welcome to the kaiser report imax kaiser with stacy herbert stacy i want to talk to you about paul the psychic octopus because i think this paul our octopus is headed for a severely disruptive end to an otherwise illustrious career to just say that he's worth millions now this is because his. his value on the prognostication market is skyrocketing having predicted six or seven wins during the world cup. now some lunatic hedge fund manager i'm sure will pay millions for paul the psychic octopus and of course a part of the work picking stocks and of course will be a reversion to the mean meaning that is stock picking prowess is prog must

a gate of ability will deteriorate quite rapidly and this crazed hedge fund manager will probably take a an axe to paul the psychic octopus and whack whack whack you see this what does this tell us what do we learn from this that the government should not be giving taxpayer money in bailouts to crazy wall street and hedge fund bankers you see he's a victim of the bailouts paul the psychic octopus max actually reuters video if you look in the background here if you don't need to listen to this guy he's a banker in london or he's got this tank here for paul the octopus he does have an offer out parallel to hire all the octopus but along the same line and you mention that the u.s. destroying the global economy i posit that they're actually destroying themselves faster and this headline really captures it all ha ha ha ha ha our i am a paid its lawyers more than sixteen million dollars in two thousand and eight to recover

only three hundred ninety one thousand dollars now this is actually better than the previous year two thousand and seven where twenty four point five million dollars was spent recovering just five hundred thousand and the three years are i a which is the enforcement arm of the global record music industry they spent sixty four million dollars to recover one point three million so this seems to me like the global how the us empire operates it's a corporate welfare empire of prisons and war and it spends trillions for it like nominal gains of just like twenty billion dollars for profits for say an oil company they lose money on every dollar they spend but they make it up on volume. seems to be it but the king of all of this isn't the headline paulson likes what he sees in overhaul. that paulson that paulson your friend hank oh

oh oh the children the forward treasury secretary who orchestrated the heist of congress when he held it up and said you know give us seven hundred fifty billion dollars there's going to be martial law and we're going to crash the markets well he likes the financial reform bill now going through waiting for obama to sign he said unless you believe that the big financial institutions or intentionally trying to blow themselves up. they were able to spot a number of the issues exactly they are suicide bankers where you said that since the very beginning that they were intentionally trying to blow themselves up and obviously he's been watching you tube i think he's been watching all your videos of the notion of guilt but i don't he's a suicide banker he's a banking jihadi in other words he's got a flawed fundamentalist belief in the belief that markets somehow are going to do god's work as lloyd blankfein c.e.o. of goldman sachs put it and of course there are suicide bankers they will float

ideology and they're going to blow themselves in the world economy if this is the mission of guilt by hank paulson he should be thrown immediately into jail yes i believe it was a freudian slip as we talked about recently in the keiser report but what's so well hank paulson is out there pushing this financial reform and you know that when a former c.e.o. of goldman sachs is pushing for the population to get behind a particular financial reform it's most likely not the people however max they're obviously watching because their report because they're too smart here's a headline wall street fix seen ineffectual buy for a five and us yes four out of five americans surveyed for the bloomberg national polls us month say they just have a little or no confidence that the measure being championed by congressional democrats will prevent or significantly soften a future crisis forty seven percent say it will actually do more to protect the financial industry than them yes the chokehold of the racket the syndicate the mafioso's washington and wall street is getting stronger yet well it's also getting

harder to defend and the people are getting very very smart here's a seventy year old retiree from nelson ohio lenore critser who says quote banks and the governments are making out not the ordinary person we're going to have another crisis and worse the next crisis will be much worse let's be clear about that the crisis of the two thousand two thousand and seven period. is really just a harbinger of a much bigger collapse to come because of this watered down ineffectual financial regulation which actually removes some of the regulations that were in place when also concentrates more power into the federal reserve bank they're going to be in charge of this consumer protection then why is that destroy the consumer in the first place absolutely i mean the federal reserve bank is a parasite that just leeches integrity tax dollars in interest payments from

hardworking americans same as every sunday banks around the world are nothing but parasitical leeches and then you've got a huge commercial bank like j.p. morgan and their six hundred trillion and derivative contracts that's like a. pool of interest payment tax leaching sucking the vitality out of the economy bankrupting millions causing wide scale poverty because there are plain old joke sparrow. but speaking of the federal reserve this is another thing being voted on by senators in the next few days is that they're voting on three new fed governors obama has nominated and i want to check out this video it's grant discusses potential new federal reserve governors this is jim grant of grant's interest rate observer these are people who. think we're unlikely to oppose novel solutions to our fundamental monetary dilemma which is that the u.s. dollar is the face based currency of the intrinsic value that is manipulated by the

