regards the moscow army's no way with our headlines britain's courts race to read the riot act of those behind the recent looting and violence if you had rights groups accuse judges of laying down just proportion of justice just for popularity points. top flight trade at the international air show in moscow and the nerves of steel for the russians premier pilots among those stealing the limelight is the latest russian stealth fighter of the team fifty with state view on the way instead . of a syrian army reportedly fires and thousands of anti-government protesters are promised

the country with some serious say they're glad to see tanks moving into their towns residents claim bases security forces as protection from armed groups. but next we look at how quantitative easing is good for the rich bad for the poor and how sterling is offering no refuge spots in the kaiser report. you know a lot of people ask what is the root cause behind all these riots things to her more the riots in the street i might add and the riots in the markets headline reads quantitative easing is good for the rich bad for the poor or quantitative easing the bank of england's recession busting policy of buying up

billions of pounds of bonds may have contributed to social unrest by exacerbating inequality according to one city economist person because they missed diagnose the problem back in two thousand and eight they felt that there was a liquidity problem in the markets instead of an insolvency problem at the big banks max they misdiagnosed that to the public this is what they told the public because that evidence suggests that q.e. cash ends up overwhelmingly in profits and thereby exacerbate an already extreme income inequality and the consequent social tensions that arise from it and you also point out that real wages adjusted for inflation have calling in both the u.s. and u.k. they've risen in germany which has not applied any quantitative easing that is core rect and it's incorrect to talk about this in terms of inflation because inflation implies that wages are going higher but there's

a lot of demand and the prices are being pulled higher this is about prices being pushed higher by an infusion of trillions of dollars worth of more debt on top of the existing debt and it's the interest cost now that's causing these bankers to issue more debt to pay off. the interest expense it's exactly like a household paying off one credit card with another credit card so mervyn king of the bank of england or over there the federal reserve bank ben bernanke they're simply borrowing more to pay off existing debt they're borrowing from peter to pay paul is that it's like the same household members borrowing from each other's credit card but one gets to borrow at zero percent the other has to borrow thirty percent so essentially they're making just one of the family or the household to pay for it all because as he says quote real wages and salaries athol and by four billion pounds profits are up by eleven billion pounds since the recession this is

because over the past ten to fifteen years the banks that were once the intermediary force to match buyers and sellers of loans they are now subsumed into the structural components of the government itself so they take the cream off the top and claim it's their prerogative as government functionaries and they don't actually do standard banking anymore no one does banking anymore it's just a matter of siphoning cash that's true and also again remember this quantitative easing is the central bank buying up assets from who are who get to sell these assets. spiral at the previous one hundred cents on the dollar price to the central bank the rest of the population has to live in the deflationary spiral world in which their incomes are down deflating right basically the people who are rioting they've seen their house prices crash because they've

been cut out of the ponzi scheme whereas the major banks as you point out there are buying and selling assets from each other and these are bonds linked to real estate but they are not marking to market the value of those loans quote unquote assets and they simply swap them back and forth for huge fees and they claim this is needed to maintain liquidity and that it's a liquidity issue instead of the truth is that it's an insolvency issue and you've got a bunch of captive regulators allowing for this larceny at the top and therefore it trickles down to the bottom well in our last episode of kaiser report we spoke to william k. black and he called this a crime jenny environment in which the regulators and the politicians create an environment in which crime will happen so let's look at this headline here following on the first headline where we know quantitative easing causes wealth and income gaps sterling no refuge as king stimulus bank of england governor

mervyn king signaled on aug tenth that he may resume pumping cash into the economy in order to boost growth he have no choice because the debt monster both visible on the shadow banking system is gordon brown himself called it is this huge out of control monster that requires zero percent interest rates there is no risk of rates going higher what happen in anyone's near future interest rates will be kept at zero indefinitely and this is another way. to disenfranchise the poor who are rioting as an example of trickle down larceny the other thing i might add is that you could have predicted this in the price of gold because of course the price signal from gold has told us that this crime a gentle atmosphere environment of the u.k.

