now here mostly this is all t.v.'s sickness and society or a sickness in the system as you feel forces famed gangs before nights of violence locals all stick to government will break down the crime inside sensational and keep it helped create. a paranoid unprepared for this economy teetering on the brink americans don't compound food supplies radios on to get them through doomsday which growing numbers can either be right around the corner. and ethnic sides in

the recall so they say they live in fear of having their lives and property taken as tensions remain high following weeks of volunteer the pool to train stuff say. it's wrong to use headlines for this hour the kinds reports up next here on our. backs guys or this is the story of four check it out then. we went to new york city and they downgraded america. immediately as we told you they would others doubted us but we guaranteed it and now we're back in france and guess what. here were tell us more well next i'll tell you

they have line as soon as the next kaiser arrives in france to pull a read france may be vulnerable to downgrade following cut to the u.s. yeah well those have tremendous ripple effects of thing with this downgrade because the u.s. dollar is course connected to the u.s. treasury bond market and it's connected to the thigh bone connected to the hip bone connected to the foot to the yeah it's all tonight it's only down graded start to pull the thread on the u.s. dollar the whole kit and caboodle gets on rival here you all might also say however that it's all related to s. and p. itself and moody's and fitch because the u.s. and france are in such bad shape due to all the so-called aaa rated collateralized debt obligations and other credit derivatives that s. and p. allowed to be rated aaa and these country's banks bought these toxic debt so that's

an interesting part of the history isn't it during the period leading up to the financial crisis the selling of collateralized debt obligations c.d.o. zas they're known and other flora and fauna of the derivatives fear spawned by the which are self life masters. fish and moody's and s. and p. gave these cancer nations these abominations their aaa rating and it created this huge ponzi scheme now they've pulled the rug out from underneath. another story related to this financial chaos going on at the moment bank of new york mellon charges depositors america's biggest bank has been forced to start charging customers who have deposits of more than fifty million dollars as more investors take cover from the my. turmoil so they're saying that they're basically trying to

force people out of cash and into somewhere else because they're receiving so many people coming in flooding the banking system with all this cash and this is something we've spoken to james turk about where he envisions reverse capital control that instead of capital controls being on money being taken out of the u.s. it would be against money being brought into the u.s. in order to avoid the hyperinflation of all those dollars that are overseas another great point trying to stop that money from coming in by charging essentially negative interest rates people so you can take interest rates below zero but you can by charging people to hold their money at the bank they start off with these big fifty million dollar posits and then they work their way down to mom and pop or out there with a couple thousand dollars on deposit you will be charged one or two percent or more at the end of the year you have that much less in your account as the bank is trying to pay off their bad loans that could've should've been ring fenced and

dealt with back in two thousand and eight but instead will lead to metastasize and grow into this enormous economy killing tumor of debt and i mean this is another actual point for those who argue that there's deflation and there are some people who argue there's massive deflation so here is a bank is able to charge money for people to hold this amount of cash but it also the article points out that the news of the levy emerged as a sale by the u.s. treasury of twenty billion dollars of ten day bills offering zero yields further demonstrated investors have now become intent on preserving capital. yeah the trend is obviously toward negative interest rates and that's negative purchasing power and oh by the way that's a good reason to buy gold again we come back to gold well let's move on to the other aaa rated securities about to be downgraded muni market prepares for a loss aaa ratings so the two point nine trillion dollars municipal bond market is

preparing for hundreds and hundreds of downgrades after standard and poor's lowered the u.s. one level to double a plus the first ever reduction for the country so s. and p. is likely to cut its ratings i mean it's a pull debt secured by the federal government so just pre-funded bonds tax exams backed by u.s. agencies and credits that are most dependent on federal spending write the aaa rating of the u.s. treasury bond is a reference rating that is connected to all these other aspects of the economy like the municipal bond market also on the corporate side i was just looking at zero hedge that made the good point that institutions like options clearing corp or the group that is responsible for clearing of short sells they're all being downgraded too so this is affecting the fundamental infrastructure of the entire system itself was being downgraded as the entire ponzi scheme and rattles yes i also read while

we were in the states that j.p. morgan is the next for a downgraded i s. and p. and the reason why is they said that j.p. morgan rely so much on the u.s. government despite all their protestations despite every year when jamie diamond collects his tens of millions of dollars bonus he says because i deserve it nobody works as hard as i am i'm so clever i can print money but it's the u.s. government according to the rating agencies that give or take the morgan it's its rating but nobody works as hard at fraud as jamie diamond but as you point out all they do over there j.p. morgan is they take the risks on their. books and they stick it on the federal government's books that work beautifully for years as long as america had a aaa repeating but now that america has a double a plus rating and interest rates are going to by definition creep higher that is going to be a huge wall of arbitrage enter agency arbitrage for cock the

