video on demand. omissions from the palm of your. machine. welcome back here with our team here is a look at the top story as nato continues its bombardment in support of the libyan uprising people in benghazi cry out against alleged atrocities committed by rebel forces meanwhile cracks emerge in the coalition strategy media with country steps back to intervention now casting doubt over the mission. president obama confirms his decision to withdraw ground troops currently deployed in afghanistan a third will be pulled out by next summer people in

a war torn country fear that fewer american soldiers will not mean less bombing of their homes and intensified u.s. drone attacks. the second bailout for greece is crippled economy takes center stage at a meeting of the e.u. leaders in brussels and thursday that's while the brief prime minister pushes for even more cuts at home to secure financial aid amid massive and hysteria the protests. so we had on its next hour financial guru max kaiser and his co-host asia herbert talk about financial terrorism dads and how to prevent world economies going under. there this is the kaiser report we are back from athens where we were able to stand up good lot of tear gas. from provocative to oars what's a provocative or that's

a cop dressed up like an anarchist and these things are what's up i think max in fact i believe they were i.m.f. agents stressed out as anarchists and they are tear gas canisters and c.d.'s written alongside collateralize just swap on the tour just sort of that is financial terrorism i think it's called credit default swaps that there are so many different names for these derivatives these days and actually the big topic of the day is all the debt circulating around the economy but first i want to show you this little image because we return from greece bearing gifts and this is artwork colonel pop and dry oh good people love me those who are causing all the trouble are terrorists the people hate them you know they're outside of the parliament building and screaming thieves brought all brought up all the people in greece hate the parliamentarians they hate george. i notice you're showing in the palm of your

handling of the palm of my hand this is for you george. little george as they call him so well the i.m.f. is in the news and you were speaking to the crowd in some thomas square constitution square and you told them that after greece would come to us low and behold and our first headline i.m.f. downgrades us after raping and pillaging much of the world the i.m.f. bankers come home to smash and grab what they can from america i was in constitution square speaking to hundreds of folks gathered the day after the big tear gas best of all and i told them point blank in my own self-interest the people of greece need to stand up to financial terrorism because greece goes down are goes down portugal's goes down spain goes down and they're going to come to the u.s. the u.s. is going down by the same financial terror so please people of greece don't lead the jails in those nincompoops in your country steal all of your wealth well

remember as this article describes the i.m.f. the international monetary fund. they are the global lender they're a lender so they're pushing debt that's the product they push on to people so in fact they're warning the u.s. that gross domestic product will grow and in need mc two point five percent this year and two point seven percent in two thousand and twelve of course those numbers are fake yet anyway that's right g.d.p. numbers are cut they're fake you can't get growth by increasing the debt you could fake it for decades for every dollar and debt they created a dollar g.d.p. after world war two that has been going downhill ever since then it takes six seven eight dollars of debt to create one dollars of g.d.p. but at some point it becomes like blood transfusions you could say technically the patient has a pulse but that's completely due to the transfusion of the blood you're not really a live there on the table there's blood circulating because of patient is in fact

dead but here's the i.m.f. warning america that they've got to get their debt situation in under control and remember only a few years ago two thousand and six two thousand and seven the i.m.f. was bankrupt itself and they were out of business so. stop right there let's tigress a bit about the son of situation they are completely bankrupt that's why they go into a country like greece they take greece's assets they use that as collateral to borrow money from other corrupt bankers to take over of greece but what the i.m.f. is doing now is pulling a hate paulson on a global scale but these guys are just a construct an artificial construct out of nowhere they are hold up the world economy and and act like we owe them money and people pay them and it seems to work because who are they who are these people just go away that's what you have to tell them because right now they're saying the problem why they're threatening the u.s. is because the the political drama going on where the republicans are refusing to

