to my. mind. and. the palm of your. time for a look at the headlines now. syria has allowance member turkey claims the downing of its military jet by the mascot's with. syria says it's. like shooting down a plane which. moscow flexes its diplomatic muscles as the russian president the middle east pushing for more dialogue between israelis and the palestinians on nuclear ambitions and an ongoing conflict in syria also among critics parties. the crisis claims its fifth victim as.

a multi billion meant to rescue its people banking sector and finance its debts it follows in the footsteps of spain. it's. time for the latest edition of the kaiser report. i am x. times or this is the kaiser report well we're seeing what happens when the world deflates we're seeing some odd behavior for people out there say what about health care what about student costs those prices are going up that's inflation not against gold that's the case everything's deflating against gold over the past ten years particularly warren buffett stock all right let's hear more states than ever max it seems everybody in the world is seeking salvation economic and financial

salvation first of course you mention gold so i'll mention this headline in the news a talian police seize gold worth two million euros swiss border italian tax police have seized fifty kilos which is one hundred ten pounds of gold from an italian businessman at the swiss border well the first thing i thought about when you saw this story of course was the scene in french connection where they find the heroin packed away in the run aboard of that car imported over b.m.r. say from the french guy to new york where popeye doing well played brilliantly by gene hackman eventually captures it but this is not about heroin this is about gold and of course gold is getting across borders now as people try to figure out what to do in this global the flesh generate nightmare they want to hold on to something of value that may change purchasing power so you see the evidence of this down behavior not only in the markets but in the behavior of people well exactly two things in the article i mentioned first of all that they tell us are believed to

have billions of euros an undeclared wealth stashed in switzerland funds that italy is now trying to have the swiss authorities tax retroactively you mentioned the deflationary collapse and this is part of that deflationary collapse is everybody is scrambling to find any sort of assets anywhere in the world whether it's j.p. morgan looking to make good on their you know while the. black holes in their balance sheet or it's the governments looking to fill the black holes in their balance sheets right and of course italy it's got twenty four hundred tons of gold the government does on their balance sheet and has been snooping around looking at that trove of gold oh germany member germany saying oh all of you european countries that want our cheap loans to stay in the euro happy to do so just give us all your gold so once again gold is of course the only salvation as you put it in a world that's collapsing from the place nary a nightmare it would be collapsing a lot quicker stacey however the central banks are pumping cash into the system

which is basically just like the branches. preventing the global economy corpse from hitting the ground faster but it's definitely heading lower but this border the swiss border is really becoming ground zero for this war between the bond vigilantes and the gold vigilantes now we see some people crossing the border with trillions and bonds now the gold bizzle entities are making their mood right just a year ago or so the story was trillions in bonds being transported over the same border that should tell you just a space of one year their preference from nonsensical paper to gold as trend has changed and people realize that you just can't put up nonsensical paper as collateral anymore even if you're a central bank and so what's your line or the e.c.b. there are now looking at really the real stuff and so the criminal behavior out there in the world is changing to reflect the preference now for actual stuff yes and everybody seeking salvation whether it's criminal behavior or deranged to behavior austerity doesn't pay as debt markets ignore rating cuts u.s.

borrowing costs plunged to record low after s. and p. rating cut as you can see from this chart in the article and britain's bond yields also plunged following their rating cut so but however it's not just britain and the u.s. after standard and poor's stripped france and the u.s. of aaa ratings. interest rates paid by countries to finance or deficits dropped rather than rose for investors and policy makers predicting the consequences of a ratings change by s. and p. or moody's the dominant issuers of debt scores may be a little different from flipping a coin well this is concrete evidence that these markets are not free to trade her market activities person true supply and demand curves these markets are being held captive by algorithmic trading by quantitative easing by central planners who are using financial repression as its call to keep interest rates artificially low and it's great except that the price of gold and silver is saying that most people

don't believe in your salvation in paper the paper salvation is not really going to work and this is a supply people are smuggling hard assets around the world trying to escape this theory that paper will somehow trump gold so according to bloomberg analysis of three hundred fourteen upgrades downgrades in outlook changes of the past thirty eight years the rates moved in the opposite direction forty seven percent of the time as one would expect so i think this is part of your price propaganda story that they in response to somebody daring to downgrade the u.s. for daring to downgrade the u.k. of course the central banks we don't know who the buyers are who are buying it sometimes negative yields in the case of germany or switzerland or other some scandinavian countries whose buying at negative yields is it just is that the part of the financial war that we talk about well is a lot of us just computers buying their program to buy from other computers again

