welcome to the kaiser report i'm max kaiser the it is a growing out the trends are reversed saying the sands are shifting all signs that the four horsemen of the bond apocalypse are riding into town and when they arrive all that you thought you knew to be true will in fact be false house prices always rise false bonds are safe investments false gold is dumb money false your toilet will flush when you push the handle that's completely false all things that were true are false when the bond apocalypse arrives stacey max for decades we've lived in a world where bond prices have been rising and commodity prices were declining however as the crisis hit the crisis hit once that started to reverse and we see in

all of our headlines today. the fundamental nature of all the world around us is changing due to these reverse in trends of prices. swiper take twilit as u.s. homes with plumbing ebb amid the worst recession since the great depression pilfering cut the number of u.s. homes with complete plumbing by about ten point four percent from two thousand and eight to two thousand and eleven according to a us census data compiled by bloomberg that reverse the five decade trend the decay of housing adds another obstacle to recovery and rust belt cities already beset by crime and poverty so there max are now three million homes in america with no plumbing at all that's about two point two percent of the stock in some cities like detroit nineteen percent of homes have no plumbing twenty four percent in gary indiana because it's all been stripped but they're just cell phones no plumbing no

indoor plumbing but they do have cell phones where they can access virtual games and they can invest in virtual property on second life or some virtual environment and use a virtual toilet in virtual space but the analog space of reality is crashing the cause of this is that the metal in a typical urban home is worth one thousand to one thousand five hundred dollars a fraction of the cost of course to repair the damage caused by ripping out the pipes and it cost tens of thousands to fix and in fact they interview a woman in baltimore who had who had installed in a house that she was renovating a two hundred forty dollar water meter it was stolen within hours and the person sold it for five bucks right the central planners say that there's a ton of gold around to create a gold standard so we're going to keep flooding the market with paper money that's driving the cost of metals copper zinc gold silver and platinum played him to all

time a store of ties forcing people to steal it out of the very plumbing. so for getting a ham sandwich when all they could simply do to reverse all that was recognize gold as a currency and go back to a gold standard people would stop selling their plumbing stop putting in a bag and throwing it over their neighbor's fence and they would have an economy based on sound money but that's not going to happen because that would require the bondholders and the banks to recognize losses on their balance sheet which means that guys like j.p. morgan and goal and lloyd blankfein and and haster here at r.b.s. here in the u.k. would have to be recognized as charlatans as as as as financial wizards you know there are just there they would have to come to reality but they know where people would rather stay in a virtual world of course we've had globalization over the past few decades thanks to these rising bond prices and falling commodity prices now the other trend has

been that declining wages. now that hasn't reversed certainly in america they are increasing in china and places like that but part of the reason why many americans didn't notice their declining wages since one thousand nine hundred seventy one when the us went off the gold standard is that food prices have continued to fall and fall fall so it always made up a left lower and lower percentage of the average household expenditure now according to john gapper of the financial times perils of supermarket cost cutting machines the switching of horsemeat for beef is a spectacular signal that a limit has been reached so he talks about the declining prices that the supermarkets have been good in one way and we've never quite known what spent in these ready meals but now he's saying this crisis is showing that we're we've hit a tipping point the trend is reversing because this changed in two thousand and seven to two thousand and eight the decline in prices with the first of several

commodity price shocks the us use of agricultural products for fuel raise the prices of corn palm oil and oil markets felt the pressure of emerging economies growing demand for meat china's per capita consumption of meat has risen four fold since one thousand nine hundred sixty so again trends are reversing things are changing right the cost of food was going down along with wages as america was subsidizing the corn industry using paper money and blocking out foreign corn sellers from competing so it's right anti-competitive but it's reached association point they can't subsidize the corn or the cotton any longer so prices are reversing a forty year trend prices are now starting to move up and but there's no wage increase so that's the very definition of disenfranchisement or impoverishment and of course the food stamp levels of never but i are poverty race had never been higher people can afford to buy food anymore mcdonald's just reported that their

earnings are suffering because people. can't even afford a one dollar happy meal at mcdonalds anymore that's considered a luxury the food stamp usage went from about eleven percent at the beginning of the crisis it is now a one thousand and a half percent in america so people are relying on food stamps to eat but the other trend as you talked about is the squeezed middle and this is the other trend that john gapper in the financial times sees is that that middle has been so squeezed and you see that in the inequality numbers one hundred twenty something percent of all of the wealth created since the crisis began one hundred twenty something percent has gone to the top one percent meaning the bottom ninety nine percent have actually lost since the crisis began and they've gained even more so this is the other element that he says is in the food supply system the middle has been squeezed the most vulnerable he said the u.s. auto industry once dealt with suppliers in a similar fashion squeezing them so heavily that the product deteriorated and the

