Sovereign Man’s founder, Simon Black, has long held some fairly contrarian views. Discover ten of his most recent hard-hitting quotes on subjects ranging from the Fed’s mismanagement of inflation and SVB’s demise to the banking crisis and government hypocrisy – all sourced from recent episodes of the Sovereign Podcast.
And if you like what you’re reading, be sure to sign up for The Sovereign Podcast now.
1. On the disastrous behavior of the Fed:
My favorite one to beat up on, though, is the Federal Reserve… Seriously, I actually think it’s very important to beat up on the Federal Reserve because the Federal Reserve, the central bank in the US, is the most cared for agency.
Nobody says an unkind word about the Federal Reserve, right? …people beat up on the SEC. They beat up on the White House. They beat up on Congress… They beat up on the national parks. They beat up everybody in government. But not the Federal Reserve, right? Technically, the Federal Reserve is independent from the government, but it obviously has this huge role in the US… and there’s a lot of overlap between the Fed and the government.
But nobody says an unkind word. Nobody scrutinizes the Fed. Nobody criticizes the Fed… everybody just sort of bows down to [it].
The Fed says, let there be 0% rates, and it was good. And nobody questions the almighty Fed, partly because I think people are afraid of looking stupid, because so many people… don’t understand central banking, so they’re going to sit in a room with a guy who’s the chairman of the Federal Reserve.
This is the great and powerful Oz, and they’re terrified of the man behind the curtain. So they don’t want to look stupid, so they just go, okay, well, the Fed raised rates. The Fed cut rates. Nobody really questions any of this, but they should, because what the Federal Reserve does [this] over and over again, they engineer these bubbles.
They engineer huge consequences. [And] they’re totally asleep [at the wheel].
2. On the decline of the US:
But the major trend is essentially the decline – the peak and decline – of the United States, the dominant superpower. And you could say, really, the West in general, but specifically the US… And I don’t think it’s controversial anymore to say that the US. Is in decline.
I started saying this when I started Sovereign Man back in 2009, and it was a very controversial thing to say back in 2009.
But I was one of the people saying it in 2009, saying, look, this is not a pretty picture. You got a lot of debt, you got a lot of deficits, you got wars, you’ve got really funny stuff happening with the currency and the central bank and so many things that just don’t make sense.
This is obviously a place that’s past its peak, and I don’t take any pleasure in saying that, but I think it’s important.
Again, I went to West Point. I served in the military. I have absolutely no pleasure in saying that the United States has passed its peak. But I think any rational individual who’s being intellectually honest has to take a very sobering appraisal of the facts, the actual objective facts, not the political spin, but the actual facts and data that are publicly available and out there for everybody to see and make an honest assessment.
Because… throughout history… there’s never been a dominant superpower that’s lasted forever…
3. On the cyclicality of civilizations:
History is so cyclical. Rise and fall, rise and fall… Quite often, most dominant superpowers – the Romans and the French and everybody – at a certain point just simply assumed that their power and dominance would last forever.
But it never does.
And if you understand those cycles of history, you understand, [if] you take… an intellectually honest approach to examine the facts and circumstances that are publicly available for anybody to see…
I think any rational person would draw the same conclusion, saying, this is a place that’s in decline, it’s past its peak, and that doesn’t mean the world is coming to an end.
It doesn’t mean that civilization and life as we know it is going to fundamentally disappear forever. No, of course not.
That would be super dramatic. There are, of course, people out there talking about the collapse of this and the collapse of that. But that’s silly. The world isn’t coming to an end. Nobody’s going to spontaneously combust.
But a shift to transition away from US dominance, a shift in transition away from the dominance of the dollar as the main predominant reserve currency in the world, that’s a really big deal.
It means that people, I think, especially in the US… have some thinking to do, have some planning to do…, and you really have to take some steps to reduce the risk and your exposure to some of that, because it’s a really, really big deal.
Again, if you look to history and you see the economic effects of transition from being the dominant superpower to going into decline, it’s usually a really big deal.
