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stories this hour ahead of calls for yet more money to be made available to struggling economies in spain slide towards debt distress and the cost of borrowing souls. syria's president issues a decree legalising opposition political parties in the country the move has been dismissed protesters who claim they are being massacred by bashar assad's forces. and a failed palestinian suicide. mission for peace corp before decimating advise and is now trying to promote tolerance between is right is the palestinians. pulling no punches against the world's financial.

max kaiser this is the kaiser report you can see from the scene behind me that i am in new york city not far from me is the legendary madison square garden home of many heavyweight bouts of the past and we're here in new york to witness another heavyweight bout the new york dollar versus the rest of the world are i should say the american dollar and so far that looks like the dollar in round sixteen of its post world war two epic battle with the rest of the world is about to go down stay server down the newsroom talk to me hello max yes the dollar is in the news in

fact it's in my very first headline here i am asked guard says u.s. dollar may lose privilege amid debt limit crisis so this is the new international monetary fund management managing director christine lagarde let's just cut to the clip here where she's interviewed on p.b.s. news hour the global economy is clearly highly dependent on the u.s. economy because the u.s. economy is the post in the world and it's a it's a major it's a major power in many respects so to have the lead economy. uncertain about its that is quite who are some and if you if you were to take it further clearly that would be that would be consequences in the rest of the world not just in the united states for example. the dollar has always enjoyed what she's called this time the former french president many years

ago called the exorbitant privilege of the dollar because it was the currency the reserve currency that moves central banks hunt well clearly there was a dent in this exorbitant privilege and the confidence that moves people have towards the dollar it would probably entail a decline of the dollar relative to other currencies and probably don't in the mind of those people who reserve currencies as to whether it's a dollar he's effectively do you ultimately and prime currency off yesterday see exorbitant privilege which is a nice way to say rent seeking by the u.s. dollar being the world's reserve currency a united states gets an extraordinary play on the global economy and this is insulated americans from price hikes in food and energy in a way that ninety nine point nine percent of americans don't understand but they

will understand soon because even though the u.s. is experiencing a recession a slowdown they haven't seen nothing yet because once the dollar truly collapses price of gas will quadruple price of food will skyrocket and then are really going to see what the american economy is all about a third world pig dressed up with a lot of lipstick and phony accounting tricks well max that in a way i think it's kind of like the oil curse having this exorbitant privilege of the u.s. dollar in that the government really doesn't need the population because they can just print money they truly can unlike any european country where in europe you have to work for a living you actually have to produce wealth in order to maintain your standard of living or to increase your wealth you have to actually produce it in america they

can just print it and therefore the population itself. is is not needed yet let me emphasize the point that you're making because it's a point you have made before and it's an excellent point in the oil rich countries they do not need their population so they abandon them and you see that huge wealth and income gap in america because of this exorbitant privilege american policymakers do not need their population they don't need a middle class they just print money for wall street wall street speculates when they make a mistake they go to washington they print more money and of course washington imposes austerity measures which have been invisible to most americans because of this world reserve currency status the u.s. dollar enjoys which it is about to lose the rating on the us treasury bonds is on the way down from aaa down to triple be down to wherever greece's debt rating is at the current moment and this all bond. ponzi scheme that's been in force for decades

is crumbling and christine lagarde is absolutely correct of course it took over from dumping strauss kahn who's got some troubles here in new york city maybe we'll get an interview with him later but let's go back to this exorbitant privilege because this is what. valerie just saying said as she referred to but this was under the charles de gaulle administration recall and this is the first time that america really went bankrupt big time on the global stage because in one nine hundred sixty nine charles de gaulle asked for the three hundred million dollars worth of gold that the u.s. technically owed france due to the trade deficit and france sent a naval ship over here to new york to collect their gold and america had to give it to france had to give the three hundred million dollars worth of gold shortly there after britain asked for their gold as well which was similarly about three hundred

million dollars america went bankrupt basically they said no we closed the gold window we're not going to pay you what we owe you so this is this whole debt ceiling debacle has already happened before spectacularly america did go bust but charles de gaulle had warned that you know it was the post bretton woods the bretton woods era when they established the u.s. dollar as a reserve currency he complained that it would be an exorbitant privilege and that america would run deficits to the i could see because they wouldn't really have to pay for anything that's right and why was nixon forced to close the gold window at that time one hundred seventy one to pay for the vietnam war and wise america bankrupt today to pay for wars of convenience war profiteering and iraq and afghanistan and all fake wars that the u.s. is engaged with using real american dollars it's interesting because the new york fed it is of course where francis gold was kept is also where a lot of european gold is kept including germany six. percent of germany's gold is

