today violence is once again flared up. and these are the images the world has been seeing from the streets of canada. operations room. itself. this is our own seat scotland does set to consider a break from the united kingdom on full independence after the country's nationalist party ends up with a majority of seats in the parliament. the european union's main lended germany business patients with member states that have received bailouts demanding straight source terrorism measures before they're offered any further rate. president obama has outlined his policies for the trouble that middle east in

a major speech it follows the introduction of new sanctions against syria which for the first time target the country's president. i was a financial situation in europe azzam stable is over it's the whole monetary system itself that could be at stake that's kaiser explains what's behind it all the kinds of forces that. keyser welcome to the kaiser report special in the same.

is in the us a great people i go to court to. court. yeah that's for a spring it stays here if there's ever well max this whole suicide banking crazy insane banking model is spreading to the entire world everybody is actually like a crazy banker headline reads south korean staged bomb blast to cash in on stocks and this guy obviously learned from hank paulson he was the best that this whole story this south korean man staged two minor bomb attacks with homemade explosives and so last week in an attempt to cash in on stock investments by affecting market sentiment police said they said quote he invested fifty million won or forty six thousand dollars this month and said he believed bomb explosions will send stock markets falling giving the concerns of terrorism after osama bin

laden's death well this is a huge issue this man has stumbled upon something very important markets are over leveraged markets are reflective of hundreds of trillions of dollars in leverage so yes a small thirty or forty thousand dollar bomb then. markets to crash because they are so highly leveraged by the professional hedge fund managers five hundred thousand dollars on nine eleven because of multi-trillion dollar collapse forty five thousand dollar investment here could cause a multi-billion dollar collapse this is not really this guy problem so much as the problem of the markets themselves they're all over leverage because of the fraud in the. the world but where is robert zoellick is robert zoellick and then the dominant transcona having a meeting at the world bank. how am i not. yet.

there's another quote from the policeman in the situation which is important to it to address because he doesn't take it as seriously people don't take these flash crashes and hank paulson holden the american population hostage we see no intention of political terror here at least and says the suspect was just trying to affect market sentiment again let me emphasize that due to propaganda they have successfully delineated between financial terror and political terror this is commingled into one global financial terrorist dominated global economy there is no political terror anymore there's no ideology going on political parties there are no religions there are no country boundaries there's only the market leverage and events to make the prices go where you want them to go this guy is the hank paulson

of the retail side he is you know basically you know the equivalent of hank paulson going into a liquor store not going over but he's the same mindset from the same other there sprang from the same domain extra. semen. well so here it's not political terror it's just affecting marc. sentiment so let's look at the head politician of the world see if this is political terror or just affecting market segment let's look at those head politicians headline reads obama says u.s. default may on ravelled global finances so is this obama doing the same thing so he's trying to get the republicans or will scare the population into convincing republican politicians to vote for an increase in the debt ceiling not that it matters apparently that you even increase it technically right well thread of blue and red balloons together would get the right color for obama to listen to you

could create the obama version of this yeah if you go crazy. postal over you have made poor made slaves there ok. go far enough obama is a financial terrorist just like dumb extra just like no no no the south korean police would say he's just trying to affect market sentiment and it's not fair or right sense of it not prices they don't even understand that sentiment drives prices well so now that you have you know the president of the united states going in front of the people via face the nation program on c.b.s. and telling them you better out the entire financial system is going to unravel unless you give us more debt well look at this headline barbie's the urges gold back zim dollar so this is the reserve bank of zimbabwe and their chief dr getting go know who's advocating for a gold backed zimbabwe dollar gideon gono yes well he made quite the stir when

he introduced the one hundred trillion dollars and bob way note it was right for inflation now they're the first into gold back yard see here's the thing according to game theory which of course drives to global economy in this highly leveraged cock the world if one country goes to a gold standard there's going to be a lot of money actually going into that currency it will force other countries to go into a gold standard both robeson. oh i remember once dr gono started printing madly before the hyperinflation that led to the hundred trillion dollars on the central bank of zimbabwe's website they actually cited the u.s. fed policy and bank of england policy of quantitative easing that they said they were doing the same thing well their currency has now collapse and now they're saying ok well everybody is going to abandon the us dollar because we know because we copy them and look what happened to us so now we're going to he says quote zimbabwe is sitting on trillions worth of gold reserves and it is time we start thinking outside the box for our survival and prosperity it's going to work i

