eyes on cheap goods from china and wall street relies on cheap money from china and they've both been hit by chaos following free lunch glitches to the electronic welfare payments systems at a wal-mart in louisiana a glitch with the electronic food stamp card the e.p.t. cards showed unlimited balances available to holders of the card shopper stampede it emptied the shelves of every last good available. on wall street the freds quantitative easing to infinity is the e b t car for wall street and it's showing an unlimited balance which surely must be a glitch right and the bank stores are stampeding employing during the world of productive assets in louisiana when the glitch was fixed the walmart shoppers abandoned shopping carts piled high with the talks are good and the so-called food that they could not afford without the lunch of an unlimited bt the same thing will

happen on wall street bankers will abandon giant piles of c.d.o. zx of toxic assets and so-called wealth they too cannot afford without the free money of unlimited q e is a my getting those correct stacey earlier that was a good summary there now i think we should actually rename wall street get rid of one of those l's and there is a remarkable similarity between the two especially how they rely on cheap goods and cheap money from china now the story you're talking about in louisiana happened in spring hill louisiana and mansfield louisiana and the headline is shopping chaos ensues in louisiana wal-mart stores after abt cards stop showing credit limits so you can look at this video here taken from inside the shop and you see that there the shelves were emptied completely emptied as people piled high because they could buy as much as they wanted and they purchased but when the system came back on line

they abandoned just shopping carts filled with food and other goods from wal-mart that they just abandoned their yes like an abandoned civilization or the aftermath of the jim jones massacre in the jungle where they were all drinking koolaid but you know wal-mart is the prototypical american success story the wal-mart family the richest family in the world probably made their bones by convincing the government to pay for the salaries of their employees and to. for the play the. underwriters subsidize essentially the employees that are unable to survive on a wal-mart wage so this is the perfect example of the plutocracy in america the kleptocracy in america in action so here the consumer thought they were getting free lunch so they piled high and then they abandoned the baskets so the local asked others who witnessed this what they thought one patron said the chaos was a normal reaction to the prospect of free food we see this all the time we see this

on wall street as you compared it to in the beginning of the show here you they're given free money and what do they do but consume every single productive asset you could possibly find on earth driving up the prices extracting the equity because they're given free money to do that stan garcia another shopper said it was just plain theft that's stealing he said that's all i got to say about it the fact is these guys were using their cars electronic benefit transfer cards which record what they purchase so all they were doing is bringing forward consumption from other months which presumably they'll be deducted from so there was no free lunch they thought they were getting free lunch but you see the thought that they were getting free lunch. created a misallocation of their free lunch money i think we need to return to the top of the show in the comparison to wall street and wall mart because the frame money at wal-mart drives distortions in the marketplace the free money on wall street drives

distortions in the marketplace so the price for example of homes in london or the price of the homes in new york are eating all time highs that's not because of inflation it's not because of working its way through in terms of higher wages and everything that usually is associated with with classic inflation it's because of price distortion these prices are distorted because of free money so when the bankers on wall street are buying a house for one hundred million dollars in the city of manhattan they are acting as a kissing cousin to the e.p.t. transfer wealth payments system of a guy in a wal mart buying into a box of twinkies what is abt a car those two are similarly pulling at the seams of the system they both are benefiting from this free money system that is ripping apart the economy in america and leading to the dollars alternate demise yes and it's a mis allocation of capital i assume that those per person in walmart were

misallocating their capital as well probably buying stuff that they wouldn't normally buy with their limited funds in order to get as much nutrition as possible but they probably misallocated it now you bring up the dollar and their equivalent to the e.p.t. card the equivalent to quantitative easing the equivalent to this free lunch has been something america has enjoyed for decades and that's exorbitant privilege you can call that the heart of the global economy and this exorbitant privilege is the united states able to print dollars and basically get free goods pile up there walmart carts with free goods from the rest of the world free oil free goods free services. and they get to live off that the sun is setting and dollar supremacy and with that american power this is the telegraph and they're saying that you know this craziness going on and the capitol hill and congress and whether or not they want to go bankrupt and defaults well just like in the comment section on the

article about the wal-mart shoppers there is so much hatred of racism and classism there well the same reason why the u.s. dollar is about to be ditched you see the same hatred for this freeloaders of america rarely before has international dissatisfaction with the dollar's role as reserve currency to the world but as great as it is now the most visible anger comes from china with more than three trillion dollars of dollar foreign exchange reserves one point three trillion of them held in u.s. treasuries for ordinary chinese it has come as a revelation to discover they own so much american debt that they own it in a country which because of political brinkmanship may actually default has provoked understandable fury yes another fractal insight by stacy herbert if i get your point you're saying that the hatred spewed on the users of the tea cards at wal-mart from the privileged class in america that is the recipient e.p.t.