raise the debt ceiling and they have to do this by august or early. yes and the i.m.f. warns you cannot afford to have a world economy where these important decisions are postponed because you're really playing with fire well there we go again putting a gun to people said saying make a decision quick you know give us your money or your life it's a stick up because this kid saying this over and over again claiming this is the emergency give us all your money at some point you actually have to step in with some blood dislocation some kind of government functionality you've got to actually have a functioning economy this kind of bandits of the i.m.f. constantly holding people up and saying we were killing dollars actually they're not even actually demanding any real wealth what they are demanding the american people do is they're not saying you guys need to do something to sort out your g.d.p. growth to build real wages and real wealth and real productivity they're saying increase your debt ceiling that's what we want you to do and if you do that then we

will no longer downgrade you said all they want is more debt onto the american population it's a topsy turvy alice in wonderland through the looking glass cocked a nightmare where the i.m.f. is saying the path to economic glory is by increasing your debt ceiling. oh. well ok so the i.m.f. is not writing us politicians but let's look at what the u.s. consumer stroke citizen what their position is and how u.s. consumers menace the world and that's actually from here i don't have a picture of the headline to turn to because it's stephen roach and that's in the financial times and it's now on line hey you know talking about zombies and people dead getting a blood transfusion a debt that's the same thing with these consumers isn't it they're just zombie consumers the walking dead or shopping but they're dead they're dead shopping well this is why he says the global economy is being hobbled by a new generation of zombies the economic walking dead the u.s.

consumer is in the early stages of an unprecedented retrenchment deal. bridging has barely begun however he says the u.s. consumer is only down to one hundred fifteen percent of personal income is now debt down from one thirty but it needs to get down to historical averages of seventy five percent of debt to personal income they've got to continue to deal leverage which means that better continue to save which means they've got to stop shopping but what do you see there you see the zombie shopping at wal-mart must buy a dog food most plastic crap from giant but he points out that the fed and the u.s. government are actually causing the zombies they're keeping the zombies alive they keep on trying to put electrodes into the zombies and make them go take on more of that just like i mouth is doing to the u.s. government now in this saying research debt ceiling this is what the fed and the u.s. government are doing to the consumer stephen roach contends here they're just trying

to force them to go shopping by keeping low rates and trying to encourage them to get back into the housing market you know they offering all sorts of incentives to go into the housing market which of them still count profit disturbing wheels of all new general motors cars then you turn on the ignition to get a huge jolt of electricity and it gets two hundred miles an hour to the nearest shop and you start spending beyond your means wildly person to the u.s. economy actually you know what they should also do at the same time is have george bush's words come on and say go shopping standing on the rubble from love and attention shoppers don't look behind me at the pile of rubble go back to the store put your credit cards a risk well so i have these final two headlines regarding the housing market and as i said the us fed and the government are trying to force the american consumers to take on more mortgage that and the i.m.f. is trying to force them to force those consumers to take on more mortgage debt housing crisis worse than great depression seven shocking facts about the u.s.

housing market well number one is the low has announced that the average price of a home in the u.s. is about. percent lower than it was a year ago and that it continues to fall about one percent per month look the house price of two ation is not going to get any better as long as incomes keep cheery you're raiding i just saw an interesting statistic that one percent of americans own the same wealth as the bottom ninety percent of americans and income in america is collapsing because remember the global banks are isn't doing the i.m.f. they want income levels in china in america to be about the same which would equal about two thousand dollars a year so america has got a long way to go in terms of income parity which means the house prices are set to crash even case shiller index says house prices will crash another twenty five percent and i guarantee if they ever do crash another twenty five percent case shiller will come out again and say. another twenty five percent well as you

brought up income i'll go to the next headline on this because this involved income as well and its relation to housing prices when the economy becomes a financial circus based on debt fuelled acrobatics lessons from the great depression part thirty four tracking housing values from one thousand nine hundred to two thousand and eleven and this is that the housing bubble and he looks at house prices going back to one nine hundred forty all the way up to two thousand there was a direct link between house prices and us income but then from two thousand to two thousand and eleven the first time household incomes fell over a decade since the great depression we saw the largest housing bubble ever and then he shows us g.d.p. per capita in the u.s. and that is in the blue and then you see the median household income in red that you see from two thousand as well g.d.p. per capita in the u.s. grew straight up income went down. so americans were earning