Very seldom, if ever, do we have an example of some dominant superpower that goes into a period of decline and everything’s just fine. There’s [major] economic consequences, there’s [major] social consequences.
4. On the demise of Silicon Valley Bank:
… how are future historians going to regard our time? There’s going to be something that they circle on the calendar. It’s going to be some iconic event that’s going to say this is what really signaled the decline. What will that be? Will it be the withdrawal from Afghanistan? Will it be COVID-19?
…I think they could point to… elections… they could point to so many different things.
But to be fair, I think it’s possible that the Silicon Valley Bank collapse last week could be one of the things that they circle as that iconic event.
I’m not trying to be dramatic but I think it’s important to understand that the Silicon Valley Bank collapse and the subsequent consequences… this is a really really big deal and I think a lot of people don’t fully appreciate how big of a deal this really is.
I want to briefly summarize some of these points because the long-term implications for this are really extraordinary.
Number one, it’s important to remember Silicon Valley Bank did not go bust because they had bought some crazy high risk investment.
Banks notoriously take their customers money and they go and buy stuff with it. They go and buy assets, they make loans, they buy bonds, they do all sorts of stuff.
Back in 2006, 2005, banks were going out and buying these ridiculous super-high-risk mortgage bonds.
They were out making loans to unemployed homeless people and they were doing it with your money, with our money, with depositors money, taking these crazy risks and pretending like there was never going to be any consequence to that whatsoever.
Obviously it was stupid. It almost brought down the entire US economy, the entire US financial system, the global financial system, which is why they called the global financial crisis the GFC when it finally busted in 2008.
Silicon Valley Bank wasn’t doing any of that.
Silicon Valley Bank didn’t go bust because they’d been making loans to unemployed homeless people. They went bust because they bought US government bonds…
5. On Barnie Frank and stress-testing legislation for banks:
Barney Frank was hardcore left leaning, hated big businesses, hated big banks, loved high taxes, all that sort of stuff. He was the guy who was the architect behind the legislation that requires stress testing and deeper supervision and scrutiny of banks.
Well wouldn’t you know it? This guy, after he retired, suddenly discovers capitalism, embraces his newfound love for capitalism… became a director on the board of directors of one of these banks that just went under.
This is the guy that wrote the legislation, and a lot of good that did.
And it’s just another example of politicians [who] just don’t actually understand the problem. They might have had good intentions, but it doesn’t matter because they go and they create these rules.
Fast forward ten or 15 years and it turns out all the rules ended up doing absolutely no good whatsoever. What’s going to happen now? They’re going to come up with new rules, right?
This is what they always do. They come up with new rules. They go, oh well, the old rules didn’t work, so what do we need? We need new rules. So they come up with more rules and more rules and more rules and this ridiculous cycle never ends…
6. On what went wrong at Silicon Valley Bank (SVB):
Yes, Silicon Valley Bank was stupid about the way they did it.
They bought $120,000,000,000… in bonds. Most of that was long-term bonds with maturities going ten to… 30 year maturity.
I mean they were taking on huge interest rate risk. At some point somebody in that bank should have been like, hey guys, you realize if interest rates go up to like three 4%, we’re going to be totally screwed.
But apparently nobody realized that. So they just kept buying these ultra-long-term government bonds. And again the regulators saw it. It’s not like the regulators didn’t have access to that information.
The regulators were supervising them the whole time and said, oh great job Silicon Valley Bank. Nothing to see here. You’re doing a great job.
So Silicon Valley Bank is not some innocent babe in this whole scenario. They were totally stupid. And obviously the fact that senior management was selling stock before the collapse, it looks really bad, but a lot of things they’re doing look really bad.
But you got to look at the government’s role in all of this, passing all these rules that amounted to nothing. The regulator’s rules. The regulators saw all of this information and not just a couple of months ago.