totally recommend going to the voters i've been hoping that some country in fact does exactly this i thought china or india or brazil would be the first country to have the first mover advantage in this case first mover advantage is going to be huge because once you get on the gold standard people are looking around of currencies or like we're going to get a natural resource based currency all the zimbabwe dollar on them and this is going to bring huge amounts of capital into zimbabwe and then make them an international global player well ok and then some can look at zimbabwe and think ok they've had a hyperinflationary collapse there around by maniacs but then look at who else holds the u.s. dollar who's the biggest bond fund trader in the world max kaiser cucolo well they're in this next headline bullish on cognac yogurt and gold so fortune magazine interviewed pimco equities portfolio manager and good fein and she said quote the largest position in the fund is gold which we think is

a very good form of protection against what could go wrong we were encouraged by the fact that a lot of central banks especially in asia are big buyers we think that's an underlying trend that's very favorable for gold that's right although grocers names on over there are pimco. due to the way that. the charter that created it on he's not allowed actually to own precious metals but he's a believer in inflation if not hyper inflation so you would naturally think he'd be a buyer of gold so here's one of the satellite phones actually buying gold so now the circle has been complete pimco is pimping gold as he should be in this environment where the bond market will get creamed well there are also as gold and silver have corrected over the last two or three weeks that they've had big declines silver up to thirty percent there's been all sorts of shouting and screaming especially in the b.b.c. saying it was a bubble it's burst that's popped so what do these sort of people who do you trust

for example the largest bond fund trader in the world or the b.b.c. trust the actual people who are dealing with money day to day not the lackeys of to b.b.c. who are an extension of the corrupt government and after the hutton affair of course the b.b.c. lost all objectivity and they're in the pocket of those nasty number ten downing street operetta well and this goes on to the other thing so gold as i said fell back here is the headline gold coin sales reaching one year high signal no end to rally in history so this is from bloomberg another big financial news service the u.s. mint sold eighty five thousand ounces of american eagle coins since may first is the standard and poor's g.s.c. i index of twenty four raw materials fell nine point nine percent the last time sells reached that level bully on rose twenty one percent in the next year freedom is on sale as i explained on the show many times days in particular with the price

of server when it caught up to the prize of j.p. morgan stock price that there would be a huge turbulence because j.p. morgan is going to defend that price because they've used their own stock to collateralized against naked silver short sells just like enron use its own stock to try to keep the walls of the door and then eventually collapse the. david morgan stock will collapse to zero at some point so when it got to that price of j.p. morgan stock in the mid forty's then you had j.p. morgan pull in a lot of favors with the fed and the treasury in the global banking says and in the various sisters of deceit led by dion and tim geithner and they you know stage an attack on sober as they've done before but they can only talk of so much because what they've done is they've radicalized more silver buyers the silver liberation army has been radicalized by more of these attacks and so you've got a much wider base developing which will translate into a much higher amplitude and eventual target of five hundred dollars i'm sticking to

it's not just the u.s. mint that's all the record amount rand refinery which sells the krugerrands which myths krugerrands they also decorate month also u.b.s. had a record month in selling gold so but this is that big theme that we've said to focus on for two thousand and seven that's a collapse of the us empire which is the collapse of the dollar and you'll see that there's no getting around it and finally headline max this shows you without any doubt just like this pimco story that the dollar is ready to collapse and gold therefore will be the new currency j.p. morgan's hunt for afghan cold. to the mortgage what tell me more team of bankers starts to tap the country's vast mineral riches with help from the pentagon. so j.p. morgan capital markets are in afghanistan backed by the pentagon and they believe that afghanistan represents a gigantic untapped opportunity one of the last great natural resource front here is and they reckon it has hundreds of billions of dollars worth of gold and they're

in there to acquire that because they don't want to pay thirty five dollars an ounce or so over fifteen hundred dollars an ounce for gold they want to pay nothing they want to free they want to have the u.s. taxpayer financed the pentagon to go into afghanistan murder about. people destroy the civilization and kill the culture and steal all the resources that was a strategy in iraq with oil that's the strategy of the pentagon slash j.p. morgan slash goldman sachs around the world these two fused together now how somebody can argue that this isn't some you know bastardization of fascism i you know it's plain to me how this isn't fascism when you've got the banks of the pentagon fused together and the pentagon has bombs the country and the bank steals all the precious metals how is that how is that a sustainable foreign policy and how is are not going to lead to a social unrest and on kind. of to me listen this is goes in with the collapse of the dollar because all and the collapse of the empire the fact that the u.s.

