the children of each college are big but you know who to put you know. to make hotel cool durable teetotal and tomatoes. in serbia booties available in most clubs and hyatt regency couldn't. talk to join our top stories this hour nazi with intensified nato bombardments claiming civilian lives and alleged atrocities committed by rebel forces some libyans feel betrayed after what initially started as a nationwide uprising. the u.s. trades boots for bombs in afghanistan a bomb announces the withdrawal of more than thirty thousand troops wanted leave drone strikes are stepped out sparking fears of more civilian casualties accused of inciting hatred and discrimination against muslims don't fall right politician here villagers walks free from

a quarter basement say his trial shows europe's multiculturalism policies have simply driven communities apart and plan bringing the past to russia and its heart and soul search local audience twenty four hours a day off these new documentary channel goes live with the help of president. nixon's the kaiser report in which max kaiser and find out how the international monetary fund will actually make money on european states in crisis such as greece that's next. max kaiser this is the kaiser report we are back from athens where we were able to stand up to an onslaught of tear gas from provocative jurors what's a provocative or that's a cop dressed up like an anarchist hastings or what's up with max in fact i believe

they were i.m.f. agent stress that has anarchists and they are tear gas canisters had c.d.'s are in alongside collateralized debt swap on a tour of. this financial terrorism i think it's called credit default swaps all right i'll go with 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 the 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. brought all brought all the people of race hate the parliamentarian's they hate george papa dr i notice you're showing him the palm of your history in 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 are speaking to the crowds in st thomas square constitution

square and you told them that after greece would come the u.s. lo and behold in 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 festival and i told them point blank in my own self interest. 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 papa jails and those nincompoops in your country steal all of your wealth well remember as this article describes the i imagine the international monetary fund. they are the global lender they're a lender so they're pushing debt that's

a product they push on to people so in fact they're warning the u.s. that a gross domestic product will grow and in me make two point five percent this year and two point seven percent in two thousand and twelve of course those numbers are fake yet anyway but that's right the g.d.p. numbers are cooked they're fake you can't get growth by increasing the debt you could fake it for decades for every dollar in 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 lot of there on the table there's blood circulating but the patient is in fact dead but here's the i.m.f. warning america they've got to get their debt situation in under control every

member 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 sign left 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 greece but what the i.m.f. is doing now is pulling the hague polson 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 us 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 early august and then 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 and people said make a decision quick you know give us your money or your life it's a stick up you can't just keep 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 in this kind of bandits at the i.m.f. constantly holding people up and saying we were killing dollars put little to 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 so that all they want is more debt onto the american population it's a tough alice in wonderland through the looking glass for cock the nightmare or the

i.m.f. is saying the past two economic glory is by increasing your debt ceiling. well case so the i.m.f. is now threatening u.s. politicians but let's look at what the u.s. consumer stroke citizen what their position is and how the 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 stephen roach and that's enough. in actual times and it's. hey you know talking about zombies and people dead getting a blood transfusion a death this is the same thing will be as consumers is that they're designed to consumers the walking dead the shopping but they're dead they're dead shopping well this is where 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 leveraging 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 they've got to continue to save which means they've got to stop shopping but what do you see there you see the zombie shopping at walmart must buy a dog food must buy plastic crap from china 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 zombies and make them go take on more debt just like i'm after is doing to the u.s. government now in this same reserve 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're offering all sorts of

incentives to go into the house and mark this shouldn't stall count process disturbing wheels of all new general motors cars when you turn the ignition to get a huge jolt of electricity and it gets you one hundred miles an hour to the nearest shop and you start spending beyond your means wildly out of the u.s. economy actually you know what they should also do at the same time is have george bush's worries come on and say go shopping standing on the rubble after nine eleven but i've seen shoppers don't look behind me at the pile of rubble to go back to the store and put. 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 debt and 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 eight percent lower than it was a year ago and that it continues to fall about one percent per month but look the