would not stop as the price of gold has soared over eleven hundred pounds and ounce that was only six or seven years ago two hundred pounds well you measure something the price signal in an environment where prices are manipulated the bond prices are totally manipulated the governments are buying their own bonds so you can look to them for accurate price discovery stock markets are bought seventy percent bought and sold by computers there's no price discovery there either so you still in place you have a real price discoveries in gold and silver and gold and silver for eight nine ten years it's been saying that it's not a commodity it's a currency and it's going to go higher as the crime or genic wave increases and gets bigger and bigger speaking of price signals the most important price signal in our economy is of course oil. saudi need for oil eighty five dollars may speed cut back so this is

a cutback in saudi oil production being predicted if the price of oil which is now at about eighty five if it goes below that that's saudi breakeven point due to the financial disaster happening in the west of course the saudi royal family has had to spend over one hundred billion dollars placating their population to keep it from looking like london so the same machinations in the markets we see at work keeping interest rates at zero that is the countdown to the banking terrorists and their need to foster larceny at the top end of society is at work in the middle east in that we now have a floor on oil and eighty five dollars a barrel because this is the price needed to placate the riding population for them they are just buying off the riding population with cash as a result of selling oil of course the u.k. is running out of oil due to peak oil so it's implementing other solutions which

are going to be dead on arrival you can also see how we are at the peak system that we have at the moment because we have a petro dollar basically dollar backed by oil but they're in a death grip saudi arabia can't do with less than eighty five dollars because of the disaster of the us based debt system which is now which is clearly not been fixed so but because of that the us can't ever grow out of those that's the western world because oil cannot go below eighty five dollars right and you also will never have the demand for a credit to keep the credit ponzi scheme going like it has been because of the well europe to find new significant oil discoveries that would require a massive draw on credit so this is peak credit working along with peak oil and peak everything else peak globalisation peak financialization so things are falling

apart and they're falling apart in different countries in different ways. now speaking of resources i want to go to this headline for an interesting quote in this story is jeremy grantham the world's most powerful environmentalist so jeremy grantham is the head of asset management for g.m. . and he's talking about global warming and he says global warming is bad news finite resources this investment advice therefore that you should pitch the global warming story as an investment sori but the interesting thing is i think he's he's really wrong here when he says that americans are just about the worst they're dealing with long term problems down there with you down but they respond to a market signal better than almost anyone they roll the dice bigger and quicker than most i think he's referring to things like the threat during the sixty's of sputnik which got a response right away to put a man on the moon and america won the space race. so he's saying that if you could

position this in such a frame as this that it would require this type of gung ho attitude and it's an investment device or there's an urgency behind it that people would get behind it but you see the problem here is i see it as a that would require leadership i think it's kind of the opposite max i see it as a population who is dumbed down through everything being taken care of them so they see the price ignore the price signal on oil has been there for the last five years we've seen it at one hundred dollars consistently over one hundred dollars they've done nothing fuel efficiency standards have not increased they are not responding to prices they're just sitting there dumb thinking that well our government will go invade libya and will be taken care of our government invaded iraq well they take care of us always on this issue yeah well the price of gas which is independent

really the price of oil per se is the price signal that tells americans that everything is ok now the other reason why people might be failing to respond to a price signal is that we live in a crime again ik environment where crime goes unpunished it happens without any sort of regulation so we don't know what prices are real lord miners calls for enquiry on black box trading board miners the former city minister has called on the government to launch a focused inquiry into so-called black box computerized trading in the wake of extreme volatility in the u.k.'s biggest companies so he alleges that the three hundred billion pounds knocked off the footsie in london is due to high frequency trading it is so is the downgrade of u.s. treasury to create the volatility to make it easier for high frequency trading and black box trading to extract more wealth from the exchanges that's why they put the servers next to the. changes themselves to siphon the cash off more quickly and

more efficiently and this is without a doubt and instance a looting by wall street banks by the banks in the city they're looting hundred million dollars a day by some one estimate and they get no punishment whatsoever then you go to london riots and somebody is caught stealing a pack of gum and they get six months in the clinker again i asked david cameron about this i mean i mean he's not a stupid man but when he fails to see the problem here what has to ask oneself is seen fact all moron well look at this fifty percent of trading in london is high frequency trading. and people are saying that is putting ordinary investors at a disadvantage due to the speed which with such trades are placed so they're stealing from ordinary investors david cameron in parliament last week stated that he would investigate whether social networking sites should be shut down if they