less and less every year as the housing bubble took off to you. historic proportions you've never seen anything like this at all in the united states that's right the debt levels increased income went down at the top of the cycle the banks worked and they took all the equity out that they had extracted using derivatives they left the consumer with all the debt then barack obama was elected president and he came into office and the first thing he did was he matched the wealth confiscation of the creditors by giving them twenty trillion dollars more in bailout money so they doubled three legal bets and put the consumer into twice the income impairment by now having hundreds of trillions of dollars worth of debt hanging over their head any mention circus stacy herbert and you can have a circus without a contortionist and this is what ben bernanke he does when he gets on t.v. he's trying to convince people that the economy it's actually not sure it is he

uses contortion very language does they. do they are my. i don't care what mike says of a ok well max finally and reading on the airplane back here from athens i did read speaking of barack obama and his policies towards america and zombies is his biggest campaign contributions come from exelon nuclear energy firm and there are serious questions about why america is not warning its citizens about the nuclear fallout happening along the upper northwest coast of north west coast citizens are getting fried well they have called hot particles which are radioactive little particles of success human strong cmin plutonium going falling into their lungs or turning the citizens of the hot pockets because a lot of those things are put on microwave that obama's microwave and his own people well the population already zombie fied from toxic debt and on top of them

you're putting radioactive waste. this is like a genuine situation where you could see real live zombies my real life cancer zombies in the pacific northwest was like washington oregon kurt cobain's already dead so someone who knows you may see him again soon he may be coming back beautiful all right so thank so much for being on the kaiser report thank you don't go away much more coming away so stay right there. really you believe this in some instances. from the realms. of the future

covered. i welcome back to the kaiser report all right this is a treat we've got the non-economist non-economist steve king welcome back to the kaiser report it x.x. i say or non-economist because of course you're known for your classic text debunking economics which you pretty much tear apart all the assumptions that people have been using to go through the past let's say post-war era and i would say that if you're a stock you'd be trading at all time highs because what you've been saying is all these classical models don't work and they have to take a different approach to kind of get a handle on understanding the forces that are shaping the economy and let's talk about a basket case in the world today greece and i should also mention that you're a professor of economics at the university of western sydney and you're an expert on debt deflation so clearly and grace that is

a test case example walk us through what's happening well the whole good versus an unfortunate instance of what's happening in the whole global whole always so you do economies and the real cause of this is being a huge debt bubble which is being driven by the financial sector that is knows it can only make money by creating did it but it has to find a wife persuading or so you go and get into more debt than we actually want to take on i'll use the knowledge is a bit like going to a dentist the dentist wants to take out more teeth because the multi take up more money max and you want to go through that action needs to be removed but he's persuasion would have more taste removed will be sexier so you fall for the more traits removal and that's what's happened globally so we have far more private debt than we should ever of had and that's what's driving the entire process. now greece i don't know enough about greece to say that was once where the same god bubble is america or england or australia or canada or portugal or spain etc etc but they certainly had one of the great provisos

a bit was watching of them what to do and hiding the situation to get them into the c.d.o. goldman sachs so we have a process called but you much that what's the solution is put forward by the kinds of inventions thinkers cut wages it wasn't high wages that caused the crosses right ok we're going to get to that a second on this debt mode keeping this in mind now of course one of the big pushers of the debt most let's say it came keynesian thinking but wasn't it when it came to a thing that you can go into debt during the slow times but during the good times you try to pay down that debt well it's actually kinds kind of talking about public that is really what's happened with private the ok what you get in reverse is that when you when you look at the financial system we're in it's a system driven by privately created it and also which was therefore creates credit money but you also have a government system which can create government debt and in the process creates the