part eighty six percent of the trades of the new york stock exchange are computers trading with other computers and we now know from a forbes article recently that a lot of the computers are reading articles in the financial press that were written by other computers this is called computer aided narrative technology that forbes uses and they put it out there into the general population computers are. a computer generated story and then they base trades based on what the computer in many cases the same computer so it is a lot of time just computers circling around themselves in a motion that you could liken to circling around a drain as the economy plummets into the sewer next headline max david cameron fears near perpetual stagnation in euro zone so the prime minister of britain says that britain must look to merging economies for economic salvation yes well once again the eurozone i like the way you conveniently omits britain from the eurozone you know when it when it's on the way up at

a bull market of course is raw raw eurozone but during the hard times it's a wait a minute we're going we're going to do the confident leave us alone we're going to own guns i'm going to hold central bank another going to other guys or even though you guys what we never heard you guys so typical duplicity from a tory leader what else is new and his island nation is sinking into the muck the austerity measures are a bust george osborne is trying to walk back as aggressively as he can without losing his entire support the coalition is a shambles and that that won't last much longer yes but max i believe hedge funds and goldman sachs have already bennie in the so-called emerging economies for quite a few years now we've been talking about at the bric nations even was a coin by jim o'neill from goldman sachs so now cameron comes of this brilliant idea where people have already ben for years and years and years and in fact those guys are kind of getting out of china saying get out of china get out of brazil the

reality is like at all time ha yeah the french for this is topic to topic davy so he's coming in at the top you know it would be like buying facebook on the i.p.o. for example you top tip top ticking this stock before it plummets or buy groupon or at the open this is the topic you know after that it's a twenty thirty fifty percent drop so yeah there. cameron is stumbling into these markets one of the horses bolted you know there's no more bones no more meat on the bones of the bric economies dave cameron you're not going to salvation yourself using you know he didn't wouldn't marry throw britain out of these countries before you know they're not there have a welcome sign that i want you back your even throw it out they stay out go away and he doesn't want you remember they covered you well let's go look at one of those emerging economies max and that's south korea suicide arrests show trouble at korean savings banks so far regulators have closed korea's twenty weakest banks and prosecutors of uncovered illicit lending and lax oversight leading to indictments

of nearly two hundred people and at least two jail sentences for bank executives have committed suicide according to police and more than eighty thousand depositors and bondholders many of them retirees saw one trillion wan which is eight hundred fifty seven million dollars of their savings in excess of insured levels then right so in asia there seems to be a real deterrence you see this in china where they penalize bankers have committed fraud with the ultimate harshest of penalties now some of these bankers in south korea from what you're saying that they committed suicide so there is a real notion of shame in these countries when they steal money that's something you don't see in the u.k. there's something you don't see in america there's no idea of shame the stealing is not a shameful act in america or the u.k. at this time as a matter of fact it's celebrated as a reason to hold these people up and lionized them when jamie diamond goes in front of congress he storms in like a conquering hero because he's one of the biggest thieves of them all there's no shame in jamie diamond dictionary so this is

a very interesting culture clash between east and west one woman they talk to max jeannie young who lost forty million won or about thirty five thousand u.s. dollars in korea savings bank she recalls getting a text message in september two thousand and ten from korea savings pitching five year notes yielding eight percent annually it. easy the bank promised she invested her mother's savings four times as much as her own and bonds that aren't protected by deposit insurance she said quote how can i tell my eighty year old mother i've lost the fund she lives on i was deluded by a couple of percentage points of interest rate now i can see it was only a trap well this is a trap that we've seen in the mortgage market banks offering mortgages to customers that they themselves didn't hold in their own books the liar loans this caused a huge multi hundred billion dollar catastrophe in america that was the banks doing here in asia banks offering c.d.'s they can't possibly pay off we saw this during the savings and loan crisis we see this time and time again there you know they're

talking about a global banking institution or lending facility to bail out these banks how about if bankers want to operate globally with no law whatsoever there should be some attempt to either a prevent that from happening and have no too big to fail banks or to say no banks can have more than one or two percent of any given market in any given country or be they're going to be subject to some real harsh deterrence and penalties you know the banking industry in america under f.d.r.'s regulations function brilliantly for fifty or sixty years before all those were repealed away under successive administrations in washington under the direction of bankers who are interested in getting their hands on that money in an illegal way the same thing that we saw in the twenty's leading up to the crash now that they've been given the the ability to do the exact same thing all over again we're having another crash well i want to tell this woman g me young to be where any calls from david cameron because he's going looking for her they're looking for high yield

