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a different story don't get fooled by the hype station over tells more yes max in the past week we've had the dow jones hitting all time highs and everybody of course celebrating that the jobs numbers look good they came in better than expected but check out this headline and yet the labor force participation rate is still falling and turning to this nice chart here and you can see that yes indeed this is the participation rate by those available to work in the market and they are not working sixty three point five percent of the workforce is actually working now all of this looking at the chart and the data that was available from the bureau of labor statistics is that felix salmon of reuters said that the number of multiple job holders rose by three hundred forty thousand this month to seven point two six million arise larger than the headline rise in payrolls which means that one way of looking at this report is to say that all of the new jobs created were

second or third jobs going to people who were already employed elsewhere so remember this is that famous scene looking back on george w. bush when he was campaigning for reelection and he was sitting there with that woman who said yeah i have three jobs and he's like uniquely american isn't it so these are people who are taking on second and third jobs and the news segment there are job holders that's calculators being a new job overall and this is heralded as oh this is fantastic there's growth in the economy but the labor participation rate continues to decline but that faulty assessment of what's happening with job is all the impetus needed by the algorithms on wall street to kick in borrow another trillion or two trillion buy stocks at the market drive the dow jones to new highs and then so you see job's are plentiful stocks are all they're failing to say that the judge participation rates crashing and the debt. driving these prices has never been higher so there's

a huge gulf between the statistical representation of reality and what the being spirit on the ground on the street by the average joe and josephine bag of donuts you know i've seen headlines in new york times alleging that these jobs numbers prove that ben bernanke quantitative easing the quantitative easing to infinity is working and that we can continue that because these jobs numbers are so good but as you see again you know the participation rate is down and those who are working are having to work two or three jobs to keep up with inflation let me jump in here for a second because over in the united kingdom of course people are saying look at america there stimulus is working george osborne and you know you we need to go away from austerity in the u.k. and bring about american style stimulus there's i mean the people in the u.k. want second and third jobs on top of the you know their current work environment that they're complaining about that the gas to get through the day as it is looking for this is sort of

a bad omen as well for what will happen under obamacare because one of the interpretations of this is that it's obamacare means that the employer has to provide health insurance to their employees if they have over fifty employees but if they're working full time and full time they counted thirty hours so apparently a lot of corporations are cutting jobs hours work to under thirty so people are having to find a second job to fill in the hours they need well instead of obama care barack obama should have triggered something called the american individual american well being account and one percent of every securities offering every stock every bond every derivative every securities offering the trillions of securities that are offered and packaged and sold in america one percent would go into the american wellbeing fund wall street would never notice the difference bonuses on wall street would be impacted by very little and all that money would accrue. to the people who are actually building the country and not the frickin charlatans and thieves or raping

the country barack put your thinking cap on he does so the other big headline news of the past week that everybody in new york city manhattan here behind us are shouting with glee running around buying seven thousand dollar bottles of champagne popping them up and smashing them against a wall they don't care about money apathy over the dow's rises and surprising yes apparently outside of manhattan people don't care so much about the dow jones hitting an all time high because christopher caldwell of the f.t. says well looks like a rally may just be the effect of elites passing money among themselves you know you go back to the banking collapse of two thousand and eight we found out that banks like lehman brothers bear stearns j.p. morgan and goldman sachs at the end of each quarter exchanged debts to fool the regulators into thinking that they had less of their balance sheet and then when they booked the debts again after the regulators left they would put that as a capital gain so they were just playing this ponzi scheme of capital gains and they've extended that now to a multi hundred trillion dollar derivatives market the biggest banks in the world

are in this huge here called jerk or daisy chain to award themselves a loser who profits and then pay themselves huge bonuses to options and warrants on their stock price that go up based on essentially what at the end of the day is amounts to financial masturbation i mean the other thing is that as they point out here in the half decade since the western financial system almost collapsed the relationship between stock markets and the real economy has seemed more tenuous you could describe this in many many many ways one of them we've described as neo feudalism that they just don't need the population they don't need most of the population and a financial ised world and they could just extract equity in rents from everybody around the world but it's a mistake to point to the disconnect between the economy in the stock market as being indicative of there being some under underlying financial scald. because the economy in the stock market rarely go hand in hand occasionally they will

coincidentally work in march together but that's not generally the average between these two indexes but what we can say is that the wealth is being ported over to the big house of the slave masters and that the people who are not engaging in this stock market rally it's not because there's a disconnect with the overall economy it's because they're being disenfranchised and in the slaves we're back to priest civil war days the antebellum south will rise again in america you've got sleeves all over america working for uncle tom that is j.p. morgan's jamie diamond who let them in the big house every once in a while and through a boom but other that got their pick cotton you all know good because of jamie douglas you know rather plantation you all well of course one of the famous sayings