from the federal reserve is analogous now or played out in a parallel sense but on a macro sense by the hatred now spewing out of china toward america because america has used this privilege it's exorbitant privilege of printing us dollars to pay for stuff when america imports the oil from saudi arabia in the middle east when it buys all that stuff from china it uses a currency that it self prints you get to seventeen trillion dollars in national debt that's how you get to two hundred two trillion dollars of unfunded liabilities because people take dollars that are being printed that have no intrinsic value other than the. illa terry i mean that's if you ask the smart people like paul craig roberts or others they'll say that the only thing backing the dollar including dr michael hudson a so this are they are the war machine is the us pentagon and we saw this in the in the saddam was saying we want to go to euro's they kill them iran want to go to

euro's upright oil and gas there's an embargo and you see this played out around the world if you decide you want to get out the dollar matrix the american military will come and kill you but now that's all breaking apart and we see the consequences the u.s. military bases around the world will be the equivalent of the abandoned wal-mart carts once the dollar is no longer the reserve currency yes that's you know that you're on fire you got it that's right all these tanks and ships abandoned like all those s.u.v.s abandoned in doha well so as right now we don't know as we reap record this whether or not the u.s. has defaulted whether it's decided to default or it's going to just pull it out at the last minute but you know they point out in this article that the problem is that. everyone can only look on in horror as the us decides to commit economic suicide it's like they've strapped on a suicide vest as

a as an economy though she was not preggers yet i've been saying that for years usually side breakers there are banking shoddiness they stomp on the bones they pull the plug and a blow up the world for their ideology of market fundamentalism the terrorists are point in time or something is really now it's one of the few people understand it people try to say wait a minute we've invested in financial terms to wall street we won't much went back well it's also because these people are all on the equivalent of abt cards whether it's quantitative easing on wall street abt cars at wal-mart or the exorbitant privilege transfer mechanism from the rest of the world to the united states and that's the important point here because they point out that more than sixty percent of global foreign exchange reserves are held in u.s. dollars which also account for more than eighty percent of global foreign exchange trading the dollars hedge money is all pervasive this is given the greenback a degree of leverage unmatched by any other reserve currency in history so right now they're in a situation where they won't pay rather than that they can't pay because the way the system is set up they can just print money it's that unlimited balance abt card

for real at this point and just like however when those people at wal-mart realized that this was a glitch and that it might be corrected at one point they went crazy and got as much as they could i think you see that same action in america i think they see they hear what russia what china what brazil what india way all these other nations are saying about getting off the u.s. dollar and they're doing the same thing that's why they're grabbing every single thing they can but little i still have the free dollar exorbitant privilege just before this shutdown took place the pentagon loaded up on billions and billions of dollars of war machine work toward the exact same thing as a wal-mart shopper or putting it you know fifty or sixty car into twinkies in their basket you know but i think the whole thing can be summed up with two television shows down. abbey and boardwalk empire which both take place at roughly the same time except at downton abbey the british rule as world reserve currency is ending

and all those people like lady mary and others are crying about their lost empire whereas in america you've got steve buscemi at boardwalk empire and then on the cost of the american century and their gangsters and that gangsterism that informed america's rise during the twentieth century is reaching its climax and now with the rise of the banks or in the suicide bankers on wall street who have now decided instead of going quietly into history like lady marian down abbey lord grantham they're going to blow this for going to world apart because they're psychos well finally you know david bloom from h.s.b.c. says that in the event of a default actually what will happen because it's so pervasive and there's so many different maturities of all these bonds that are with the backbone of the global financial system it actually could be a situation like what jim rickards says is that you could just a phase in the s.t.r. as the u.s. dollar bonds become you know expire that's right jack james record says s.t.r.

will be phased in. first they'll start trading oil in s.t. ours and not the dollar and that will be the official end of the dollar yes so it could be a smoother transition then the chaos that happened in these wal-mart shops down in louisiana so of course i could use but going back to my first point our as a server thanks so much for being on the kaiser report thank you max. states in for the second half a whole lot more. real damage and complexity of this oil spill is not something you gross just by looking at dirty birds we have between four to five million p. . when this directly affected area of the coast and it's pretty clear why it's not being reported because b.p. can't afford to have a reported all along the gulf coast are clean they are safe and they're open for

business if b.p. is the single largest oil contributor to the pentagon the us war machine is heavily reliant upon b.p. and their oil this is a huge step backwards for the marker see it's a step forward for the oligarchy carex it is toxic is a look a lot like spraying in vietnam it was it was not a picture believe there the government or b.p. really wanted to have out there i don't want dispersants to be the agent on. his bills. but. i didn't know that you know the price is the only industry specifically mentioned in the constitution and. that's because a free and open press is critical to our democracy albus. role. in

