today violence is once again flared up. these are the images the world has seen from the streets of canada. before asian. i am max kaiser this is the kaiser before check it out jet blome. we went to new york city and they downgraded america s. and p. did i made it les as we told you they would others doubted us but we guaranteed it and now we're back in france and guess what. stacy herbert tell us more well now it's also you that have line as soon as max kaiser arrives in france chip

will a read france may be vulnerable to downgrade following cut to the u.s. yeah well there's a tremendous ripple effects are 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 it's on rubble where you are 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.m.p. allowed to be rated aaa and then these countries banks bought these toxic that still doesn't mention part of the history isn't it during the period leading up to

the financial crisis the selling of collateralized debt obligations see the rows as they're known and other flora and fauna of the derivatives fear spawned by the witch herself blith masters. fish and moody's and s. and p. gave these concatenations these abominations their aaa rating and it created this huge ponzi scheme now they've pulled the rug out from underneath them well max another story related to this financial chaos going on at the moment bank of new york mellon charges depositors' america's biggest custodial bank has been forced to start charging customers who have deposits of more than fifty million dollars as more investors take cover from the. 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 envisioned 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 without another great point trying to stop that money from coming in by charging especially negative interest rates people so you can't 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 cars it's in and they work their way down to mom and pop are out there with a couple thousand dollars on deposit you will be charged one or two percent or more of the much less in your account as the bank is trying to pay off their bad loans that could or should have 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 tumour. 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 but again we come back to gold well let's move on to the other aaa rated securities the past we downgraded the 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 discipline debt secured by the federal government says just pre-funded bonds tax exempt backed by u.s. agencies and credits that are most dependent on federal spending. the aaa rating of the u.s. treasury bond is a reference rating there's 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 a good point that institutions like options clearing corp or the group that is responsible for clearing of shorts cells they're all being downgraded too so this is affecting the fundamental infrastructure of the entire system itself was being downgraded as the entire poem and rubbles yes i also read while we were in

the states that j.p. morgan is the next were downgraded by 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 they can take the morgan it's its rating but nobody works as hard at fraud as does 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 agency arbitrage 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 is not a fact so it's short naked in fact of better naked short at this at this time would have been bank for america if you follow this next head by max bank of america getting smashed as a i.g. johnson for the lawsuit fray and a big way so is her 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 a good one of barack obama came into office they see by not shutting down the too big to fail banks by letting a.i.g. live another day they're committing massive moral hazard on a incredible epic biblical scale and now they're out suing everybody who's involved

all 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 noticed a keyword and we just said counterparty you know this extends to financial markets as well because when you go from aaa to a.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 sixty trillion or six hundred trillion says me the rivet is out there they say well it's not really a risk because they're all offset each. 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 actually talk about barack obama refusing to prosecute these these people they're too big to fail so the banks toure's this is why we're still in this situation this leaves this up to the biggest firms out there who can sue it because mom and pop go back to 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 let ai g. get arrested with this massive fraud number they and when hank paulson to congress have extorted three quarters of a trillion dollars it was all that we got to keep these markets open we can afford to go bankrupt we can't afford to counterparty risk we can't afford a systemic risk and barack obama just put his phone as. who. and now to have years later it doesn't matter

barack obama but 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 deutsche 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 have 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 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 got all of their debt and they would be on the road to starting over again that's genius it's the reverse nixon it's the reverse next thing 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 put say if you were a real leader and have that call an ace of was say richard nixon which i can't believe i'm saying that after having been dragged through watergate as a kid and be and then humiliated but compared to barack obama richard milhous nixon

looks like a genius statesman compared to this no spine leader list none nobody bagga nothing bag of worms and that's a genius idea simply and it's going to happen anyway they have to bring back a gold standard you know 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 if you have six hundred trillion dollars worth of worthless derivatives 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 there were thank so much for being on the kaiser report thank you max don't go away after the break i'll be speaking with leadership.

this is a table from the u.s. embassy in colombo to talk about here it occurred june seventh incident of extrajudicial executions the military according to the press that on that they killed nine guerrillas and from the best of you should write instructs you including you know and their kokoda that he strongly suggest however that the nine were executed by the army and then dressed in military fatigues. explain how you know this kind of the phenomenon where bodies are dressed up as guerrillas and presented as killed in action and this and this the idea that you need to produce parties actually encouraged paramilitary collaboration this is a cia document central intelligence agency they knew about these activities they knew they were happening they knew about links to paramilitary groups and yet the

usa continued to throw out. the official. pulled touch from the shops to. life on the go. video. old girls and streets with the palm of your. question on the. mission three couldn't take three days for charges free arrangement three. three stooges free. old free blown just close. the video for your media projects free media gondar teton com.