about wall street is where are the clients yachts of course clients have yachts the bankers are the ones that have yachts and this of course is alluded to in this f.t. article where they say the u.s. federal reserve has added more than two trillion dollars to its balance sheet since two thousand and seven in general the tide of liquidity ought to lift all boats in the harbor but when the harbor is an equity market you won't find your listed and less you own one yeah the occupy wall street they should all go to to greenwich country club and the granite yacht club and occupy the great yacht club that's where you need to go and occupy and sink all those frickin boats sink twenty thousand yachts in groups connecticut send a message that nags those bankers already have credit default swaps on those yachts of course so they'll make a fortune if you sink at it of course they've got all just collateralized and credit to. default swaps. so now we've looked at the true

story behind those good headline jobs numbers and the true story behind the so-called bouncing booming dow jones now let's look at the maestro and what he says about the sequester you know the eighty five billion dollars in cuts well alan greenspan the former fed chairman was asked about these cuts and whether or not they would do anything greenspan sequester cuts won't be horrendous for economy he says the crucial issue is how the sequester influences the stock market because the stock market is the really key player in the game of economic growth at the moment he says the data show that the stock prices are not only a leading indicator of economic activity they are major cause of it all greenspan's pacemaker is connected to the dow jones so unless the dow jones keeps going up greenspan is going to kill over and die is an important thing to realize that this is his thinking he says that. prices cause activity cause economic

activity and that the reason is the wealth effect of the stock market he says which has risen to five year highs and it explains why the consumer has been able to overcome various headwinds such as the payroll tax increase so the price rises are a looser they're not real their faith they can evaporate we've seen that happen the tax increases are real they take your real wealth your real savings your real money and transfer it to basically wall street well i mean a great example of that would be a company like corrections going to america the biggest largest prison operator in america the stock price goes up according to greenspan that's great the fact the deal with municipalities around the world to put ninety eight percent occupancy rate in their jails and you rounding up people and prosecuting them and in jailing them just by the needs of that stock price never crosses the mind of greenspan. again it's a good point the price he's saying is the be and all the what that price represents

never enters his brain and then finally max on that on the story of alan greenspan and saying that stock prices are determinant of everything every record dow jones point cost two hundred million dollars in federal debt we're hitting all time highs in the dow jones but there's no such thing of course as a free lunch where does a come from here is the invoice in the past five days alone total federal debt rose from sixteen point six four trillion to sixteen point seven trillion an increase of sixty one billion dollars in five days amounting to one hundred ninety eight million six hundred ninety seven thousand and sixty eight dollars for every of the three hundred seven dow jones industrial average points game this week because remember us debt is the asset that allows the fed to indeed to monetization and as a result hand over trillions and fungible reserves to banks while they're saying that the accumulation of debt two hundred million dollars of debt for every day jones point is meaningless and the only way they can possibly say that is if the

federal reserve bank in washington d.c. will never have to unwind the debts that they've taken on to make this bubble occur and the only way that's going to happen is if you've got a global recalibration of the major g seven currencies and the only way that's going to happen is if the dollar takes a fifty to sixty percent hit against these other currencies which is exactly what the gold markets telling us let me put this into perspective why i'm not that impressed with jones of fourteen thousand because i have owned gold now during this rally for the dow jones to equate my performance in gold it would have to be at forty thousand not fourteen thousand. against gold it's been a complete loser spent a disaster against big coin it's in a ninety percent all time low so it's a big round trip to nowhere how long i was what does it take to keep jones from going up slowly nowhere over less. twelve years one trillion no three trillion as ben bernanke you said it was still on the fed's balance sheet no the contingent

liabilities mean the fed and the us government take on thirty trillion in new debt to go absolutely nowhere all right stacy ever thanks so much for being on the kaiser report thank you max don't go away much more coming why stay right there. here is mitt romney trying to figure out the name of that thing that we americans call a dollar. i'm sorry i'm just a guy who cares an awful lot but you sir are a fool you know what kind of my son you. want to be listening to featurism be on the ball and the crist. confusedly such as. you

know the corporate media distracts us from what you and i should care about because they're profit driven industry that sells a sensationalistic garbage he calls it breaking news i'm abby martin and we're going to break that.

