one would think they were you know it through the pass of this currency war on china's behalf they've been very concerned about america and their money printing and quantitative easing but it's moved down to japan they're concerned primarily now it's about japan because since the middle of last november the end has fallen by close to eighteen percent against the dollar this is likely to promise capital flows into hard currency so in the asia region max they're considered the you add is considered hard currency relative to the yeah so all this capital inflows are going into china causing inflation crossing more property speculation right while bank of japan is bent a socially nationalized by the new government in japan and they've been told to print print friend money wildly recklessly out of control meanwhile mark carney is being moved from the bank of canada over to the bank of england his mandate like japan is to print money out of control ben bernanke is already printing money out

of control the european central bank the e.c. big is less inclined to go down the path of this type of reckless money printing so that's why the euro relatively speaking has not experienced the kind of damage that some have to dictate with the peripheral nations like greece and others running into so much trouble but at some point the e.c.b. will join in and they will also be forced to print like mad men and the e.c.b. his balance sheet will increase by chileans of europe and this is the twenty first century conundrum that we all face is that there are no underlying strong economies from the point of view of manufacturing wages savings there's only financialization and financial trickery which is field by zero percent interest rates and money printing which as jim rickards would tell you is leading to gold ten thousand dollars an ounce so back to china as i said they are becoming they're being kicked considered like the hard currency of the pacific region and the latest. here showed

a surge of money heading into china last week china's central bank reported that companies and individuals changed six hundred eighty four billion yuan our one hundred eighty nine billion dollars worth of foreign currency in january this was a record for a single month and the data point is often used as a proxy for hot money flows and that's really the only game left in town is to try to manage the hot money that's out there remember to global g.d.p. is approximately sixty trillion but the global shadow banking system is quite quite a bit larger probably close to one hundred twenty two hundred fifty trillion dollars the global derivatives market is seven hundred trillion dollars and really that on the margins of the shadow banking system is where the fortunes of these underlying economies are going to be determined that absolutely nothing to do with house prices or wages or jobs or savings it has everything to do with people fighting the currency war in the shadows and we only see the best ijaz of the of the shooting that's going on when the occasionally you'll see a flash crash or

a or a gap opening or some kind of market event but behind the scenes it's a raging a stew of of of of of quantitative and nightmarish currency bubbles so now they're they're concerned mostly about capital crossing their borders plunging itself into their economy and them losing control of their own monetary policy and we've also seen this is switzerland where so switzerland of course is the safe haven it's considered safe haven lease a massive inflows of capital during the crisis and they introduce a currency peg now of course china has a currency pegged to the dollar but they say perhaps the real reason behind the amplified currency war rhetoric is that china has been pushed into a tight spot the end game could be floating its currency much sooner than it would have wanted right well you know this is the i would call the peter shift. where the . the chinese currency appreciates and you have a tremendous

a local domestic economy spenders in china who are buying the things that they've been manufacturing because they can afford it because their currency suddenly appreciated remember the u.s. dollar as a percentage of world trade as steadily decrease every quarter every year for the past twenty years and this trend is now getting to the point where as a percentage of global trade the u.s. dollar will dip below fifty percent at that point you can categorically state that the u.s. dollar is no longer the world reserve currency and are rapidly approaching that number so again here we see a situation where china might have to internationalize like let it float suddenly ok that's one thing so in the background that would mean they must be looking at a way to accumulate gold more rapidly if they think that's the situation on the international stage look at this next headline currency wars central banks in denial or lying and this is from our friend upon the planet that comments fire

stein and he says a large consumer products company johnson and johnson announced a one off last owing to a thirty two percent devaluation in venezuela now this cost them one hundred million dollars so he says think about that think about a company the size of johnson and johnson losing one hundred million dollars on a little tiny country like venezuela devalued by thirty two percent now what happens if the yen has a sudden devaluation where they're setting up valuation. to these sort of companies and this is just one company and in one on one currency transaction right you know apple's got billions and billions held offshore that they have not yet repatriated onto the u.s. and all these make multinational companies play these four x. games where they're moving modeler money around in a shadow banking system and it's a point well taken because the fortune five hundred companies out there very low.