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 europe aciphex capital peter schiff welcome back to the kaiser report thanks for having me on all right piers if as we have been talking about and as you have been talking about how the u.s. has downgraded been downgraded by s. and p. their debt from aaa to double a plus did the s.n.p. go far enough but of course not at least they way so in the right direction you know it wall street parlance any downgrade means get out you know they never like to put a sell out anything i say you have to look at it 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 really what s. and p. is saying as far as i'm concerned is get out u.s. debt eighty dollars denominated debt because what they're really downgrading is not

treasury bonds but the dollar because s. and p. knows as alan greenspan said it warren buffet said they don't have to default they could print but that's worse especially if you're a bond 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 it is pay you back in dollars get rid of it all right now let's talk about the whole rating agency motif you know how they how they have the role that they've claimed 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 remiss in that they gamed. the riverdance a collateralized debt obligations and these other concatenations bastardizations these securities ations 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 subprime 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've been aaa and they're still doing it at least s. and p. is learning from its mistakes whereas the other agencies are not and the obama administration is criticizing guess and pete 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 this woman markets are being downgraded because the aaa rated of the u.s. government is a reference range can you 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 loss than if you used to be a double a plus when you got to go down to double a because you're not on par with the treasury if you are somewhat rich left 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 prince at the base of the dollar benefits all bonds not just its own laws 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 i don't world is the world's biggest debtor a bigger risk than the world's biggest creditor yeah why do. it's kiters 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 in bed and you know the a-bomb administration is all over s. and p. because they claim they got the math wrong that they didn't count is two trillion dollars of assume savings over the next ten years why should be counted it's not going to happen and in fact the real math problem is with the administration using eusebio budget congress 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 can take all those rosy scenarios and throw them in the trash can where they belong the budget deficit is going to be much worse then both the administration and this in p.t. believe so i mean they're all wrong about about all right i want to go over that i once more just because everyone's talking about this two trillion dollars take this

review that again why that's really a false canard in all this and also a comment on warren buffett's remark that moody's that s. and p. is somehow wrong and that his investment in moody's that 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 of goodies and if 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 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 it was good i mean what good is his opinion if it's that moronic you know automate maybe you you know senility is catching up with warren because obviously he can't be a great as great 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 will save the taxpayers a lot of money if warren buffett really buy our debt if we pay nothing and of course he also said that the federal government has

a pretty impressed 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 away the public's assets including the assets of war and a warren buffett of course he's criticizing. us as if people are missing some private housing bubble he missed it too he got it completely wrong in fact many of his companies might have gotten baked rocks if the financial institutions were bailed out by it by the u.s. government but big the true trillion dollar math era so-called is again based on s. 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 they need to but almost all of the two trillion in cuts happen 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 custom were made to the two thousand

allowed budget and there are not in fact i just heard barack 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 and he wants to spend more money on government infrastructure that means he is advocating for bigger increases in the deficit right now ok now you bring something up there it may sound similar to what was experienced during the lyndon johnson and kind of guns and butter you know they want it all and this led to a huge over expenditures was a lot ultimately to nixon closing the gold window in one nine hundred seventy one stacey arab or do i do the show with brilliantly asked me earlier in the show can obama if he was really a leader do a reverse next 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 goes to

deflate awaited bets i mean that that is an attempt to remodel ties 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 defaulted on our promise to pay gold and basically rendered a dollar off yacht with no real value but i think that the loss that you're going to see in a dollar in the decade ahead is going to be far greater than a loss in a nine hundred seventy s. because the dollar mean change it's reserve currency status despite the fact that we defaulted on that promise the dollar now is going to lose that status right now the only thing that's standing between a dollar and complete collapse is the 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 they 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 nineteen seventies hopefully at some point we will go back on a gold standard but the price of gold will have to be much much higher for that to happen talk about what's happening over there bank of mellon they're charging fees on the posits over fifty million dollars to pass' can talk about what this charging of a fee on a deposit means isn't a negative interest rate will we see more of it other words banks charging people to go through that cascade i think i think this is a byproduct of too big to fail because people that have a lot of money want to put it in the chute gentry's 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 the apostles were saved because they're all bid on it it us dollars so what people need to do is convert there are their dollars in other currencies work or gold of a look at. swiss franc today this was frank is up almost three full says he needed dollar thirty two to buy a swiss franc in fact with

a euro dollar forty want to have the swiss franc is rapidly approaching parity with the euro and it just took parity with the us dollar that happened very recently and now it's at thirty percent premium and look at this list right i mean begin to imagine where that again would be debated japan had flushed the quota fifty billion dollars down the toilet last week to buy u.s. dollars and of course u.s. treasuries what is your pant doing with all those dollars that they're buying they're buying treasuries not 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 and i've 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 of full speed so. clearly you know as we're saying before if you go back to call stand you 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 have you thought about what i what price what i don't know because it depends on where we are i when we go back to the goal sarah obviously go to the gold standard today that gold price will be lowered if we go to 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 coal that. which jet that would set. it back and what we're able to give for each of our ious but once we do that then the spending stops then the

deficit stop we can't do it anymore if we actually go on a gold standard if it's real then we have to look i'd buy it and so i don't think we're going to go to it again and so 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 so they can it's not until there are real consequences like a collapse of the bond market a collapse in the dollars and cents interest rates already that sends consumer prices soaring that case the stock market that puts people in the streets protesting you know and that is not it's all that happens we're not going to do the right thing all right peter schiff thanks again for being on the kaiser report thank you all right that's going to do it for this edition of the kaiser if you are with me max foster and stacy herbert i guess peter schaeffer if you want to send me

an email please do so at kaiser report r t t v that are you and so next time this is nice guys are saying. hey tom are in here broadcasting live from washington d.c. coming up today on the big picture.