held in the new york fed in new york do you think germany will send a warship down to new york harbor and demand its gold back stacey max germany has zero chance of getting back their gold as jim rickards says i think i think it's you could safely include it in the us reserves whatever those might be yeah well another country that is experiencing the heebie jeebies a little bit nervousness there is china tell us what's on china's mind roach says chinese officials appalled by impasse on raising debt ceiling so this is something that you and i have talked about is the banana republic and ization of america that's the thing that is concerning china it's not that. the debt ceiling was always going to be raised that's that's never really going to be an issue because at the end of the day has to be raised because it's or it's just paying for what congress has already ordered this is spending that congress has already spent they're the ones that we ordered the administration to spend this money and that was the debt ceiling but they're concerned about according to stephen roach who's

in non-executive chairman of morgan stanley asia he cited an unnamed chinese policymaker as saying in mid july that we understand politics but your government's continued recklessness is astonishing well yeah absolutely what we have in the washington d.c. is a repudiation of the two thousand and eight election there are a lot of folks in washington that would like to and all barack obama's election as president and they're doing so by forcing this debt ceiling issue as a referendum on his presidency this is a new piece meant a virtual impeachment and they're going to basically put a gun to the economy said the same way that hank paulson put a gun to congress and said back in two thousand and eight and extracted and extorted three quarters of a trillion dollars for his banking buddies now boehner and his group of politicians his friends in washington are putting a gun to obama said and say either you abandon your president say you give us all

the power or we're taking this economy down it's what we've been calling in the show financial terrorism is the most pernicious and ugliest form of terrorism in the world and al-qaeda look like mother teresa in terms of scope damage and the destruction of human life and boehner is kind of like a terrorist with a suntan he's the suntan terrorist financial terrorist from washington but it's also part of their banana republic in ization that we've talked about this a number of times as this often happens like in the egyptian economy where how egypt fell apart how will bark left office is because they were turf wars between the various monopolies over the sectors of the economy so when you have these very powerful oligarchies this is always what happens at the end of a banana republic and a condom e is. you know there are powerful interests each for each party they take the red

team or blue team yes it's a winner take all mentality said by the corrupt ideology of that communist strumpet i know rand who's enjoying some popularity again in america and her philosophy of take everything kill everybody and don't have a conscience about it let's move on to the next head by my so while the boehner and obama are settling while rome burns literally let's look at what how rome is burning recession took bigger bite than estimated so the two thousand and seven to two thousand and nine recession get out the world's largest economy more deeply than previously estimated gross domestic product shrank five point one percent from the fourth quarter of two thousand and seven to the second quarter of two thousand and nine compared with the previously reported four point one percent drop now this is from the commerce department but the most important thing that they say here is that companies fared better and workers worse over the past three years than

previously thought before tax corporate profits adjusted for the value of inventories and capital depreciation were revised up by two hundred sixty four point nine billion over the period led by improved earnings at financial institutions knox so from two thousand and seven to two thousand and nine the commerce department is saying that the corporate profits at banks actually went up this well corporations rely more and more on their dealings with wall street and their dealings and derivatives which are extraordinarily profitable and when you get the government to give these corporations trillions now we know that they gave away thirteen trillion dollars to american banks and foreign banks it's not hard to make money money even a rhesus monkey can make a billion dollars if you give a billion dollars in free coupons and if they make a mistake you give an. a billion dollars this is some president make more money meanwhile the jobless rate has continued to go higher and the wages have continued

to deteriorate anyone who's actually working for a living would never say that there's been anything like a recovery from the crash of two thousand and eight and now they're saying you know what there really wasn't worse press than we were saying and by the way going forward it's going to be worse than we can ever imagine so again it's up to the people when the social contract is broken to revolt you know i think people would be surprised at this these statistics that came out from the commerce department they were released of course during the kabuki theater of the debt ceiling kabuki so most people didn't see this but the fact is that everybody every american will know that the crisis is a banking crisis so you would think during a banking crisis that their profits would go down but in fact they went up and they performed better during this crisis than any american who is now being asked to pay for this but also being asked to pay through the exorbitant privilege that they are about to lose and they just have no idea what is going to happen once they lose the

exorbitant privilege of the u.s. dollar is the reserve currency yet and once again barack obama when he came into office because he didn't throw geithner out larry summers ben bernanke he's paying the price for allowing the financial terrorist to run his campaign and run this country now he's being marginalized the i.m.f. is running the show barack obama has become a non entity all right stay server from the newsroom thanks so much for being on the kaiser report thank you max don't go away much more coming your way stay right there. the official. so called time from the top story. on the. video on demand r.t.s. mind broadcasts and r.s.s.