nightmare bamboozlement that will no longer serve j.p. morgan in their quest to hide losses and that starts going down like a pile of bricks short j.p. morgan some of products sell it short made good in fact a better name for it at this at this time would have been bank for america if you follow this next headline max bank of america getting smashed as a id jumps into the lawsuit friday in a big way so sure it american international group is expected to sue bank of america what might be the largest mortgage security related action filed by a single investor the suit seeks to recover more than ten billion dollars in losses on twenty eight billion dollars in investments in mortgage backed securities this is again one of barack obama came into office they see by not shutting down the too big to fail banks and by letting a.i.g. live another day they're committing massive moral hazard on a incredible epic biblical scale now everybody who's involved all of the people all

accounted parties here that are suing each other are bankrupt and they're suing each other for the right to drain the federal reserve of more of the citizens capital and notice the key word we just said counterparty you know this extends to financial markets as well because when you go from dump aaa to double a plus suddenly when you start to downgrade all these dishes that are the intermediaries for all these market manipulating fraud deals you have counterparty risk so they say well look for example the sixteen trillion or six hundred trillion says me the riveted out there they say well it's not really a rest because they're all oss that eater. there through the counter-party obligations but if the intermediary that's responsible for making those obligations good goes bankrupt then you don't have a good coverage there you actually have a six hundred trillion dollar risk according to the report there's a growing trend of investors pursuing private lawsuits claiming banks misled them

into purchasing risky securities the trend also stands from the lack of prosecutions on behalf of the justice department against the largest financial firms and their executives so there you go max you talk about barack obama refusing to prosecute these are these people the too big to fail the banks toure's this is why we're still in this situation this leave says up to the biggest firms out there who can sue it because mom and pop joe baca donuts can't sue j.p. morgan and bank of america and all these other banks but you know the giant bankrupt organization a.i.g. care. i think this is so important because at the time when they led. with this massive fraud number they and when hank paulson went to congress and the story of three quarters of a trillion dollars it was all that we got to keep these markets open we can't afford them to go bankrupt we can't afford the counterparty risk we can't afford the systemic risk and barack obama just put his phone.

and now to have years later it doesn't matter barack obama but i'm not enforcing the law by not following the constitution it's going to blow up anyway well apparently a.i.g. is planning to file similar lawsuits against goldman sachs j.p. morgan and joy bank and of course after that will come the rating agencies because j.p. morgan goldman sachs and deutsche bank were selling products that were aaa rated by s. and p. but with all these things falling apart everybody losing their aaa america falling apart into a pocket of fraud and nothingness i want. bring up one final headline to think of another option another reality that we could be facing today what if barack obama had been a leader the bull case for gold and gold is rising because the world's monetary system is being debased and there's no sign of stopping well what if barack obama

instead of engaging in this elaborate stupid awful theater with john boehner what if he had just come out and said you know what forget all these negotiations we're just going to go back to a gold standard and we're going to value it at twenty five thousand dollars an ounce by and just left and that would have you valued all of their dad and they would be on the road to starting over again that's genius it's the reverse of this reverse nixon now nixon defaulted on the debts of america by dropping the gold standard when he owed all this money to foreign creditors well america is in the same position now and they could effectively do the same thing they could effectively default by devaluing against gold. that's exactly what's going to happen anyway and barack obama if he were a as you perceive a he were a real leader and had that call an ace of let's say richard nixon which i can't believe i'm saying that after having been dragged through watergate as

a kid and beat and been humiliated but compared to barack obama richard milhous nixon looks like a genius statesman compared to this no spine leader list not nobody bag enough a bag of worms and that's a genius idea simply and it's going to happen anyway they have to bring back the gold standard you know that the smartest guy out there in the punditry universe jim rickards you know he points out that those who criticize this idea say there's not enough gold and you know he would point out and i would point out that there's something called the price discovery mechanism you know markets reflect supply and demand and if you have six hundred trillion dollars worth of worthless to rivet as well you some of that's going to end up being repurposed as a gold standard at twenty twenty five thirty thousand dollars an ounce that's just the way markets work except market driven capitalism or go home. base here and thanks so much for being on the kaiser report thank you don't go away

after the break i'll be speaking with peter schiff. will. you believe the signs and signals from the realms where. the future covered. mission. couldn't take three sports chargers. to make amends three. three stews three. three broncos splitting p.t.o. a four year media project c.e.o. don carty dr tom. welcome back to the kaiser report time now to go to connecticut and talk with money