is an empire the article states this wealth all these natural resources and afghanistan has lain there mainly undisturbed for thousands of years as armies of persians greeks mongols prinz russians and now americans trapped above invaders have dreamed of exploiting it since the time of alexander the great but no one has yet succeeded in a large scale i reckon the us won't succeed either us or the empires go to die before we go let me do my impression of scott when he arrives first first night in a prison cell surrounded by a bunch of hardened criminals moves. well buddy gotta learn some new tricks all right that's going to do it stacy herbert thanks so much i think you max when we come back much more coming your way so don't go away.

repairing a broken link. highway construction and humanitarian aid. but as she officials keep the spoils of war it's. the people who pay the price of. profiteering here is no longer just down to drug trafficking. afghanistan the dollars. and greet for the full story we've gone to. the biggest issues get a human voice face to face with the news makers. to . plug a magnetic eyes report time not to go to boston to speak with energy analyst gregor mcdonald of gregor dot com gregor welcome back to the kaiser report good to see you back so it's great to be writing on your blog you write paper vs real exit from

normal ecological economics and probably ballistic regimes in one chart well you've got all that in one chart the chart is the thirty year treasury bond versus the c.r.p. the commodity research bureau index tells about it tells us a couple of things first let's just note that since two thousand and two the u.s. dollar has expressed youth or in dollar terms or existed in terms of u.s. treasury bonds has lost about sixty five percent of its purchasing power against a broad basket of commodities and i just find that with this latest ramp up over the last two years in worldwide commodity prices in the global financial community there's a real reluctance to own up to the fact to face up to the fact that paper currency is losing its purchasing power against natural resources so i do think as it's starting off point it's worth just pointing out empirically that the u.s.

long gone has lost sixty five percent of its purchasing power against the natural resources which are all the things that we used to live every day sentence what year since two thousand to. the sixty five. loss of purchasing power against resources the stuff that you buy with that paper money for and the the d. x. y. the actual dollar index that people look at that has not depreciated sixty five percent since two thousand and two. so i think also what you're saying here is that there is a bit of a complete disconnect in terms of comprehension on the part of those who follow markets and follow economics that they look at these technical indicators like a dollar trade weighted index but they missed the big picture here that sixty five percent of purchasing power of the dollar's been smashed says two thousand and two and i take it the trend is not good either you know it's not and i don't understand

why so many in the financial community regard these types of comparisons as as arcane i mean as anyone who's retired or you know knows we all use our financial assets eventuality to command services labor resources energy food and so what the financial community has clever really been able to do is to talk about g.d.p. in nominal terms talk about corporate earnings and nominal terms talk about the rebound since the financial crisis lows of two thousand and eight in nominal terms but to avoid talking about these figures in real terms what does the s. and p. five hundred buy you know what does u.s. g.d.p. buy you know what do those corporate earnings buy you know they buy you a lot less of just about everything you need to run a business or to live in retirement so you know this is a of a reality that sort of you know behind the front page and of course we're starting

to see of professional professional money management we've certainly seen the first few professional money managers like the university of texas find gold we've got journey grantham it g m o in boston talking about the problem of scarce resources we're starting to see the first few escapees from the world of nominal and they're starting to face up to the world real. oh well another factor in this of is the percentage of income that people spend on food and energy now in the developing world that number is quite high they make very little money and a huge amount of it is spent on food and energy like fifty sixty percent in some cases in the united states and in other developed countries up until recently that number was almost negligible so due to the growth of the fianna currency period

after the one nine hundred seventy one and the ill and the income that was derived from the bond market and the stock market and the artificially inflated housing market this component of the household income was ignored but now it's coming back with a vengeance at what point does it do we start to see parity between the developed world and the developing world we're the entire world is going to be paying a lot more for food and energy on a parapet sue basis to use a fancy banking term well i love that question just a couple of things here if we look at the united states in aggregate. the drag on rising food and energy costs doesn't look catastrophic yet but if you look at the for the first three quintiles of americans in other words the sixty percent of of income of income wagers earners in the united states you're actually seeing enormous stress among those first three quintiles of wage earners in the united

