and yet.

today violence is once again fled. and these are the images the world seeing from the streets of canada. for racial surreal. kaiser this is a kaiser report you know every time you spend your money you increase the debt in the globe which decreases your purchasing power that's why you're going broke that's the word they love out there but there's a new dimension now a new way for you to go broke it's called zing of dollars we're going to find out all about it but first let's bring in the lovely the talented stays here max all my

headlines today have to do with this sort of neo feudal gulag casino state the first headline reads the european gold confiscation scheme unfolds european parliament approved use of gold as collateral according to their press release yesterday's unanimous agreement by the european parliament's committing on economic and monetary affairs e-com they go by to allow central counter parties to accept gold as collateral under the european market infrastructure regulation and near another word for king is further recognition of gold's growing relevance as a high quality liquid asset of course you know the history of this is they outlawed gold for a while they try to bring in money which was as good as gold and now that they've

discovered that the money is bogus there's got to passive diverging number one they are reminded thais involved are trying to bring it back into the system but they're using all the money that they've created willy nilly to use that to acquire the goal of various states like greece for example which has one hundred eleven tons of gold they've been told now that. there's goal can be used to settle the debts that they themselves do not incur these are debts that were forced upon them from outsiders and now that they can't pay the debts that they had nothing to do in creating the outsiders are saying well we'll take the gold so that's a really great deal. exactly i mean even in their quote max from their press release it's a recognition of gold growing relevance as a high quality liquid asset this is this is a currency that has been around for five thousand years and it's been excepted for five thousand years or so you know suddenly is growing in relevance but it looks

like we've been playing basically farmville for the last thirty forty years since the beginning of a total global figure out currency world and we've all been incurring this debt like thinking we're getting away with something for nothing we're getting free lunches and now they're like actually we're going to take this gold well another thing that's growing from the relevance is the price and as the prize goes higher it's becoming more relevant i wonder how that happened and so just to note that this is of course to get the gold of greece spain and italy in portugal greece has one hundred eleven tons portugal has three hundred eighty two tons spain has to mention eighty one tons and italy has two thousand four hundred fifty one tons so speaking of gold that's my next headline gold farming in a chinese forced labor camp it's not the physical gold you might think gold farming is actually they force these chinese prisoners to play multiplayer

games amassing credits and virtual objects then the prison guards are forcing the chinese slave labor to hand them the virtual credits that they've gained in various games around the world whether it's war world of warcraft or form bill and carry them to the prison guards who then sell them for real cash right this is the beautiful thing about these. dollars farm bill dollars as i explain to the top of the show when you spend your money the a levels of debt in the world grow which has the effect of reducing your purchasing power it's called inflation you're getting poorer every day because you keep spending this money that's backed by ninety nine percent debt that was then the dollar or a formula dollar is backed by one hundred percent of nothing and the more that use time you spend on farmville or the more of the overall money that's in circulation is the base by

a quantum leap more in terms of the basement and you end up in prison so these chinese person or two are forced to play zingo farmville games to amass credits that are being passed to their prison masters people in the us hold they've in fact of league check themselves in to their own hole in prison where they are playing on the dollars and farmville creating massive amounts of this of this new fee virtual currency which is the basing the purchasing power and this is same thing as collecting into prison they're taking their hard earned money that they earned doing menial jobs is ninety nine percent and they're exchanging it for virtual money that's one hundred percent bed well to go along with this headline max about the gold farming headline reads farm ville heard lined up for market is the plans some are flotation so it's millions of users stump up real money i.e. one point eight billion dollars worth last year to pay for

a virtual couch as they play online phenomenon. the ploughs in the cows and the artifacts of farmville are virtual representations tied to the cost of electrons of which there is no cost and it's infinitely reproduceable so you're taking again your labor the. you're getting ninety nine percent that back to be out of money for a mere slopping it for a virtual currency that's deep based on the currency again driving all of your net worth down into the prison level where you are to live thanks to zenga dollars and farmville the new prison motif taking the walt disney dream of a perpetual amusement prison to extermination point of ultimate imprisonment well so we're on the glue. when the glue factory a lot of the horses in these virtual farms are made into virtual glue and they stick them together and they create virtual glue sniffers and they get high on

virtual glue sniffing men from virtual horses talk about a virtual nightmare that's one of the worst i've heard in the last fifty seconds well we're on the global casino gulag model and this takes me to the next headline you actually wrote it but you have such a good picture here on this headline i had to use that global flash crash equals splash crash so i remember the flash crash of may sixth two thousand and ten first message parents attack on a terrorism yes when that was a stock market collapse. sharply a thousand points of doubt and then back up well they're now warning about a catastrophic splash crash a dislocation by high speed trading computers that could simultaneously slash across many more asset classes and markets so it wouldn't just be the dow it would be the sea and the gold market and the oil market all splashing at the same time so