. consequences the glaciers are often quite distinctive quite different from what was intended that's the problem there let's focus jim grant's words their faith based currency what is the faith in this case it's a broken ideology of neo liberalism and neo keynesianism which has done remarkable amounts of damage that's part of the. really ideology goal destruction that is wreaking deeply into the economy james grant knows it and he's got a really cool balta. he does that he's going to much cuter boats then jim rogers you know jim rogers both sides kind of sloppy but this is important to talk about is that he's talking about the fact that it's the federal reserve from whence all of our financial fraud exists in the world from inflation to

deflation that follows the inflation to a situation where of too much debt in the system well absolutely there's the u.s. before the fed came around in one nine hundred thirty they could issue their own money and it was backed by gold and the economy did fantastically well they could issue money that was not debt every single dollar that is that so debt is also a big story in united states deficits everybody's introducing austerity measures all over the world here's a big headline deficit fraud g.o.p. senator extend the bush tax cuts for the wealthy even if they add to deficit but don't pass unemployment insurance if it impacts the budget so he was interviewed on fox news this is john kyl minority whip are you going to pay the six hundred seventy eight billion dollars just on the tax cuts for people over making more than two hundred thousand dollars a year you should never reduce taxes in order to cut taxes surely congress has the authority and it would be right to if we decide we want to cut taxes to spur the

economy not to have to raise taxes in order to offset those costs you do need to offset the cost of increased spending and that's what republicans object to but you should never have to offset the cost of the deliberate decision to reduce tax rates on americans you can't increase the deficit by thirty three billion to extend unemployment benefits without increasing. oxes he's saying but you can keep the bush tax cuts that did more than anything else to increase the deficit under bush because he cut taxes without any corresponding cuts in services and it's actually increased them because what is war but a welfare racket that's right you know america could solve this problem by creating a website called american slaves dot com just simply dial in and you have all these cheap labor at your disposal and they could reboot their entire economy but go back

to this idea of the deficit doesn't matter if it's for a war it's that what we were talking about at the top of the show with our ira sees no problem spending tens of million dollars in order to terrorize little kids around the united states and order to extract a few pennies and the same thing here with the republican party it but you know many of the democrats as well are all for war and imprisonment even though it makes no sense economically it is financial suicide it's economic suicide it's suicide for the nation they'll continue to spend it because these deficits for some reason to them don't matter as long as you're killing somebody well this is the problem the currency. you've got the ability for the elite the power fall in the country to believe that the dollars the current turn that they whole is somehow in titles them to different rights and privileges then the currency held by the lower classes and this and the permanent underclass of america and the valuation is completely.

spurious it's just something that's pulled out of a hat there's no real accounting methodology for this whatsoever it's just a lot of powerful people saying our money's worth more than your money is a way to discriminate against the poor by saying our dollars are somehow greater in value than your dollars if you had a real currency based buy something real like gold then you'd have a democracy you'd have egalitarianism you'd have a republic you'd have freedom but unfortunately none of those things because you have this trashy piece of paper. no good make idiotic peeper paper nonsense that people believe is worth something when in fact it is not exactly well that's what jim grant is saying it's fake currency anyway so people are it's i believe this republican versus a democrat oh deficits matter don't matter we were deficits didn't matter under dick cheney when it was for a war class war there's no economy other than class worn out america well stacy herbert thanks so much for being on the kaiser report thank you speaking of gold when we come back i'll be talking with ben davies there's a fun about

a tour in the u.k. as a big position in gold and has a big price target for gold so don't go away stay right there on the kaiser report . good for almost to see. you lose two superpowers. to. the skins congress. worries which are made to police children.

in the city is. worse than the. security again. welcome back to the kaiser reports i'm not a go to the london to talk to ben davies director and c.e.o. of high end capital welcome to the show ben davies thanks very much like the right been the run of gold fun why has gold risen so much in value and i you sticking to your target of thirty six thousand dollars an ounce. question. gold is rising because there is a mass to produce one of the global currency is around the world. central banks of . governments of moved on a policy of monitise ation and fiscal imprudence in order to socialize

