if you're just joining us a very this is. your headlines now. will be investigated. with leaders of the. lower house of parliament after. at least two people killed and up to sixty injured. and. police say the attack was carried out by just one man.

russia's foreign minister. nouri. paved the way for. supporters of the former ukrainian prime minister. being. but for now. gaming companies are involved in virtual money the u.s. central bank with. all the details wall street people don't want you to hear coming up next the report.

welcome to the kaiser report not only are structural banks counterfeiting fear out currencies around the world to impose austerity measures and all manner of financial repression and depression but gaming companies are also involved in counterfeiting virtual currencies and this is reverberating throughout the global economy stays the overt yes max kaiser as we have talked about many times here is about to go public and there in the headline max zingo gets pretty i.p.o. boost from gaming grossed thirty rock star alec baldwin and apparently alec baldwin was on an american airlines flight on the runway in l.a.x. waiting to go to new york and he was playing scrabble like game words with friends that is. and he got kicked off for this and he tweeted out baldwin tweeted flight

attendant on american reamed me out for playing words with friends while we sat at the gate not moving l.a. based tech analyst michael pachter says this is phenomenal for a problem for a single with investors has been that the average portfolio manager doesn't relate to their games this definitely helps change their perception well how can the average portfolio manager not relate to games and is in the business of counterfeiting money the average portfolio manager is in the business of shuffling around counterfeit money whether it's euros or dollars or in the m.f. global scandal where they were shuffling around massive quantities of counterfeit money or in the lehman brothers or bear stearns or ai gee it's all counterfeit money thing is just a virtual counterfeit company so no money manager in the world can't understand that business model because it's the same business model as their career. business model they've got itself took up baldwins calls with twitter posts featuring the

phrase hash tag let alec play so this looks like it's going to be good for their i.p.o. it might now be revalued a little bit higher but i want to move on to another recent i.p.o. in the tech space and this group on groupon allegedly hacked merchants e-mail to alter contract so a federal class action lawsuit in the united states alleges groupon altered one of its merchants contracts by gaining unauthorized access to the merchants stored e-mail the suit filed by household construction and repair website bid my crib claims groupon slee change the contract to extend the terms of a deal bid my crib had offered write well this was a major scandal because in the offering document for the reason i.p.o. initial public offering under risk disclosures this information material to the underwriting of that security by goldman morgan morgan stanley other wall street firms was omitted so that's a breaking of the law right there but not that there are any laws on wall street

but here they are committing massive fraud again group on top of the fraud of taking a ponzi scheme public pocketing billions and leaving the carcass to rob the accounts of pension holders all over the world that will be forced to suffer austerity measures to pay for this massive fraud that is group on but it's also a theme that we've seen throughout two thousand and eleven the consequences of not pursuing justice against the top point zero zero one percent that they are able to maraud around the world destroying economies operating outside the law so blatantly like a lord of rupert murdoch icon lord he's not really but he is one of these lordly class and he's like how much more evidence do we need that the whole enterprise of news corps was hacking phones were hacking databases how much more do you need before anything is happens to him so again you know here you have in the u.k. which is not only harbors criminals. of counterfeiting but also harbors criminals like rupert murdoch who's involved in phone hacking people emulate murdoch they

want to be like lord murdoch so they phone hack so google says you know what if murdoch gets away with phone hacking then we should be able to get away with phone hacking so they engage in phone hacking they cut their books and wall street takes them public they pocket billions of dollars and the i.p.o. is left to rot in people's budget accounts trickle down fraud as we've covered here before and william k. black said that that is the one that said that the fraud happens at the top and once you have a corrupt upper class that gets away with these crimes it trickles down and you have a corrupt society and that's how it happens one day the u.k. could look like pakistan or india in terms of the levels of corruption i know it's great in india they government issue is fake money that people can use to pay off bribes without losing face maybe that's the future for well i think dollars will be used but the u.k. pound can be used to make money use it to pay off well speaking of fake money max this is in the next headline d.j.