makers went bust tricky though it is to forge relationships with suppliers in a world where customers demand low prices the food industry does not have a good alternative so again we've squeezed the middle we squeeze the incomes but that's what the oligarchs have been left with now so america is a clapped out country has like it's a disaster zone because the middle has been so squeezing yeah sure the top one percent have some money to and they have indoor plumbing but the rest of it is not producing any well for anybody or the average person has been demanding lower prices instead of higher wages but now it's too late those wages are never coming back jobs are being replaced by machines and robots there is no job replacement that's ever going to come back and meanwhile the banks are continuing to pay themselves huge bonuses by engineering things like the merger of the u.s. airlines or american airlines all this will do is create a noncompetitive airline to him is which will mean prices go up again but the

bankers will make a lot of money it destroys competence. and once again they get pay the justice department the anti been awfully department whoever's in charge of that these days should not allow something left to go through because it destroys competition destroys the economy makes it less stuff safe without competition safety standards go down so the more plane crashes but people don't care about that anymore that they just watch him on t.v. for amusement well he notes here in this article john gapper does in the financial times that the same situation has happened to the food industry there used to be mom and pop shops all over the place little fruit and vege markets all over the place and now there's just a few behemoths of food delivery mechanism their price their profit margin has maintained throughout this crisis like this where competition yes there is no competition where as come you know because we know costs have come up and people are able to afford less we know they've had to cut prices where it's come from is the farmer because quote the farmer is a price taker with little power in the market there is

a limit to how far you can get by squeezing suppliers time and time again says justin shared a global strategist at rabaa bank who believes that food suppliers need to have stronger links like in asia like in japan he says the that the food supply system is a lot different from what here where the middle is squeezed and squeezed the farmer squeezed to death but the mythology of the farmer persisted america go during the super bowl the annual big football match they had an advertisement that would be shared and god created the farmer you know on the seventh or eighth day and they were celebrating the farmer in america what they fail to mention is that on the day after god created genetically modified seeds of monsanto and farmers around the world are committing suicide i think that's what they should have mentioned that indian farmers and american farmers slitting their throats because of monsanto patent terrorist was and enter into the food chain monetizing scenes in a way that has created poverty and obesity. and corn being injected into products

of coca-cola so you have this woman who drank a cola to death and now called gulping el parsley liable for that death and rightfully so because a part of a concerted effort by the corporations and bankers to create a basically a hole of cost of the consumer so what is underlying all of this of course the most important ingredient in all of it is the bond prices and in the yields we saw last week bond prices in the u k. fell by four percent in one day yes i predicted on the show yeah so yeah it's going to go up and this is when everything people are still holding on but they're holding on to their tracker rates on their mortgages which are now going up so they'll be almost there holding onto their tracker rates they're holding on to their delusions which are far more important those are much much much more dangerous to the global economy and to your survival is that if you hold on to those solutions for to

a little bit too long if you don't have gold or silver for example because you're holding on to this illusion that ben bernanke he's chilean dollar coins might one day rescue you and so you can go back to how it used to be and when you all those goods at tesco in supermarkets across the world were going down that would be fine but feds stine banks could be smacked by bursting bond bubble banks could be walloped by a bursting bond bubble cautions federal reserve governor jeremy stein banks warn in a recent speech in st louis maybe especially at risk from losses because they typically hold a higher portion of long term bonds which suffer the most when interest rates are you know the bond apocalypse is similar to what happens when you throw a rock into a house of mirrors and what i mean by this is that all the banks are riyadh paf the king bonds with each other to finance the creation of new bonds that are sold to another bank that's ok did that bond to be sold to a third bank at

a fourth bank in for night and daisy chain of fraud with h.s.b.c. barclays r.b.s. lloyds j.p. morgan goldman sachs b.n.p. they're part of a daisy chain a fraud a house of mirrors of rehab off occasion where there is no collateral but you're saying any of these bonds whatsoever they hold in their books for one hundred cents on the dollar they're worth zero cents on the dollar the bond pocalypse is upon us these bonds are to be marked down to zero not by government edict what should be the case if there was a functioning government represent the government but by the baath party left which means that suddenly the shot is. wired i predict that once china or i should say james records for next one china and now says that they have four thousand tons of gold and they are talking about a gold back room in b. this will be the trigger that starts the cascade of bond pocalypse resulting in interest rates in the u.k. and us around the world going up three four five six percent in a week i stay sober thanks so much for being on the kaiser apart thank you max stay tuned for the second half i'll be speaking to former energy regulator chris cook.

