Author: jwithrow

Are we at the early stages of another financial crisis?

Last weekend featured both the second and the third largest bank collapses in American history. Then just yesterday Swiss banking giant Credit Suisse plunged 25% on concerns that it’s on the verge of collapse as well.

What’s incredible here is that Credit Suisse was founded in 1856. It’s been in operation for nearly 170 years. And I’ll add that Switzerland has been known as a banking safe haven for much of its history.

Yet Credit Suisse is teetering. And with the stock tanking yesterday, Credit Suisse shares have lost over 87% of their value in the last twenty-four months. Ouch.

Naturally this begs the question – are we watching another financial crisis unfold here? Is this 2008 all over again?

Nope. To the contrary…

What we are witnessing is the restoration of America’s economy. This is all part of the battle between the Federal Reserve (the Fed) and the globalists that we discussed last week.

Remember, the Fed represents the New York banking interests. In fact, it’s almost certainly owned by those same interests.

So the Fed’s incentive is for America to have a healthy, functioning economy. That’s how the New York banks maintain their wealth, power, and influence.

Meanwhile, the globalists have actively worked to undermine the legacy economy. Both in Europe and here in the United States. One could argue that every government policy we saw imposed upon us in response to the COVID-19 hysteria was all part of this plan.

There’s a lot of chatter out there about how the Fed “broke” the banking system by raising rates too far too fast. Perhaps that’s true. But I have a different perspective.

The Fed is forcing fiscal responsibility upon the system. That’s what’s happening right now.

Simply put, an economy needs real interest rates in order to function properly.

Interest rates are the price of money. The higher the rate, the more expensive it is to borrow money.

So when rates are high, only the most important, high quality companies and projects can get financing.

And the opposite is true as well. When rates are low, even questionable companies and projects can get financed.

We’ve been stuck in a world where interest rates have been next to zero for the better part of the last fifteen years. That’s led to the “financialization” of everything.

It’s also enabled the U.S. government to borrow over $31 trillion dollars… and largely blow it all on stupid and destructive programs.

And on the commercial banking front, funny money and zero-bound interest rates destroyed the fundamentals of risk assessment.

Instead of funding solid top-tier projects in this country, lenders poured trillions of dollars into high-flying projects that promised nothing more than a quick buck. Many banks also funded uneconomical “environmental, social, and governance” (ESG) programs in the name of political correctness.

As a result there’s an onslaught of zombie companies out there. We’re talking companies that hemorrhage money every year because they don’t do anything important.

These zombie companies have survived simply because they’ve been able to float new bonds at ridiculously low rates. In some cases less than 1%. That’s enabled them to raise more and more money to keep themselves alive.

Those days are over.

We are going to see an absolute avalanche of corporate bankruptcies in the coming years. The financial media will play it up as a tragedy and demand something be done about it.

In reality this is exactly what needs to happen.

We need to stop pouring trillions into fly-by-night operations. Then we can focus on the real economy.

We can make sure that those companies who actually do important work get the financing they need…

We can make sure that business owners and homeowners have access to capital to properly maintain their buildings, tools, and equipment…

And we can make sure that we take care of our critical infrastructure. We can fix our roads and bridges like we should have been doing all along.

You know, a friend of mine did a tour of the Rust Belt several years ago. With a few exceptions, it’s amazing how much of America has fallen into disrepair.

Our infrastructure is outdated. And once illustrious Main Streets now sit deserted and disheveled.

Many of these Main Streets feature brick and stone buildings that date back a century or more. And most were once the center of vibrant local communities.

Of course, there are a lot of contributing factors here. But economics had a big part to play in what’s happened to our country.  

With near-zero interest rates, we’ve “financialized” everything. And in the process we’ve denied individuals and small businesses the ability to earn any yield on their savings.

The path back to a healthy economy requires the Fed to do exactly what it’s doing right now. It must continue to raise interest rates and then let all the zombie companies go bankrupt.

When that happens the banks will get back to doing proper risk assessment on every loan they make. They’ll have to.

And what follows will be the restoration of the American economy. Believe it or not, that’s the path we’re on right now.

So the big takeaway is this…

We’re entering into what’s going to be a chaotic transition period.

The media will likely stoke the flames of fear and worry… but we should ignore them. Getting back to normal is going to be a painful process.

-Joe Withrow

P.S. The restoration of our economy is great news. But that doesn’t mean we’re going back to the days where the U.S. stock market always goes up. Quite the opposite.

The fact is, the Age of Paper Wealth is over.