i say dow jones industrial average fourteen thousand depends on us saying we're all in this together with europe never before has the euro influenced us stocks as much as this year a sign that american equities aren't going anywhere until europe's credit crisis is solved the so-called correlation coefficient max showing how much two markets rise and fall in tandem hit point eight five the highest level since the euro was founded in one thousand nine hundred nine reading of one means the assets are moving a lot step right well there is no difference between the euro and the dollar they're both counterfeit currencies. corrupt central bankers that steve king is in dog create back currency from their strength training i'm paraphrasing of course but you know a lot of people around the world worry about this whole new world order in a global currency that just shows there is already a global new world. order sort of currency there is one entity unified group of

guys who control everything so that that's why everything is moving in lockstep they press that button to make that go up they press that button to make that could down you get out of line is a mafia racket they wipe you out in that territory you have shares in groupon they don't like you people they they take you down well this is going about the alec baldwin case is qana like the julian assange of case because julian assange took on corporate powers so they cut him off from pay pal from visa for master card and they isolated him same thing with alec baldwin he made a disparaging comment against a big corporation so the corporations cut him off so this is where you know that we're living in now you could argue that alec baldwin is in the top one percent i would say safely in the top one percent and yet he's not immune from having corporations simply delete him from the grid because they don't like what he says about a corporation so if he doesn't have any rights as a person to speak openly then what hope does anyone else who is not even anywhere

near that level of wealth in being able to express their selves in this economy the answer is zero well ok so here this headline is obviously encouraging the united states population to get behind their fed chairman support his drive to flood liquidity around the world but the on the other hand of course s. and p. standard and poor's downgraded the outlook for europe they said they might downgrade fifteen european nations including germany so this headline follows that max german politician euro downgrade is an american standard and poor's warned it may downgrade fifteen euro zone countries including germany reiner brooder all of the free democratic party said quote i am no fan of conspiracy theories but sometimes it is hard to avoid the impression that some american rating agencies and fund managers are working against the euro zone while it's over so war it's a currency war it's a fine. war the s. and p. is backing the u.s.

in this war and germany is clearly shooting back and there's a basically what it amounts to say that when you look at this objectively the war ended actually when the financial crisis started in two thousand and seven the thing that we're trying to be figured out now is who's going to pay reparations who is really the loser in this war there's about one hundred trillion dollars of debt that needs to be paid and the question is going to be germany in the eurozone is going to pay reparations or america that's going to pay reparations we're not clear who's going to pay reparations yet both will try to avoid paying reparations based on their own currency but what of the market with more counterfeit securities and more counterfeit currency and this is the war we're into right now but my impression is that it's not a factor of supporting the u.s. there are no nations they really don't exist because there are there might be some people who live in a geographical area but it's a group of guys it could be one bank it could be j.p.

morgan it could be. a group of hedge funds whoever is paying the most to s.m.p. that day gets what they want and maybe this hedge fund or this bank that they're working for today has a big short position or they say they stand to gain in that case and also we're in this currency war that much like the beginning of world war one people just didn't understand the nature of the new game that we were in and there famously were right around christmas time what happened in that first christmas of world war one is the germans and the brits put down their arms and started playing football with each other because they didn't take it seriously it was some other guys who wanted a war not the people on the ground but sure enough the hatred for each other did work after a few years of this and the wars continue the hot wars continue for decades after because the economies kept going. tracting because there's no growth because war became the profiteering model for those who are interested in conducting more war

and they cut off systematically everything that was generating genuine economic growth and the other thing about this in the global economy is that the emerging economies in asia for example or in south america and brazil they're being affected by this currency war with their currencies being debased with this hot money that's floating around the system so there's hurting their ability to. graduate the global economy into a growth phase as well so they're stuffing out the only area of growth that could possibly save this situation from not degrading into this huge deflationary nightmare well we are in a currency war it is a war so you know i'm going to read the headline be careful it could just be propaganda from this bank u.b.s. is advice on what to buy in case of eurozone break up precious metals tin goods and small caliber weapons so this is from u.b.s. who's like sure they're one of the shriekers wanting the fed to come bail out

everything so they said i suppose there might be some assets worthy of consideration should the eurozone fall apart precious metals for example but other metals would make wise investments to among them tend to goods and small caliber weapons and they go on to warn that basically we could have another world war two site sort of situation and i think this is an amazing headline because u.b.s. is a major bank and they're basically taking the same position as alex jones takes in his broadcasts in the united states and he's just there by mainstream media to be fringe with his views however u.b.s. one of the biggest banks in the world is going exactly that message that gold guns and food is a legitimate way to prepare yourself for the collapse airing this major financial global war were having and then finally max mark fall for dr doom he was on bloomberg this week and he was asked about this whole euro zone crisis and what

he's doing and basically it's going to fall apart he believes then the presenter asked him do you own dollars then instead of euros and look at his response. i have a very special dog for you. all. you know what i prefer to hold where i'm bloody finally. it's jumped on my bandwagon now since two thousand and three i've been ninety percent gold and silver and that's what we've been telling people to do it's worked out with this past decade it will work the same the next decade daisy ever thanks for being on the castle report thank you very much max don't go away much more coming your way so stay right there.

