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today violence is once again flared up. these are the images the world are seeing from the streets and chatted. for a chatroom. 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 anyway pouts in the past and we're here in new york to witness another heavyweight bout the new york dollar versus the rest of the world 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 of. our own so they server down

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 look guard says u.s. dollar may lose privilege i mean a debt limit crisis so this is the new international monetary fund management managing director christine lagarde let's cut a clip here where she's interviewed on p.b.s. news hour and global economy is clearly highly dependent on the u.s. economy because the u.s. economy is the first 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 it's that is quite who are some and if you if you were to take it further clearly they would be they would be the consequences in the rest of the world not just in the united states for example. the gold who has

always enjoyed what she's called the former french president many years ago called the exorbitant privilege of the dollar because it was the currency the reserve currency the new central banks hunt well clearly there was a dent in this exorbitant privilege and the confidence that people have towards the going or it would probably entailed a decline of the dollar relative to other currencies and probably don't in the mind of those people who reserve currencies us to witness the dollars effectively. and prime currency often is that yes they see exorbitant privilege which is a nice way to say rent seeking by the u.s. dollar being the world's reserve currency. the united states it's 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 to really get to see what the american economy is all about a third world pig addressed up with a lot of lipstick and phony accounting tricks well no i expect in a way i think it's kind of like the oil curse that 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 on like any european country where in europe you have to work for a living you actually have to traduce wealth in order to maintain your standard of

living or to increase your wealth you have to actually produce a america they can just print it and therefore the population itself. it's 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 copulation 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 to impose 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 where ever greece's debt rating is

at the current moment and it's all gone. ponzi scheme that's been in force for decades is crumbling and christine lagarde is absolutely correct of course she took over from public trust on who's got some troubles here in new york city mabel got an interview with him later but let's go back to this exorbitant privilege because this is what valerie this thing 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 a 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 bowed 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 goal shortly thereafter

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 redwoods 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 that 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 nine hundred seventy one to pay for the vietnam war and why is america bankrupt today to pay for wars of convenience were profiteering in iraq and afghanistan and the whole fake wars that the u.s. is engaged with using real american dollars it's interesting because of the new york fed it is of course where francis gold was that 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 can safely include it in the us reserves whatever those might be yet well another country that is experiencing the heebie jeebies a little bit nervousness there is china tell us what's on china's mind roche says chinese officials appalled by impasse on raising the debt ceiling so this is something that you and i have talked about is the banana republic in ization of america that's the thing that is concerning china it's not. 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 were 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 policy maker saying in mid july that we understand politics but your government's continued recklessness is astonishing well yeah absolutely but 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 unknowledgeable 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 the same way that hank paulson put a gun to congress's head back in two thousand and eight and extract that 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 a bomb. has 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 i'll kind of 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 the sun tan terrorist financial terrorist from washington but it's also part of every banana republic in ization we've talked about this a number of times since this often happens like in the egyptian economy where how egypt fell apart how dark left office is because they were turf wars between the various monopolies over sectors of the economy so when you have these very powerful oligarchies this is always what happens at the end of a banana republic in a condom e is. you know there are powerful interests each for each party they take of

a team or blue team yes it's a winner take all mentality set by the corrupt ideology of that communist strumpet i know random 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 i'm not 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 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 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 not 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 the last three and their dealings in 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 can. the billion dollars just some president make more money

meanwhile the jobless rate has continued to go higher 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 the statistics that came out from the commerce department they were released of course during the theatre 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 the 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 severed 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. he used to be you know i deal place for a holiday. in the moment. the

wounds of war are still visible. the republic is not only relieved but also shaping the future. the official. talk from the queues ops to. the. russians feeds now with some of you want. to. welcome back to the kaiser report i'm not surprised are there i am on the glorious

west side of manhattan there 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 with stacy herbert and stacey hey max actually we you were due to speak to i guess i'm saying hi i knew 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 projects 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 but 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 about 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 it 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 going to back down seeing how this thing is going to blow up first and this is leading to potentially a global conflict in the financial war that would be really defining moment for the twenty first century while at a time of world war three 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 a collapse of the us empire and there's there's a america lacks the imagination to stop it from happening so this is all the kabuki here you're seeing going on is one thing but on the other side it. aisle and 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 use 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 us 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 us dollar years ago it only now is 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 have this massive transfer of labor from the us 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 reviving the u.s. economy that would imply that there are some manufacturing base that is there to be revived but there is a manufacturing base there's only weapons of mass financial destruction created by

the banks on wall street and they keep going to matter what the economic conditions are because it's an economy found 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 person by the their ocean front property concocting new ways to destroy countries whether it's greece or dublin or america itself it's the noose that was used to hang these other countries it's now being used to hang the american economy and the american people are the last the joke is on them speaking of this relationship with china many of our goods in 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 go point out interesting headline in the last few days here in america apple now holds more cash than us government so apple's. now more cash

rich then united states government figures from the u.s. treasury department show the figures released by the us treasury department show the country of 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 spends up a number of interesting telling stacey 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 se 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 apple's balance sheet it's not their money so call 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 could 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 a 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 have more jobs in america and presumably more people in america able to buy apple products you know most of apple sells it outside of america because people in america can afford to.

by apple products because steve jobs move all the jobs overseas speaking about apple having more money than the us government on their books i think is 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 cristiana were not all 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 it 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 here because in two thousand and nine one of the spanish banks that has since become bank kiya 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 all these football players have become the new god heads and economy that worships the collateral is ation of human flesh in much the same ways we saw one hundred fifty years ago in the slave trade you know the collateral of slaves of 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 this labor is coming back as a viable business model are things going to happen these people america when they don't have the jobs will be picking cotton and a new slave market right white white cotton pickin slaves down there in tennessee and the south of america we're naldo is rated triple a by moody's moody's at the moment is it seeking to great america we're talking about big time like forget about the slaves max they don't. rather i'm talking about the big time game here

and so moody's is rated naldo triple a which was judged eighteen million pound rael madrid paid manchester united for ronaldo as safe as u.s. government debt so right now we're not all know is going on him is as safe as the u.s. government debt which it could actually be safer very soon well it says something about how the economy has now gotten to the point where rating agencies are passing judgments soccer players are football players in the same year but they're in able or unable to give a structural kirti in any meaningful way for an entire country like spain it without actually glom onto a degrading situation piling on and actually making situations much worse it does this let me ask you this by giving on all the aaa 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 consolidation of wealth and power in the hands of a few we're emerging into a global oligarch and a global elite it apple has more money than the us government were naldo could soon have a higher credit rating and the us government this is the but we haven't we have concentration of wealth and power these people are mightier than any government on earth well i'd like to i had to start working on my football game obviously i mean i used to play ice hockey i used to come to 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 burden that was probably your for all those worth of aaa credit bob your must be worth his weight in platinum. golden crusted such as your

belief letter and one positive note because if the u.s. is downgraded and they have to pay more interest there is for the savers for the retiree they will be earning more on their treasury bills than they currently are because right now their retirees in america we've spoken to some while we've been here have been decimated their incomes of collapse by almost one 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 or six percent before before this she hoddy 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 us government market say see herbert 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 a chinese economist. excellent and that's going to do it for this edition of the

kaiser report with me next guys are going to thank stacey herbert if you want to send me an e-mail pleased. to report in our to. argue until next time this is max keiser same. time arriving here broadcasting live from washington d.c. coming up today on the big picture.

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