growth economies she says i wish it were a bad dream about this text message she received that resulted in her losing her mother's life savings i always wondered what kind of stupid people precious money into messy banks now i am one of them i think max you can look at the entire global financial system you can look at america you can look at. ireland you can look at iceland you can look at france germany greece the u.k. south korea china japan brazil you can look at everybody and we could all say the same thing i wish this were all a bad dream i wish we hadn't been so stupid and picked up the phone when jamie diamond called when lloyd blankfein called when david cameron called when tony blair called well actually when tony blair calls you had a dead. well you know milton friedman famously said you never get it nothing like a free lunch and yet that concept of getting a free lunch is the entire concept that drive wall street the city of london now for thirty five years getting something for nothing right that's you never pay off

except with more debt now suddenly that's all coming to haunt them milling frame and of course lay the groundwork for this abomination called neoliberal banking and now we're seeing the result of it so he was right in one way however in the long run he proved to be a bit of a charlatan as are all of the other neil liberal architects that brought us this current the task of face to face ever thanks so much for being on the kaiser report thank you the no i am much more coming away stay right there. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you

knew you don't know i'm tom hardy welcome to the big picture. welcome back to the kaiser report i'm max kaiser time not going to rick ackerman of rick's pics newsletter rick welcome to the kaiser report back show you doing fantastic rex ackerman tell us what happened to all the hyper inflation i think they've been pretty quietly next we have nothing but a deflationary juggernaut unfolding in europe. or sturdy may have been voted thumbs down but you don't see any infusions of new credit making their way into the system it seems like everything that's happening in europe right now has a deflationary outcome right thing that the ravages of the credit peak of two

thousand and seven continue to wreak all kinds of damage around the world and no matter what the central banks try to do to stop it the deflationary pressures continue to mount what do you tell people when i say well look at the price of medical cost and look at the price of student loans these are rising in price how does that factor into a square dance this deflationary trend well i call that little spin inflation maxon compared to the larger deflationary picture which is an asset deflation the grocery store inflation is relatively tame even that's going to hit a wall because the money that you spend on groceries has to come from something else if the price of groceries goes up because real incomes are stagnant so it's really sort of a closed loop in it the price of one thing goes up it means that less is available for something else but also i i think that the three intractable engines of

inflation are slowing down one of them of course is government spending at the state and local level it's actually crashed and burned you know that hasn't happened at the federal level of course because the federal government can print whatever it needs but two other engines of inflation health care and education have sort of hit a wall on the college end of things for a number of years the colleges basically collected their fees from parents who were putting their homes in hock second mortgages were paying a lot of tuitions but of course that route is not available and i think that even though tuitions continue to go up. they may have. reach that point where the coyote has run off the cliff and just does hasn't look down yet let's talk about the year off our stock of the euro has become a very volatile currency with hit swings and both directions what are your charts

are saying and despite the political and the debt crisis the euro were ultimately having a very interesting question max from from a purely technical standpoint i'm looking at a dollar eight and i feel pretty confident about that it goes against the common wisdom that the euro is headed to at least par with the dollar or lower and because it doesn't seem to be going that low to me there's question is why as far as i can see or for as i can reason the countries that are solvent still using the euro are stuck with it if for instance germany or finland or the netherlands were attempt to go back to their original sovereign currencies the whole world would converge on them they would basically say geez i'd love to have german bonds or german this or that because the germans are very prudent stewards of their money so that's the last thing in the world the german he wants is to be

the hard currency of the world so they're all i guess going to be keepers of the flame they'll retain the euro regardless of which which countries greece italy or spain perhaps exit the the currency union ok now let's talk about germany some more they recently floated the idea of a european redemption fund whereby nations would have to put up gold as collateral for any national debts over the master treaty limit your thoughts well i don't think any of the countries in debt or going to easily give up what you would call real money no one has any skin in the game except for germany and that's why germany is insisting heart on heart. currency and heart terms but for those that the debtors if they ain't got the ain't got well i mean gold of has been talked about by us in the. study of which way inflation or

deflation will impact the price of gold it seems as though even though you've got the flesh and it's deflation and everything against gold correct yes but you need to understand that the whole world really doesn't prefer a hard money standard you know even the chinese use a debt based money and it's really the the payment method of choice if we were if countries were forced to pay for for instance oil was something other than worthless dollars. there be a lot less oil sold so it's an arrangement of convenience that the oil producing nations accept currency which they convert into. specially the next best thing whether it be euro's or dollars or or gold or silver right but these countries are now aggressively buying all they're doing swaps outside of the dollar reserve