The Fed has supported the stock market by pushing interest rates lower and pumping easy money into the financial system for the last forty years. That’s why U.S. equities have been the staple of pretty much all retirement plans for decades now.

We’re entering a new era today.

Hard assets and “bearer” assets are making a comeback. They are the backbone of a strong economy.

As such, it’s time to rethink financial planning 101. We can do so right here: Finance for Freedom

The root problem with conventional currency is all the trust that’s required to make it work.

The central bank must be trusted not to debase the currency… but the history of fiat currencies is full of breaches of that trust.

Then banks must be trusted to hold our money and transfer it electronically… but they lend it out in waves of credit bubbles with barely a fraction in reserve.

That’s Satoshi Nakamoto writing in an old cryptography forum back in 2009. He was explaining – quite clearly I think – the true purpose of Bitcoin. It’s to restore honest money to society.

Satoshi is the person who created Bitcoin. The name is fictitious… but the person is quite real. I have it on good authority that he was in fact a cypherpunk.

The cypherpunk movement was strong back in the 1980s and 90s.

It consisted of computer programmers who were early internet pioneers. Their calling card was that they believed in the sovereignty of the individual over the State.

More specifically, the cypherpunks believed that all individuals should be able to interact and transact with each other freely and privately, so long as they did so without coercion or fraud.

That was the key. No coercion. No fraud.

Today there’s an entire social philosophy based on this premise. It’s called voluntarism. But that’s a story for another today.

Yesterday we talked about how the Signature Bank collapse wasn’t a collapse at all. The regulators forcibly shut it down as an attack on the crypto industry.

I certainly don’t condone such actions. I’m myself a voluntarist at heart.

At the same time, I’m not a fan of what the crypto industry has become. On the whole, the industry has strayed far from Satoshi’s vision.

Painting with a broad brush, Bitcoin’s purpose is to restore honest money to society. That’s spelled out clearly in the Satoshi quote above. And in the early days the entire crypto industry was aligned with that purpose.

As I mentioned yesterday, I’ve been plugged into the Bitcoin world since 2014.

Back then, there was Bitcoin and only a handful of other serious cryptocurrency projects.

Litecoin was one. It’s job was to be Bitcoin “light”. That is, to facilitate faster, cheaper peer-to-peer payments while Bitcoin worked to build a network effect.

Namecoin was another. It’s goal was to provide an alternative to the highly centralized DNS system. That’s because the system as it exists is largely contrary to the original vision of an open and unrestricted internet.

Ripple was around back then too. I never cared much for it. But it did have a specific purpose. That’s to modernize the way banks handle cross-border transactions.

Dogecoin was around in 2014 also. It came about entirely as a joke. It was never intended to be a real project. I guess we can say that its purpose was humor.

To my knowledge, these were the only five crypto projects running in 2014 that are still prominent today.

And notice that we didn’t mention Ethereum.

Ethereum was still in development at the time. It hadn’t launched yet.

Still, Ethereum had a specific purpose. Painting with a broad brush again, it was to be the world’s super computer.

My point is this… the digital asset industry was small and mission-driven. And with a few exceptions, the major cryptocurrencies were complimentary to one another.

This dynamic changed with Bitcoin’s incredible run in 2017. I remember it well.

In 2017, Bitcoin opened the year trading at $997 per BTC. Then it shot up to about $17,000 by December of that year.

For those of us who were around in the early days (and I wasn’t that early), this was incredible.

You see, we didn’t think about the dollar price too much back in 2014. We weren’t interested in Bitcoin because we hoped to make a return on our dollars.

Instead, we got on the Bitcoin train because we believed in honest money.

That is to say, money that can’t be created from thin air arbitrarily and unilaterally. Doing so always and everywhere debases the purchasing power of the money.

In other words, we got into Bitcoin because we saw it as a better monetary system. That was the Bitcoin vision. And it still is.

So when Bitcoin exploded in popularity in 2017, I naively thought that the world had realized what I did three years earlier. That Bitcoin was simply better money.

I was wrong.

What the world learned was that they could put their dollars into “crypto” and get an unbelievable return on their investment. Then they could sell their crypto and take even more dollars out.

Hence the term “cryptos” was born. And to this day I can’t stand it.

I can’t tell you how many people approached me in 2017 with “cryptos” schemes. I agreed to take their calls because I naively thought they saw the vision. It didn’t take thirty seconds for me to realize the folly in that.

The same thing happened again with the big crypto boom in 2021. People with schemes came out of the woodwork. But I knew better by then. I took zero calls.