helped to plot crime so what are these called high frequency trading algorithms but plotting crime it's plotting crime they know when they write these algorithms that they are going to steal with it they're plotting are they've mechanized crime it's an assembly line of crime they're extracting wealth and as a result trickle down larceny kicks and you have kids stealing at the corner shop and arriving caused by larceny at the top people who can't see that are obviously in bed with the larcenous and they should stop looking at the arsonists and start looking at themselves as their larcenous face here but thanks so much for being on the house report thank you max don't go away much more coming your way. closer.

to future flights. to the max their show. but america kaiser report imax kaiser time now to go to san francisco and talk with richard heinberg author of many bots including his latest the and of growth richard welcome to the kaiser report and to be with you max all right richard heinberg

markets around the world are once again volatile and once again credit is a vapid reigning tells out energy plays end to the chaotic peak debt scenario where you know economic activity alternately depends on energy and raw materials we tend to forget that we think money makes the world go round but but really when you get right down to it it's it's energy and raw materials so we've benefited from extraordinarily cheap concentrated energy sources for many decades really since the start of the industrial revolution but we've been extracting them using the low hanging fruit principle so even though there's still lots of oil coal and natural gas left on the ground. we're going toward lower and lower grade resources all the time that means more and more investment capital is needed in exploration and production. and that means the cost is increasing and that's what one of the main reasons that oil is one hundred dollars

a barrel today instead of twenty dollars which is what was being forecast a decade ago. so there has real impacts all through the economy it increases the cost of shipping which hurts global as a. it increases the cost of running automobiles which hurts consumers so they have less in their pocketbooks to spend in a an economy like the u.s. that depends on seventy percent consumer activity for its its economic growth. that's a real problem in effect i think high oil prices are a cattle and world economic activity right now. although people talk about the economy slowing down around the world price of oil thought stock trending higher due to that scarcity now kicking in in this peak oil scenario but getting back

to the question of debt. and peak credit over the past fifty years the growth of the banking in a three to growth the growth of financialization the growth of the bernie made our pine z. scheme like wa three layer upon layer upon layer of the riveted of the debt and more of the read of as main contention on the growth of credit as relates to oil and so talk about the interactivity between peak debt and peak oil up debt has become the lifeblood of the society and in many ways we have a debt based currency we the way we create money these days is through they close so in order to grow in the economy in order to grow the money supply we have to have ever more debt so we've done head over the past several decades particularly the last couple of decades consumer debt has grown of course we we suffered in the early part of the twentieth century from over production with cheap

oil we could make stuff faster than people could buy it so we created the advertising industry in the consumer credit industry. and afternoon in the early one nine hundred seventy s. when u.s. wages started to stagnate. people continued to buy more stuff because they were being talked into it by the advertising industry but the only way they could do it was by taking on more consumer debt so with credit cards and of course they were encouraged to do this by the banking industry so with credit cards. cheap home loans people got loaned up to their eyeballs and this is one of the problems with the u.s. economy right now why a recovery is almost impossible because the levels of consumer debt are just you know intolerable there's no way the average american can take on more debt and there is no way that the banks will loan and more money because they're not credit worthy at this point with very high unemployment and stagnant wages. so we're we're

at this fundamental turning point where we've we've reached the limits both to our energy supplies and to debt both consumer debt and now government debt as we're seeing not only in washington but also in europe ok a report out of the u.k. this week says that qualitative is a thing as making a reference there and the poor are poor are by driving up prices of math i think clearly in commodities like oil what do you think the role of the fair is and terms of the price of oil well you know by by creating liquidity for the banks that does encourage speculation in oil but you know i don't think there is there is that much of an effect what we're really looking at is higher oil prices being driven first of all by higher costs within the industry and second by higher demand in china and other asian countries. what the fed is doing with quantitative

easing is it's kind of a desperate measure there's there's some understanding there that. you know the government is kind of the last resort for keeping. the economy growing and government spending and borrowing have have really paid for the recent u.s. recovery but now politically in the u.s. more government borrowing is really impossible you know it's a political orphan neither democrats or republicans want to claim it so the fed is left with its speed very small tool box of solutions and quantitative easing is basically what's what's left on the table it doesn't work in fact none of the policy solutions that are on the table in washington will really work to get the country back into economic growth but the fed is going to try the one thing it