money so this true sources of money flowing into the economy neoclassical economists the guys that are pillory in the banking economics mistakenly believe that the government system controls the private good like having a you know a centrally controlled system making sure that all the cars move at the right speed on a freeway in fact what you've got is rather more like you got a whole bunch out of control cars being driven by out in the center on too many dozens of simulants and the government's coming along in an ambulance chasing the wreckage so private created credit drives the economy government money comes along and what tends to happen is when there's a product that crosses the way that manifest is the right of growth of debt slows down and therefore the growth of the economy slows down so the government comes in and spins are running a deficit and balances that out now if you had a. well functioning economy they need to have you know sing along like this in government didn't downswing in the opposite direction and in my first modeling minsky's financial instability hypothesis that's precisely what i had happening

what i didn't cover in daytona paper that i had to cover and all they wanted two thousand was that there can be a situation with rather than the private debt doing this new government at their own net and to the private it doing this and so for the government to balance it it's got to be doing the same thing in the opposite direction and that's what you have what people now call the minsky moment when some much profit it's been taken on but the only way out of it is to take on a never ending amounts of public debt as well so if you go down that route you know you've got the pandas had private stable laws is perhaps the thought of a little public if it continues rausing trying to balance the deflationary effect of reducing private the real solution to say hey guys we shouldn't have had this product in the first place if you want to solve the process somehow abolish or reduce the real burden of that profit and ironically the best way to do it and kinds made a similar case than not is not quite as frankly as all naked now is to increase wages. increased wages ok let's get back increased wages now this goes against

a lot of the so-called wisdom out there so by increasing wages you're actually helping to solve a problem you will then cause inflation as i've been ages ago my describing if you have a process is quite simple the government have a run its printing press that's where you got to look at the din nickname from and print the money and it will cause inflation and everything will be solved well he printed money faster than anybody has ever printed government on the planet in two thousand and eight and two thousand and on literally more than doubling political bias money in america and what you had was a when you went into the process inflation americans running about thought the same it filled the monist true so we had the fleischmann and then literally more than double bass money and inflation went from modest to cluster and then started heading down again so with an enormous injection of money given. to the banks almost nothing in inflation some inflation was called but not enough to devalue the debt and fix the whole process up if you really want to cause inflation and therefore reduce the effective burden of that that the way to do it is to increase

wages because they in terms of got no choice but to increase their process which is about no choice but to spin because costs have gone up you actually get a fictive in violation that why didn't any ford figure that out he raised the wages of his workers so they could buy a car yeah yeah and again like the result the logic out of the new deal was giving this away just workers so when you cut the wages it looks like a sensible this is the whole inability to think in the feedback sense that the actual economy operates in if you cut wages you will therefore have a deflationary impact on the economy when it's already in a day fleishman so by driving across a little down you increase the value in norman in real terms of the outstanding debt and making a process worse what you have to do is reduce the value of that bit on the easiest way is to reverse the trend of the last forty years which has been trimmed for falling wages both in real in terms of the proportion of g.d.p. so you cause a bit you put the wages up not to actually get a much larger share of g.d.p.

because you expecting inflation to come along and eroded but by reading the by the inflation eroding the value of the dead you will draw down the bank a share and that's the section that should be reduced why do people who rely on a wages for a sub subsistence don't seem to be arguing this case and then america for example has a wage earner if they're demanding higher wages because we don't see a complex systems that cause the real economic behavior and we tend to think about things in a household fashion and this is actually when the classical economics of being marvelously useful to people who want to screw up the economy and i've actually really wants to do that but that's the impact of the theory because what it tries to get you to believe is that what applause for you as an individual can be extrapolated to the social level so if you're in a house or. old and you're running a deficit you've got to cut back the spending which means the kids can buy the nintendo games anymore you know that's make sense the household budget you've got to do that because you face what i can call a budget constraint. and that works if you're at your individual level but you