you're welcome back to the kaiser report time now to go to london and talk with david live schlichter author of a new book paper money collapse the folly of elastic money and the coming monetary breakdown did live as an austrian school economist who worked in finance for twenty years including stanton merrill lynch and j.p. morgan well where the kaiser report did live play so much of the pleasure to be a show all right deal of selector what is the folly of elastic money why must paper money always lead to financial disintegration fully over less that money is that today there is a widespread belief that we can buy ongoing economic growth and ultimately prosperity by constantly expanding supply the supply of money you know monetary

system where money is you know feet of money it can be created by the central banks and by the private banking sector sensually at almost no cost and therefore without limits and all the system is designed to constantly expand that supply of money but that must lead to economic dislocations because it will constantly be artificially low interest rates encourage extra investment and capital accumulation of building out of the capital starke that is. really not funded by savings but just by printing money and economists for a long time have shown that this must lead to imbalances in the economy it leads to excessive levels of debt it leads to investment projects as i said that are not backed by saving and ultimately the economic boom that you buy yourself this money creation must lead to dislocations that ultimately lead to a correction so any growth that you buy by generating money into the economy pay for later with an economic contraction now the central bank of the united states

the federal reserve bank was created nine hundred thirteen this was created as a way to ameliorate the boom and bust cycle creating a lender of last resort but it's failed in its mission or how come it was important to know that the federal reserve for started in one nine hundred thirteen under you still was officially a gold standard now please remember in a gold standard the elasticities of the money supply should be very limited no money cannot gold cannot be created by anybody and in a gold standard money is essentially gold but remember also that banks the private banks have always managed to issue so if money substitutes your bank deposits bank notes and because the banks issued them and claimed that the holders of these bank notes and bank deposits could we deem them for gold you know instantly because of their policy the public accepted these money substitutes if you like in place of gold you used them as media of exchange in the economy and by doing this the banks

actually allowed the money supply to expand and this caused exactly the problems that i just explained but of course you know the banks enjoyed the privilege of printing these money substitutes and the politicians also liked it so the idea of having a further reserve like a government backstop was designed so that when the credit boom would lead into a credit bust as it must as i just explained when the credit contraction sets in the federal reserve. would provide extra money to the banks well that course in fact was that the credit boom was extended even further and we all know after the fed was founded in one nine hundred thirteen this encouraged very much more credit expansion more bank credit creation and. to large degree led to the credit boom of the nine hundred twenty s. but again dislocation imbalances accumulated which cause then the great depression in the one nine hundred thirty s. obviously the ability of the fed to again encourage the banks to further extend

credit creation and avoid the correction was limited because the federal reserve was tight still to gold so in one nine hundred thirty three the gold standard was abandoned and now we have in the meantime moved to a system in which the federal reserve can create bank reserves which used to be goat and now they're just simply money the fed can create at will and literally out of thin air so over time we have made our monetary system ever more elastic if you like we have to zines it in such a way that it can create ever more money in an attempt to extend these credit booms ever further all right so in the austrian school all the depression in the united states and around the world in one thousand nine hundred thirty s. was caused primarily by the credit expansion in the one nine hundred twenty s. this goes against the prevailing theory of people like ben bernanke or part krugman of the new york times who believe that the depression was not caused by

a credit boom of the one nine hundred twenty s. but caused by policies that came in after after the crash so your thoughts i would say the following you know if you look at such a crisis and such a recession it is very clear that at the starting point of such a recession or depression the economy must have accumulated mess of mis locations or imbalances and the question for us economists is how can an economy. to get itself into such a position that it has these mess of dislocations that obviously for an extended period of time so many people made you know wrong decisions and allocated capital in correctly overextended bank balance sheets how could all of this happen and i think one of the criticism i have of the interpretations of other mainstream economists is that the always focus on this thing of lack of a good demand the focus on a symptom of the crisis but the kenneled really explain how this imbalance came