all of what they do is what you think they do johnson and johnson mostly is a financial speculator the banks obviously are financial speculators the oil and gas companies are financial speculators fester primary business is by hoarding cash on their balance sheet they get almost free from the central banks and then playing accounting games and market manipulation games and currency arbitrage games and then they pay themselves a humongous bonuses based on gaming the system johnson and johnson i mean they're not about baby powder baby oil they're about gaming the system they're about financial terrorism they're about manipulating the system they're about political influence peddling they're not about babies so again it's fireside chat notes this but in recent months the japanese yen has plummeted thirty percent against the euro and some twenty percent against the us dollar those figures are astounding enough in themselves but get this the euro currency probably won't even exist in a few years time i know even to me disagree with that but he's noting that in the

italy that they grillo he says he would get rid of the euro they would exit the euro now even in germany they're having a surge in the anti euro parties so there is a chance that not that it would collapse on its own but that the people would choose to remove their economy from the euro well let me make a statement and i'm not saying this for the sole reason of being provocative but it is a provocative statement that i think needs to be said if you read let's say john perkins economic confessions of an economic hitman anytime you have a populist leader like they potentially in italy they suddenly find themselves falling out of an airplane at thirty thousand or meeting some other similar mishap there's no way that this guy is going to get anywhere near running that country before some major accident befall them and before any major accident the false the global currency of course we have to keep an update on this next headline and it's about gold korea enjoys russia cossacks down. imputing gold holdings the bank of

korea added twenty metric tons in february raising its gold reserves by twenty four percent to one hundred four point four tons holdings rose about one point zero three billion by value to four point seven nine billion at the end of last month put into one point five percent of total foreign exchange holdings this follows on them they added thirty tonnes and twenty twelve and forty tons and twenty eleven so there rapidly accumulating there in the midst of that whole japanese versus china currency war going on book tour is like it's a middle sized central bank ok they see what the big central banks are doing they're starting to aggressively buy gold as we've been saying on this show russia huge gold buyer china huge gold miner and buyer and they're out there around the world accumulating gold on the stealth to increase their position the central banks and the game being played a circular firing squad otherwise known as quantitative easing happening around the world with central banks debasing their own currency can only end one possible

outcome and that is with gold the ten thousand dollars of them so they don't want to be left at the altar of the new global currency grid holding nothing but a bunch of ramen noodles and they want gold and so finally max as we talk about this quantitative easing about the possibility of the euro falling apart what if it's all because of just a typo and i want to get this quick final headline here from the united states about what a typo does to a human and what it could possibly have done to our global economies another person dies from the stress of dealing with wells fargo on the morning of december nineteenth two thousand and twelve in a torrance courtroom larry dallas ysis heart stopped as he watched his attorney argue his negligence and discrimination case against banking behemoths wells fargo the bank's typo led wells fargo to demand that dallas is paid thirteen thousand three hundred sixty one dollars and ninety cents two years of late property taxes.

the bank said it had paid on his behalf in order to keep his wells fargo mortgage afloat well in fact max he didn't owe those taxes that didn't stop them from collecting it and doubling his mortgage payments he was on a fixed income because he was retired and he and he ended up losing his house his wealth everything on a typo but it reminds me of a key plot point in the movie brazil terry gilliam's brazil where a due to a typo there was a you know the state went after an individual and then the robert de niro character who's kind of operating in the elevator shaft of this dystopian nightmare is out there pulling a stunt where he would go into oh and any would reverse the sewage pipe with the air pipe so that the apartment was flooded with sewage now i suggest that down there in omaha nebraska headquarters of warren buffett's berkshire hathaway charlie munger the biggest shareholder of wells fargo somebody reverse the pipes with the oxygen in the sewage because al is the major shareholder of wells fargo and they

come out and made any statement or destroy monger going to make one of his commentary goes well too bad you killed yourself in your family because of a typo suck it up so kudos all right stay sober thanks much bigger because a report thank you don't go away much more coming why so stay right there. toward the shoe faces of freedom fighter.

