janet and then you glimpse something else and here's some other part of it and realize that everything you thought you knew you don't know i'm trying hard luck is a big issue.

more news today violence is once again flared up. these are the images. from the streets of canada. for asians are today.

out of her a little bit of. it was just six pts. max kaiser this is the 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 there but there's a new dimension now a new way for you to go broke it's all doing good 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 read the european gold confiscation scheme unfolds european parliament approves 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. they go by to allow central counter parties to accept some gold as collateral under the european market infrastructure regulation and here another word for king is further recognition of gold's growing relevance as a high quality liquid assets 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 they've discovered that the money is bogus there it's got to pass or diverging number one they are reminded thais ingall they're trying to bring it back into the system but they're using all the money that they 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 a 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 have nothing to do in creating the outsiders are saying well we'll take the gold that's a really great deal well 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 isn't a currency that has been around for five thousand years and it's been accepted 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 free out currency world and we've all been incurring this debt like thinking we're getting away something for nothing and we're getting free lunches and now they're like actually we're going to take this gold well another thing

that's growing aside from the relevance is the price and the prize goes higher it's becoming more relevant i wonder. and so just to note that this is of course to get the gold of greece spain and italy and portugal greece has one hundred eleven tons portugal has three hundred eighty two tons spain has two interest an 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 a physical gold you might think gold farming is actually they force these chinese prisoners to play multiplayer games amass and 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 schemes around the world whether it's war world of warcraft or farmville and hand 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 explained the top of the show when you spend your free out 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 now as then a dollar or a phone bill 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 play a quantum leap more in terms of the basement and you end up in prison so these crimes prisoners who are forced to play single form bill games to amass credits that are being passed to their prison masters people in the us the whole they've

been effectively kept themselves in to their own home prison where they're playing on zoning of dollars and farmville creating massive amounts of this of this new fee virtual currency which is basing their purchasing power and it's the same thing as checking into prison they're taking their hard earned money that they earn doing menial jobs is ninety nine percent and they're changing it for virtual money that's one hundred presumed dead well to go along with this have imax about the gold farming headline reads farm ville heard lined up for market is out 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 cow if they play online phenomenon form go 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. you're getting ninety nine percent debt back to be out of money for your swapping it for a virtual currency based on the currency again driving all of your net worth down into the prison level where you are to live thanks to saying good dollars and farmville the new prison motif taking the walt disney dream of a perpetual amusement prison to its terminations point of ultimate imprisonment well so we're on the glue. on 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 a massive terrorist attack on a terrorist yes when that was stopped the stock markets collapse. sharply a thousand points the dow can then back up well they're now warning about a catastrophic splash crash a dislocation by high speed trading computers that could simultaneously splash across many more asset classes and markets so wouldn't just be the dow it would be the footsie and the gold market the oil market all splashing at the same time you have all these markets around the world big markets oil gold currency markets all going through enormous volatility computer driven as a way to again keep the population completely outside of having any chance of

amassing any sizeable 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.'s a look dated companies thanks to goldman sachs the ultimate arbiter and purveyor of currency virtual currency the nonsense of gold. the polls. 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 heaps 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 strauss kahn to read some may there

that's obvious joke there conquer 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 arbitragers 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 raked out of the global economy remember goldman sachs the high frequency trading scandal 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 accounts out there that are now suffering the people end up with nothing and they all and of course based down in the mud playing casino games for farmville so part of 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 a second they try to get in front of it so and you also know that twitter is totally manipulated as well the trending topics on a lot of people put out fake celebrity death notices so the same thing 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 in it in ways that they believe will affect prices to create arbitrage opportunities and manipulated profits on any given moment well as the machines are trading yes you tell that or one of the machines could technically write a tweet a hoax tweet and order it to manipulate one of the other machines and we see that similar in the next headline. c f t c charges 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 quote load of money and then dump it in and in a never tickle puking according to e-mails acquired by the c f t c well the inevitable puking is known beforehand because the system is so highly leveraged we're talking a leveraged ten thousand to one forty thousand to one and they know that at certain points that the system will automatically puke out positions because they're allowed to continue would mean instant insolvency for half the global economy it's kind of like watching those japanese sex robots have an orgy and then all the sudden they run out of electricity have never seen that but this scheme happens between january and april two thousand and eight to see if to see 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 future of contract and by march they had eighty four percent of all of will 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 p. 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 that prevented a financial cuisinart they take fifteen throwing dollars can mean they don't put in the quezon are and then they chop. in the months left. there they sell for you know what the rest of us scavengers in other countries thanks sarah thanks so much for being on the kaiser apart thank you max that's going to do it but don't go away

cause much more coming alive stay right there. when you take three. more charges free. free. free. free. free blog live video for your media project c.e.o. don carty dot com.

