twitter at meghan underscore lopez. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm tom harpur welcome to the big picture.

welcome to the casa report i'm max kaiser you know that feeling when you've blown your life savings on a carnival game and all you have to show for it is a stuffed banana with dreadlocks they're used to it because there's no plan big it's only a traitor savings your wealth their earnings are going to stuff banana with dreadlocks stacy. that's basically the global economy the global financial system of course now this guy new hampshire man loses his life savings on carnival game is he was henry gribbohm and he lost his life savings of twenty six hundred dollars on this game where i guess you had to put this ball into a hole and he wanted to win

a bigger prize but when he found is that when he practiced he says it was easy but something changed when he started playing for the prize and the balls kept popping out it's not possible that it wasn't rigged said graham if you were observing the situation if you were in a situation where you saw it was rigged would you walk away or would you say hey i'm going to try to win my money back that i've just lost right well this is part of economics and behavioral economics and what wall street and other brokers and bankers prey on is on the fallibility of the human psyche that is prone to emotionally get involved in a situation where they're losing money in a rigged market and they are blinded to the rigging they only have an emotional reaction that they want to get their money back so they're willing to double down on a rig market this is what people like goldman sachs j.p.

morgan are doing your bank in germany this is how they make their money they're very sophisticated casinos in this way they know that the punters the people who come in who are losing their lives savings are behaviorally drawn toward this kind of suicide mentality they see the mobs flying into the light and killing themselves that's the business model of wall street so in this case here the thirty year old from epson says he kept trying to win back his money by going double or nothing he dropped three hundred dollars in just a few minutes then says he went home to get twenty three hundred dollars more and soon lost all of that as well you just get caught up in the whole thing he said i've got to win my money back so you know here we have after a financial collapse a lot of. people have lost their homes for through foreclosure or negative equity they've lost all of their four one k. pension funds money down in the stock market so they're doubling down trying to make that money back and we see that all across the world everybody is diving into

the stock market we see housing bubble again emerging in the united states because people want to win back the money even though they know it's now a rigged system well let me reintroduce a concept i've talked about on this show before which is the martin gal betting system the martin betting system if you go to the casino you're at the roulette wheel you bet on red and if you lose you double your bet and you bet on red again and you continue doing this until eventually you will win and you will win win a bunch of money but typically more people don't do this because you run out of money a lot quicker than the odds are that you're going to hit the right number and get the money back wall street have been able to legislate and to re shape the way finance is conducted around the world to allow them to engage in martin gail betting system again a j.p. morgan or goldman sachs they're constantly doubling down on losing bets because they know because their source of credit is the federal reserve bank it's the american taxpayer and now precisely as to global taxpayer in the global banking

system they have an infinite supply of credit at virtually zero percent interest rates they are engaged in the martin bank system and they never lose whereas this poor guy the but now nick man with the dreadlocks he encounters the shortcomings of the martin betting system which is that he can only do one or two throws of the dice then he's busted bankrupt he goes home completely without any money if you are working at j.p. morgan you continued to do this exact same bet using the house money using our money using the the federal reserve the central bank's money until they made a profit that's the acute difference between the insiders who are reaping the system and everybody else well we can point to two real world examples of this long term capital management that's. when the fed first got involved in manipulating global interest rates in order to bail out one person they went bust on martin gal betting technique of doubling down on the russian ruble they lost the bet over and over and over until they couldn't sustain the bet anymore the same thing happened with m.f.