feeds now in the palm of your. question. live well. bringing you the latest in science and technology from around the world. we've got the future covered. welcome back to the kaiser report i'm max kaiser there i am on the glorious west side of manhattan here to witness firsthand the collapse of the american dollar the american empire the american belief system they american dream it's all crashing in real time right here on the west side of manhattan let's go down to the newsroom and check in once again stacy herbert and stacey hey max actually we you were due to speak to a guest in shanghai and you were going to talk about the red back but perhaps china

is not ready to take over the world because apparently their internet system actually isn't up to steam well that's an interesting point about stacy about china's rise to power is that they have done so on the back of a loser a project known as ghost cities so the government has engaged in shovel ready projects as barack obama might call them building skyscrapers in villages and towns and cities that nobody lives in the cities but it looks like they're generating g.d.p. growth meanwhile they're beholden to america through the relationship with the u.s. dollar and now the u.s. dollar is crashing this is setting the stage for a global conflict i heard somebody make the following comment and an interesting interested in your thoughts about it they said that the posturing going on in washington reminds them of what happened before world war one countries were

intransigent they're taking their positions are digging their heels in and then suddenly a popped off it seems to me that this is what's happening right now stacey countries and politicians are taking these positions where they're not willing to back down seeing how this thing is going to blow up at first and this is leading to potentially a global conflict in. financial war that would be a really defining moment for the twenty first century while at the ethnic time of the world were pretty world war one of course that was the beginning of the collapse that was the in the process of the u.k. collapsing and losing their empire so yes similarly where there and it's the collapse of the us empire and there's there's a way america lacks the imagination to stop it from happening so this is the all the kabuki theater you're seeing going on is one thing but on the other side of the aisle in the equation is whether or not china actually wants to step up and be

a superpower. now this is one of the things we're going to talk to our guest daniel collins about he's written an article about the red back and how china is actually more and more trade is happening in china in asia in the u.s. so there there there are all sorts of currency swaps happening so china is actually expanding the pool of central bank reserves of the u.s. that's right so the chinese are doing bilateral currency swaps with russia iran and other countries so they've been moving out of the u.s. dollar as world reserve currency status for a while it's like the old joke about the husband knowing the last one to know that his wife's been cheating on him the american people are the last ones in the world to know that the rest of the world has been cheating on the us dollar they've abandoned the u.s. dollar years ago and only now is it becoming an issue in the us but it's been an issue around the world ever since china became part of the world trade organization

and you had this massive transfer of labor from the u.s. to china taking advantage of the so-called wage arbitrage thanks to bill clinton which gutted manufacturing in america and when they talk about this debt ceiling and the need to stimulate and the need to print more money as rick. having u.s. economy that would imply that there is some manufacturing base that is there to be revived but there is no manufacturing base there's only weapons of mass financial destruction created by banks on wall street and they keep going no matter what the economic conditions are because it's an economy balance not by the discipline of gold or the rule of law but by the willing the only means of a bunch of corrupt hedge fund managers who live not far from here in the hamptons i don't long island they're standing by the they're ocean front property concocting new ways to destroy countries whether it's greece or dublin or america itself it's

the news that was used to hang these other countries is now being used to hang the american economy and the american people are the last to know the joke is on them speaking of this relationship with china many of our goods and america are made over there and therefore the actual american workers don't make much money because they have no jobs and i want to know point out an interesting headline in the last few days here in america apple now holds more cash than u.s. government so apple is now more cash rich than you then united states government figures from the u.s. treasury department show the figures released by the u.s. treasury department show the country the united states currently has a total operating cash balance of seventy three point seven billion dollars this compares with apple's seventy six point four billion of cash reserves which has built up during a phenomenal half decade of strong sales of course most of their goods are well

