please speak your language. programs and documentaries in arabic it's all here on. reporting from the world talks about six of the ip interviews intriguing story for you. then try. to find out more visit. welcome to the kaiser report i am max kaiser you know apparently it takes one point three million liters of water to make a liter of water that's right the lunar of water that you purchased down there at the shop it requires one point three nine liters of water in the whole process getting the water manufactured in water distributing the water consuming the water to get that one liter of water it's called the economics of suicide yes humans are

frickin stupid but even that's not as idiotic as when we try to create one unit of g.d.p. growth get this sense to collapse of lehman brothers some estimate that it has taken eighteen dollars of debt to create one dollar of g.d.p. growth it's called stall speed. so. that's the first article here that we're going to discuss chart form this stall speed of which you speak paul brodsky the fed is holding a burning match the burning match can be seen in these two charts first up the orange line there is total us credit since one thousand nine hundred three you can see that it's divorced from the blue line which is nominal g.d.p. and the gray line at the bottom is base money supply so either one of those two has

to increase either the nominal g.d.p. or the base money supply in order to collateralize that orange line of debt going up the second is total us credit to us nominal g.d.p. that puts all those charts for the first one into one chart and you can see the stall speed so we've hit a point where no debt is not creating anything yet this is really the amazing charts here clearly demonstrate this economic problem is that no. matter how much larger jest is given to these banks in the form of free money from the central banks they are on able to lend it out into the economy in sufficient quantities to generate any g.d.p. growth and that number has always been a bit skewed sense the world what off a gold standard on to a currency standard says nine hundred seventy one but going back to nine hundred seventy one so you needed at that time about one to two dollars of debt to create one dollar of g.d.p. growth then right before the crisis of two thousand and eight it required seven

dollars of debt to create one dollar of g.d.p. growth then the reaction to the crisis in two thousand and eight was to flood the world with debt and they flooded the world with eighteen dollars worth of debt for one dollar of g.d.p. growth which is to say that they don't get any g.d.p. growth at all really but they're just keep flooding this is done with debt and that debt is suppressing g.d.p. growth then money creation as i've said on the show many times before the money printing is creating a net effect of deflation that's what g.d.p. collapse is all about your prices some prices are going up but not as fast as the implosion of the banks the shadow banks the zombie banks are causing those stall speed as you point out stall speed and when they hit stall speed you're up there at thirty thousand feet or what have you and then boom do gravity takes effect what do you do when you hit a speed if you're the head of an empire or the head of the central bank of the united states the federal reserve bank what do you do well if you can't grow the

economy on principle they're against that anyway right they're against people having any sort of wealth of their own so they've got to steal it don't they because the fundamental disconnect today is unnatural clearing levels prices of goods services and assets that do not reflect society's sustainable needs wants and preferences so over time the natural cycle of an economy is that prices will decline but in a finance based economy central banks. heads of state don't like that they want always inflation so you see global monetary authorities have sought price stability which in practice implies the need for constant price inflation to offset what what would otherwise be naturally occurring price deflation indeed price stability has become a bipartisan socially acceptable euphemism for consistent policy administered credit and price inflation functionally the dominion of currencies purchasing power and they provide a chart for this this is c.p.i. from one nine hundred ten to the present and as you can see it's been declining and

down fifty nine percent max since one thousand nine hundred three all right bring up a couple of different things there this one debt deflation in this context is debt deflation the idea that the government can print money to create inflation is an attempt to try to inflate debt a way that's their intention but that's not happening in fact that's exacerbating the debt accumulation the more money they print they're not getting the inflation that they hoped they would get that would diminish the debt actually they're increasing the debt load the debt load is going ire both phenomenal and in real terms because g.d.p. as reporting out is also shrinking so the debt as a percentage of g.d.p. is going higher the debt in nominal terms is going higher debt is just keep going higher and higher and if it does stall speed there's no policies or saying there's no policy there's no monetary policy there's no fiscal policy that can be implemented that can rectify this fact that the engines on the plane at thirty

thousand feet of stall and we're getting ready for heading down into a crash landing nothing can stop the crash land i mean more current so it's going to take the bank of england belgium from fortunately it pounds the none trillion pounds and it to have to keep the plane there's no way engines running at this point in the air for a little while longer that may work for another few moves but ultimately within. next to all bugs it's going to crash well i mean this c.p.i. chart shows that this is a form of theft as well by the way inflation is a form of theft from the people remember i said this is if they they've hit stall speed what do they have to do they have to steal it so as they point out here the rate of currency dilution has exceeded the rate of production growth so by every single trick every single idea they could come up with they're losing they're falling further behind now regarding this stealing from work and labor and