global junk or assigned bet on the euro bonds and he doubled down doubled down doubled down eventually the bet went right but too late for him now but those are when the odds are it's not totally reject that their odds are that eventually you might win here in the markets now there is no chance of you winning the odds are that you will lose on every single thing just like with this guy with the banana man he was never going to win there is he could have doubled down for eternity he would not win because the game was rigged high speed traders exploit loophole high speed traders are using a hidden facet of the chicago mercantile exchange as computer system to trade on the direction of the futures market before other investors get the same information using powerful computers high speed traders are trying to profit from their ability to detect when their own trades for certain commodities are executed a fraction of a second before the rest of the market sees the data traders say so it's only giving them up to a ten milliseconds advantage but that's enough for them to guarantee profits right

it's not enough that they're able to engage in this market betting system of guaranteed profits using the central bank's balance sheet as they want more they want to be able to front run as well as engage in this massive fraud on the market go betting system story that we're just talking about today they're not satisfied with that this is why the wealth and income gap in the u.s. and around the world is growing so so much is because so much of the billions and hundred billion dollars per day of training that goes on is simply another stolen or front run and of course not just drains the system of capital that would be used to create jobs create more balance in the economy and you'd have a less of a risk now of social. cohesion riscos the economist magazine calls it a revolution so according to this article sixty one percent of all trading on the u.s. stock exchanges is by high frequency traders so these guys can trade in a fraction of a millisecond they're just able to go in their way before you front run

a trade that you're even thinking of now and people keep on getting into the markets though they see the balls popping up out of the hole they know it's rigged and they keep on getting it in for some reason officials with virtue financial high speed trading firm in new york the u.s. like head start is good for the overall market according to a person familiar with their thinking the person said the data helps traders who buy and sell futures contracts throughout the day manage risk in post more quotes that benefit other buyers and sellers the person said virtue doesn't use that information to amplify its profits by anticipating moves elsewhere in the market well this is again a return to the neo feudalism model they're using the argument of the divine right of kings that their profits are better got me legally by exploiting loopholes and by stealing they deserve it because they consider themselves to be what are some call market fundamentalisms they are the jihad ease of market they are the they are the suicide bombers of chicago in new york they're exactly equivalent to

a suicide bomber in a cafe in the middle east then you have a suicide bomber in chicago or new york they're cut from the same cloth they believe in the sanctity of their own narcissism as the guiding light of their actions and they're killing themselves and others and that's why we have a big problem so again you know hit the market making in liquidity or the excuses they use over and over we play that a few years ago where lloyd blankfein of goldman sachs was interviewed by charlie rose he said that their market makers are just providing liquidity to the market all these fraudulent c.d.o. is that was just market liquidity they they had no position blith master she was now under investigation for rigging energy markets she just said the same thing about silver a few years ago she said we're just providing. aditi where market makers we don't take any position we don't profit from any position in the article they say proponents say eliminating the ability of parties and a trade to get information slightly in advance could lead to less liquid markets because some firms would be inclined to trade less due to the greater risk right

well if they were adding liquidity and making markets then we wouldn't have the problem flash crashes flash crashes exist because there is no genuine liquidity beneath the current bid and offer prices of these many many markets around the world and the term making a market or liquidity when it comes out of the mouth of a blind masters or so on wall street again you have to understand is code for we worship the god of markets to tell us to commit an act of suicide whether it's jim jones in guyana or you have lloyd blankfein of goldman sachs their lead in their cult leaders into a suicide cult and market making a liquidity is code for drink the cyanide blow your brains out wipe out a village kill everybody that's in there doing a fantastic job what you mentioned flash crashes and that's in the next headline relating to high frequency trading see if he sees chilton high speed traders likely made money on twitter hack attack so this was of course the twitter hack attack

where a.p.'s twitter account was hacked and it tweeted out that there was two explosions at the white house and barack obama had been injured the markets dove two hundred billion dollars wiped off the market cap he said quote it's likely that high frequency traders made money on the way down and the way up but there are undoubtedly were folks who got caught lost money and then couldn't get back in he said so again the ball's keep on popping out the balls keep on popping out but i'm going to go home and get the rest of my savings and double down to make up the losses for getting trapped out of the markets right people this conflict if you trading is is exactly like siphoning gas out of a gas tank they're using technology to siphon money out of. exchange is what the tech that's what the technology is used for the people who are being victimized by this because of behavioral economics we know that the victim blamed themselves so the people are losing money in the market like the beaten wife who blames themself for the for the beatings that they get here the market participants who are