So here’s what I want you to take away from this…

Bitcoin is not an investment.

If you’re looking for something where you put dollars in and then get more dollars out later, buy stocks and real estate. We have specific guidance around both in The Phoenician League.

But when it comes to Bitcoin, it’s all about accumulation. The same goes for gold.

We don’t buy Bitcoin or gold hoping to make a return on our investment. We buy them because the dollar has lost 96.7% of its purchasing power since 1913… and we know that trend’s only going to continue. Monetary debasement is baked into the current system.

Therefore, we buy Bitcoin and gold to turn our dollars into real money. Money that will protect our purchasing power for centuries.

-Joe Withrow

P.S. I gave a presentation titled Bitcoin’s True Purpose a few years ago. You can find it right here:

Bitcoin’s True Purpose

I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals. There was no real objective reason for Signature Bank to be seized…

That was former Congressman Barney Frank on CNBC. He was talking about Signature Bank’s collapse this past weekend. 

If his name sounds familiar, Frank co-sponsored the Dodd-Frank Act back in 2010. That was the government’s official response to the 2008 financial crisis.

Perhaps it’s no surprise then that Frank found himself sitting on Signature Bank’s Board of Directors upon retiring from Congress. 

Frank served on the board from June 17, 2015 through this past Sunday. That’s when regulators stormed in to freeze Signature Bank’s assets and prevent the bank from opening its doors on Monday.

We talked yesterday about the Silicon Valley Bank (SVB) fiasco. It’s now the second largest bank to collapse in history. And we had to ask the question – is there more to the story?

Well, Signature Bank is now on record as the third largest bank collapse in history. And there’s absolutely more to this story.

Signature Bank opened its doors to the cryptocurrency industry in 2018. 

That sounds like a simple thing. But it was monumental back then. 

At the time, most banks refused to open deposit accounts for businesses dealing with cryptocurrency in any way.

So Signature Bank has been a favorite of the crypto industry for years now. In fact, it housed $16.5 billion in deposits just from companies in the digital asset space.

And as of its most recent regulatory filings, Signature Bank held $88.6 billion in total deposits and $110.4 billion in total assets. As Frank pointed out, the bank simply was not in financial trouble.

So why did regulators shut it down?

Clearly, it was an attack on the crypto industry – as Frank pointed out. But there’s a lot more nuance to this story.

I’ve been plugged into the world of Bitcoin since 2014. 

At the time there was Bitcoin and only a handful of other cryptocurrencies. And each of them had a specific purpose. We can talk more about that tomorrow.

Fast forward to today and the “crypto” industry is something entirely different. 

Don’t get me wrong. Bitcoin hasn’t changed. It’s still mission-driven. 

But the industry at large became something else. It turned into a worldwide casino. And for those who were hip to the game, “crypto” could provide incredible leverage.

Many projects created their own “tokens” and sold them for dollars. Then they used those dollars to acquire other assets. Or, in the case of FTX, to pay off a bunch of politicians.

This is why I despise the term “cryptos”. 

Most cryptos are a scam. Their only purpose is to vacuum up dollars for the founders.

And even many of the crypto projects that have a legitimate business model aren’t exactly in alignment with Bitcoin’s true purpose these days. That disappoints me.

And this brings us back to Signature Bank…

As FTX demonstrated, the crypto industry became essentially an extension of the Eurodollar market. And the Federal Reserve has been hellbent on draining the Eurodollar market of liquidity. 

That’s what the Fed’s aggressive rate hiking campaign has been all about. Inflation was just the cover story.

This is something we cover in a lot more depth in The Phoenician League’smonthly newsletter. 

To keep it simple, Eurodollars are U.S. dollar-denominated deposits held at foreign banks. They are mostly held in European banks. Hence the name.

The Eurodollar market exists outside the U.S. regulatory system. And it provides liquidity to European financial institutions and ultimately European governments. They can leverage Eurodollars to support spending programs that they favor.

So by draining the Eurodollar market, the Fed is hamstringing the globalist power structure and their “Great Reset” plans. That’s what the rate hikes are really about. 

And it appears quite likely that this is what the takedown of Signature Bank was all about also.

Simply put, there’s a power struggle happening at the upper echelons of the global financial system right now. 

Of course, the media will explain it all away as “normal”. That’s what they are there for.

But what’s happening today is anything but normal. We’re living through an incredible inflection point in history.

If you would like to do a deeper dive on this story, please give our investment membership The Phoenician League a look. 