they're designed and innovated. in the united states but they're all manufactured in china yes this brings up a number of interesting points stacy first of all fifty percent of all the apples manufacturing capacity could be in the united states so instead of having seventy or eighty billion in cash they might only have ten or twenty billion in cash. by law under the f.c.c. a company is not even allowed to have that much cash without paying a dividend so they're actually breaking the law on that front second of all this is actual cash on apple's balance sheet it's not the money so-called that's on the american government's balance sheet which is actually not hard cold cash it's a low grade debt which is still debt based which is not actual cash and the funny thing is that if apple were to transform itself to a bank like j.p. morgan they can leverage that eighty billion ten times over quite easily and be an eight hundred billion dollars balance sheet it would be almost

a trillion dollar balance sheet on top of the company that's generating many hundreds of billions of dollars in sales but they keep the cash on their balance sheet not sure exactly what steve jobs strategy is there other than to weather some downturn but the hard cold bottom line fact is that if he brought those jobs back to america less cash you'd have more jobs in america and presumably more people in america able to buy apple products you know most of apple sells and outside of america because people in america can't afford to buy apple products because steve jobs moved all the jobs overseas and speaking of apple having more money than the u.s. government on their books i think a good idea for america how they can get out of our debt situation and keep their liquidity flowing to keep the government operating is has emerged from spain spanish banks fields were naldo as collateral so christiane no we're not although the most expensive footballer in history has joined the european central bank on

a free transfer sources say the authorities want us help on the sovereign debt crisis by kicking the can further down the road so he was joking of course but what is actually we're naldo could feasibly become the e.c.b. property after he was pledged as collateral for emergency liquidity support by spain's struggling savings bank. bank because in two thousand and nine one of the spanish banks that has since become bank lent to it re all madrid seventy six point five million euros to pay the transfer fees for rinaldo now because of the liquidity crisis it is emerged that bank has put up the loan as collateral with the e.c.b. in return for a vital funding this football players have become the new god heads and economy that worship's the collateral is ation of human flesh in much the same way as we saw one hundred fifty years ago in the slave trade you know the collateral of

slaves drove the triangular trade hundred fifty years ago between the sugar producing states the plantations in america and other points on the map of the globe during the british empire as you mentioned previously the slavery is coming back as a viable business model were things going to happen these people america when the nominee jobs would be picking cotton in a new slave market white white white cotton pickin slaves down there in tennessee and the south of america were naldo is rated triple a by moody's moody's at the moment is seeking to downgrade america we're talking about big time like forget about the slaves max they don't matter i'm talking about the big time game here and so moody's is rated we're not although chip will a which would which judge the eighty million pound rail madrid paid manchester united for ronaldo as safe as u.s. government debt so right now we're not although is the loan on him is as safe as the u.s. government debt which it could actually be safer very soon. says something about how the economy has now gotten to the point where rating agencies are passing

judgments on soccer players or football players in the same year but they're in able or unable to give a structural critique in any meaningful way for an entire country like spain it without actually glom ing onto a degrading situation piling on. and actually making situations much worse it does this let me ask you this by giving arnaldo it's a play rating and by offering him as collateral to buttress the spanish economy is this in fact a net positive for the bond markets around the world or is it just basically the rating agencies laughing at the banks and the people once again and giddy with their imperial power here is the the consolidation of wealth and power in the hands of a few we're into global all the darky and global elite that apple has more money than the u.s. government we're naldo could soon have

a higher credit rating than the us government this is what we have and we have concentration of wealth and power these people are mightier than any government on earth wow i'd like to know how to start working on my football game obviously i mean i used to play ice hockey i used to come for the rangers game right here at madison square garden back in the seventy's i saw the boston bruins won the stanley cup in the seventy's i was right there in the garden that was bob you're there for now those were the aaa credit bob your must be worth his weight in platinum gold and trusted precious beyond belief left and on one positive note because if the u.s. is downgraded and they have to pay more interest there is for the savers for the retirees they will be earning more on their treasury bills than they currently are because right now they're retirees in america and we've spoken to some while we've been here as been decimated their incomes have collapsed by own most

a hundred percent that's right the grandmothers and grandfathers in america are rooting for a collapse because they want the interest rates to go back to five and six percent before that before this jihadi bankers took over so they can once again have some kind of standard of living that's absolutely right the grandmas are out there rooting. for a collapse of the u.s. government market say server i think we've run out of time so thanks for being on this extended version thank you max i was a good stand in for chinese economist. excellent and that's going to do it for this edition of the kaiser a fork with me max kaiser i want to thank stacey herb or do you want to send me an e-mail please do so at kaiser reporting r t t v are you until next time this is max keiser saying by.

move. in.