victimized are saying oh my god i'm i'm because of behavioral economics we know this to be a fact they blame themselves and we know that the wall street plays on to that and they they play on the psychology here so that people are more likely to blame themselves for the crimes being perpetuated against them well just as the guy at the top of the show where he lost all his life savings for in exchange for a banana with a dreadlocks he said you just get caught up in the whole i've got to win my money back so then we cut to new york stock exchange margin debt approaches all time highs as the market surges we inevitably see a sort of ponzi effect in the market where more confidence breeds more credit and the bidding up of prices it works until it doesn't and when it doesn't the air sure comes out fast right the eight hundred eighty five billion and quantitative easing per month begets eight hundred fifty almost a trillion dollars and debt indebtedness including margin debt and other bond

schemes you see apple computer instead of picture repatriating the money overseas they made and paying a tax on that which with it they would have paid a nine billion dollars tax which would have gone into the ability of america to create jobs they're just trying to increase debt because interest rates are low due to the fact that we just mentioned that the central banks around the world are engineering this irrigation like system of putting money into the pockets of the martin gale spinning fraudsters and banks there's all the problem the rest of the world of a job and a savings rate and any kind of claim to decency and this is why people are rising up and getting you know toward this notion of a bloody uprising because they've had their dignity stolen from them by wall street by lloyd blankfein by jamie diamond and you mentioned quantitative easing you know . finally cut to a quote here from zero hedge in a tweet the level of stupidity of people trying to justify all time market highs with plunging fundamentals is that q.e. levels so again it's like people except all the losses in vegas in exchange for

a free glass of bourbon or this guy losing his life savings in exchange for a banana dreadlocks all right stacy ever thanks so much for being on the report thank you max all right that's it for this half of the show states i'll be back with a whole lot more. 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 about. you so are you know what that is my fear is so. i want you to listen to featuring me on limbaugh and the chris. coons usually out of the. you know the colbert you distract 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 imax guys are time now to turn to schlichter author of paper money club's debt love welcome back to the kaiser report thank you much credit news the day marion draggy has cut the e.c.b.

cut their rates by twenty five basis points that brings it down to a half a percent which i guess is same as bank of england what's the update there your thoughts well i think it's not going to make any made meaningful difference to the to the european economy i mean we had this policy internationally now forward five years of interest rate repression you know financial repression keeping interest rates artificially low this policy is supposed to kick start the economy to you know just give input impetus to it it's evidently not working the policy is a failure in fact i think it's now counterproductive because will be seeing as we when you bubbles in financial markets i mean the the main response you get is in financial assets. at these kind of interest rates it's obviously cheaper for banks to do one big books and you know financial assets be softer the announcement the german government bonds booms making new all time highs. a lot of that a little bit of that may ultimately trickle down into the real economy but but this

is. the policy does doesn't work let's talk about this phrase financial repression for a second so in other words you have these rates a half a percent but the nominal rate of inflation even even when the number that's being reported by the governments which is understating the number of adults take their their number of roughly two and a half three percent when when rates are underneath that level that opens up this idea of repression doesn't because people's people are especially also you have a situation where wage growth is only maybe one percent a year so wages are in the savings rates are materially underneath even this low nominal rate of inflation so right there out of the box. are losing losing their purchasing power and they're being repressed you could say and that's kind of where the genesis of the term comes from a way can you elaborate on that some more well first of all of think it simply means that central banks doing everything they can to not allow the market to set

interest rates and respond i mean it's fair to say that i think on many of these assets the yields on these assets a lower than they would be if we had not this financial policy from the central banks and i think many risk premiums on financial assets on corporate bonds or on equities would be higher if we did have that policy so the idea is to step as prices and yields that are not set by the market but by central bankers. this should encourage people to spend and to you know a borel and invest. but i think that i think the problems we simply have after the crisis a lot of people feel they have too much on corporations feel they have too much debt and individuals feel they have too much debt people went through a boom bust cycle already so i think it's also tenable that people don't want to take up the cheap money and do the same thing again all the central bankers do everything in their power to encourage them to do just that me just pick up those two ways to grow an economy you can borrow to invest or you can spend money in terms of capital expenditure and you could save money in terms of developing