states and when you get down to the first quintile new lower quintile you know certain americans are almost struggling against food and energy costs the with the way many other people or developing it all over the world not just in the developed world but in the in the in the developing world now the larger issue is the fact that as we move through this world we're we've got we're posting you know nominal prices by. everyone's living in a real crisis you know we see certain asset classes or salute we collapse in for example wait us house in the us housing got its first blow from the fact that it had been put into a bubble but now it's really suffering from the far with food in energy costs housing can't really recover in those conditions and so housing looks like it's probably one of the prime victims of peak oil and the fact that higher energy costs are basically raising the real living costs of everything in the system are let's

roll back for a second and talk about the three fifth's quintile cell just to put that end to a layman's term you're talking about sixty percent of the population is coming in to the point of contact with stress and in terms of the rising price of food and energy and the bottom twenty percent the lowest quintile is actually now you could say on par with a lot of the developing world who is struggling on a day to day basis almost of hand to mouth existence and this is creating in the eye states but social strata which seems like it's completely ignored by the political class nobody running for president for example addresses the fact that the economy is producing a permanent underclass of people who because as you point out due to the constraints in the energy industry constraining future growth these people will be in the lowest twenty percent in perpetuity because there's no way to climb out of

that permanent underclass given the restraints on growth that's tied to the restraints and oil correct is absolutely correct in fact we've seen the price of oil globally basically leave the whole tranche of people both in the especially in the developed world behind the price of oil is now of course at one hundred dollars a girl and it's basically left behind the poorer of the of the o.e.c.d. of of europe. of the united states these are people that may never really be able to afford oil again and you're right there is i almost call this emerging america it's almost like emerging market america where a certain portion of our society is unable to feed themselves their own able to afford gasoline we've got to an extraordinary number of people we're we're going to probably hit fifty million people on food stamps next that's in a country of six hundred of three hundred million people and you know supposedly the wealthiest nation on earth fifty million people not able to feed themselves i

want to talk about volatility for a second because this is something that i think is completely under the radar as the energy constraints start c.e.o. kick in and as countries start to actually hoard their own energy from saudi arabia and other countries that are oil rich they're saying we want to hold onto our energy we don't want to export as much as we used to because there's not that much around this is increasing the volatility in paper assets and we see huge volatility in the currency market talk about that relationship place what we have come to understand is that the steady ness and the consistency and the liability of industrial growth is really the driver of what allows paper assets to hold and maintain their value when you're floating paper assets which is either promissory notes of zero maturity like cash or or some other promise which is maybe

a ten year bond those paper assets are basically promising to the holder of those assets but there will be future industrial growth it would occur at a profit and the profit will be used to pay the coupons and it hey that paper us sets back and what we've seen is once we run into the energy limits ok and i mention a you know nine hundred centuries scientists named liebig who talked about limits within natural systems once we ran into the end. limits then paper us it's not only beginning to falter but now they become unstable they become wild but the forex markets are wild the foreign sovereign bond markets are wild and unstable and i see very dim prospects that any walder of a chain your u.s. treasury bond or a fifteen or thirty your newest version will be repaid in any sort of dollars or any sort of paper capital that will allow them to go out and purchase the food and

energy that they need you know which is this is supposedly their savings and so a one time max paper assets worth secure place to store your capital they are no longer a do still have a group of rent seeking predatory in the banking industry who know that this volatility is real and they know the causes of the volatility but their answer is to put on a volatility spread on the volatility index they'll buy the put and the call simultaneously and they'll pay for the spread and they'll let this whole market and ecology collapse knowing that the volatility itself will generate returns for a van and this predatory class is really. in charge of not only milking the system necessary capital but to what extent are they actually adding to the volatility gregor mcdonald well you've heard the expression i b g y d g which is all be gone be gone it will be gone and that's sort of credo of the

short term. you know will buccaneering. trading capitalist who's not interested in extra analogies in the system is not interested in future risks basically just wants to play a current volatility in bank short term profits and of course you know this is sort of the tragedy of our system we really do. you need to have the political complex and the financial complex working more in concert to address longer term issues if we were addressed longer term energy issues climate issues environment issues it would bring down volatility but since we're not interesting those we're in hansing the volatility we're almost in hansing the volatility just by the fact that we refuse to deal with these large long term pressures that we need to face all right great only tunnel thanks so much for being once again on the kaiser

report great to be with you max and have to afternoon all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert my guest gregory macdonald gregor thought you ass if you want to send me an email please this so it kaiser reported r t t v that are you until next time this is nice guys are saying by al.

can. keep. walking.