manager radio show host author all around nice guy peter schiff of euro pacific capital peter schiff welcome back to the kaiser report they sure have a yacht all right piers if as we have been talking about and as you have been talking about the u.s. has downgraded been downgraded by s. and p. their debt from templated double a plus did the s.n.p. go far enough but of course not but at least they weighed so in the right direction you know in wall street parlance any downgrade means get get the hell out you know they never like to put a sell out anything i say you have to look at to go from a strong buy will buy it means you know look out below and so they did the minimum that they could do but he is saying as far as i'm concerned he's get out u.s. debt eighty dollars and i'm at it yet because what they're really downgrading is not treasury bonds but the dollar because that's a paedos as alan greenspan said it warren buffett said they don't have to default

they could print but that's worse especially if you're a bomb holder and you get paid back with monopoly money and so what this means is that all debt in dollars should be downgraded whether it's treasuries muni's corporates you name it if it's pay you back in dollars get rid of it all right now let's talk about the whole rating agency motif you know how to. how they have been the role that they've played in this crisis and what's been going on the last few years because during the lead up to the crisis they document very well in your book crash proof and crash proof two point zero you talk about how the rating agencies were remez in that they gave the derivatives a collateralized debt obligations and these other cancer patients bastardizations the securitizations triple a rating so why suddenly did they get religion how did that how that happened because they were they were in god it's funny that the obama

administration is saying well why should we listen s. and p. after all they got it so wrong with the sub prime they think we should listen to moody's it fish but they also got it wrong and what everybody got wrong was they rated stuff aaa it should have been fair play and they're still doing it at least as he is learning from its mistakes whereas the other agencies are not and the obama administration is criticizing guess it for learning from its mistakes that's interesting i'm looking today and the the unintended consequences i guess you could call it because now fannie mae and freddie macas being downgraded some of the institutions like the options clearing corp and other part of the infrastructure and the architecture of the markets are being downgraded and in this bill bond markets are being downgraded because the aaa rating of the u.s. government as a reference rate it talk about how this is going to trickle through to these other pieces of the infrastructure and what consequences certainly because if the u.s. is not aaa if the u.s.

is double a plus then if you used to be a double a plus when you've got to go down to double a because you're not on par with the treasury if you are somewhat rich more risky to treasury you're still more risky because the treasury can tax everybody to pay its bills and if the treasury doesn't tax it prints it debases that dollar that affects all bonds not just its own bonds but you know it's also crazy about the rating system why. is china the world's biggest creditor nation we owe china trillions how can they be rated double a minus and we're all and we're a double a plus and we're kind of trial like it's own world is the world's biggest debtor a bigger risk than the world's biggest creditor now why what's kreider is comments he says s. and p. is being irresponsible as an s. and p. being responsible like. saying it's big government this big you're responsible they're the ones that are racking up debt and you know the a bomb administration is all over s. and p. because they claim they got the math wrong but they didn't count his two trillion

dollars of assumes savings over the next ten years why should they count it it's not going to happen and in fact the real math problem is with the administration using the cvo budget numbers all of these deficits assume a rapidly growing us economy for the next decade with low inflation low interest rates this exists only in a dream the reality is we're already going back to recession so you could take all those rosy scenarios and throw them in a trash can where they belong good cause you deficit is going to be much worse then both the administration and this in p. believe so i mean they're all wrought up about all right i want to go over that once more just because i want to talk about this two trillion dollars take this review that again why that's really a false canard in all this and also comment on warren buffett's remark that moody's

that s. and p. is somehow wrong and that his investment in moody's they're right yeah of course yeah people forget that he's got a dog and it's hot because he's a big shareholder in moody's and s. and p. has got it right that means moody's has got it wrong so when he comes out attacks moody's he's got it i mean s. and p. he's got it genda also this guy said that he would buy treasuries even if they had no yield so he would. i mean what good is his opinion if it's that moronic you automate maybe yeah you know senility is catching up with warren because obviously he can't be a great as graded investor as people think if he's saying he's going to buy treasuries even if they pay zero you know if that's the case let's sell him some special treasuries it'll save the taxpayers a lot of money if warren buffett or really buy our debt if we pay nothing and of course he also said that the federal government has a pretty press well you know what good is that to our creditors it's great for the government because it you know it inflates away its liabilities but it also

inflates the way the public's assets including the assets of warren warren buffett of course he's criticizing. s. and p. for missing some private housing bubble he missed it too he got it completely wrong in fact many of his companies might have gone bankrupt if the financial institutions weren't bailed out by by the u.s. government but the true trillion dollar may have era so-called is again based on best and p. not calculating the full amount of the savings that congress claims are going to be made over the next ten years based on what degree to what almost all of the two trillion in cuts have been sometime after two thousand and seventeen will be a different president will be a different contract congress they will not be bound by anything that was agreed to last week the only thing that counts are the customer made to the two thousand and eleven budget and there are not in fact i just heard rock obama speak and you know last night talked about the need for more tax cuts he wants to cut taxes for the

