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 card 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 bennett socially nationalized by the new government in japan and they've been told to print print print money wildly recklessly out of control meanwhile mark carney's 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 as not experienced the kind of damage that some have to dig did 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. 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 figures showed a certain. 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 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 that 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 but lobel 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 of jews 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 stoop 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 in 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 peg 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 china. 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 in a rapidly approaching the 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 my friend

a ponzi planet dot com it's 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 suddenly up valuation. to these sort of companies and this is just one company in one on one currency transaction right you know apple's got billions and billions held offshore that they've not yet repatriated out of the u.s. and all these big 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 little of what they do. if 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 that's the 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 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 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 you and jim rickards disagree with that but he's noted 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 grid of course we have to keep an update on this next headline and that is about gold korea enjoys russia cossacks down into sting. 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 tons of twenty twelve and forty tons and twenty eleven to their rapidly accumulating there in the midst of that whole japanese versus china currency war going on book three 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 bank 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 look at 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 oocysts heart stopped as he watched his attorney are you his negligence and discrimination case against banking behemoths wells fargo the bank type 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 due to a typo there was a you know the state went after an individual and then the robert de niro character who is kind of operating in the elevator shaft of this dystopian nightmare is out there pulling a stunt where he would go into oh my and he 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 my 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 you know all right stay sober thanks much bring up because a report thank you don't go away much more coming away so stay right there. cretaceous three months for charges free. range free. three stooges free. food free broadcast quality video for your media project free video don carty dot com.

they've been living this way since the seventeenth century. their rituals are strict. their communities are the salafis. they clearly distinguish between their own and the alien.

and guard their family and things in the trash. sixty. welcome back to the kaiser a part time mag guys are time now to bring in jim rickards author of the

internationally acclaimed currency wars jim rickards welcome back to the castle 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 your book which was the the roleplaying that goes on of 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 it's economic competition between countries i want to steal some trade from you so i love you know a chip on my currency the dollar whatever maybe i explore my deflation to you try to get some inflation steal some exports from you that's a currency what's nasty but it's economic financial war is a little different which is actually you use finance is

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 there are separate 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 dr strangelove 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 right 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 can just too big and too obvious particular the bank of japan where we were. talked about it years ago in the u.s. and brazil and switzerland and others but finally the b.r.g. just b.o.j. just said we're going to trash the end so it became

a little bit obvious but people still don't like to talk about it in exactly those words so you have that on the guard head of the i am not saying well we don't have the kind of sewer we have kind of see where he's you have barry eichengreen leading scholar of the exchange rate say well it's not a county war it's a stimulus war on i question for barry will be will barry how do you get the stimulus you got to buy cheap in your county so it's still a congress who are. 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 economists who are plain and simple isn't this a classic prisoner's dilemma situation the the national 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 to center 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 to something great and then and then it goes all haywire well that's exactly right now you know up until nine hundred 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 can take to the dollar if you want in two thousand and ten president obama ben bernanke and him geithner tore up the dollar start 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 or the political front for that matter when there's no leadership it's every country from self see c.g.i. 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 whereas the equilibrium you can have a dual even triple it will librium system where you get in a situation where one equilibrium breaks down and then jumps to another equilibrium that's a well known phenomena of physics but we could actually be in between. we're not of the new we're out of the old equilibrium but we're not to you know what though goes close the new normal we're not there yet we're in that in-between stage which is very turbulent very uncertain all right side time

a quantum leap 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 concepts like chaos theory and other quantum theoretical because the the amount of derivatives and amount of leverage in the 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 will get the financial markets and think it says that this and well metaphorically this is a little bit like that i think it's 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 sable

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 is that one of the hallmarks of complexity to it was diversity in the players we have about capital markets it's interaction what we have that capital markets you know it's adaptability which is sort of a learning function and there's communication between the parties so we have all the elements 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 apply the sixteen will help from 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 it's as such there. kind of i near this all in a way. pioneer a little bit has a client the capital markets there is a branch called economy physics which basically understand the economy to physics i

prefer complexity theory because i think it's it's straight up you can take good you can take complexity science and it applies very well to capital markets not metaphorically 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 two of the sands work when i became a philosopher i think we can do better i think we can use science we have to be humble about what we can now we have to use it carefully all right you mention this idea of financial 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 paid some debt to 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 don't 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 now 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 their when the tear gas was flying in the international chamber of commerce so how much my question is isn't there a bit of a controlled demolition aspect to the way greece spell group. that max but i would lay out all of germany's feet because number john paulson and john course are going to blow up on others you know for you know force people you're talking about

they're not countries they're individual actors they might be hedge funds they might be wealthy lovelace in a german 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 a country now they seem to go from there then they went to spain with a worchester looking 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 our normal interest rates and really straightness lease countries by you know you're feeding them all this stuff leveraging them up and then collapsing it and 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 and stiglitz and crewmen all these guys say you know greece has got to put 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 germany is the richest most powerful country in europe so it's bound to dominate europe the same way the u.s. dominates to america china's going to dominate asia that's a natural set of affairs but when i say the fourth reich i mean as such as to be provocative i'm not thinking about the third reich which is pretty despicable thing about the first reich of charlemagne and that was a much more it's called a soft touch it was cultural it was educational there was a military aspect to it as well i don't think we'll see the military this time around belief and. machel and seven military but i think germany is sort of 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 drachma cheap 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 concert 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 you 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 the currency war right now they're on the receiving end they've been on the receiving end of u.s. aggression now they're on the receiving end of japanese aggression they're getting a little tired of the cell but they're ready to do what they have to do so those

who don't think or buy that 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 how the central banks are adding to their positions well that's really smart i mean first of all you know gold is one asset the want 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 fishes in korea recently what i'm saying to this is look if you think your commerce is too expensive i was to embrace the strong currency make yourself a magnet for investment the way generate exports is not a cheap currency you deal with innovation of value added but i would say that the koreans if you if you really think your car is just too strong a word about it by go print money buy gold that way you'll find your find a fixed rate that from the course we have come to with keep printing money so you have the target and you get to keep the gold. why buy bonds and why buy why buy. why buy bonds at what point will one of the central banks print money to buy gold

instead of printing money to buy bond was think you're saying 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 another 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 china's interest really russia is there are is the gold. rush is close to god china has not. thanks so much 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 thank my guests author of the phenomenally successful currency wars if you want to send us an e-mail please do so at kaiser reported are

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