welcome back to the kaiser report max kaiser time now to turn to steve king. bunking economics steve's also got a project on kickstarter he's raising money for a dynamic financial simulation minsky steve king welcome back to the kaiser report by the way him. steve tell us about this. kickstarter project well the starting point is i want to call him mr right now and what i do is i try to model the economy and the belief that it's always an equilibrium pretty damn close and it doesn't have banks doesn't have debt and doesn't have money which are all absolutely assumptions that dominate conventional economic theory so i built a method for simply build models that strictly monitor you can have banks and saw their financial transactions shadow banking whatever you can model you can put in

there it stunned them a could snowmaker librium and it's a close a way of getting a lynch looking how the economy actually operates and the stuff which is dominated by economics and didn't i didn't see this process coming and they don't know why we're still slowly dragging away out of it so the minsky i'm in minsky of course the economist but one of his postulates is that you've got a rising bubble in an economy where the the bubble assets are used as collateral to finance more leverage to increase until such time as the bubble bursts but all throughout the building up of the bubble people are convinced that as alan greenspan said in the one nine hundred ninety s. there's a new paradigm there smoking their own belly button lint they're getting high on the on the on the high prices are that sometimes there's a collapse of this minsky machine is going to capture the irrational. analogy of markets it makes it possible to capture you can model actually virtually any system

you lock and you can model whether it's using exactly the same basic technology that engineers have developed over the last thirty is simulink can visit him and then simmons that engineers would be aware of what economists have never gone and that dynamic direction saw him getting out as a tool it's not actually he doesn't and capture light minsky but it lets me express minsky and most people build any model so long as it's done emic and it's monitoring i think one should do that you'll get all the stuff minsky was talking about was in a fundamental way at a accurate vision of the real world but you can't express that visual issue or skype from a cool librium and except that the system is fundamentally monitoring once you do that i think miscue stuff will turn up automatically but austrians could use it anybody except street near classical music or they believe in a fairy land so if somebody wants to contribute to the project they've got to kickstarter go to kick solder it's very simple if you bought a book from amazon you're ready to contribute to simply say you want to make a pledge choose the amount the reward you want whatever you can do a good moral than any amount if you want to give it in

a particular reward click in next thing you know i mean amazon's by age you make a pledge and you back in future solder again six string this simple all right steve cain. brought along some chart horn for us to look at this is a chart of margin debt through the dow jones industrial average what's what to tell yeah well this is i've been trying for a long time to find margin debt because i know that the driving force for any asset bubble is the acceleration of the debt that finances it and if you take a look at the correlation of the celebration and margin debt to the change in the dow jones you don't quite perfect but it's too damn close for comfort what it still she was any stock market bubble is driven by accelerating debt and because accelerating debt can't go on forever at some point the bubble has been looking at it the dow is definitely in a bubble now and it model off the year maybe two but it's going to say well this is sounds like a minsky moment it's being developed right now with all this incredible dead. you know when the market froze and two thousand and eight. a lot of people had hope

that maybe they would instigate some kind of bank reform and put some bankers in jail who had abused the system who had been it related the markets but instead the response of green greenspan and bernanke of course his successor was to just pump up the bubble again yeah that would have tried to risky the posture this is a human frailty no one totally crucified greenspan and co for doing it because they're behaving like all the fools in the hospital if they could go back and continue an unsustainable trend the mayans are all in those the woods they kept on going until the last tree we're doing the same thing here rather than saying we need to china learning a lesson the same will go to risky what used to happen in the past the little start happening again once we do that the process is just kick the process further down the road how will the lesson professor be learned by making this money artificially cheap you're making let's say natural resources

artificially scarce yeah you're making the risk artificially cheap. in other words when these hedge funds and these money managers are buying into this bubble of warren buffett for example buying into this bubble they're just taking advantage of a situation that is depriving the bast majority of the population of a decent savings rate decent wage but why why can't there be any educational process to try to have people come to terms of the fact that you're feeding a model that is either a divine right of kings or a slave model but it's not about a representational democratic free market system anymore nothing like it it's something which is actually a ponzi capitalism capital and we've let that spike over the system in the last forty is because it's become what we've always had as a background we think it's normal but people look at us and powerful millennium insight. out of these people not see it is predatory capitalism it's not productive

capitalism we need to get back to the not in fifty's america where when you borrowed money it was to build a factory of wind vince some new technology not to build a bloody derivative and rip a bill off in the process and admit it we call yourself wealthy in an investor we mentioned alan greenspan he's quoted recently as saying the stock market is the really the key player in the game of economic growth so it's almost like plato's cave or something where he's looking at the shadow of growth that being a stock price and that's the reality even though that reality that he claims is the only thing to look at is the indicator of how we're doing is the very thing that's undermining and causing incredible duress to stress the unemployment an ecological collapse the real problem is late they talk about drawing asset crosses and houses and stocks is being what they call the wealth effect it's not the will effect it's the leverage of fix it's driving up the gap between consumer process message crosses with extra debt so what they're picking is that the economy is the path of