you have all these markets around the world big markets oil gold currency markets all going through enormous volatility and computer driven as a way to again keep the population completely outside of having any chance of amassing any sizable net worth that would give them any political power to stop the transformation of their economy and their political systems into the casino model that we now seizing and these other i.p.o. floated companies thanks to goldman sachs the ultimate arbiter and purveyor of the currency virtual currency nonsense of gold gold. non-sensical not economical nonsense well the machines these high frequency trading machines typically hold the stocks for two to seven seconds realize a portion of a penny profit and repeat the process over and over the pennies accumulate into

astronomically large heap estimates of the unregulated secretive industries profits for two thousand and nine ranged from two billion to five point six billion in profits seven seconds or almost longer than thanks dominic strauss kahn to read some names there that's obvious there coming from max kaiser but we're talking about high frequency trading i want to say that these are as the article points out you know these are not something that a mere mortal can scoop those millisecond fractional arbitrage is so what sort of market is this where it's it's just machines trading against each other the machines are in charge as we've been warning about for quite some time and the people at these banks they don't actually work for a living they just come into the office in the morning they see how much money the machines of raped out of the global economy remember goldman sachs in the high frequency trading scandal from last year it was estimated that they steal one hundred million dollars every single day through high frequency trading it's an old

scam on wall street you put on a thousand trades at the end of the day the ones that are winners you take the ones that are losers you give to the pension the towns out there that are now suffering and people end up with nothing and they all end of course face down in the mud flying casino game for farmville so part of the the splash they envision is that they all they all have their own unique algorithm and some of them are tied into things like twitter so they'll be looking at like any breaking news in a fraction of second they try to get in front of it so and you also know that twitter is totally manipulated as well the trending topics from a lot of people put out fake celebrity death notices so the same thing as a splash crash could be. caused technically by somebody putting out a fake tweet but not only do the machines read the news and then react to the news but the machines can also write on it in a way that they believe will affect prices to create arbitrage opportunities and manipulator profits on any given moment well as the machines are trading against each other one of the machines could technically write a tweet

a hoax tweet in or it to manipulate one of the other machines and we see that similar in the next headline. c f t c charges the oil traders for puking on market so james dyer and nicholas wild goose forward b.p. traders who were working for oil trading house arcadia upon were charged for a scheme to hoard oil make a load of money and then go put it in in a never double puking according to e-mails acquired by the c f t c well then the inevitable puking is known before hand because the system is so highly leveraged we're talking a leveraged ten thousand to one twenty thousand and one and they know that at certain points that the system will automatically puke out positions because they're allowed to continue with instant insolvency for half the global economy it's kind of like watching those japanese sex robots have an orgy and then all of

a sudden they run out of electricity i've never seen that but this scheme happened between january and april two thousand and eight the sea f.t.c. complaint alleges that by mid january two thousand and eight the traders had accumulated four point six million barrels of physical oil or two thirds of oil available for delivery against the february w t i futures contract and by march they had eighty four percent of all of a valuable for delivery and then they dumped it on the market and then they left the market but the profits they made were fifty million dollars so this just shows you this is another theme we pointed out is that these guys take down a fifteen trillion dollar economy for fifty billion in christmas bonuses so it's a it's it's the opposite of how we have to encourage more and more debt in order to have one dollar g.d.p. growth the same for the way down for these guys to take profit from destroying the economy they need to make the collapse bigger and bigger and bigger no question it created a financial cuisinarts they take fifteen trillion dollars economy and they dump it

in the quezon are and then they hit chop. and then what's left. you know they sell far you know what their personal scavenger you know the country thanks eric thanks so much for being on the kaiser park and thank you max that's going to do it but don't go away because much more coming your way stay right there. that are killing us here well as a. supply side that's never around say. a song called still with me are i think garbage every day. from the memories. i have so much so long time.

