have a great night i'm christine frezza. more news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. before ation through the day. ok tom arriving here broadcasting live from washington d.c. coming up today on the big picture.

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as are this as the kaiser report we are back from apple. as were we were able to stand up to an onslaught of tear gas from provocative juers what's a provocative or that's a cop dressed up like an anarchist hastings' here but what's next in fact i believe they were i.m.f. agents stressed out as anarchists and they are tear gas canisters at a c.v.s.

written along the side collateralized debt slow on the tour. financial terrorism i think it's called credit default swaps that there are so many different names for these derivatives these days and that's 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 groff all the people in greece hate the parliamentarians they hate george papa i notice you're showing in the palm of your handling in the bottom of my hand this is for you george as a that. little george as they call him so well the i.m.f. is in the news and you were 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 the people of greece need to stand up to financial terrorism because greece goes down our 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 the people of greece don't. and those nincompoops in your country steal all of your wealth well remember as this article describes the i and 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 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 and debt they've created a dollar g.d.p. after world war two and that has been going downhill ever since now 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 those 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 i 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 digress a bit about the sign of situation they are completely bankrupt that's why they go into a country like greece they take greece is that 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 you hate colson 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 why. 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 august 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 give us your money or your life it's a stick up the kid 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 to slow sions some kind of government functionality you've got to actually have a functioning economy you just don't have bandits at the i.m.f. constantly holding people up and saying we are the children dollars well look 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 use of all they want is more debt onto the american population it's a tough sea turvy alice in wonderland through the looking glass for cock the nightmare for the i.m.f. is saying the past two economic glory is by increasing your debt ceiling.

what case though 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 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 the financial times and it's not. 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 simmers is the walking dead they're 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 the 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 to 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 do a live rich and which means they've got to continue to save which means they have got to stop shopping but what do you see there you see the zombie shopping at walmart must be dog food must be 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 mouth is 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 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 micheline still callup process disturbing wills of

all new general motors cars when you turn on 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 with the u.s. economy actually you know what they should also do at the same time is have george bush's voice come on and say go shopping standing on the rubble after nine eleven a touch of shoppers don't look behind me at the pile of rubble go back to the store put your credit cards or risk well so i have these final two 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 more. housing crisis worse then 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 us is about eight percent lower than it was a year ago and that it continues to fall about one percent per month look the house prices to 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 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 as 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 house prices will grow 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 and or 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 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 u.s. and that is in the blue and then you see the median household income in red and you see from two thousand as well g.d.p. per capita in the u. . 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 those are the debt levels increased income went down at the top of the cycle the banks whooped 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 they 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 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 he mentioned circus days to herbert and he can't have a circus without a contortionist and this is what ben bernanke does when he gets on t.v. he's trying to convince people that the economy it's actually not sure if. the users contortion very language because they. are to make their money. 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 along the upper northwest coast of the north west coast citizens are getting fried well they have called hot particles which are radioactive little particles of six s c m n strong c m a plutonium going falling into their lungs or turning the citizens of the hot pockets. there's a lot of those things of putting on micro after that obama's microwaving his own people well the population already zombie fied from toxic debt right and on top of them you're putting radioactive waste this is like a genuine situation where you could see real lives on these emerge 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 they may be coming back beautiful all right so thank so much for being on the gaza report thank you it goes away much more coming away so stay right there.

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 i say are non-economist because of course you're known for your classic text deep bone ping economics which you pretty much tear apart all the assumptions that people have been using to guide them 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 cut 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 this is a test case example walk us through what's happening well the whole greece is an unfortunate instance of what's happening on 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 bit but it has to find a wife just waiting to get into more of it than we actually want to take on and i use the analogy is a bit like going to would be interested in this wants to take out more teeth because the multi take up more money max and you only got one through that action needs to be removed but he's persuasion would have more traits removed will be sexier so you fulfil the military its removal and that's what's happened globalise

