russia today has an extremely confrontational stance when it comes to us. the official ante up location. called touch from the. video. call. john martin here broadcasting live from washington d.c. coming up today on the big picture.

the latest in science and technology from. the future covered. as or this is the kaiser. we are back from athens where we were able to stand up

to an almost lot of tear gas from provocateurs what's a provocative or that's a cop dressed up like an anarchist hazier what's up thanks in fact i believe here i am f.h. and stress that as anarchists and they are tear gas canisters at us c.d.'s written alongside collateralized debt swap on a tour through the financial terrorism i think it's called credit default swaps that there are so many different names for these divot is 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 thieves groff all brought up all the people and

raised to hate the parliamentarians they hate george papa i notice you're showing in the palm of your handling of the palm of my hand this is for you george as a cadet. little george as they call him so well the i.m.f. is in the news and you are speaking to the crowd in this in thomas square constitution square and you told them that after greece would come the u.s. lo 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 bestival 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 our list 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 let

public jails and 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 a gross domestic product will grow in any 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. 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 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

alive there on the table there's blood circulating but the 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 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 cholesterol to blow 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 early on. 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 of 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 and this kind of bandits of the i.m.f. constantly holding people up and saying we were killing dollars well look 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 service alice in wonderland through the looking glass cocked a nightmare or the i.m.f. is saying the path to economic glory is going creasing your debt ceiling. oh. well case so the i.m.f. is now threatening us politicians but let's look at what the u.s. consumer stroke citizen what their position is and how zombie us 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 in the financial times and it's 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 their design because zoomers is the walking dead they're 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. 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 they've got to continue to save which raise i've got to stop shopping but what do you see there you see the zombie shopping at wal-mart most dog food most plastic crap from china but he points out that the fed and the u.s. government are actually causing those zombies they're keeping the zombies alive they keep on trying to put electrodes into zombies and make them go take on more of that just like i'm not as doing to the u.s.

government now in this saying raise your 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 a 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 shouldn't stall cattle prods and disturbing whales of all new general motors cars when you turn on the ignition they get a huge jolt of electricity and it gets one hundred miles an hour to the nearest shop and you start spending beyond your means wildly first of 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 after nine eleven but search and shoppers don't look behind me at the pile of rubble to go back to the store or put their credit cards or risk well so i have these final few headlines regarding the housing market and as i said the u.s. fed and the government are trying to force the american consumers to take on more mortgages 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 zillow 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 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 you 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 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 you. historic proportions you've never seen anything like this at all in the united states but for the debt levels increased income went down yet at the top of the cycle the banks scooped 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 you did was he matched the wealth confiscation of the creditors by giving them twenty trillion dollars more in bailout money so they doubled their evil 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'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 are a language does the oh here's what's wrong with you do they 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 is 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 a long upper northwest coast of north west coast citizens are getting fried it well they have called hot particles which are radioactive little particles of success human strontium and plutonium going falling into their lungs or turning the centers

of the hot pockets because you have all 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 lives. but 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 he may be coming back beautiful all right say sarah thank so much for being on the kaiser report thank you don't go away much more coming away so stay right there. with three. three. three. three. three. three. video for your media project. tom.

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 you're a non-economist because of course you're known for your classic text economics which you pretty much tear apart all the assumptions that people have been using to guide you 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's 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 cd 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 us to go 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 a more money max and you want to go through that action needs to be removed but he's persuasion would have more teeth removed only six or so you thought of the more truth removal and that's what's happened globalise we have private debt 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 debt bubble is america or england or australia or canada or portugal or spain etc etc but they certainly had one of the great proviso that was watching of them 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 what's the solution is put forward by the kinds of invention i think was cut wages it wasn't high wages that caused the process ok we're going to get to that a second on the debt mode keeping this in mind now of course one of the big pushers of the debt most let's say is keynes keynesian thinking but wasn't it when it came to us saying that you can go into debt during the slow times but during the good times you try to pay down that well it's actually kinds kindest working about public that your focus 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 before creates credit money but you also have a government system. which can create government debt and in the process creates three it money so there's two sources of money flowing into the economy in a classical economist the guys that i pillory in the banking economics mistakenly believe that the government system controls the private bit 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 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 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 private 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 will functioning economy then you have you know profit it down sing along like this and government didn't bounce in the opposite direction and. modeling minsky's financial instability hypothesis that's precisely what i had happening but i didn't cover in daytona paper though i did cover in a later one in two thousand was that they can be a situation with rather than the private debt doing this and the government at their own net good profit 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 we go down that route you know you've got the pan as head project that stabilizes perhaps of thoughts of little public that it continues rausing trying to balance the deflationary effect of reducing private the real solution is say hey gause we shouldn't have had this product in the first place if you want to solve the process somehow balazs will