We’re tracking these developments in extended detail every month. And then we use this understanding to craft highly robust investment strategies.

You can find us right here: The Phoenician League Home Page.

Cutting to the chase – we’ve got $2 million parked at SVB. We’ll find out on Monday how much we’ll be able to withdraw…

That note came to me over the weekend. It was from the founder of a start-up company who just raised $5 million in what’s called a Reg CF raise. This is the mechanism by which regular investors can invest in private companies – no accreditation necessary.

SVB refers to Silicon Valley Bank. As of last week, it was the 16^th largest bank in the United States.

This weekend it became the second largest bank to collapse in history. That’s after lines of people stormed the bank to pull their money out.

Over 2,500 venture capital (VC) firms banked at SVB. As did countless early stage private companies. By some estimates SVB did business with roughly half of all private technology companies in this country.

Imagine what those companies went through over the last several days…

As we know, FDIC insurance covers deposits up to $250,000 in the event of a bank collapse. For individuals, this is more than enough. Very few of us keep more than $250k in the bank.

But when it comes to enterprise clients – $250,000 is typically a drop in the bucket.

So half of the tech companies in this country just faced the prospect of losing most of their money. And if that were to happen, we would likely see a record number of businesses go bust at the exact same time… taking out some major VC firms and angel investors with them.

After a few days of panic, the U.S. government stepped in and outlined a $25 billion funding program to ensure that all SVB depositors are made whole. Uncle Sam’s not going to let the early stage tech sector go bust.

But the question is – what happens from here?

Is the banking system in trouble? Will the Fed have to stop raising rates?

The answer to that first question is no.

SVB simply got caught with what’s called a duration mismatch in the banking world. The bank had a large portion of its reserves in long-term U.S. Treasury bonds and mortgage-backed securities.

Now, the value of a bond moves inverse to interest rates. When rates go up, bond values go down.

And that’s what triggered an old-fashioned bank run at SVB. The value of its bond portfolio had declined dramatically… which raised questions about its financial health.

What’s interesting here though is that SVB planned to hold those bonds to maturity. And when a bond matures, investors get their original investment back. No matter what.

So the fact that SVB’s bond portfolio had declined in value shouldn’t have been such a big deal. It was largely just a paper loss. The bank held those bonds for the yield they provided… and that’s it. They weren’t going to sell those assets at a loss.

This begs the question then – what triggered the bank run? What prompted SVB’s depositors to rush to pull their capital out?

Most of us aren’t analyzing our bank’s financial statements every day… so it stands to reason that somebody must have triggered concerns around SVB.

I’ve heard rumors that JP Morgan CEO Jamie Dimon may be behind all this. This is unsubstantiated, but word is that he urged some top enterprise clients to pull their money out of SVB.

And to be sure, JP Morgan is going to be a beneficiary here. Many tech companies will move their deposits to the iconic bank. That includes the founder I mentioned above. The one who had $2 million parked at SVB.

So this begs another question – is there a bigger game afoot here?

We talked last week about how there’s a distinct split between the globalist power structure and the New York banking interests.

Interestingly, the Federal Reserve and the Treasury are on opposite ends of this schism. The Treasury supports the globalist initiative. Meanwhile, the Fed supports the New York banking scene.

So I can’t help but wonder… was this just another shot fired in the war between the Fed and the Treasury?

We’ll see. This certainly shines the spotlight on the Fed’s upcoming meeting later this month.

Many are pointing to SVB and saying that this will force the Fed to stop raising rates. Some think this paves the way for the Fed to “pivot” and cut rates again.

Color me skeptical.

If I’m right about the ongoing battle for monetary supremacy, we’ll likely see the Fed continue along its chosen path. That would include another 25 basis point rate hike later this month… accompanied by “hawkish” talk around future rate hikes.

And if that is in fact what happens, it will be the strongest confirmation yet that the days of low rates and easy money are over. Which means the Age of Paper Wealth has come to an end.

If that’s the case, we’re in uncharted waters here.

Nobody under age sixty has been an adult in a world where rates didn’t consistently go down over time. And how we manage our finances when rates are going down is dramatically different from how we handle our money when rates are rising.

Fortunately, there’s a simple solution. Learn more right here:

Finance for Freedom

-Joe Withrow

May you be blessed to live in interesting times.

The above line is an ancient Chinese proverb… and it absolutely applies to us. My friends, we are at an inflection point in history. Right now.