we have fallen will profit 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 as america or england or australia or canada or portugal or spain etc etc but they certainly had one of the great is the debt was wadding of dollars in the. what to do when hiding in a situation to get them into the c.d.o. goldman sachs so we have a process called much much debt what's the solution is put forward by the kinds of invention i think was cut wages it wasn't hard wages that caused the process ok we're going to get to that a second on this debt load keeping this in mind now of course one of the big pushers of the debt let's say is keynes keynesian thinking but wasn't it when it came to the thing that you can go into debt during this low times but during the good times you try to pay down that debt but it's actually kind of kind of talking about public that because it really was having with

a private bank and 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 a classical economist the gauze of a pillory in the banking economics mistakenly believe that the government system controls the private bit like a having you know a centrally controlled system making sure that all the causative 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 later on 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 if all 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'd have you know private it bouncing along like this in 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. well they wanted two thousand was that they can be a situation with rather than the profit doing this new government at their own net and with 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 good as well so we go down that route you know you've got this is as japan has had private stabilizes perhaps a thought a little public that 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 ties the knot is not quite as frankly as all make it now is to increase wages. increase wages for illicit increased wages that this goes against a lot of the so-called wisdom out there so by increasing wages you're actually helping to solve the problem you will then cause inflation. ages ago made this printing press argument that if you have a process it's quite 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 dice money in america and what you had was a when you went into the process inflation americans running about thought percent it filled them on a stoop so we had the fleischmann and been literally more than doubled based money

and inflation went from modest to bluster and then started hitting 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 this will reduce the effective burden of that bit the way to do it is doing. chris wages because they in terms of got no choice but to increase their process which is about no choice but to spend because costs have gone up you actually get affected inflation that one didn't have a four figure that out he raised the wages of his workers so they could buy a car yeah yeah and again like a result though a large part of the new deal was giving this away just the workers so when you cut the wages it looks like it's sensible to do this 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 flush and so by driving across a little down here we increase the value in norman in real terms of the outstanding debt and making across this 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 has been trimmed for falling wages in real in terms of the proportion of g.d.p. so because of that 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 i wrote it but by reading the ng the well 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 way to force sub subsistence don't seem to be arguing this case and then america for example is the 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 has been 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 household and you're running a deficit you've got to cut back a spending which means the kids connaught in intended and any male you know that's makes sense the household balancing 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 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 simulates i bit the maddest part of aquavit to write the borrowing 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 a bunch of money you've got the a.t.m. created inflation that in that way but what you'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 starts to ra's all this extra dipping taken out to buy houses and that means the house process rausing because they was people who take on more debt of our house across houses so you get a spiral pushing it up and that's bad it that's a sort of that we shouldn't allow in the system in a way does remain static regimin statically got 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 out of houses 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 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 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's chopped their own arm off and then you put the twenty. and the twenty guys now blame for the fact that the on fell off race because there's a huge disconnect now then all this bill. occasion couldn't quite honest in the us for example unions which are there to hopefully support some kind of wage growth or vilified and 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 finance working capital that's what should be financed by coalition if they fund a speculation and we're convinced that that's good that's not so when they get in trouble then they seek bail out and they get risky but i do think that austerity measures push 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 increase is tied to g.d.p. but g.d.p. is another one of these economic statistics they 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 preventable soon but professor if i came to you in your class i said well would it be an interesting idea if they cops and firemen and teachers and 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 and we get a grade on that that's a good idea that would this is so that would stop me in my tracks in my class you say because. money supply growth is how bankers pay themselves and yeah you get paid by the how much money they inject into the system of they get a fee based on that the i mean i can see here is what i actually back far no that's

what you what happened back in one chain nineteen in england which caused the depression in the beginning of the twentieth not in twenty years there was that that you you see it negotiated the cost of living adjustment so they actually got a cost of living changes not not manageable as you were talking about however what the government has got up 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 it can backfire on your show you have to get all you know in the bank and then your hedge . well firstly you have 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. people can give a standard process even further austerity is not what europe needs to get if it's the private system is not producing the credit which it won't do in this level of debt and the government's got to come in and produce money supply to feed growth going over rather than austerity you need prosperity from the public sector which means i said why should 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 design that has a record nice keyser and stacy herbert and i thank my guests steve king author of the soon to be released. an homage to part two if you want to send me an email please the kaiser report at r t t v dot or you want to like sign this is nice guys are saying well you know.