middle class and for the poor anyone to spend more money i government infrastructure that means he is advocating for bigger increases in a deficit right now ok now you bring something out there it sounds similar to what was experienced during the lyndon johnson kind of guns and butter. or you know they want it all and this led to a huge over expenditures going to lead ultimately to nixon closing the gold window in one nine hundred seventy one stacey herbert who i do the show with brilliantly asked me earlier in the show can obama if he was really a leader do a reverse nixon and just say we're going to reopen the goal window at twenty twenty five thousand dollars an ounce to inflate away these debts well that does it inflate away the debts i mean that that is an attempt to remind the thais gold put the u.s. back on the gold standard yes that's what we should do but there's no chance that

we're going to do that certainly not under obama you know that was the last time the u.s. government actually did default we default on our promise to pay gold and basically rendered a dollar i fear not i would go real value but i think at a loss that you're going to see in the dollar it decade ahead is going to be far greater than a loss in one nine hundred seventy s. because the dollar mean changes reserve currency status despite the fact that we defaulted on a promise the dollar now is going to lose that status right now the only thing that's standing between the dollar and complete collapse is to foolish actions of the bank of china the bank of japan the world is propping up the dollar because they believe foolishly debts in their political self-interest but as i said when they figure out it's no longer in their interest they will pull the plug and the dollar is going to collapse much worse than it did in one thousand seventies hopefully at some point we will go back on the gold standard but the price of gold will have to be much much higher now for that to happen talk about what's happening

over there bank of mellon they're charging fees on deposits over fifty million dollars to pass' can you talk about what this charging of a fee out of the posit means in a negative interest rate when we see more of it other words banks charging people to death on their casket i think i feed this is a byproduct of too big to fail because p. . pulled out a lot of money want to put it in the shoe gently because they feel that they're too big to fail and so they're but their deposits are safe but the reality is that of these deposits are safe because they're all bid on it and u.s. dollars so what people need to do is convert their their dollars into other currencies or or gold of a look at a swiss franc today this was frank is up almost three full cents you needed dollar thirty two to buy a swiss franc in fact with the euro dollar forty want to have the swiss franc is rapidly approaching parity with the euro and it just took parity with the u.s.

dollar that happened very recently and now it's at a thirty percent premium and look at this list right i mean the years imagine where the yen would be if the big picture pan had flushed out of fifty billion dollars down the toilet last week to buy u.s. dollars and of course u.s. treasuries what does japan do with all those dollars that they're buying their buying treasuries about because they want to but because they think there's a gun to their head but they're mistaken so instead of paying somebody to hold your dollars sell your dollars and get into this was frank or get into gold i have got about thirty seconds left i just want to go back and revisit the gold standard idea clearly as you point out what with the problem today is inflation and by returning to a gold standard you are coming back with something that will hopefully restrain government from spending and from the printing presses from rolling out at full speed so what clearly you know as it was saying before if you go back to gold standard got to

find a price that way would make sense given the fact you've had all this money printing going on for so long i know you've got a long term target on gold in the thousands but if you thought about what i what price what i don't know because it depends on where we are how can we go back to the gold standard obviously go to the gold standard today the gold price will be lower if we go. do it two years from now when it's going to have to be that much higher so a lot of it depends on where we get religion and of course we have it all depends on how much gold we actually have you know relative to all of our notes that are in circulation because it's a relationship between the supply of dollars and a supply of gold that would suggest that would set. back it and what we're able to give free to our ious but once we do that then be spending stops then the deficit stop we can't do it anymore if we actually go on a gold standard by which real then we have to abide by it and so i don't think

we're going to go to it again until we have a real crisis as long as the world is buying our bonds we're going to keep selling them as long as the world is gobbling up our paper we're going to keep pretty as long as we can live beyond our means we'll do it a lot as long as politicians get elected by plunging us deeper into debt they will do it it's not until they can't it's not until there are real consequences like a collapse of the bond market a collapse in the dollar a sense interest rates soaring that sends consumer prices soaring that case the stock market that puts people in the streets protesting you know and that is not until all that happens we're not going to do the right thing all right peter schiff thanks again for being on a kaiser report thank you and that's going to focus on the kaiser par with me maximizer and stacey harmer i would thank my guest peter schiff if you want to send me an email please do so have kaiser report r t t v that are you until next time this is max keiser saying.

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