There are many reasons why that’s the case. But I’m a finance guy, so I’ll focus on the financial aspects. We’ll start with some quick background…

The Federal Reserve (the Fed) is the central bank of the United States. And it owes its existence to a piece of legislation that passed in 1913.

The story of how that legislation was crafted and pushed through is absolutely incredible. If you like mystery novels, the story of the Fed is for you. But we’ll save that for another day.

Today, the Fed claims to have a dual mandate. It’s to ensure maximum employment and price stability.

Between friends, that mandate is bunk. The Fed does neither. Nor is it supposed to.

The Fed’s true purpose is to ensure that the U.S. Treasury is forever solvent… even if it spends money that it doesn’t have.

In other words, the Fed’s job is to print money to cover the U.S. government’s excessive spending. We call this “debt monetization”.

But there’s a new wind blowing out in front of the Eccles building. And it seems the Fed has made a conscious decision to break from the Treasury.

Fed Chair Jerome Powell was on Capitol Hill this week. And he made it abundantly clear that the Fed is no longer going to cover for the Treasury’s malfeasance.

Check out Powell’s exchange with Senator Lummis:

As we can see, Powell made it very clear that the Fed is not going to keep interest rates low just to help the U.S. Treasury service the national debt.

Sure, he paid lip service to the dual mandate. He has to. But the big takeaway is that the Fed\’s not going to support the deficit by keeping rates low.

I know this confused many analysts. It would have confused me a year ago as well.

After all, Powell succeeded Janet Yellen as Fed Chair. And Yellen happens to be the head of the U.S. Treasury now. Aren’t they on the same team?

The answer is no.

The fact is, there’s a power struggle happening in this country right now. This has become apparent over the last twelve months… at least for those who cared to read between the lines and analyze incentives.

Yellen is aligned with what we’ll call the globalist power structure. It seeks to reorganize our society per the World Economic Forum’s “stakeholder capitalism” model.

It’s intended to sound like a friendlier version of capitalism. But in reality stakeholder capitalism is more akin to a grotesque neo-feudalism.

That’s because the “stakeholders” in their vision will control all aspects of money, finance, and energy production.

This necessarily requires the commercial banking system to be diluted or discarded. And it takes all decision-making authority and places it in the hands of the stakeholders. The rest of us are expected to fall in line and accept their edicts.

Meanwhile, Powell is aligned with the New York banking interests. They have been prominent for over a century now. This is the power structure that helped get the Fed established in the first place.

This faction wants to maintain the American status-quo as it currently exists. In fact, their power, wealth, and influence depend on it.

There’s very clear evidence that these two factions have been battling it out for at least twelve months now… maybe longer. Except everything’s happening just under the surface. Most are unaware that anything like this is afoot.

And with Powell’s overt comments on Capitol Hill this week, it’s clear the battle is ramping up. This is the first time Powell publicly admitted that the Fed has broken ranks with the Treasury and the globalist narrative.

So things are about to get especially interesting. And this all has major implications with regards to money and investing.

First of all, understanding what’s happening at the macroeconomic level enables us to make intelligent decisions when it comes to our investments.

Most of the financial world has been stuck in this echo chamber where they are repeating the same thing to each other. They all agree that Powell is raising rates in the present to fight inflation… and that he will “pivot” and cut them again when inflation subsides.

That’s not what’s happening here.

The Fed isn’t raising rates to fight inflation. It’s raising rates to fight the globalist power structure… and to preserve the power and prestige of the New York banking scene.

That’s a deep rabbit hole. And we cover it in a lot more detail in The Phoenician League’s monthly newsletter.

But for investors, the takeaway is this: the days of low rates and easy money are over. The Fed will not support the stock market anymore.

In other words, the Age of Paper Wealth has ended.

And that means what’s worked well for the last several decades won’t work so well going forward. It’s time for a new approach…

-Joe Withrow

P.S. If the battle between the Fed and the Treasury piques your interest, we are actively tracking this story every month in The Phoenician League’s monthly newsletter.

We’ve already spilled tons of ink on the subject – about ten thousand words to be precise. And we’ll continue to do so going forward.

Simply put, this is the most important macroeconomic story of our day. Yet, very few people even know what’s happening… let alone understand it.

In The Phoenician League, we also talk extensively about how to position our investments in response to the major changes that are afoot right now.

This includes robust asset allocation and an intense focus on building passive income streams. And we have specific investment suggestions and a systematic process for going about this.

The Phoenician League only opens its doors to new members a few times each year. And our recent enrollment period ended last Saturday.