ready to clean up and. free. not. to be free to sway. and if you. couldn't take three school children three major and three. three. three. three books you play the field for your media projects. r t v dot com.

welcome back to the cadbury part time magpies are time now to bring in jim rickards author of the internationally acclaimed currency wars welcome back to the kaiser report thank you max all right you've become a globe trotting spokesperson to try to educate the world about these currency wars with very success but one video i've seen on you tube that's fascinating talks about a for a financial pearl harbor economics tension of what we read about in your book which was the the roleplaying that goes on approach war games going on talk about this financial pearl harbor a little bit the financial pearl harbor as they call them access a little bit more on the national security side but definitely related to the current sewers the way i would distinguish them as currency wars or economic phenomena its economic competition between countries i want to steal some trace muse who i love you know a chip in my car see the dollar never maybe i explore my deflation to you i try to get some inflation still some exports me up that's

a currency what's nasty but it's economic financial war is a little different which is actually you would use finance as a weapon you do stocks bonds derivatives currencies as a weapon to charge and destroy around me the same way you would with a missile or an aircraft carrier but using financial weapons now they are separated sort of areas of study on involved in both but where they come together is you could have a something that starts out as the comments were gets nasty and then accidentally trips into a financial war which much worse outcomes call like the old doctor movie where the two sides didn't want to nuclear war but they got one by accident so. those kinds of things can happen right we have something of a financial doomsday machine in this global derivatives market back kid that is highly leveraged highly unstable and out she years ago when currency war was coming out people would denying that it exists now they all seem to agree that it exists but that it doesn't matter talk a little bit about some of the rhetoric we see now because whoever came just too big and too obvious particular the bank of japan we were talking about years ago in the us and brazil and switzerland and others but finally the b.r.g.

to just be our judge said we're going to trust the un so it became a little bit obvious but people still don't like to talk about it in exactly those words so you have about on the guard head of the i am not saying well we don't have the kind of sewer we have conversely worries you have barry eichengreen leading scholar of the exchange rate say well it's not a county war it's a stimulus war only question for barry will be will barrie how do you get the stimulus you got to buy cheap in your currency so it's still a congress who are we a marriage or are you coming out saying the less said about this the better it's an exact quote so you get everyone sort of they're using euphemisms but it's because they were plain and simple isn't this a classic prisoner's dilemma situation the the nash equilibrium as it's called they're all in the interrogation room and they're all claiming they don't have responsibility but all it takes is for one dissenter and you have a ripple effect and then you have i mean you have to almost go back to world war one it's kind of a similar lead up massive globalization i coordinated you know manipulation of something great and then and then it goes all haywire well that's exactly right now

you know up until ninety seventy one we had a gold standard it was it was flawed but it was some kind of gold standard from one nine hundred eighty to two thousand and ten we had the dollar standard not as good as the gold standard but the u.s. said we're going to maintain the value of the dollar and all you other countries compared to the dollar if you want in two thousand and ten president obama ben bernanke and him guys there tore up the dollar and sort of the congress was so now you're exactly right we have an unstable situation when there is no leadership and right now the united states is not providing leadership on the economic order. political from for that matter when there's no leadership it's every country from self so you see geno germany cozying up to russia see japan and going their own way you see china trying to build alliances that's a very unstable situation where's the equilibrium and you can have a dual even triple it will librium system where you get in a situation where one breaks down and then jumps to another equilibrium that's a well known phenomena of physics we could actually be in between like we're not in the new world of the old equilibrium but we're not to you know what though goes