all the losses in the private side of the bag so to so in order to to allow the banks they needed to find some money and unfortunately that wasn't very forthcoming so they've had to create the consequence of that is that people understand the money is becoming gradually or actually rather rapidly worthless as a consequence there is a growing move into gold so when people talk about a bubble brewing and gold i think they're very misguided in actually what we're seeing is a bubble in paper currencies all right now when you talk about the government creating lots of paper in the u.k. it's just been reported that the government has just closed and they found magically many more trillions of dollars in bad debt that they didn't have or do existed as early as two weeks ago so isn't part of the problem here in terms of the scenario going forward that all the money that's being created it seems to be even

more bad debts suddenly appear out of nowhere and then there result in fact is the situation we have today which can be described as deflation clearly as as under threat of being fishes deflation sonority as you have income but debts and they become realized and you have a deal leveraging of the system there is a demand for currency which would be counted sure to the amount of currency those being created on the other side but the policy response this time and considerate probably to continue particularly with the united states and probably what we're about to see with regard to the european financial stability facility i think there will be another shock and or process where we will see more school. priming and we will see more monetized ocean and as you say the more you leveraging is they really have very little choice open to them they can either go down the route of an

explicit default which is just not possible if you are one of the reflected when you go down an implicit route which is to reflow the system so yes they have a fight on their hands and they're going to have to constantly manage reflation versus this as you call it deflation but i would add. the you have to be very careful how you define inflation and deflation deflation or inflation is really related to money supply if the money supply is increasing you have a symptom of which is inflation a rise in the price of goods that is the definition so a collapse in money supply leads to what you call deflation although the money supply is reduced somewhat globally it's still probably runs at double digits so i don't see deflation in the terms that you express it i guess is a moot point ben davies because what you're saying is that at some point when the

deal leveraging process and there is going to be a ton of cash sitting there and the inflationary genie will be out of the bubble so we could say that gold is telegraphing a point time or inflation becomes a dominant factor even though today. just to be technical the global economy is experiencing deflation now let's talk about manipulation and the gold and silver prices who's doing it why are they doing it where are they doing it and talk a little bit about the problems with physical delivery london billing markets association etc ben davies tell us more. is this is a fascinating to post topic and it brings both sides of the debate out to the four year old those who are against and to. those. belief or hardly the i lie somewhere towards the middle but perhaps. beginning to lean more and more

that the market is definitely saying suppression that was evident to me in july way to november of zero eight particularly in the paper market. or a third of the paper market i mean max and perhaps the o.t.c. unallocated accounts but when you look to the k.-max behavior it would appear that a couple of the commercial banks had taken egregious short positions which was amounted in so over particular to almost one hundred forty percent of the annual mine supply now to get the kind of limits that you would need to that i would suspect that you need a bit more. vall or margin capability than was was available particularly and the deal leveraging environment so that. a warning to me to some extent what concerns me in is that there is a fractional reserve system occurring in the album a market whereby for everyone else that you believe that you have as

a claim on physical assets i don't know what the number is and there will definitely investigating that but it would seem that multiples of that have been lent out and so that if you were to take. trying to arrive at a wholesale claim of your physical assets you know it wouldn't be possible to take delivery so to come back to your you know your question i do think that there is some manipulation the market i do think there's some intervention potentially by government. organizations i think that is evident in every market i mean after all the hong kong monetary authority very openly intervened in the equity markets back in ninety eight but i think the difference here is that it's not transparent and that flags warnings to individuals ok so you've got a few. x. on the ground here j.p. morgan in new york purportedly short something i thirty thousand silver contracts an enormous position in the commodities market to have and they bend

a story as for keeping the price of silver artificially cheap you've got andrew mcguire in the u.k. whistleblower on the london billion market association testifying to gary gensler of the c f t c talking about leverage of one hundred to one on that market physical being collateralized or speculated upon with paper bets one hundred times greater than any possible so over in the vault and also you know going back a few years some would posit that gordon brown's sale of half of the u.k. gold supply at the absolute low price for decades had a lot to do with trying to meet short positions in this artificially goosed short precious metal market as a as again a way to support the fear of currency system which is a system that not only has brought us a bankrupt economy around the world but has also fed the financing

needs for the most ugly aspects of our society and i'm talking about the war machine in the u.k. in the us the ecological devastation we're saying but then of course we're getting more into a political arena and i want to keep this more on the economics now the biggest story the gold story the past week has been the news that european commercial banks are reportedly engaged in gold swaps with the bank of international settlements ok top talk a little bit about who that be i s's and a little bit of others gold swap story please the rewind slightly. but prosper. so to go to in order to to me growing short from swaps loose gold i think a lot. i mean i do find it interesting that the c.b. them announced. by giving them some. it's to do is series was i believe there were seventeen over the next three years for four years i think ninety nine to two thousand and two police to be who probably. a legacy to the been this bank who fell