house price of two ation is not going to get any better as long as incomes keep cheery you're raving 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 hers and put in the i.m.f. they want income levels in china and america to be about the same which would equal about two thousand dollars a year so marriage 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 you if they do crash another twenty five percent case shiller will come out again and say. another twenty five percent well as he brought up income i'll go to the next headline on this because this involves income as well and its relation to housing prices when the economy becomes

a financial circus based on debt fueled 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 dr 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 this g.d.p. per capita in the us and that is in the blue and then you see the median household income in red and as 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 historic proportions you've never seen anything like this at all in the united states most of the debt

levels increased income went down at the top of the cycle the banks swooped in 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 you did was he matched the wealth confiscation of the creditors by giving them twenty trillion dollars more in bailout money so they doubled the e.u. 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 and you mention circus days to herbert and you can't 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 or the economy it's actually not sure if it is the users contortion very language does the. cruiser throwers who are my.

i don't care what mike says about 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 with along the upper northwest. coast northwest coast services are getting fried well they have called hot particles which are radioactive little particles of six strong plutonium. falling into their lungs or turning the services of the hot pockets because there are all those things are put on micro i call those microwave and his own people well the population already zombie fied from toxic debts right and on top of them you're putting radioactive waste this is like a genuine situation where you could see real live zombies and real life cancer

zombies in the pacific northwest was like washington oregon kurt cobain's already dead so there's someone who knows you may see him again soon they may be coming back beautiful all right say sarah thanks so much for being on the kaiser report thank you right don't go away much more coming away so stay right there. the official location. called from the. video. feed now in the palm of your.

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 about snacks so you're a non-economist because of course you're known for your classic text debugging economics which you pretty much tear apart all the assumptions that people have been. and using to guide them through the past let's say postwar 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 that's it also mentioned 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 globe the whole always see the 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 way of persuading us who go it get into more of it than we actually want to take on and i used the analogy 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 only got one two that actually needs to be removed but he's persuadable of have more teeth removed will be six. so you fulfill the military it's removal and that's what's happened globalise we have private and 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 greece went through the same that bubbles america or england or australia or canada well portugal or spain etc etc but they certainly

had one of the great proviso of that is a lot of balancing on what to do in hiding this situation to get them into the the c.d.o. goldman sachs so we have a process called much too much debt that's the solution is put forward by the concert invention i think was cut wages it wasn't high wage that caused the process 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 push. as of the debt they came with 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 bill it's actually kinds kind of talking about public pit because it really was having with. 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 it's also which was before creates credit money but you also have a government system which can create government debt and in the process creates the

it money so there's two sources of money flowing into the economy and in classical economists the guys that i pillory in the banking economics mistakenly believe that the government system controls the product like a 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 stimulants and the government's coming along in 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 private crosses the way that's manifest as 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 then you'd have you know profit it bouncing along like this and government didn't bouncing in the opposite direction and in my first modeling miscues 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 they can be a situation with rather than the profit doing this and the government at doing that and with private it doing this and so for the government to balance it it's going to be doing the same thing in the opposite direction 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 neverending amounts of public good as well so we go down that route you know you've got this is japan has had. private stabilizes perhaps a thought a little public that the continues rausing trying to balance the deflationary effect of reducing private the real solution is 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 the private and ironically the best way to do it and kinds made a similar case than autos not quite as frankly as all make it now is to increase wages. increase wages ok let's get back increased wages that this goes against

a lot of the so-called was them out there so i increasingly it is you're actually helping to solve the problem you will then cause inflation which have been ages ago made this creating president that if you have across a spot simple the government have a but it's a printing press that's where it will be helicoptered in 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 one literally more than doubling the level of bias money in america and what you had was a when you went into the process inflation american running about thought the sent it filled them on a stoop so we had the fleischmann and then literally more than doubled based money and inflation went from honesty to cluster and then started heading down again so with an enormous injection of money giving it 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 wanted to cause inflation and therefore reduce the