close to a new normal we're not there yet when that in between stage which is very turbulent very uncertain all right a quantum leap one equilibrium turned out there and you know you're flying physics to. finance and this is typically not the way people look at it but era way of thinking is you have to apply almost concept like chaos theory and other quantum theoretical because the the amount of derivatives and amount of leverage in a system is so great that you don't really have a classic supply and demand economy anymore it's more of a systems analysis where you're just trying to figure out how these hundreds of trillions of dollars of derivatives are going to flow and just like in quantum mechanics depends on where you're looking where you're sitting what you see what's exactly what i expect but when i do this to me it's not a metaphor i'm not like we'll get the financial markets and think if as of this and well metaphorically this is a little bit like that i think it's the exactly applies to the exact lancer science it's called complexity theory it's related to chaos theory it's related to systems

to now which is the systems on them and not every system is unstable some are say able some are on stable you can have a noninterventionist relatively stable supply and demand system we just don't have one right now we have a very unstable set of affairs but when you look at complexity theory said one of the hallmarks of complexity theory was diversity in the players we had the capital markets its interaction what we have that capital markets you know its adaptability which is sort of a learning function and there's communication between the parties so we have all the i. immense of a complex system in capital markets they are complex systems and once you reach that conclusion you can take sixty years a good science and applied sixteen were helpful in understanding what's going on so nassim taleb seems to be something of a frustrated philosopher jamie seem to be a frustrated physicist well not so frustrated max because i've spent ten years or a category of financial physics as such there is a kind of i near this all in a way the pilot pioneered

a little bit in terms of applying to capital markets there is a branch called a kind of physics for space the understand the economy to physics i prefer complexity theory because i think it's it's straight up you can take good complexity science and it applies very well to capital markets not lead to fourthly but scientifically that the elements are there the dynamics are there and so it's a much better understanding of the fans love i love what's alleged in the black swan into the baseball bat demolish the bell curve you know once and for all someone needed to do that i'm glad he did it but he kind of stopped there he said well models don't work so let's just forget models they said you know stuff happens you know it's a little more colorful than the apple kind of stuff out of the two of us has worked when we camouflage that for i think we can do better i think we can use science we have to be humble about what we can and we have to use it carefully are you mission this idea of finance or warfare and i want to digress a little bit and go back to look at greece charlie because some argue that greece the problem in greece the collapse in greece was part of their own making but apart

from outsiders really using financial warfare using credit default swaps using a member of the banks and wall street goldman sachs you know they did some debt too elaborate to get into the euro and then made bets against greece later then john paulson made bets against greece a hedge fund manager later isn't a financial warfare and shouldn't there be some a way for a country like greece to seek recourse in the case that they've been attacked in this way your thoughts the things back their mobile parties are such just two sides you know the good guys and the bad guys so to speak i'll. i think germany wants to destroy greece germany wants to help greece but they're doing in a very you know a hard way they're yet let me just cut it because you know they're buying these assets for pennies on the dollar race the private equity funds i was there when steve forbes was down there shopping for for assets you know during that when the tear gas was flying in the international chamber of commerce so how much of my question is isn't there a bit of a controlled demolition aspect to the way greece spell i agree with that max but i would lay out all of germany's feet because remember john paulson john course when

he bought bonds others you know for you know for his people you're talking about they're not countries they're individual actors they might be had funds they might be wealthy lovelace in a germany seat i'm saying that greece was a three in a billion dollar economy which is on a a leveraged buyout basis not a big leveraged buyouts and you had guys predatory come in you know germany was just looking at this from a from a taking a step back but you had guys go in there they trashed the country now they seem to go from there then they went to spain with a worchester looking at italy to what degree is europe being destabilized by. credits or leverage guys from wall street the city i think a very great extent this is just a wall street as usual it's been going on for a hundred years you know they fleece individual investors in u.s. markets you know the banks you know fleeced depositors by not paying the normal interest rates and really straightest least countries by you know you're feeding them all this stuff leveraging them up and then collapsing in which you know front on them so i definitely that's going on but there's something else going on which