fact the single biggest threat facing our nation today is the corporate takeover of our government and across we've been hijacked lying handful of transnational corporations that will profit by destroying what our founding fathers one school class i'm job market and on this show we reveal the big picture of what's actually going on in the world we go beyond identifying the problem to try rational debate and a real discussion of critical issues facing them not to five different you know ready to join the movement then walk a little bit there. welcome back to the kaiser report imax keyser time now to turn to the macleod of gold money dot com allister welcome back to the kaiser report it's my pleasure ok alister on

friday the eleventh of our job or at eight forty two am someone sold six hundred forty million dollars worth of gold in a one large block how many towns was it and why would someone sell such a matter i understand it was about eighty tons in terms of normal trading in the market it makes no sense whatsoever if you've got a large order you do it carefully so as to not disturb the market whereas in this case it seems it was deliberately designed to push the market so for whatever reason that is so you would not privy to it we don't know but it seems that it was a deliberate takedown in the market ok so isn't this a form of what we call price propaganda in other words or on wall street i remember when i was a broker we have something called painting the tape or banging the clothes where you're pushing the price around to send a message to other players in the market is that just a case of somebody trying to encourage other sellers into the marketplace with no

real fundamental economic reason for this to take place especially given the backdrop of increased is such a bank intervention and bond crisis and currency crisis correct yes i guess the standard market makers practice if they see the stops or you know stop orders as it were on a fool they can think what we can take this on by banging the market with us a perspective for a second because let's talk about the global gold supply versus the demand in china and its size order of this size to give people an idea because it's not just about an over the counter market maker banking some five dollars stock at the close to create some price propaganda as i call this is really something given that looking in the perspective of global gold a man i just mentioned you were talking about the china gold and see what people see put this. in the context it's completely disconnected from the physical market which is quite extraordinary and it is as if the capital markets in the west are living in a bubble of their own completely divorced from reality the fact is that from april

when they first banged the market below forty eight hundred dollars demand for gold in asia took off it was already threatening to buy up every single ounce produced by norman trying to ease normal russian. mines and now we have a situation where that demand has accelerated and china alone by my calculations just looking at the shanghai go to exchange deliveries and hong kong and netting out across business so this is a minimum figure china has actually this year taken out an annualized two thousand six hundred tonnes if it continues at the same rate that it the that it has so far this year it will be two thousand six hundred tons the end of this year if you take trying to go production out of the world total which is roughly four hundred forty tons we're less left with two thousand two hundred sixty tons and trying to mount a loon is two thousand six hundred tons i mean you know someone must be supplying

this and this is the this really is the is the conundrum which we don't have a clear answer to that we have suspicions i mean for a start if you look at the other holders of the stock of gold which is roughly one hundred sixty five thousand tons of gold in existence above ground most of those long term holders most of them already in asia actually and they're not sellers on a shakeout driven by futures in the united states or by the o.p.m. a long time in the fourth markets they're basically holders if anything on the margins they probably acquire more and certainly go to money that's been our experience i mean the vast majority of people we hold gold in custody for are basically people who are in. against systemic risk and that is the position ridea virtually everybody who seriously owns gold so when you bang a crime price you don't freak out these guys the sort of will of the wisp stay

traders traders anything like that we're talking about seriously locked up and something really fundamental has to has to happen to change that well there seems to be an accounting fraud going on because the central banks who are large holders of gold and leasing it out to the billion banks and they keep it on their books as still good deliverable gold because that's an accounting figure that they've got gold that they have yet to deliver that they've loaned out but the bling banks have sold the bling banks end up selling it to the east used on the show you coined the phrase pretty much on this show recently that gold is moving from west to east and says you've said that on the show it's become a meme everyone seems understand what's going on here so. it has to do with the dollar does that refer to it for they want to create confusion and doubt about the alternatives to the dollar because the dollar is the world reserve currency is backed up by the u.s. military and the u.s.

is in jeopardy of losing its empire and so gold is really the antithesis of this but what about the dollar itself what state is it in. and you you have a new metric right to measure the money supply so tell us about that yes i was not happy with the existing metrics and one m. zero three and so i'm so forth really want to wanted was to construct some sort of measure which would define the difference between sound money and fit currency and i came up with the with the fit money quantity money quantity the amp you have f.m.s. you yes i do not going in for a ride emma you take it away you write a basically what it is is it's the sum total of all. all deposits in the system plus cash and gas defined as cash defined as folding notes in your pocket book as it were ok now the reason all the logic behind this is that when we first went to

banks going back a long time ago we had gold which we used as money we deposited that gold in the bank and the bank would issue the notes which we now call you know dollars or whatever. or alternatively what they would do is they would credit an account showing that they hold so much gold for us now they started expanding credit on the back of that and eventually what happened was that they set up central banks to try and control the problems of that expansion of credit well this is beginning a fractional reserve banking absolute goal the goal of the gold bank but going back hundreds of years they would lend out more gold than they had in the vaults it became a phrase i was there and then we heard that today the central banks and various banks and then the central bank started doing exactly the same thing so what they did was they took the gold which had been deposited with the banks within their system and took it on board themselves. against their monopoly which they gained of