about and i would argue that the austrian school is the a very superior and of thing by using the credit expansion the uk to fish really low interest rates and the artificial boom that is generated by bank credit expansion is a very powerful explanation of how we call me to get into these situations where then ultimately a recession is unavoidable right and right now of course it's becoming more of a question going back to this question because as the economy continues to suffer there is the talk now of going back to a gold standard and the people like krugman or bernanke the you think that the gold standard caused the depression. totally disregarding the incredible bubble of credit of the one nine hundred twenty s. whereas other folks are pointing to gold and saying look it's the only. real system that we've had that's been consistently workable over the years so it's becoming

more of a factor but let's look at europe for a second because you've got. the tim geithner and his school ever expanding debt and to promote quote unquote aggregate demand trying to push merkel in the bundesbank around in the e.c.b. to expand money supply to mimic the problems of america germany doesn't want to do that and then you've got of course david cameron in the u.k. who's defending the turf of the corrupt. in the city of london you know a lehman brothers and that's global all went through david cameron city of london this is the global headquarters of fraud so he's trying to protect is turf how do you see this situation going forward because it's really a clash between these two schools of thinking isn't it i mean before say more about europe i mean as you said before you know there is this debate now about a gold standard has the gold standard course the great depression and it's very clear in my view that the goals that it has not created the great depression what has been the case even under gold standard conditions bankers and politicians and

the two of them work together here as they do today one to have ongoing credit expansion is very profitable for the banks you obviously politicians wonder for office reasons as well you can can one much larger budget deficit you know the state for the last thirty years that we have a complete feet money system around the world states around the world could accumulate huge amounts of debt and fund a lot of their spending not via taxation but by constantly boring money so states and banks hugely benefit from the system a fully elastic fee up money but it is very clear from the austrian analysis that you reach some kind of end point here that you cannot push the system out ever more ever more at some stage you have excess levels of debt you have overextended and weak banks you have completely distorted as it markets and at some stage the system is craving a correction you know a deal leveraging even de force and sort of some sort of liquidation of these accumulated imbalances so how does it play out in europe i think the only

alternative you have is you stop printing money and allow the market to liquidate what the market ultimately perceives to be you know unsustainable you know the extent that we have accumulated debt is completely out of line with underlying private savings true savings and also with the underlying real income streams. of the market to correct like we've seen in the case of greece which i august. painful it is very painful but the alternative would be you print ever more money ever more aggressively which then destroys the entire currency system i think the problem in europe is simply that i think the german position twice now is some kind of middle way in which you do not default but you don't print money either in which you try to cut back budget deficit as quickly as you can to build confidence in the market again all right well let me just talk about the austrian school itself now carl mangere the founder of the austrian school all he was one who posited that

economics itself is not to be viewed as a hard predictive science like physics or chemistry where the point is to be able to predict outcomes by having a hard set of formulas the etc but that economics is more of a science of self knowledge that our our our experience as human beings in our quest for self knowledge is the is the school of economics that he founded and that by understanding this you can understand more how economics works in society and going forward it is this this is obviously. a radical school for some however it seems as though its time has come again because the the folks that are running these global economies same woefully inadequate in even knowing their own motives when you talk to jon corzine of m.f.

global he doesn't seem to understand that he stole a billion dollars he has no self-knowledge at all he's a sociopath maybe he needs to visit an austrian school to understand at least himself your thoughts there's a thing i like your description very much i do think yes i think the austrian school starts with the individual you know human act you know the austrian school. it's very clear that economics is not like natural sciences absolutely correct and i do think a lot of the problems that we face now in the world and that i think even modern mainstream economics is in fact in crisis because it's very clear of the strengths of mainstream economics that have developed over the last year fifty seventy eighty years and that dominate academia and you know that provide theories and knowledge for the central bankers and the financial bureaucrats around the world you know one

of the problems is that these theories try to mimic the natural sciences you know that they they treated economics or something like natural phenomena and how do you deal with natural phenomena where you have to observe them via statistics used to take data points as talk of data points and you try to find patterns where the differences if you look at economics is obviously a social science we're dealing with you know human beings and we are humans ourselves so when we look at the economy we can understand the motives of the actors we we know why people trade we know why people safe we know why people prefer to use money rather than bought exchange so weak by understanding purposeful human action and building economic phenomena from the starting point of the human act we can build a better understanding of the economy i read a time deal of schecter thanks so much for being on the kaiser report a pleasure to be on your show thanks so much max and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guest deal of shuttler he's the author of paper money collapse you can also find

his personal website at paper money collapse dot com you can follow us on twitter or facebook just look up kaiser report or you can say i mean e-mail kaiser report at r t t v are you until next time x. guys are saying.