is germany is trying to impose the german model on the periphery it may work it's hard you know you had you know would be in stiglitz and crew and all these guys you know greece has got to quit the euro chip in the u.k. sorry i got to jump in here jim because you know two years ago when all this was kicking up you and i are on doing interviews and various t.v. shows around the world that we use this phrase fourth reich germany is a bit provocative at the time but how much of that is rhetorical and how much of that israel or germany is the richest most part. country and europe so was bound to dominate the same way the us dominates to america china's going to dominate asia that's a natural state of affairs but when i say the fourth reich i mean a such as to be provocative i'm not thinking about the third reich which is pretty despicable thing about the first right to charlemagne and that was a much more it's called a soft touch it was cultural it was educational it was a military aspect to it as well i don't think we'll see the military this time around the financial and seven military but i think germany is destined to dominate

europe and they're doing it in a way that's probably good for the rest of europe i think you know greece can lower its you know labor cost it doesn't have to go back to the drop mentioned in the currency just lower labor costs in euro terms bring in chinese capital bring in german technology utilise youth labor and you'll be an export powerhouse that's working let's go back to the currency wars and kind of main event because in china the deputy governor of the central bank said china is fully prepared for a looming currency war i guess i just read your book at the same time brazil surrendered and stopped fighting the currency war talk about it was a matter of fact i just recently met the chinese translator in my book actually when the new chinese forward he told me he's very well connected guy told me that the leadership actually hybrid cars who are so very very happy to know that i think the chinese are being honest you know madame lagarde it's not my job is not them or not it's not the chinese called like i say it is a currency war right now they're on the receiving end they've been on the receiving end of us aggression now they're on the receiving end of japanese aggression

they're getting a little tired of it so bad but they're ready to do what they have to do so those who don't think or buy the currency war story they they should look at what the central banks have been doing since two thousand and nine which is behind all right which is for the forty years they were sellers then they became buyers now south korea just bought a big chunk recently russia's been buying talk about out of central banks are adding to their positions well that's really small i mean first of all you know gold is one asset the one vaporised if there is some kind of collapse which i think it can roll out but what i would say i was down was last summer i was speaking to. fishelson career is that what i was saying is look if you think your congress is too expensive i was embraced the strong currency make yourself a magnet for investment the way generate exports is not a cheap currency you do with innovation of value added but i was said to be crazy if you think if you really think your car is just too strong a word about buy gold print money buy gold that way you'll find the facts right that on the course we have come to with the printing money target and you get to keep the gold we want why buy bonds and buy buy buy buy. buy buy bonds at what

point will one of the central banks print money to buy gold instead of printing money to buy bonds what i think you're seeing in korea already i think that's the coming thing and i think the chinese are doing as well that could be the tipping point along other big number we'll about thirty seconds left your big number to watch would be tons of gold owned by china you think that when they come out or they own four thousand tonnes up from the one thousand and fifty the official reserve number right then their gold to g.d.p. number is gives them a place at the table correct to really say you know say to america we're now going to take a move and become a dominant or you denies those can dictate to us where we're we're on an equal footing with you china is not there yet interestingly russia is there i call this the goal is caligula missile gap of the ninety six is russia has closed the gap china has not they're catching up. thanks so much for being on the kaiser report thank you all right that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert our time i guess jim rickards author of the phenomenally successful currency wars if you want to send us an e-mail please do so

at kaiser reported r t t v are you until next time. for something extreme cold. it's a cooling if you look you can see that the water is going to send my body feels really warm now this is good for you. they plunge into icy water to make themselves stronger you can't get used to the cold it will but you can tolerate it and you can struggle with. people of snow and ice picks as a frost. surviving the cold sea. they've been living this way since the seventeenth century.

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