a savings rate and this idea where we're not going to have capital expenditures are going to rely on consumer culture seventy percent of the economy here is consumer culture it's going to be funded by people borrowing money and it's resulting in as we're saying asset bubbles and now stocks and and real estate but no genuine growth in terms of the underlying economy the participation rate of labor for example united states is still at. the low we have to go back to nine hundred seventy s. defined as low as it is now wages are barely moving at all the fabric of the economy still falling apart because there's a choice the choices for borrowing suspect. late instead of investing essentially and capital creation so that that's a that's a conscious choice and it's a choice that so far as resulted in not in any meaningful growth but only these asset bubbles so what point to politicians need to say we made the wrong choice and

we make another choice where i think the point is now i think they should stop this policy right away and stop these this manipulation of market they're doubling down during creasing quantitative easing their amplifying their mistakes i think that's absolutely correct i think the central banks painted themselves into a corner now because they don't dare stop this kind of policy and druggy has even hinted negative reinforcement so the right over there is the b. which is the central saver is the bundestag i mean that they're being sucked into this this idea totally against the d.n.a. of your german central banker they're now going to expand the e.c.b. the balance sheet by trillions of your of to compete with the u.s. in the u.k. the german people they must be outraged at this because they were going to watch they're going to right back into a hyper inflationary scenario right ultimately this could very well lead into a hyper for inflation or scenario no strangely right now i think it's causing bubbles in germany and i think what we see right now is something that be saw the flip side of back in two thousand and three to two thousand and five when the interest rates were also very low to help our germany at the time and that helped

to built all these bubbles in southern europe in particular you know that we did state market in spain where now is the reverse now we have even lower interest rates to help southern europe and now we see you know germany now on paper looks better than it really is fundamentally and in terms of its underlying economics we see right now germans lowering the savings rate we see germans entering the real state market we have a real estate boom in germany so if this all continues we will see new bubbles pop up somewhere else i think if you step back there there's only we have to keep in mind your consumption ultimately has to be backed by production and investing is ultimately to be backed by saving you can disengage these. components for some time just printing money expanding credit some simply of money creation and leverage and this is what we did you know again and again most recently up to two thousand and seven two thousand and eight and be trying to do that again and this will only lead again further to bubbles which will pop at some

stage and we go into another financial crisis or at some point this policy will undermine the confidence in money and then you do get a higher velocity of money you do get inflation and then be really in a mess ok so one of the price signals people look for to see whether or not the central banks are making a mistake or not would be the price of gold yes now gold in this recent news cycle has actually traded down on the news there is a bit of a flash crash in gold they fell suddenly in april. so this is being pointed to by those that are on the side of the paper pushers as i call them as vindication that they're correct then on the other side of the coin you have folks that are pointing out that while gold like whether it's live bore or whether it's by masters in the oil energy markets it's manipulated and it's giving a false price signal there scarcity of gold what's going on the gold in relation to all this whether the president manipulator or not it's difficult to say so i don't

want to even enter that discussion i take it attests face value so i think if you look at it is there a reason why the gold price is trading down and i think we can find these reasons in the you know these short term reasons i think what's happening is that so far the policy of all this money printing has not led to a substantial rise in consumer price inflation which is really what most people look at just reading again to inflation in essence prices but not in consumer prices so this is something i think the holders of gold some of them getting nervous you know this is not leading to the inflationary impact that many of them expected and secondly i think the central bank us enjoying enjoying a little bit of a sweet spot right now in the markets in the sense there. the money they're creating is leading to these. price appreciations and that sucks more people again into the equity market and i think a lot of investors find it difficult to sit on gold when some of the equity market is rallying and even the bond market is rallying or financial assets are going up