change and did now the change and it can also drive demand on the real economy so you get a correlation between the two he's seeing the stock market as the cause of the change in wealth in fact changing did is what drives the asset market and also pumps the economy up for a while but as we've seen it can be an artificial pump and it collapses lyta we need to get back to the productive economy not the rip off opponent of the people i bring spent to promote it there steve cain we're here on the the west side of manhattan over on the far west side and looking east just a couple of blocks side the viewers can't see it but i can sit and i can see the headquarters of the new york times and of course in that building occasionally would walk paul krugman there economics editor now paul krugman is the guy who believes that there should be no real supply demand economics there should be no integrity in the banking system there should only be money printing till the cows go mom and. and using the stock market as a guide a success how could this guy it gets away with such intellectually

dishonest editorials to the real a nuremberg trial for so micro men perpetrating the the financial hole of cost that he is you and i got to be on different sides of this to some extent because crude is talking about the delusions that come not from the sought of this river but found down chicago and the delusional idiots found they were chicago cops secada economists to the people he actually thinks are his main enemy and they're the ones who spotting and compared to them doesn't make sense and i want you to weigh in i agree with a lot of what he argues in terms of policy at the moment when you've got the private sector sucking money out of the economy you don't know the government being a joint vampire in the process of taking cash flow out of the economy so it doesn't make sense in these circumstances but intellectually he's still wrong and shallow because i still believe in he said it in print. he's all for including banks and stores where they matter but what's the role of banks in debt and leverage now that

is so wrong it's always been picture whiting is a mythology that you can model capitalism without banks that money and that's where his negative contribution really is yeah but that's completely dishonest to krugman because he's saying essentially oh we can expand the balance sheet ad infinitum to stimulate the economy and the problem are those guys in chicago are taking all these derivatives of the chicago school of economics of the private to the financialization of the world but those are the guys who are hedging supposedly all the risk being taken by the central bank there's a symbiotic relationship between what's happening in new york and chicago and by him claiming that while he supports one and not the other is the sound of one hand clapping this guy just wants it all he's totally dishonest intellectually and again he should bear some responsibility for the catastrophe that the policies that he himself is being indoors were right back in two thousand and two a i get the greenspan created housing bubble to get us over the collapse of the dot com bubble so in that area i'm going. agree with you that's not it that's delusional we done in a bubble economy when the real production economy but apart from that he's argument

about needing the government to pump in cash when the private sector is taking it out is correct so i'm going to disagree with you on that one but the key is still with the probably picture awaiting an intellectually dishonest way of thinking about the economy and that's why design a program like minsky so people can look at the sort of stuff through and do and that's so old fashioned that's lawns equilibrium that's nonsense that's going to dynamic thinking and that completely inverse the way he thinks about the world i don't believe is dishonest but i do believe his wrong ok fair enough i want to talk about kickstarter first second because here you have an economic model that's relatively new that relies on altruism to yeah it's a great but according to iran kickstarter could never exist doesn't exist altruism simply discourage so according to her this comp this this because this is a company kickstarter this movement of crowdfunding which is now sweeping the globe should be abolished because it supports altruism and we can't possibly have that is iran just a dope it's

a lunatic she would have been much more about humanity now entry made back in the fifty's that's nonsense humanity's always been a competent combination of competition and altruism americans focus upon competition as though that's what made a strong but if we were competing with animals on the african plains with you walked out by the nearest chimpanzee you could tell you a pot of good tim the two of us together we can take on the chimpanzee so cooperation is what was competition what made a strong as a species rand is mad to ignore that the cooperation versus competition those two dynamics that drive economics and society in varying degrees yeah here in the united states you're visiting this country you'll notice that this idea of cooperation is considered to be communistic for example and barack obama would say different famously you didn't build that i believe he said referring to the fact that everybody in america is working together to create something called america. and that there is though everyone is standing on the shoulder of giants to

paraphrase another great philosopher. but how did they get to the point in your opinion as a visitor you could be like to talk till now observing america as a visitor how did the american psyche get to the point where the idea of co-operation itself became. equated with everything that's evil in the world it's a good question i think it relates back to look back to the cold war period and demonizing the the sod and believing that the rug because the other side went for total apparent cooperative system the so-called cooperation of the soviet union had to be totally about competition now they were wrong to be totally about cooperation and planning american be wrong to be totally about competition and lack of coordination it's a symbiosis between the two it's seeing in the yang thing to get that rot and see a balance there we're going to produce an extreme society like the soviet union collapsed and deserve to collapse or an extreme society where you can trust each other you can't even car on the street now you need to have

a combination of the so we need to get in the middle there and stop demonizing cooperation as much as the russians have to stop demonizing competition it's a blend of the two that makes the society strong and america has got that in its history and should get back to what ten to fifteen thanks so much for being on the kaiser report. and that's going to do it for this edition of the kaiser a par with me max kaiser and stacy herbert i want to thank my guest dave came author of be bunking economics if you like that we need. to report in our t.v. that are you ask other thing by you know. three couldn't take three. free. range means three. three stooges. bloggers plug in video for your media projects free medio daugaard tom.