i was ashamed. i was ashamed that i didn't. i was ashamed that i hadn't a clue why i got my arm i got my legs. in the my. car i would be out of knowledge i was a boy. now believe what i was going on once or i think. that i was a book so. most older on the other side and i think i'm just a good. i

welcome back to the kaiser report time now to turn to economist john mcdonogh sees a former c.e.o. hushmail he's a former chief for extra visa he's also a blogger and monetary future he's been writing about bit coy we lately so we're

going to talk to him about bitcoin john but tell us welcome to the kaiser report thank you max good to be here all right so what is it going well to start off. initially how i got interested in this i've like to just take a step back and say that as a society i think that i believe that we can do better then centralized monetary planning and the basing the currency as the central banks are as have been doing ok that's a recurring theme on this exactly this is why we really want to dig into this big point story is getting a lot of press lately so take us through what's going on here ok the beard at the very basic level bit coin is a peer to peer distributed electronic currency when you say p.d.p. peer to peer i think music file swapping and there's computers and they have music on the computers and the computers are able to swap files of music p.d.p. in this way and they made famous from napster you know napster was

a very few became very famous and bit towards and bit torrent it torrents for movies ok so you're now this is being applied to currencies right now it's being applied to currency so you can think of it as bit torrents for movies applied to currencies you can also think of it as p.g.p. encrypted email p.g.p. for money there's another way to think of it people know about pretty good privacy for email like p.g.p. is an encryption technology that that's readily available readily available now it wasn't at first but now you can have and to and secure email rights to take us a place to a transaction so i normal transaction using bitcoin on the web so how would i as a consumer. how do i how do i interact with it well as a consumer you would initially download the bitcoin client and you would do that from bitcoin dot org it's open source software and the currency is not centrally managed it's not the it's not centrally issued and the transactions aren't centrally verified all of those tasks are performed by the collective nudes of the

network so it it's almost like a headless mob where there is no central direction and that's beneficial that's what you want the main thing ok so i download the client other bit a bit calling dot org which which now i am part of the network so now you've downloaded the client you have the option either to generate coins or to perform transaction ok and send so i can either generate coins or i can be involved in a transaction using these coins correct correct ok so let's let's put aside generating the coin for a second because there is some jargon there we're going to revisit but let's just talk about it transaction of the transaction side how does that work the way the transaction works is you would either have to receive or send coins so let's assume that you already have some coins ok and that you either purchase them or where they were sent to you what you've done when you've downloaded the client is you've generated your own public private key pair so you're able to sign your coins and

then you have a public key like you would for p.g.p. that you put out for receiving your court ok so i purchased these because if i can purchase them with my dollars by u.s. dollars so and there i presumably there's some kind of exchange rate the exchange rate currently is around six or seven u.s. dollars for one declaring and that's floating i would imagine it's twenty four hours a day it's floating rate right so it's a floating rate depending on various online demand just like any four x. just like any currency there it's it's floating on the exchange based on supply and demand exactly exactly i mean overall though i do think the exchangers are one of the weakest links in the chain just because that's. where the rubber meets the road in terms of converting these so-called math puzzles ok into actual national political currencies ok so that you're saying the exchange mechanism or not is not as robust as it could be because because of the puzzles that go into creating the exchange rate mechanism what i mean the math puzzle is just a it's just

a slang term that i use for the digital token you have to remember it's a digital bearer token that i'm sending you so it's like if i were to scrunch up a casino chip or one hundred dollar bill and shoot it through the broadband connection it would shoot out your internet here and you would have represent to you would have the value when you lose bitcoins they're destroyed you can't get them back and just like when you burn a dollar bill that hundred dollar bill is gone from the system so that's what makes these so unique and different is that it's not just a counterparty trade like with pay pal it's a digital bearer token that you can actually send to someone over the internet and we haven't had that before on the internet which is a lot of what a lot of people miss in this red digital pair or coupon or digital birth certificate rights like a bear or certificate like a bear are gone and we most frequently see that term it's it's not made out to anyone specifically its own like a dollar is not does not my name on it correct it exists because of the generation

that you went through on the cryptographic side but pay pal is has more it is a barrier in the sense that i'm using to name the e-mail disappearance and they're making across not only is it rare but it is subject to reversibility and has up to sixty days when they can reverse transactions with with bitcoin you have one hundred percent transaction irreversibility so it really is like cash on the internet ok so it's anonymous in the way that dollars should be however cents they the non digital economy is becoming more. dominated by electronic payment systems that are tied to databases and being identified constantly in fact those transactions are not really as anonymous as people think or would hope that they would be or as a big point electronic transaction peer to peer they ever note the central essential lies is in fact anonymous absolutely it has the potential to be anonymous