That said, we can still accommodate a few new members in the current cohort. So I’m going to make an exception and extend one final opportunity to join our network at a discounted price.

If you’re at all interested in our offering, just go here:

The Phoenician League Membership Program

You can use coupon code member25 at the checkout page to take 25% off of our membership rate. This will be the very last time we extend this discounted offer.

Let me tell you something, son. Never say you’re sorry to a potential client. Ever.

The year was 2007. I found myself in Great Falls, VA interning at a company that presented itself as a high-end investment brokerage. 

That image is what attracted me to the opportunity. 

Great Falls, VA is a suburb of Washington, DC. It’s consistently one of the wealthiest counties in the country on a per capita basis. And it’s surrounded by four or five of the other richest counties in the U.S. 

At the time I wanted to break into the world of investment research. And that’s exactly what the broker who recruited me promised.

The reality was the exact opposite.

The inside of this operation looked like a scene from the old movie Boiler Room. It was a bit dark and dingy. And there wasn’t a computer to be found. 

In fact, computers were prohibited. As were cell phones. They still wrote up trade tickets for clients by hand like the old days.

And there were only five rooms in the entire office. You entered through something of a narrow hallway.

Immediately to the left as you walked in was the conference room. The next room on the left was the president’s office… which was mostly just for show. He never came to work.

If you kept walking, the hallway would open up into our larger workspace. It was a sea of cubicles. They each consisted of a chair, a phone, and a small desktop. Then in the very back you would find the restroom and the compliance officer’s office.

I’m not sure what exactly the compliance officer did all day. But he was a self-described blue collar Italian from “Philly”… and he happened to also be the president’s brother. 

He’s the one who was scolding me.

Listen to me – you’ve got talent. I think you’re the next big thing in this industry. But you gotta grow up. Let me tell you something, son. Never say you’re sorry to a potential client. Ever.

My cubicle was right in front of his office. Which seemed to lack a door. 

He took a liking to me because I worked hard. I recognized at the time that he was just trying to give me what he considered to be good advice.

The problem is, it wasn’t good advice. 

Nor was I working at a high-end investment research firm. It was a chop shop where we made cold calls all day.

Still, that was quite a formative experience for a young guy who wanted to break into the world of finance. And I vividly remembered this story as I sat down to write to you today.

I planned to start out by thanking you for wading through all the marketing emails I sent last week. I figured I could say sorry for blowing up your inbox as well. 

Not because I don’t believe in the message I wanted to share. I very much do. But I also know that we are all bombarded with all kinds of messages every day… and it can be draining. 

So thank you.

Our launch for The Phoenician League last week exceeded my expectations. This was only the second time we have opened our doors. We’re still a new thing.

And to top it off, I received a kind note from a gentleman who joined us during our first launch last year. He shared with me some of the wins he’s had since joining our network. And he was very complimentary of the program we’ve put together.

We’ll open our doors again at some point later this year. I’m not sure exactly when it will be… but I’ll send out a bunch of emails when we do. That’s just what we have to do to get noticed.

Perhaps I should apologize for that in advance. Or maybe I should adhere to my Boiler Room mentor from Philly’s advice and stay mum on the subject.

Either way, we’ll start sending out weekly “infotainment” emails once again now that the launch is over. 

My hope is that these are short, entertaining, and informative. And we’ll put a link at the bottom of each email.

Sometimes it will be directing you towards our stuff. Sometimes it will go to somebody else’s stuff who we find interesting and important. 

But either way, our only goal is to provide value and an actionable takeaway. That’s the first and second rule of writing a daily newsletter. I learned them from my friend Tom Dyson.

And since I dropped Tom’s name, I’ll put his new research service in front of you today. 

He’s the investment director over at Bonner Private Research. It’s absolutely a contrarian take on the world of money, finance, and investing.

You can subscribe to their free daily e-letter on Substack right here: Bonner Private Research

In this fourth part of our passive income Q&A series, we’re diving into advanced strategies — from using options for cash flow to building safe, scalable real estate portfolios — all while protecting your wealth and simplifying your business structure.

How to get passive income from option strategies?

A. Great question. The best way to generate income using options is to systematically sell uncovered puts and/or covered calls.

For those not familiar with options, they represent a contract to buy or sell 100 shares of the underlying stock. 

When we buy an option, we pay a premium up front, and then the value of our option contract can go up or down based on how the underlying stock moves. BUT, our option contract gradually loses value over time as it approaches expiration. 

That being the case, sometimes we can lose money even though the stock moved slightly in our direction. That’s incredibly frustrating.