effective burden of that bit the way to do it is to increase wages because they in terms of what no choice but to increase their process work is about no choice but to spin because cost of gone up you actually get a fictive inflation that once didn't henry ford figure that out he raised the wages of his workers so they could buy the car yeah yeah and again like the result though a large part of the new deal was given decent wages to work as so when you cut the wages it looks like a sensible that is the whole inability to think in the feedback sense that the actual economy operates in. if you cut wages you will they will have a deflationary impact on the economy when it's already in a day fleishman so by driving the process level down you increase the value in norman in real terms of the outstanding debt making across this 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 is being trained for falling wages both in real in terms of the proportion of g.d.p. so you cause of that you put the wages up not to actually get a much larger share of g.d.p.

because you expect the inflation to come along and eroded but by roading the inflation eroding the value of the dead you'll draw down the bank a share and that's the section that should be reduced why do people who rely on a waiting for a sub subsistence don't seem to be arguing this case and then america for example is a wage earner is out there demanding higher wages yeah because we don't see a complex systems that cause the behavior and we tend to think about things in a household fashion and this is actually when the across italy economics has been marvelously useful for people who want to screw up the economy 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 you as an individual can be extrapolated to the social level so if you're in a household and you're running a deficit you've got to cut back a spending which made the kids count by the nintendo games any well you know that's makes sense the household budget balancing budget you've got to do that because you face what i can call

a budget constraint and that works here at individual level but you would extrapolated 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 go on the money from the banks and that should change and it seems lights are good at the maddest part of aquavit them 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 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. you get a much clearer picture of the problem and the solution well you what you see is the good you talking about there is a positive feedback system because the process starts to ra's old is extra debt being taken out to buy houses and that means that house process because they were people willing to take on more debt to buy a house across houses so you get

a spiral pushing it up and that's bad it is a sort of that we shouldn't allow in the system in a way does remain stagnant right of main statics they've got to be income remaining static debt going up compared to incomes because everybody thinks they're making a profit by buying a house using leverage and riding the leverage of the house crossing courses but really the only people who make money oh houses rising in value over time real estate agents and banks even now what the crash of housing and the obvious wealth confiscation of banks manipulating the system people are still not arguing for higher wages because they're not thinking about what's actually caused the problem it's so easy to look at the moment you imagine this whole process is caused by government study government that we didn't have a government interest process in two thousand and seven big government debt in america and israel in the world 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 it to want to cry over the young and the twenty guys now blame for the fact that leon fell off the race

because there's a huge disconnect now then all this vilification didn't quite honest in the u.s. for example unions which are there to hopefully support some kind of wage growth below five at and t. business anti-growth the real anti-growth of the bank is the bankers have given the money food for speculation and not for investment they don't even finance investment anymore particularly they sit in front as working capital that's why they finance speculation if they find it speculation and we're can. that's good it's not so when they get in trouble then they seek bail out and they get rescued by the us austerity measures pushed down of 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 increases tied to g.d.p. g.d.p. is another one of these economic statistics they point out in your work debunking economics one and the sequel coming out i believe this fall economics donking

economics part two which is will soon but professor if i came to you in your class i said well would it be an interesting idea if let's say 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 that i got to 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 their money supply growth is how bankers pay themselves and get paid by the how much fee add 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 no that's what you what happened back in knowledge a non saying in england which caused the depression in the beginning of the twenty years not just not in twenty years then was that the true you see it negotiated a cost of living adjustment so they actually got close to living changes not not in money suppose you are talking about however what the government agents got on the

gold standard which caused a message 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 it can backfire on your show you have to be all you know in the bank in your head. well first you have you say i have a two pronged attack now we've kind 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 of the i.m.f. little can do you look stand across 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 money supply to keep growth going over rather than austerity you need prosperity from the public sector which means. wage rises you've got to reduce the deprived and 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 guy has a record me nice guys are and stacy everett i don't think my guest steve king author of the soon to be released. nominee part two if you want to send me an

e-mail please the kaiser report at r t t v that or you until next time this is nice guys are saying well you know.