reduce the real burden of that profit and ironically the best way to do it and kinds made a similar ties the knot is not quite as frankly as all make it now is to increase wages. increase wages of a really good match 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. ages ago made this creating press that if you have a cross this is what simple that we are going to have a minute's printing press that's where you got the helicopter been 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 america is running about thought the sent it filled them on a stoop 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 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 that the way to do it is to increase wages because they in terms about no choice but to increase their prices which is about no choice but to spin because costs have gone up you actually get affected inflation that one need then henry ford figured that out he raised the wages of his workers so they could buy a car yeah yeah and again like the result though a large part of the new deal was giving business wages to workers so when you cut the wages it looks like a sensible this is the whole inability to think in the feedback sense of the actual economy operates in if you cut wages you will therefore have a deflationary impact on the economy when it's already going to do fleishman so by driving across a little down you increase the value in norman in real time so the outstanding debt making a process worse what you have to do is reduce the value of that on the easiest way

is to reverse the trend of the last forty years which is being trained for forty wages both in real in terms of the proportion of g.d.p. so you cause if you put the wages up not to. we get a much larger share of g.d.p. because you're expecting inflation to come along and eroded but by roading the by the inflation eroding with value of the dead you will drive down the bankers 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 nobody has a wage earner is out there demanding higher wages yeah 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 a classical economics is being marvelously useful to people who want to screw up the economy and 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 household and you're running a deficit you've got to cut back the spending which means the kids qanbar the nintendo games anymore you know that's makes sense a household balancing budget you've got to do that because you face what i can call a budget constraint. and that works here 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 us 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 aggregate 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 you're saying is that. if you step away and just look at the wage earner divorced from the household and the house. you get a much clearer picture of the problem and the solution will you what you see is

that you would you're talking about there is a positive feedback system because the process starts to ra's all this extra dipping taken out to buy houses and that means that house process rausing because they rose people who. taken would have to buy a house across houses so you get a spiral pushing it up and that's bad it has a sort of hit we shouldn't allow in the system and even the wages remain stagnant regiment statically go to encounter mining 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 crossing course is 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 the crash and 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 it's so easy to look at the moment imagine this whole process is called by government study government that we didn't have a government interest process in two thousand and seven the government debt in

america and every else in the world came along 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 could have torn it. and it's one of those now blame for the fact that the on fell off grace because there's a huge disconnect now then all this vilification that is white honest in the us for example unions which are there to hopefully support some kind of wage growth vilified it anti business anti-growth the real anti growth of the bankers the bankers have given the money for speculation and not for investment they don't even finance investment anymore particularly they sit in front as working capital that's why firms are sure they finance speculation if they fund a speculation and we're convinced that that's good that's not selling and trouble then they seek 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 wades 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 the economic statistics that point out in your work i did bunking economics one and the sequel can. thing out i believe this fall economics to pumping economics part two which is available soon but professor if i came to you in your class i said well wouldn't 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 about i got to get a grade on this really get it right on that that's a good idea that would cause this so that would stop me in my tracks in my class you say because the money supply growth is how bankers pay themselves 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 actually what happened back in one chain nineteen in england which caused the

depression in the beginning of the twentieth not not in twenty's there was a teacher you see had negotiated a cost of living adjustment so they actually got a cost of living changes not not the money it's a little talking about how with what the government is got on the gold standard which caused a mess of devaluation and wages had to fall by twenty percent and that caused depression at the beginning of the twentieth not in twenty's in england so it can backfire on your show you have all you know in the bank and then your hedge. well firstly 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 of the i.m.f. it will congeal extended process even further austerity is not what europe needs to if it's the private system is not producing the credit which you want doing this level of debt in the government's got to come in and produce money supply if you have growth going over rather than austerity you need prosperity from the public sector which means i said wage wage rises you've got to reduce the defrauded in

anything that doesn't do that is not going to work all right kate thanks again for being on the cars report thank you and that's going to do it for this designer guys report me next kaiser and stacy everett and i thank my guests steve came author of the soon to be released. an homage to part two if you want to send me an email please at kaiser report at r t t v dot are you into like signs of nice guys are saying well you know. innovation cluster in the center of siberia one city has revolutionary ideas for the automotive industry you're a cool bandages than some of the infection straight out of the software to make free digital screen in the building blocks for russia's first nationwide four g. network terms going top one for. the future

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