the song. 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 coin lately so we're going to talk to him about bitcoin john but tell us a lot of the kaiser report thank you max good to be here all right so what is it calling well to start off on 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 centralize monetary planning and be basing the currency as the central banks for us have been doing ok that's a recurring theme on the show exactly this is why we really want to dig into this big going 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. or peer to peer i think music files wapping and there's computers and they have music on their computers and they 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 you became very famous and it towards and bit torrent it torrents for movies again 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 e-mail p.g.p. for money there's another way to think of it people know about pretty good privacy for email right 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 e-mail right to take us will take us to a transaction so normal transaction using bitcoin on the web so how would i as a consumer. how do i 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 those tasks are performed by the collective nudes of the network so 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 of bitcoin about 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 cohens or i can be involved in a transaction using these coins correct correct ok so let's let's put aside generating that going for a second because there is some jargon there we're going to revisit but let's just talk about transaction of the transaction side how does that work the way the transaction works as 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 were they were sent to you what you've done when you've downloaded the client 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 quote ok so i purchased these because i can purchase them with my dollars by u.s. dollars so there i presumably there's some kind of exchange rate the exchange rate currently is around six or seven u.s. dollars for me one bitcoin and that's floating i would imagine it's 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 who 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 not is not as robust as it could be because because of the puzzles that go into creating the

exchange rate mechanism well 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 a hundred dollar bill and shoot it through the broadband connection it would shoot out your internet here and you would have represented 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 them this right digital bearer coupon or digital birth certificate rights like a bear or certificate like a bear or vaughan and it's the 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 bearer in the sense that i'm using to name the now participants and they're making across not only is it bearer but it is subject to reversibility and people has up to sixty days when they can reverse transactions with with bitcoin you have trip 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 sense they are 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 whereas a bit clane electronic transaction peer to peer bearer note be central to the centralized 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 those to the people but if you're careful in how you used to coin you can't you can make it anonymous for yourself ok so. it's the centralized and what you're describing in this p.d.p. network is a community that is almost self regulating and it's in their interests 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 with new releases so it's updated the code is updated and you can download the newest version if you'd like to i think with everything that you're mentioning

though max it has so many so many things that are revolutionary with it 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 that would exist one side 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 bitcoin 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. 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 were 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 in that you barter your bartering out there and you borrow if 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 a digital bartering system if you well barter is still taxable though i mean even with barter you don't really get out of taxation what i'm stating is that even with bitcoin you would still be liable for the pax's but i think that would 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 thousand 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 when they need the income tax to pay for the interest and you add it 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 well. 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 is approximately fifty million dollars if you take the total number of bitcoins outstanding multiplied by the exchange rate it's fifty million dollars and it used to just be five million a 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 prop ok back to the puzzles and well i just remember you talked about it and what they got there are two things we have yet to fully explain the puzzles and the point creation i don't even think we're going to have time to get into the calling creation bit we've got to look at that yourself a bit calling dot org to fill in 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 prop 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 a prop that i brought a game is a normal us b. thumb drive yeah you can put things on now i can have one hundred thousand dollars worth of bitcoin on here and i'm talking about challenging 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 clear 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 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 get torrents through to copyright 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 there in the bitcoin direction as this is

starting to pick up i want to focus on the exchangers there's about two thousand exchangers of global you that i want to start to focus on more with a blog ok and that's monetary future dot com isn't it the monetary future top blog spot dot com 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 report of the max kaiser and stacy herbert i don't thank my guests job it's obvious from the monetary future dot blogspot dot com if you want to send me an email please do so at kaiser report at r t t v dot ru until next time this is nice guys are saying. the official t. have your body so the i pulled touch from the top still.