:25
Because if you don’t hold it, you don’t own it.

00:18:57:27 – 00:19:01:20
This is your best defense with what we’re going through right now

00:19:01:26 – 00:19:05:18
because it’s not even so much if you get your principal back.

00:19:05:21 – 00:19:09:13
But inflation has shown you

00:19:09:15 – 00:19:13:02
that you lose purchasing power value.

00:19:13:07 – 00:19:17:25
So even if you get that value back, you hold it to maturity and you get it back.

00:19:17:25 – 00:19:20:16
What’s it going to buy you? A whole lot less.

00:19:20:16 – 00:19:24:05
And that’s a guarantee because that’s the way the system is set up.

00:19:24:07 – 00:19:27:10
So in this, this is what the one percenters do, right?

00:19:27:10 – 00:19:32:24
Because a lot of the coins in there will go for millions and millions of dollars.

00:19:32:26 – 00:19:36:03
This is the category of this coin and the category

00:19:36:03 – 00:19:39:10
that I personally work in, which is a lot lower.

00:19:39:10 – 00:19:42:22
And that, too, has had a breakout out.

00:19:42:24 – 00:19:45:23
So, you know, while we’re still struggling to

00:19:45:23 – 00:19:50:24
to break out in the paper market, what are you listening to them for? Why?

00:19:50:26 – 00:19:53:19
They’re just lying and lying and lying some more.

00:19:53:19 – 00:19:56:19
For them, it’s just about a pick up and a little bit of money.

00:19:56:23 – 00:20:00:16
But the physical only market, that’s where you’re finding the truth.

00:20:00:22 – 00:20:05:20
And both of them are breaking out, especially the one percenters that either

00:20:05:20 – 00:20:10:04
write the rules or have the ability to influence those that write the rules.

00:20:10:07 – 00:20:16:20
They are clearly breaking out in a very large and pervasive way.

00:20:16:22 – 00:20:20:18
So I’d like you to just pay attention to what’s going on.

00:20:20:21 – 00:20:24:16
Don’t be suckered in by the lies.

00:20:24:19 – 00:20:27:23
It’s their job to lie.

00:20:27:25 – 00:20:30:25
It’s my job to help you see the truth

00:20:30:27 – 00:20:34:24
and your job to follow the links and do your own due diligence.

00:20:34:26 – 00:20:36:25
Don’t take my word for anything.

00:20:36:25 – 00:20:38:23
Don’t take their word for anything.

00:20:38:23 – 00:20:41:17
Either I give you the links.

00:20:41:17 – 00:20:45:26
You can find them on the blogs and you can follow every single thing

00:20:45:27 – 00:20:48:26
if you come up with a different opinion than I do.

00:20:48:26 – 00:20:51:23
Who am I to say that your opinion is less valid?

00:20:51:23 – 00:20:53:23
A random OPM opinion?

00:20:53:23 – 00:20:58:10
Yes, that is definitely less valid than my well-educated opinion.

00:20:58:12 – 00:21:02:08
But I want you to actually have well-educated hearted opinions

00:21:02:11 – 00:21:06:07
so that you can put your best interests first.

00:21:06:10 – 00:21:09:18
That’s what the strategy is all about.

00:21:09:20 – 00:21:14:16
That’s why if you click that cowardly link and you talk to one of our specialists

00:21:14:18 – 00:21:18:23
there, if you don’t know how to define your goals, they’re going to help

00:21:18:23 – 00:21:23:25
you define your goals and then it’s doing the right tool for the job.

00:21:24:02 – 00:21:27:19
What are you trying to accomplish?

00:21:27:21 – 00:21:28:00
Now, I

00:21:28:00 – 00:21:31:00
think it’s really important if you haven’t done this yet,

00:21:31:05 – 00:21:35:05
to watch securities ization market breaking down,

00:21:35:07 – 00:21:38:02
because again, a lot of this Wall Street

00:21:38:02 – 00:21:41:18
garbage has been turned into products and sold to you.

00:21:41:23 – 00:21:44:14
So they’re making money hand over fist.

00:21:44:14 – 00:21:46:11
But you’re the one that’s taking all the risk

00:21:46:11 – 00:21:48:05
and that appears to be breaking down.

00:21:48:05 – 00:21:49:24
So you definitely want to be

00:21:49:24 – 00:21:53:10
taking a look at that and looking at what you’re holding.

00:21:53:13 – 00:21:57:01
You know, you might be in something that you can choose to liquidate.

00:21:57:08 – 00:22:00:02
You might be in like a403b or something

00:22:00:02 – 00:22:03:11
like that, that you have no option to liquidate.

00:22:03:13 – 00:22:06:04
In which case you need to get yourself diversified.

00:22:06:04 – 00:22:07:27
Really important.

00:22:07:27 – 00:22:11:11
And you know, you’ve seen it and it’s awesome.

00:22:11:12 – 00:22:14:24
The materials that are coming out from the three of us,

00:22:14:24 – 00:22:19:02
including Daniella Cambone and Taylor, Kenny and me.

00:22:19:08 – 00:22:23:27
So there’s lots for you to look at when you might have a little bit of time,

00:22:24:00 – 00:22:27:18
although we are in the holiday season, so

00:22:27:20 – 00:22:28:17
you’ll do

00:22:28:17 – 00:22:31:17
whatever is going to be comfortable for you and your family.

00:22:31:17 – 00:22:34:12
We’re just trying to get you protected here.

00:22:34:12 – 00:22:37:05
And if you haven’t already, make sure you subscribe.

00:22:37:05 – 00:22:39:02
You need to know what’s going on.

00:22:39:02 – 00:22:40:07
Leave us a comment.

00:22:40:07 – 00:22:44:17
Give us a thumbs up and share, share, share.

00:22:44:20 – 00:22:49:07
Because this, my friends, is your wealth shield.

00:22:49:09 – 00:22:50:29
And until next, we me.

00:22:50:29 – 00:22:53:24
Please be safe out there. Bye bye.

SOURCES:

https://www.bloomberg.com/news/articles/2020-12-08/rent-a-muni-issuer-scored-market-access-for-bond-now-at-11-cents?sref=rWFqAg1Y

Who is the PFA wisconsin conduit municipal bonds

https://www.bloomberg.com/news/articles/2016-01-13/inside-a-muni-market-powerhouse-no-employees-lots-of-customers?sref=rWFqAg1Y​

https://www.bloomberg.com/news/articles/2023-02-07/bank-of-america-expects-municipal-bond-defaults-to-rise-in-2023?sref=rWFqAg1Y​

https://www.bloomberg.com/news/articles/2023-11-17/muni-bond-blowup-exposes-flaws-in-600-billion-corner-of-market?sref=rWFqAg1Y​

https://www.bloomberg.com/news/articles/2021-08-04/defaulted-california-plant-turns-to-burned-muni-holders-for-cash?sref=rWFqAg1Y​

https://www.bizjournals.com/sacramento/inno/stories/news/2023/10/05/calplant-factory-liquidated-willows.html​

https://www.bloomberg.com/news/articles/2023-11-21/nyc-s-7-billion-deficit-is-largely-ignored-by-muni-investors?sref=rWFqAg1Y​

Investors Dive Into Muni Bonds, Sending Trading Volume Surging – Bloomberg

Sources & References In This Article

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