This is why I believe selling options is the way to go. 

Continue reading “Passive Income Q&A: Top Survey Answers Part Four”

In this third installment of our passive income Q&A series, we’re diving deeper into your top questions about building financial freedom with real estate, gold, and Bitcoin — practical strategies to create lasting wealth beyond the traditional monetary system.

How do we create financial freedom outside of the corrupt monetary system?

A. I love this question. It’s clearly coming from a libertarian angle. And in a world where price inflation is raging, it’s more important than ever before.

My answer here is a little bit nuanced. It starts with a strategic asset allocation model that includes both gold and Bitcoin.

I see both gold and Bitcoin as market-based money. Both are outside of the control of government and the central banks of the world. Nobody can duplicate or debase them.

Now, the powers that be can certainly manipulate the dollar-based price of both gold and Bitcoin. And they do. But if we hold both assets in self-custody, nobody can stop us from using them.

Continue reading “Passive Income Q&A: Top Survey Answers Part Three”

In this second part of our passive income Q&A series, we’re tackling even more of your top questions about building reliable residual income with real estate investing — so you can escape the rat race and create lasting financial freedom.

How Much Money Do You Need to Start Passive Income?

Q. What is the minimum amount that you can start with in your system?

Q. How to generate passive income when you don’t have a lot of money?

Q. How fast can you start making passive monthly income? Can I start with $500 and start getting $10 a month in passive income in the next month?

A. All great questions. 

Lenders require us to put at least 20% down on rental properties. So the minimum amount we need to start depends on the purchase price of the first property we want to buy. 

To quantify this, we have properties available anywhere from $80,000 to $750,000. We can get started with properties on the low end of that range for somewhere between $16,000 and $20,000.

That said, we also have alternative strategies we use to help us produce residual income streams while we are saving up for real estate down payments. I have used one of these strategies to consistently generate an annual return of 9.2% with no market risk. 

Starting with $500, you could earn your first passive income payments in the first month – then compound from there.

Continue reading “Passive Income Q&A: Top Survey Questions Part Two”

This is the first part of our ongoing Q&A series where we tackle your biggest questions about passive income, building financial freedom, and using real estate investing to escape the rat race for good.

The Big Picture – How Our Passive Income System Works

Q. Can you make the system clear? I lose my way in complexity… thank you.

A. If I had to describe our passive income system in three steps, they would be:

• Understanding the macro environment
• Building financial security with a diversified asset portfolio
• Generating residual income through a scalable real estate and mortgage note investing strategy

We start with an honest assessment of the monetary system and the ongoing macroeconomic climate. This provides us with understanding.

Then we build a strategic portfolio of reserve assets. This portfolio will leverage our understanding of the macro climate. It provides us with financial security.

And in The Phoenician League, we help everyone craft their own customized asset portfolio with specific investments. We provide consistent updates on our investments as well.

From there we build a passive income portfolio. We use rental real estate as our vehicle. The tax advantages are just too good to pass up.

We also get members matched up with ideal rental properties and all the professionals they need to manage these properties and their overall portfolio.

Our goal is help everybody build a passive income portfolio that throws of $10,000 a month in extra income. And we have a systematic method for adding the properties we need to make this happen.

How to Negotiate a Great Real Estate Deal

Q. How do you negotiate a good deal on a property?

A. We invest through a nationwide real estate network. The network’s brokers have relationships with new home builders and local rehabbers in every market that we invest in.

For the home builders, selling properties through our network is much easier than listing on the MLS and hosting retail buyers all day. They can simply move homes much faster by selling to investors.

The same goes for the rehabbers. Having the ability to sell into our network allows them to move properties consistently. That’s critical for their business.

As such, these professionals are willing to work with us on pricing and concessions much more so than they otherwise would be. Whatever they lose in margin, they know they’ll make up on volume. If they can sell into our investment network, that is. We have strict criteria.

Because of this, our network’s brokers can negotiate great investment property deals on our behalf. Every rental must produce strong cash flow and meet strict criteria.

Is Passive Income Really Passive?

Q. Is income truly passive? How much maintenance work is required?

A. This is a great question. Can income truly be passive? Don’t you have to do something for it?

From my perspective, our approach to building cash flow with real estate makes it as passive as it could possibly be. That’s because we have professionals in our network who handle every aspect of the transaction and property management for us.

That said, it does require a little bit of work. But not much. Most weeks I spend no more than ten minutes on my real estate portfolio.

These ten minutes consist of bookkeeping and corresponding with property managers. Of course I also go over the property management report every month.