now it's all how you structure it it's not one hundred percent anonymous for the people who don't know how to use it and structure it right because you can always look at the block chain in the transactions that have happened you might not be able to associate goes to the people but if you're careful in how you use coin you can't you can make it in nominees for yourself ok so. it's the centralized and what you describing this p.d.p. network is a community that is almost self regulating and it's in their interest to make sure that every piece of the transaction is running smoothly similar i guess you could say what we see in the open source movement with software projects like linux where the community is contributing code to the linux operating system in their own self-interest and there's no reason not to contribute the best you could to that system because you used you you yourself used that system precisely they're coming out with new releases so it's updated because it is updated and you can download the newest version if you'd like to i think with everything that you're mentioning

though max that has so many so many things that are revolutionary let's look in the economic side of how this will affect things i mean if it's possible to have tax free exchanges you could potentially get this would assist in almost a parallel economy and it would exist alongside of a regular economy that wouldn't be counted in g.d.p. people people. people would be doing tax free transactions and and as long as they were able to spend a bit coin within the coin ecosystem they would be living in a sovereign individuals now on the government level i think what this is going to actually lead to is a move and a shift away from the model of taxing income and i think you're going to start to see governments move toward some time type of consumption based tax work headcount type tax and the reason is because the income levels of individuals are going to be more and more difficult to ascertain right so it's similar in

a way to barter and that you barter your bartering out there and you borrow you barter a goat for five chickens let's say and you're not creating a revenue stream taxable revenue correct so you're recreating the digital environment you created the digital bartering system if you will. barter is still taxable though i mean even with margaret you don't really get out of taxation what i'm stating is that even with bitcoin you you would still be liable for the taxes but i think that what will happen at the government level is that it will be difficult to ascertain true income and in and governments won't be able to use money to track identity it wasn't really until the income tax in one nine hundred sixteen that government started using money to track identity ok now clearly this is a challenge to the status quo clearly the as you mention the one nine hundred sixty income tax which came on the heels of the one nine hundred thirteen creation of the federal reserve bank which created interest bearing money and would need the income

tax to pay for the interest and you ended up a lot of people would argue close to one hundred years of a system that got complex completely away from having what the founding fathers in the us anyway had intended so but you're taking on the establishment in this way so clearly they're going to feel threatened at some point or do they feel threatened or is there going to be a confrontation of some sort or how do you approach that i don't think that bitcoin is large enough right now to be on the radar of many governments the entire economy is approximately fifty million dollars if you take the total number of pit points outstanding multiplied by the exchange rate it's fifty million dollars and it used to just be five million small time ago i can see it growing exponentially and it definitely challenges the status quo but i also think that they're in a quandary because if they were to prosecute it or if they were to prohibit it they would actually be lending legitimacy to it because it's an intangible math puzzle

so i brought a little profit i think getting back to the puzzles and well i just remember you talking about it and what have you got then two things we have yet to fully explain the puzzles and the coin creation i don't even think we're going to have time to get into the coin creation bit we've got to look at that yourself and calling dot org to fill. and on that bit but the puzzles we're going to conquer the puzzles here tell me what you got for the puzzles well the actually the problem is not for the puzzles i use the term puzzle because i'm so i'm trying to get away from the cryptography discussion that's involved in creating the coins and prop that i brought it is a normal u.s.b. thumb drive yet you can put things on now i can have one hundred thousand dollars worth of bitcoin on here and i'm talking about challenge when you mention about how bitcoin can challenge the status quo i can cross the border with this right into france or going into switzerland or going into any country and have it in my pocket and without having to declare anything and there's currently nothing illegal about

that because you have one hundred thousand dollars worth of bitcoin but no no governments recognize the value of coin it's still just math is what i'm saying ok so let me ask you this. is there a single point of failure. but other words can knock us out whether somehow if i were a government somewhere because if it's on the internet and it's part of the network and the network as we know is there is no single point of failure then is it indestructible i believe that it is and there are certain weaknesses but i will say i will tell you this if it torrents were destructible wouldn't the copyright regimes already have shut those down i believe digital cash will due to legal tender would bit torrent stude to comment right it's all right we're going to leave it there. that is fascinating and we will follow up on this you have dedicated your blogging monetary future pretty much to the exploration of this correct and the implications it's gotten more and more in the in the bit going direct and as this

is starting to pick up i want to focus on the exchangers there's about two thousand exchangers global you that i want to start to focus on more with the blog ok and that's monetary future dot com as i thought of the monetary future dot blogspot dot com look at the monetary future dot blogspot dot com yes all right john mcdonogh thanks so much for being on the kaiser report thank you max and that's going to do it for this edition of the kaiser authority maximizer and stacy herbert i don't thank my guest alma thomas from the monetary future dot blogspot dot com if you want to send me an e-mail please do so at kaiser report at r t t v dot are you until next time this is nice guys are saying by. the.