so i think we have you know these phenomena in inflation is fairly contained right now because the economy is not really picking up financial assets a booming again and so people feel that gold is a little bit of a dead weight in their portfolio i don't think this will last because as we said before. this policy is doesn't doesn't get us out of out of all problems it will create new problems as we go along right well they say one thing about gold but then when trouble begins then they have a different attitude toward gold so during the cyprus bail and it was suggested that cyprus sell their gold reserves to secure a loan now it's being suggested that italy issued gold backed bonds to monetize their gold essentially so gold during the course of this crisis period is inching toward something called an international reserve currency is being used to help high banks to square the books on some of these countries like italy and cyprus and others so it is it is a case where it's you know follow what we do but don't follow what we say because

behind the scenes it seems gold is now becoming increasingly more important your thoughts. i think go to becoming more important and will continue to become more important for people simply as a self-defense as i mean i call it is the essential self defense as the two to protect your own assets and your own wealth from inflation and other you know for the financial crises and all this manipulation that the discussing here. i think among the officials and central banks and governments it's not that important because obviously if you look at the balance sheets of the major central banks now you know the leverage of the financial system it's so big that their gold holdings as collateral is almost meaningless i mean the biggest own of gold fish was obviously the united states and their official gold holdings amount to i think four hundred billion years old and if it was printing that in the course of three or four months yeah i mean let me jump in for a second because less and less countries now their sovereign debt is considered aaa

so aaa credits are now in scarce supply as far as collateral goes as far as being able to collateralize the interbank lending schemes are going around to support this multi hundred trillion dollar derivatives market there's very few aaa rated credits now scored gold is something without any current counterparty risk it is actually collateral and we see during market sell off suddenly people dump gold because it's the only thing out there where there's a bid only thing that somebody will take in exchange to extinguish a debt or a derivative gone bust is gold now it's about china for a second g.l.d. which is that e.t.f. trades in new york it's sold two hundred seventy one tons of gold a year to date as part of the sell off now converse of the chinese housewives the mythical mrs wang bought three hundred tons in two weeks which is a more important trend here difficult to say i'd probably say neither because you know if one take that's interesting though the way i would say i would say the

reason why i think gold will continue to do well in the medium to long run is simply because it will be discussed earlier that the central banks will. you to print money and that should be a good reason for the chinese whether domestic oficial to buy more gold and should be a strong reason the medium to long term for those investors in the in the gold e.t.f. stude you continue to buy gold so in a way i think these are well which group of investors is currently buying or selling gold i think these are short term tactical factors that i think in the long term do not make much of a difference for the altar of the gold market i will say one more thing about cyprus and the central bank selling gold or using other collette as collateral i think what we could see in some of these cases is that the selling it like you know the family sofa just liquidating it because they are insolvent or close to getting insolvent so the need to liquidate assets again in the short term this could be a damp an effect on the gold price in the long run none of these factors are material the key factor is that paper money is continued to be used as

a political tool to keep you know overstretch financial system going and ultimately that's going to debase money ok so not my faith and mrs wang that live well got kind of off their raw time thanks so much for being on the kaiser thanks for having me thank you. and that's going to do it for this edition of the kaiser report with me max keiser and stacy herbert i think my guest schlecht or if you'd like to send us an e-mail please do so at kaiser report r t t v dot ru until next time ask how they're saying by all.

of the going down of the sun and good morning we will remember that we will.

if you live on one hundred thirty three bucks a month for food because you know how fabulous bad luck i got so many i mean. i know that i'm seeing the same thing really messed up. and we're all for it so personally apologized and said. the worst cure for that was playing the white house of a. radio guy in fort lauderdale minutes from a cricket office i want you to watch closely to give your never seen anything like this i'm told. what's up guys i'm abby martin and this is breaking the set so you might wonder why i along with my.