We talk about exactly how to handle these items in our program.

Meanwhile, the rent checks just show up in the bank, month in and month out.

How Do Taxes Work with Rental Income?

Q. Will you include tax strategies so we can safeguard our earnings?

A. Absolutely! This is the beauty of using real estate as our cash flow vehicle. The tax code treats rental real estate extremely favorably. We talk about this a lot in our program.

By default we should not owe taxes on our passive rental income. That’s just utilizing standard deductions and straight-line depreciation.

We also teach advanced real estate tax strategies in our program for bigger savings.

Will Passive Income Bump Me Into a Higher Tax Bracket?

Q. Won’t I get put in a higher tax bracket?

A. Not with our approach. Real estate is incredibly tax-efficient. We cover how to use depreciation and other strategies to keep your overall tax bracket lower.

What’s the IRS Difference Between Active vs Passive Income?

Q. What is the difference between different types of income according to the IRS? And how are they taxed differently?

A. Another great question. This one ties in with the previous.

Please know that the great CPAs in our network would break down this answer in even more detail than I will today. But I’ll give you what I believe is the most relevant answer for our purposes.

The IRS puts “active” and “passive” income in different buckets. And the two buckets are isolated from one another by default.

Active income refers to W2 income and any income we receive from businesses that require day-to-day activity.

Passive income is income that comes from our rental properties, limited partnerships (syndications), and any other source that doesn’t require day-to-day activity from us personally.

To me, what’s important here isn’t the tax rate.

The key is that we can’t use passive losses to offset active income or vice versa. This plays a major role in our tax planning.

For example, let’s say our real estate generated $10,000 a year in cash flow. And with our deductions and depreciation, we show $12,000 in expenses. That wipes out our tax liability and produces a loss of $2,000.

We then carry over this loss to the next year. That way it’s available to us to offset future passive income.

This all may sound complicated… but that’s why we have great CPAs in our network. We don’t have to worry about any of this – our CPA firm will handle it for us.

Now, keep in mind that the IRS says we cannot use this $2,000 passive loss to offset active income. It can only offset passive income.

That is, unless we employ some expert tax strategy. There is a way to cross the arbitrary barrier and use passive losses to offset our active income.

This strategy takes some advanced planning. And it requires us to meet strict IRS qualifications. But to me, it’s the equivalent of modern-day alchemy for those who can pull it off. It’s an incredibly powerful tool to eradicate our tax burden.

I don’t have the space to dive into the details around this strategy today. But we absolutely discuss it in length within our core content in The Phoenician League.

Okay, we’ll leave it here for today. Please be on the lookout for part two of our Q&A series tomorrow.

-Joe Withrow

Passive Income FAQ

How does your passive income system work in simple terms?

Our approach has three steps: understanding the macro environment, building a strategic portfolio of reserve assets for financial security, and then creating passive income streams — mainly with rental real estate. We also match people with the right properties and trusted professionals so they can scale up to $10,000 per month in extra income.

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How do you negotiate good deals on rental properties?

We invest through a nationwide network of brokers who have strong relationships with builders and rehabbers. They’re motivated to work with us on pricing and concessions because our network can move properties quickly. Every deal must meet our strict cash flow criteria to ensure solid returns.

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Is passive income really passive?

With our system, passive income is about as hands-off as it gets. Our network handles all aspects of transactions and property management. Most people spend about ten minutes a week on bookkeeping and communicating with managers, while the rent checks roll in every month.

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Are there tax strategies included to safeguard earnings?

Yes! Real estate has amazing tax benefits. Used correctly, we shouldn’t owe any taxes on our rental income. Plus, there are advanced strategies to offset other forms of income. We cover all of this in our program and connect members with top CPAs who specialize in real estate.

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Will passive income push me into a higher tax bracket?

Not with our approach. Real estate is so tax-advantaged that, when structured properly, rental income usually isn’t taxed at all. In some cases, we can even use depreciation and other strategies to lower our overall tax bracket.

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What’s the difference between active and passive income according to the IRS?

Active income is your salary or business income you actively work for. Passive income comes from rental properties or other sources that don’t require daily activity. The IRS separates these two buckets, so losses in one can’t offset income in the other — unless you use advanced strategies that we teach in our core content.

P.S. Don’t forget that The Phoenician League is currently open to new members.

And for those who join us this week, we’re taking 25% off our normal membership rate. Just use coupon code member25 at the checkout page to claim your discount.

For more information, just go here: The Phoenician League Membership Page