It’s going back two years. I mean the regulators should have seen in 2020, hey, you guys are loading up on a lot of long term debt that’s going to expose you to interest rate risk. But they didn’t. Nobody said a word.
7. On the US government failing its own audits:
…Twenty years ago Congress passed something called the Sarbannes-Oxley Act, which imposed CRIMINAL penalties for company executives who fail their audits.
If the federal government were held to the same standard as the private sector, dozens of officials should be facing jail time right now. Instead they’ll retire to their generous, fully-funded pensions and receive lavish board seats and prestigious awards.
They will never be held accountable.
You, on the other hand, will have to bear the costs of their incompetence, in the form of higher taxes, inflation, reduced Social Security, and other broken promises.
Personally I find it extremely unethical and unjust that the irresponsible, criminally incompetent decisions of politicians and bureaucrats should be paid exclusively by the citizens. It’s just like all the destructive decisions they made during the pandemic.
They will never be held accountable for the mental health crisis, the suicides, the substance abuse, the entire generation of children who fell behind.
Nope. There will never be so much as an inquiry. Instead they’ll make millions from their memoirs where they cast themselves as heroic saints who saved the world.
8. On the merits of international diversification:
Most people have a peasant mentality. Throughout human history, in fact, the vast majority of people never thought much beyond their tiny village, let alone traveled. But there have always been some people who have had the intellectual courage and curiosity to think far beyond their own borders.
And they’ve often been richly rewarded for it. Adopting a global mindset essentially means thinking about the entire world when considering your options. And more options is almost always more beneficial….
…The larger point here again, isn’t to suggest like, oh, you should get on a plane tomorrow or go set up a company in Timbuktu or anything like that.
The idea is really just to highlight that point, that sophisticated people throughout history have always understood that there is great opportunity beyond their own borders. And this is still absolutely true today.
And the basic logic behind this is that when you start thinking globally, you give yourself a lot more options.
9. On small groups of non-government elites having major influence on public policy:
…This is nothing new; in fact it’s quite common for arrogant, narcissistic ‘experts’ to force their ideas onto a society.
The WEF is only the latest modern incarnation. And even though it has lost much of its credibility, it’s important to remember there are always going to be ‘experts’ out there who want to tell you how to live your life.
This is ultimately what ‘freedom’ means… we’re talking about your right to make your own decisions and control your own life.
If you don’t care about your freedom, you can’t expect anyone else to care about it…
And you can probably expect others (like the WEF) to try and take it away.
And that’s why it makes so much sense to have a simple, sensible Plan B. Because there are just too many of those lunatics out there…
10. On politicians’ hypocrisy and double standards:
[During Covid]: The High Priests of Public Health decided that if anyone died for lack of cancer screenings, a drug overdose, or suicide, that was OK. As long as you didn’t die of COVID.
If your kids lost two years on their social and educational development, if your business closed, if your entire life was turned upside down, that was fine too. Everyone was expected to sacrifice for the greater good.
Everyone, of course, except for the politicians.
We’re starting to see this same attitude applied towards Climate Change. Most recently, the ruling class had its big climate summit in Egypt called COP27; they flew in on their private jets and ate expensive steak, while their ideas for the rest of us include travel restrictions, taxes on cow farts, and eating bugs and weeds.
You just can’t make up this level of incompetence and hypocrisy. The trend, though, is very real.
Momentum towards climate regulation is only picking up speed. And it doesn’t look like there’s anything on the horizon to stop it. It would at least be somewhat digestible if their ideas were actually sensible. But instead their ‘solutions’ are borderline insane. They spent an entire day at COP27 talking about gender identity, as if that has something to do with the climate.
They obsessed over incredibly inefficient sources of energy (like corn-based ethanol, which has soundly been proven to be one of the WORST and most INEFFICIENT forms of energy).
But was there any discussion at COP27 about nuclear power? None.
And that makes it really difficult to take these people seriously. They reject good ideas. And they keep coming up with bad ideas… which ultimately means less efficiency, more taxes, and more regulations.