they're positioning themselves for return of gold germany now wants gold clearly the writing is on the wall that once again as we've seen historically gold and upping the reserve currency now let's talk about the u.s. treasury paper market for a second this is a recurring theme they've touched on it before the question always is have the u.s. treasury bonds finally tapped out and is a bull market that's been going on for thirty years and you know us treasury bonds finally run its course. and seemingly it just keeps on going and going and going your thoughts one of the charts say one of the fundamentals this is really this the biggest question of all i would think yeah it really is because as the dollar goes in as dollar instruments go. so goes the world's financial system. from a technical standpoint max i've been looking at a run up perhaps to about one seventy basis the keep on futures and that would mean

that there is some room for yields on the thirty year to come down a bit there somewhere around two point five asian two and three quarters now but from a technical point of view with the keep on futures up around one seventy it puts yields down around i'm guessing two point two percent or so so there's probably some room to move for the bonds but i think that relative to the thirty year run up to thirty year bull market in bonds they're getting close to the limit on the low end for yields right now is the question about the. analysis whether it's technical or fundamental i mean the they the the us government to stop us buying by last estimate sixty one percent of the u.s. treasury paper that it floats so it's just recycling itself the latest auction they bought of billions of dollars worth of bonds and then they've sold billions of dollars of the bonds the six hours later so with that it's become a huge laundromat

a huge ponzi scheme i'd say so there's that impact the technical analysis or the fundamental analysis that it's become really a joke so i mean i or did that does the technical analysis is that the beauty of it sees through all of the underlying semantic and well i think that it's true that sometimes it's a little too difficult to parse all the logical pieces of why bones go higher why the dollars weak or strong and that's why i alternately depend on the charts but sometimes as is the case for this dollar a projection on the euro i start with the projection and try to back out the law object but you're right it is a ponzi scheme i've heard higher numbers and sixty percent as far as how much of the treasury paper new treasury debt the fed is buying but it's really a shell game if you say that the fed is not doing q e three that it's not monetizing it's effectively doing that by making credit almost free to the banks so

that they have they have to park it in treasuries and of course in europe the swap arrangement with the u.s. federal reserve makes it possible for italy or europe to have its own monetization but to have it in a currency other than the euro so it really is a big it's worse than a ponzi game it's a fraud that i should think anyone be able would be able to see through at this point right well to be honest. the total aggregate amount of u.s. purchased of its own paper exceeds one hundred percent and if you understand the collusion between itself and wall street this is why the total indebtedness keeps skyrocketing to levels that have historically never ever been achieved and this is as you point out worse than a ponzi scheme it's financial suicide v death by paper creation but this is something that america things come for when at the moment now are

speaking a federally backed paper you've written recently about the student loan market is this the next sub prime disaster the next part of the global j.p. morgan disaster that will require more austerity more printing more of the same well it's a trillion dollar boondoggle with this point and in the bigger scheme of things a trillion dollars is i'm going to say not much. it certainly is a lot of money but at the margin each it is one aspect of the big picture that could probably topple things but i don't think so i think that the student loan program is simply going to wind up as a scandal when it turns out that very few of the loans are repaid we already know that the borrowers are coming out of school ill prepared to make the kind of money that will allow them to put aside a little bit not that any of us can put aside anything these days but i think the average indebtedness coming out of college is i've heard thirty six thousand dollars that's a lot of money for

a newly minted human humanities grad someone with a b.a. in literature to pay back and so i think that the trillion dollars might as well be written off at this point right and this might be a good time to drill down and look at this relationship between inflation and deflation and prices on the student loan market the the reason. the cost of student education is going up is not because of an increase in demand it's because of an increase in credit which is ultimately got to be paid for and cents they don't have the ability to pay for that credit it results in deflation so this is a masking deflation or deflation gets masked in the in the roots of a fake price signal that is to say a fake price for student educations which is driven entirely through financial manipulation and has nothing to do with the rule of supply and demand which you

agree that's absolutely correct you know the student loan bubble was really the same as the housing bubble the vic did man is ordered officially stimulated simply by the availability of easy money and in this case the student loans are much easier money even than hellsing money was during the first go around prior to the two thousand and seven collapse you know the obama has more or less said hey this is with a wink don't worry you really never have to pay it back and even if you go to the letter of the law the payback terms are so simple they're so easy that the student can easily see borrowing without the expectation of paying back all right rick ackerman right of time thanks so much for being on the kaiser report thank you max and stacy right now is going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guests rick ackerman of rick's pics if you want to send me an email please do this at kaiser report it r t t v dot ru

until next time my skies are saying.