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welcome back to the kaiser report imax keyser time now to turn to former energy market regulator chris cook welcome to the us report good to meet you again all right well chris kirk you have written something for asia times called gas diplomacy time for iran tell us about it right well gas diplomacy is in my view we've gone quite far enough with dollar diplomacy i think it's time for energy diplomacy generally gas diplomacy what is the article on the dollar diplomacy is also being called germany i suppose basically the american. might is right. when i say the american empire is based on the dollar not so much you know people don't understand that america has an environment like they resist the label they say we don't have an empire we're just minding our business over here and in between mexico and canada but the dollar the defacto mobile world reserve currency

in places like iran and elsewhere has been really the there means for imperialism yes absolutely michael hudson writes well on the subject wrote about dollar hedge of money and that's precisely what we've got the petro dollar of the deal between the saudis and the us going way way back was you know we keep you in power say the u.s. we buy your dollar say the saudis ok it's all going back to going from a dollar stand up to gas diplomacy in iran so we move from dollar gas or not talk about how this gas the whole issue right where this where this comes from is the thought that basically energy is neutral. if you go back to the cold war the russians were reliably supplying gas into western europe right through the cold war and the west were paying for it no matter that they were proxy wars going on all over the world that was the deal also you had the woods time when khomeini was in power for nine hundred seventy nine ninety ninety three what were the iranians doing they were selling oil to israel via marc rich i'm saying the energy. actually

transcends all idiology that has been the case and i think in the future there is a solution to be found to the current problems by let's call it energy cooperation people even the lions in the gazelles when they get down to the waterhole you know they don't kill each other at that point to me energy is the mold was a hope that when you talk about gas diplomacy and we're talking about dollar diplomacy but it's not about we have think it's important to make a distinction between oil the policy and gas yep diplomacy so gas you know you have a few spears there for gas you have russia iran yeah those are three big three gas players in the world so you're saying that at this time but what about the embargo happening in iran i mean they have this huge embargo but how does that factor into this gas diplomacy well in my view gas is the new all our talk about transition through gas if you like the possibility of

a new framework for energy. pricing and you framework for energy cooperation more to the point because i think what's needed and i was a conference recently quite an interesting one with people like richard perle and john hannah not exactly. you know quite hawkish and they were saying look the needs to be some new elements in the negotiations we can't just keep offering the iranians some spare parts for their bowings isn't going to cut it in the negotiations right now the. e.u. told us here the ties report you were talking about inflation in iran the price of chicken's doubled in a week you were there yes and they're in the reale is really hyper inflation almost i mean is collapsing and again these these are tremendous pressure being born in iran presumably because of this standoff with the other mideast player israel so you're suggesting that this gap. diplomacy is somehow going to

usurp this tension between these two that economics will trump what's going on there and it's all just rhetoric you know how does this how does this play out i'm hearing two different things there well the. worst since i was there it's gone over forty thousand it was a mere thirty something families and rails to the dollar so iran is being squeezed to death so how is that the diplomatic wells i did i put my boot on your throat like a plumber see to some extent their own worst enemy because they are you know the problem they got with they subsidize. oil and gas and products and energy to a massive extent and they do it by printing rails i'm saying that maybe there's another way of doing this that maybe they could put the price the domestic price up to the global price not distant gas but you know any carbon fuel and then compensate the population with units or prepaid units redeemable in payment to

return a bill in payment for gas in other words they could monetize gas because that is the basis of a currency because gas in oil one other many countries they just give people an annual stipend annual income yes based on energy saving as alaska yeah but they pay it max in fee at currency this is my point i'm saying a currency needs backing gold is one backing i believe energy is another i think the gold is a very useful backing for what i call the clearing of credit the credit clearing when it comes to long term investment it's not i think gold doesn't work so well because essentially what you're doing is you burying the gold under the ground for the period of the loan you know you are so some promise of this discussion as it is to be upgraded some of this isn't about gas the promise is about a gas back currency is over saying that's what it will lead to. more diplomatic relations and well there's a bigger picture it's even that yet yes i advocate a gas currency i think that will be the global reserve currency of the future if

you will show that. a remarkable statement because no one else is saying this but i know you're a designer of exchange and you're a former regulator you're an insider anything this is doable and you think it's preferable it's completely doable i mean if you're the chinese you get a choice between units redeemable in payment for another piece of paper and use redeemable in payment for something that you use like gas what are you going to go for i think the chinese would fall over themselves the japanese would fall over themselves for a gas currency as opposed to you know more dulles well the russians are going to love this idea it means that. gas player they're not as i do anything i swear i should buy so much gold they're the biggest gold buy in the world right now well miss a the fifth money system and i paraphrase here yeah sucks well they're buying gold in preference to dollars and i can't say i blame them they're right the iranians are being paid in gold and i can't say i like them either because they've got choice of the go so all these routes through gas through oil through gold all

