really we are out of time but certainly these are very interesting things we appreciate you helping us make light of them brooks agnew host of x. squared radio and author of remembering the future the physics and soul of time travel but all the time we have thanks so much for watching i'm christine frisell. hamar been here broadcasting live from washington d.c. coming up today on the big picture.

today violence is once again. these are the images the world seeing from the streets of kandahar.

both of her a little bit of. it was. stacy herbert you know of people. what is the root cause behind all these riots stacey herbert so it's 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 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 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 the big banks max they misdiagnosed it to the public this is what they told the public because the evidence suggests that q.e. cash ends up overwhelmingly in profits 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 fallen 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 think of the bank of england or over there the federal reserve bank ben bernanke they're simply borrowing more to pay off the 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 the car 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 from bankers who get to sell these assets in a deflationary spiral at the previous one hundred cents on the dollar price to the central bank but the rest of the population has to live in a deflationary spiral world in which their incomes are just deflating right place or 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 they're buying and selling assets from each other these are bonds a link 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 a 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 the larceny at the top and therefore it circles down to the bought a home well in our last episode of kaiser report we spoke to william k. black and he called this a crime of jenin 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 that won't happen in anyone in the near future interest rates will be kept. 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 adenike 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 but you measure something that 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. 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 all 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 a 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 never which is clearly not been fixed so but because of that the us can't ever grow out of this that's the western world because oil cannot go below eighty five dollars right 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 you're 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. you know 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 story but the interesting thing is i think he's he's really wrong here when he says this americans are just about the worst they're dealing with long term problems down there with you. but they respond to a market signal better than almost anyone they roll the dice bigger and quicker than most i think is 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 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 pricing of 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. while 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 adenike environment where crime goes unpunished it happens without any sort

of regulation so we don't know what prices are real lord minors cause for inquiry black box trading board minors 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 with the downgrade of u.s. treasury to create 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 more quickly and more efficiently and this is without a doubt and instance alluding. to 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 it's not a stupid man but when he fails to see the problem here one has to ask oneself is c. in 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 at 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 crime they've mechanize crime it's

an assembly line of crime they're extracting wealth and as a result trickle down larceny picks 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 the larcenous they see here and thanks so much for being on the cause report thank you max don't go away much more coming your way . down the official t. hopefully cation. you pulled from the.

video. and the russians for you now with the palm of your. machine on the com. none of them but america has a report i'm max keiser time now to go to san francisco and start with richard heinberg author of many box including his latest the and our growth richard welcome to the kaiser report good to be with you max all right richard heinberg markets around the world are once again involved once again credit is the vapid rating tell

sell energy play it enter the chaotic peak debt scenario well 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 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 in 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 that's 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 that has real impacts all through the economy it increases the cost of shipping which hurts globalization it increases the cost of running automobiles which hurts consumers so they have less than their pocketbooks to spend in a an economy like the u.s. that depends on seventy percent consumer act. really for it's it's economic growth . that's a real problem in effect i think high oil prices or a cap on world economic activity right now all right so although people talk about the economy slowing down around the world price of oil is still a strong 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 industry the growth of

the growth of financialization the growth of the bernie made after the theme light wost three layer upon layer upon layer of the riveted and debt and more of the rev of has been contingent on the growth of credit as a rule a thorough oil and talk about the interactivity between people debt and peak oil 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 bake loans so in order to grow the economy in order to grow the money supply we have to have ever more debt so we've done it over the past several decades particularly the last couple of decades consumer debt has grown 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 course they were encouraged to do this by the banking industry so with credit cards. cheap home loans people got loans 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 get as we're seeing not only in washington but also in europe ok a report out of the u.k. this way says that quantitative easing is making the right writer and the poor poor are by driving up prices the math i think looting commodities like oil what do you think the role of the fair is in 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 as it's kind of

a desperate measure there's there's some understanding there that the you know the government is kind of the the those last resort for keeping their. the economy growing and government spending and borrowing have have have really paid for the recent u.s. recovery but now politically in the u.s. more government borrowing is is really impossible you know there's a it's a political orphan neither democrats or republicans want to clean it so the fed is left with its spoke very small tool box of solutions and quantitative easing is basically. 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 tell us to come affair for a second. thing now ed miliband who leads the opposition 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 in 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 an urgent thing he's been running on as audit the fed and the fed is the problem issue are we have we turned a corner richard heinberg do you think you know that finally people are putting the pieces together and see the role of the fair money fractional reserve banking and this failure to address economics in try to replace it with what bush sr used to call the do economics you think people finally get it where you know i think

people on the far left in the floor right now are getting their leaves the great majority of people in the in the middle or 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 beheld this sense that in the night there are more stimulus will work nor will austerity 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 love is cheap money and cheap credit that's enabled 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 dollars oil it's the supply and demand having to do with rising demand in the east versus shrinking supply in. the ground and the author says something interesting there and that eat you believe that the saudi oil field

galois is in decline along with bergen and can throw out as 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 soon as they could but the reality is you know your water isn't all that well afield it was discovered back in the late one nine hundred forty s. we if 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 has reached its it's the 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 national rate it tends to reduce the ultimately recoverable on out 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 i mark thorough i was speaking with things you heard in the first half an hour discussing pricing of as it relates to oil and the questionnaires what oil generating a pricing on one hundred dollars a barrel you would think in a capitalist society that relies on pricing altered to communicate to the mark. it what should be done that this would be a glaring price and know that either as

a alternative energy needs to be explored more thoroughly or there needs to be some proper ration for what is obvious laying a supply problem in coming not through the pipeline why has there been such a failure for normally rational of that adolescents in america to respect the price signal that its oil is telling us you know well you know in in capitalism one o one there is the notion of substitution you know when any commodity still gets more expensive that the market starts going looking for substitutes well that's fine in theory but let's the substitute what we use instead of well you know biofuels have been around for years and 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 really replaces you know three or four percent of the

gasoline that we're using so there is 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 make up even 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 the sick the price signal is there but there is no no obvious response that's going to have a definite addition of the kaiser report back to my friends and i wear it for being our guest it's been a pleasure max thank you all right not going to do it and it's nessun on the kaiser report with me max kaiser and stacey harmer our time i guess richard heinberg if you are sending him now please do thought kaiser report r.t.t. . are you at all next time that's a nice guys or sang by all.