knows. i would expect to see more quantitative easing in the future even though it's not going to work they'll stick on the fed for a second you me thing now ed miliband who leads our position labor party in the u.k. make a direct attack on david cameron saying look if you want to get to the root causes of these riots and line then you need to let's talk about the looting that's going on being enabled by the bank of england in the central banking system and also in the us you've got ron paul who's now the front runner the only serious front runner in the republican camp running for president suddenly his campaign is taking out some urgency he's been running on this audit the fed and the fed is the problem issue are we have we turned a corner richard heinberg do you think you know they're finally people are putting the pieces together and see the role of the fair money fractional reserve banking and this failure to address economics and try to replace it with what bush

sr used to call voodoo economics between people finally get it where you know i think people on the far left and the far right are getting it leaves the great majority of people in the in the middle who are being led you know primarily by the mainstream media who still don't really see what's going on they feel very uneasy they have this sense that you know that neither more stimulus will work nor will us tyranny and they're and they're absolutely right but there leaves them with nothing ok so if i'm hearing you correctly you are saying that the role of speculators who are emboldened by a lot largest cheap money and cheap credit that's unable let's put that out there by the fed that's really not the key factor in when we're talking about eighty five dollars oil hundred dollar oil it's the supply and demand having to do with rising demand in the east versus shrinking supply in. ground he also said something

interesting area and that even believe that the saudi oil field galois is in the klein along with bergen and catherine is that is that a fair statement to make yeah i mean the saudis have been managing their oil fields with all the latest technology in doing it i think probably as responsibly as as they could but the reality is you know go war isn't all that oil field it was discovered back in or late one nine hundred forty s. we it we can expect even the world's largest oil field to keep producing at national rate forever and there's every sign that oil field is has reached its it's really end of its glory days so the saudis are bringing on other oil fields there and they've been drilling like crazy the last few years and they claim to have. up to four million barrels

a day of spare production capacity. that doesn't seem realistic. what they're talking about is the possibility of absolute emergency measures they could perhaps bring on another two and a half three maybe even four million barrels a day over a short term but that would damage their oil fields if you if you produce an oil field absolutely flat out inaction a great it tends to reduce the ultimately recoverable amount from that field so the saudis don't want to do that they want to continue managing their fields responsibly which means that they're probably never going to produce any more than they are right no matter how i'm burnt thorough i was speaking with herbert the first half of us now in discussing price and north as relates to oil and the questionnaires what oil generating a price signal on hundred dollars a barrel you would think of a cap north side that relies on price signal to to communicate to the mark. it what

should be done that this would be a glaring price signal that either as a alternative energy needs to be explored more thoroughly or there needs to be some preparation for what is obviously a supply problem in coming not through the pipeline why has there been such a failure for our normally rational capitalists in america to respect the price signal that it's. telling us you know well you know in the in capitalism one o one there is the notion of substitution that you know when any commodity suggest more expensive that the market starts spoiling for substitutes well that's fine in theory but let's the substitute what we use instead of will you know biofuels have been around for years and. there's been an enormous government subsidy for ethanol production here in the u.s. something like forty percent of the total corn harvest goes to making ethanol and

that forty percent of all the core and grown in the u.s. going to make ethanol still only replaces you know three or four percent of the gasoline that we're using so. thirsts there is no substitute out on the horizon immediately now of course everyone's talking about electric cars and the government's offering some subsidies for electric cars but how long will it take before electric cars later than ten percent of the total u.s. fleet well you know nobody knows the exact answer to that question but it's going to be at current rates well over twenty years so. you know yes the sick the price signal is there but there is no no obvious response that's going to do it for this edition of the kaiser report thanks so much richard heinberg for being our guest it's been a pleasure max thank you all right nothing to do it for this veteran of the kaiser apart with me maximizer and stacey harmer our time i guess richard heinberg it

going to send me an email please do thought kaiser report r t t v that are you at all next time with a mask guys are saying they are. all

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