would extract related to the national level that's not how the national economy functions we have banks which give a soft budget constraint so if you actually run out if you actually want more spending in the economy you borrow money from the banks and that change and it stimulates our good demand it's part of a right and they borrow money from the banks on the household level means putting your house up as collateral so you put your house up as collateral you borrow much money you've got the a.t.m. created inflation that in that way what we're saying is that. if you step away and just look at the wage earner divorced from the household and house yeah you get a much clearer picture of the problem and the solution well you what you see is that you would you talking about there is a positive feedback system because the process was or this extra debt being taken out to buy houses and that means that house process rausing because they were people willing to take on more debt to buy house across houses so you get

a spiral pushing it up and that's bad debt that's a sort of that we shouldn't allow in the system in a way does remain stagnant right of main statically go to remaining static get going up compared to incomes because everybody thinks they're making a profit by buying a house using leverage and rewriting the leverage of the house across increases the really the only people who make money on a house of rising in value over time real estate agents and banks even now with a crash in housing and the obvious wealth confiscation of banks and manipulating the system people are still not arguing for higher wages i know because they're not thinking about what's actually caused the problem so easy to look at the moment imagine this whole process is caused by government study government did we didn't have a government interest process in two thousand and seven a government debt in america and israel in the world came long after. was to patch up what actually went wrong with the system if you want an analogy it's a bit like having a person who struck their own arm off and then you put a twenty. and the blame for the fact that the on fell off grace because there's

a huge disconnect now then all this vilification didn't quite honest in the us for example unions which are there to hopefully support some kind of wage growth below fide it antibusiness anti-growth the real anti growth of the bankers the bankers have given the money food for speculation and not for investment they don't even finance investment anymore particularly they sit in finance working capital that's what firms are sure they finance speculation if they fund a speculation and we're convinced that it's good it's not selling and trouble then they see bail out and they get rescued by they get austerity measures pushed down to the wage earners and let me ask you professor here's an idea if i'm representing wage earners. what about the idea because typically wage earners will ask for a wage increase is tied to g.d.p. but g.d.p. is another one of these economic statistics that point out in your work i did bunking economics one and the sequel coming out i believe this fall economics debunking economics part two which is available soon but professor if i came

to you in your class i said well would it be an interesting idea if what they cops and firemen and teachers negotiated wage increases not tied to g.d.p. growth but tied to money supply growth. that's an interesting one i hadn't thought of but i get do i get a grade on this one get it right on that's a good idea that would this is so that would stop me in my tracks in my class you say because the money supply growth is how bankers pay themselves and get paid by the how much fee out of money they inject into the system of they get a fee based on that the mean i can see here is what i actually back far into that's why actually what happened back in one change in england which caused the depression in the beginning of the twentieth not the not in twenty years then was that the two you see in negotiated a cost of living adjustment so they actually got close to leaving china is not not a manageable you're talking about however what the government tended to go back on the gold standard which caused a massive devaluation and wages had to fall by twenty percent and the cost of

depression at the beginning of the twentieth not in twenty's in england so i can bet foreign you're sure you have all you know in the bank and then you're hedged. your head you say i have a two pronged attack now we've kind of run out of time so i want you to tell us the final thoughts on the global debt crisis based on what is being prescribed by governments and the i.m.f. it will continue to extend across this even further austerity is not what europe needs if it's the private system is not producing the credit which it won't do in this level of debt in the government's got to come in and produce the money supply to keep growth going over rather than austerity you need prosperity in the public sector which means. wage rises you've got to reduce the defrauded anything that doesn't do that is not going to work all right steve king thanks again for being on the cars report thank you and that's going to do it for this other guys report me max keiser and stacy herbert i don't think my guest steve king author of the soon to be released the punk economics party if you want to send me an e-mail please at

kaiser report at r t t v dot or you until next time this is nice guys are saying you know.