of them suggest that the us dollar is global reserve currency is heading to its end game yet but will still turn as if it's not about but that's what i believe but as you say i'm the first one to say max right but how close are we now to discuss because the debts that are based in dollars are not being paid and others austerity in the u.k. to promote growth or printing up food stamps in america to promote growth and neither neither is able to offset the a liability of having so much debt and we're heading into debt or a bond collapse bond bubble even you know this one has money managers in the world now are shorting bonds as far as getting rid of those bonds burst so the dollar whether it's politically manage a way to something else or whether a collapse comes where we're heading to a post dollar world i agree with out there will be a post on the world but i mean don't forget there's two things as one is the dollar is currency is the other which is

a dollar is units of account. you can exchange things by reference to the dollar even if you don't settle in the dollar amounts what i can see happening if as i point out maybe a gas currency would work maybe a gold currency would with many possible currencies max and they depend upon people's accepting them you know the basis of a currency is its acceptance by the use it yeah but the thing with the dollar as we saw in iraq is if saddam hussein wants to start trading oil in euros he get blown up if libya is dishonest talking about a pan african currency backed by gold then he ends up getting you know murdered in afghanistan and around the region and iran starts talking about oil trading in something other than dollars there's a sanction going there i'm sorry much i have to i have to interject on that point and say well. it's not what you trade in it's what you do with the proceeds that was the deal with the saudis the saudis said yes we will price in dollars and we'll use the dollars to actually buy bombs or whatever it is but you know if you try to

do it credit facilities that go along with lending all this money to do development and to trade oil and gas and the energy industry makes j.p. morgan goldman sachs and wall street fabulously wealthy and that the credit side of the business not extorting wishing their bills of receipt is what makes these guys one thing that they're backed by the pentagon nor backed by jets and by the come in your country and blow you up i'm not all of you without max i'm just saying that you know you can price in euros and in a millisecond you got dollars or you can price in dollars and in the millisecond you've got your rights what matz izzy's not what you price in but where the proceeds go that's my point you know well we i disagree because i would say what matters is your ability to float a lot of credit and make it make a rent seeking play on the global economy that's what the american dollar imperium is all about i'm not disagreeing with i just say move the units of accounts in the unit of currency and borrowing to do different things all right let's talk about venezuela has recently devalued its currency by over thirty percent saudi arabia

has slashed oil production by eight hundred thousand barrels. day. what's going on these two oil producers does have anything to do with declining energy imports into america quite a lot going on the question. there is well you know the saudis have been shipping oil to the u.s. for instance but in my view that has to do with the the if you like prepay contracts that they were involved with there's no reason other than. predetermined contracts why this alyosha going to the u.s. it would be better off going east venezuela well i mean they had a big refinery which they shut down have answer in some in the virgin islands i mean i don't want to get into all the refinery mechanics but the essentially cheap oil really cheap oil in canada and in the bakken all the shallow that's been produced that is really cheap can't be shipped out of the middle of the u.s. the refiners inland. making money like it's going to fashion because they've got

cheap oil but the petrol is being priced desire it's coming from brant you know they're making out like bandits on that but what happens is that the venezuelans haven't been able to sell as much to the u.s. as they used to hence the events are refined a shirt so they're made they get into bed with the chinese big time but the chinese don't pay well so one of the devaluation in about as well the now you have like procter colgate palmolive business there it is said we're going to lose on twenty million dollars so this is a ripple effect throughout the world and this is people are devaluing now this seems to be back in the fore and you know what's true well i think the deal event is whether maxis the basically chavez has been paying money big time spending money big time all about oil wealth has been coming in is being spent it's no i know we chins you save it you know it's not going into sovereign wealth fund being spent where does that go it goes to inflation the least the devaluation etc etc so you know that's where that's coming from in my opinion also they have the cheapest gasoline in the world. so what do they do they waste it quality you know it's just

like tehran let me tell you it's just probably. about three times more expensive than venezuela but where that has to go in my view but it's my point that you put the prices up to the global price compensate the poppies population with gasoline currency you know basically carbon fuel currency because that. can all inflated price that is backed by the intrinsic value of energy much all right chris thanks so much for being on the kaiser report my pleasure max that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert i'd like to thank my guest chris kirk if you like to contact us you can e-mail us at kaiser report r t t v dot or you are tweet us a kaiser report. by. new year's celebrations on the move with the traditional t.v. or face to food surprising meetings and new adventures stories of love and love

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