issuing the notes so the banks lost the nose is suing facility that was transferred to the central bank and the central bank took all our goat so it went from you and me through to a bank and then into the central bank so we need to come up with a metric that reflects all the deposits that have been created as part of that process along with the cash and this is the basis of f m q and the thing that's interesting about it is that by including the bank accounts if you like that the banks in the system have with the fed which is what excess reserves and reserves are what we're doing is we're producing a metric which quite clearly from the layman crisis has taken off into hyperinflation let's hear some numbers. right it should. b. at the moment round about seven and a half korean it was following the trend that had been established all the way back from one nine hundred sixty and by the way it followed that quite closely up until

the lehman crisis since then it has taken off and we're close to twelve trillion so there is a gap of something over four and a half trillion between where it should be and where it is now that gives you an idea of how much trouble the system has got itself into can we contract deposits by former half trillion i don't think so i don't think that's on anyone's agenda and if that if it was attempted to try and slow down the rate of deposit creation you would merely bring a bring about a crisis in the banks saying the latter on from some of dollars well they're saying that the collateral that backs up global money supply which is ultimately gold is even more and cumbered. by the tune of four to five billion dollars all right so you're saying that they are the basis on plan which it all goes back to goal no matter how many people argue against it we've been on the gold standard for five thousand years the fact is we're on a gold standard now it's just that people fail to recognize it goes through not

circulation yet but nevertheless subtle banks will lie on it they still trade it back and forth and it's still the measure upon which anyone who is doing a transaction would refer back to if they're serious about the transactions with no one's liability it's still there it's just. in circulation as you call so so there's a four trillion dollar gap looking at these numbers and of course there's more funny money in the system then people even the harf horrifyingly would imagine yeah and this is as defined by deposits that's the key thing what we're looking at is deposits we're looking at if we were to reverse the creation of fit money back to go what actually has to be dumb and we're talking about finding a home for twelve trillion deposits. yeah ok well jim rickards has been on the show smart guy he talks about going back to a gold backed security and clearing all these liabilities you have to get to gold between seven and ten thousand dollars an ounce to make the equivalent of all the funny money in the system so that these are the numbers that you have gold laid out

calmer also positive and could be where this is all heading when the money system collapses we go to a gold standard you've got to clear those trades against something gold and therefore gold holds a lot but i want to jump to something for a second because recently and we interviewed professor and he said that the fed's money creation was causing deflation you want to use some of this interview to disagree with them you know what he is saying if i can put words in his mouth is that the u.s. economy and indeed all other economies most other economies and but world. is in serious difficulty and there is a tendency for it to come in on it so now this is because there has been a build up of mild investments if you like. investment in production of things people don't really want but government has decided to that's right we should want to say on best you know absolute contrition i blow afraid zoe a low interest rates actually again and i'm putting words in his mouth which which i'll be happy is proxy and yes i agree that i'm on his side i'm his proxy when this

pitched battle the inflation deflation debate park fifty seven thousand it has been raging for five years you're taking the inflation side we'll have a minute left unfortunately ok well very very quickly i have somebody up in one phrase yet the fed's primary function is to stop prices falling it must ensure that prices rise that is if you know what is going to has failed with this well they have failed and you've got implosion you've got cyprus supposed to be an example of this ok wal-mart because of the low interest rates which you just said cause malinvestment you've got companies like wal-mart who with these low interest rate environment with this disinflationary environment are buying back their own stock instead of raising wages for employees which would cause inflation so there's a classic perfect example that's a balance sheet effect that it will belges work these two things collide ok i'm going the gas for wal-mart and i said get more money at zero percent interest rates

and i don't want to raise raised wages on employees which would be the classic definition of inflation but instead i'm going to go and malinvestment going to invest in my own company stock which is being subsidized by the government which sells is unsustainable relationship with china which is probably going to go the way the dodo when this is all said and done that's it doesn't deflationary event but raddatz i'm so i went. to come back so soon i would have to guess at runtime but. thanks for being on the kaiser report that's my pleasure max. and that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert i'd like to thank our guest allison macleod of the wonderful gold money dot com which you should go check out if you like to get attached. the kaiser report until next time by all.

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term fix president obama signs a last minute deal to restart the u.s. government and raise the debt ceiling but the root causes of congress is most fierce battle in recent history on addressed. as the detainee hunger strike at guantanamo bay prison continue. or access to the infamous u.s. detention center. you've heard about it. but you don't really. it is a place that people forget about like they don't never think about it. and we ask those who make the facility to what it's really like to work there and do they have any regrets. plus britain's prime.