first hand the republic hyperinflation and understood the value of sound finance and gold as a consequence they came in proposed the c b j the central bank gold agreement and also the gold spike and i think that was trying to limit the. so i don't think every central bank is complicit to move on to be i.r.s. and. central banks the b i s is the central bank to the central banks and they have a mandate they can do financial transactions with those central banks they also can if you look within the statute they can transact within the commercial banking sector as well so in regard to the ice cold swaps now what is a swap swap is a transference of one asset for another in this case it is gold for foreign exchange reserves to all intents and purposes it's not much different from

a loan or a repro repurchase agreement but typically swaps occur from central bank to central bank whereas repo is from. a commercial bank to a central bank so in this case it seems rather odd that you'd have a commercial bank. giving gold to almost what bases to the buyer what would be the purpose of that and what got the imagination really foreign for people is that also there's a lot of problems in europe and rumors were abound the perhaps is in some ways some liquidity provision for the central banks and perhaps that why the bias was you know really want to come out and say no this is not central banks well there's no issues with the central banks and this is really just a commercial transaction well the reality is no commercial bank has that. much gold they have very little gold on their balance sheets and when we talk about commercial banks in this case on i suspect there's

a berlin bank so what i think has probably occurred is that the commercial bank has just been the facilitator for the swap i could go so far as to say that it's some new type of swap agreement it could be some tripe parts agreement whereby the gold is affectively. transacted through a swap via the commercial bank to the bay i.r.s. what would actually occur is that when transference of gold and the gold remain within on the central bank book and it is accounted in that in that manner whereas at the same time the bias would hold it but hold it within an unlikely allocates account at the bullion bank so there's a form of double accounting going on there why would they want to do that i don't think it's a liquidity provision fourteen billion is not relevant possibly when the crisis first brewed with greece we were talking about thirty billion euros maybe that would have gone some way to help them maybe it was nice to be swap i don't think about this case i think it signifies something more about the gold market itself as

we've talked about earlier there is clearly a growing disconnect between the paper gold market and the physical gold market and i would suggest the bullion banks are finding it difficult to provide the amount of physical gold. to the market and there's been a lot of allocated accounts initiated of light so it is possible the central banks have effectively for want of a better word least or provided gold to those bullion banks and short they wouldn't cause prices to go down but it would probably arrest prices rising as we saw initially with the downdraft but actually going forward this to me is reminiscent from everything that happened in the gold pool one hundred sixty five to sixty days when there was a two to market year splits away and the us was trying to sell gold into the market to keep it at thirty five dollars this is rehman very reminiscent or was it

different there's no fixed peg as them but and it's a free float now in theory but i would suspect that there's a bit more to the maidstone alright let me just summarize. you've got the bank of the national sentiment the central banks around the world that. mercial banks all operating together in this market so you can't really call it a free market because there's a wide scale collusion you've got to be accepting swap or paper as a way to somehow make it easier for the accounting on the commercial banks side to take into consideration the fact that their balance sheets are falling apart in real time and the net result would be some of that what we saw in the gold pool back in the sixty's which is an attempt to keep the price down which failed then and will probably fail now is that a fair summary there is a grace and also that i don't think the commercial just affairs right down through the commercial banks balance sheets are in fragile but i think they have an issue with the gold sword yes all right ben davies thanks so much for being on the kaiser

report thanks very much for already that's going to do it for this edition of the kaiser report i want to thank my guests stacy herbert and ben davies if you want to send me an e-mail please do so at kaiser report at r t t v are you until next time this is max kaiser saying by all. rights. from plans to. screen stone totty don't come.

to school with the same canary to tony peach twitter. this is only communicated. to trying to say. can we do couture in which. you can. if. you. and i get investors all supernatural. as the world's richest nation is blond to cut spending in the bottom again states teacher the financial crisis demonstrators as a major international conference on the disease and yet demand universal access to

treatment the united nations says funding cigarettes in the recent progress made against the disease which has killed around twenty five million. corporal punishment in indian school this comes and discouraging news for the suicide of a thirteen year old boy reveals that the pain still rules some close rooms this kind of print has been banned in the country parents are not calling for criminal penalties for teachers and these thing pupils. this says in five years since the two cold pool superpowers came together even though it was in space they don't play all those soviet so use and the market up or those spacecraft to get a more complex here in the twin the to me volatile country. and there's the headlines now dolphins and why did whales well then dispute stalls of russia's aquariums find out more about that live buzz in the wild and among people at our special report up next here on.