savings the economist points out labor pains all around the world labor is losing out to capital and you see a chart here this is labor cost as a percentage of nominal g.d.p. the line at the bottom there is mexico and there they've lost the most falling labor share implies that productivity gains no longer translate into broad rises and pay instead an ever larger share of the benefits of growth accrues to owners of capital the amount of money being created does have an effect on c.p.i. or you know what people associate inflation being that the consumer price index is and over the past forty years you have situations where the c.p.i. is running at a rate that's higher than the rate of debt accumulation but over the past five or six years we only have had one statistic and that is the debt is growing faster than either c.p.i. or g.d.p. or wage inflation there's only one thing growing and that is debt and this is rare

throughout the history of america and the united kingdom very rarely i would say probably never in the history of these two countries i mean that is straight seven years now of debt and money printing accumulation that hasn't generated any uptick in g.d.p. at all and remember when the u.k. and the u.s. say that their g.d.p. is positive it's because they're understanding that inflation number if they use yet. actually inflation number of stuff that people actually buy day to day food and energy it would be negative right now well they're counting the increase in debt they're just counting as g.d.p. at this point and from that first chart i showed you you saw that the debt credit is rising but it's doing nothing at all to nominal g.d.p. it's doing nothing more than just recap this for a second what we're saying here is that this is a rare situation in the u.s. economy and it's being replicated around the world that the debt is guy rocketing

and it's not having any effect whatsoever on g.d.p. or inflation or wages there have been times in the past under a theory let's say keynesian theory let's say paul krugman for example paul krugman in the new york times believe five years ago that if you simply double or triple or quadruple the debt in america you get some g.d.p. growth he's been discredited he's been proven wrong he's been proven a charlatan whereas guys who don't follow that particular school of thought have been proven correct well that's the article in the economist about labor not increasing their wages as pointing out that productivity gains have been huge and the time that their their actual share of it has declined as a new feudal it's sort of system well you don't know who are great credit to the game aren't paying prisoners a dollar a day to do eight or ten or twelve hours of work per day they're the most productive workers of america or the prison population and the policy makers in washington want to turn the whole population into a prison population and then they'd have say look there's so productive really printable a dollar

a day look at all these license plates that they're going to stamp who they're the most total marketing and getting people to point a lot of tickets and go to the casinos of blow their wad of cash there so productive well let's go back to how the fed and the banking system the finance system has to steal and where to stay in the ponzi scheme left and part of the n.s.a. scandal i think is by the way about that mostly about that is about them stealing corporate secrets from everybody else in the world but let's look at a story here cartel will try. advised banks three currency dealers linked to a global investigation into alleged rigging of foreign exchange markets advised the bank of england on the fallout from the euro zone crisis max so these bankers names rohatyn ramchandra citi group trader richard j.p. morgan executive neil o'riordan of u.b.s. are all members of an influential committee appointed by the bank to provide intelligence on the currency markets and they've been implicated now and reagan

global four x. markets a five point three trillion dollars per day market that's also deflationary in other words money is being stolen so there's less money around those deflationary why are they committing these frauds because there's no growth in their industry banking to sustain their bonuses so at the end of the year they've got to go steal the bonuses these people are engaged in embezzlement is different than the embezzlement that jamie diamond was involved with m.f. global member and stole a billion of the creditors in the completely legal fashion then they retroactively went back and they changed the law and said well we were able to reverse the rotation of the planet earth and going backwards in time we've decided he didn't break the law because those were laws that we were thinking about making at the time we didn't get around to it therefore he's innocent by virtue of time travel that's his defense and of course this is what all the bankers do i know myself i haven't worked on last year whenever you break the law it's always a fact that you know what it's going to break the law is the law as of been catching up to all my innovation as

a financial engineer now finally max talked at the top of the show how it takes one point three nine leaders of water to make a leader of water or eighteen dollars of debt to create one dollar in g.d.p. growth now we see the opposite the same sort of situation happening in the rest of the world the internet has provided great g.d.p. global g.d.p. and efficiency and all sorts of productivity gains but now we're seeing the break up of it and countries like brazil are going to spend enormous amounts of create an alternate internet essentially they're going to create. basically spend seventy five cents to keep the u.s. from stealing a dollar's worth of corporate secrets n.s.a. surveillance may cause a break up of internet warns experts internet specialists highlight lose by brazil germany and india towards creating separate networks in order to block spying and they speak to some experts ian brown from oxford institute and he says that states may have few other options than to follow brazil's pass this would be expensive and likely reduce the rapid rate of innovation that has driven the development of the internet today but if states cannot trust that their citizens personal data as well

as sensitive commercial and government information will not otherwise be swept up by giant surveillance operations that may be a price they are willing to pay of course brazil's finance minister calling the phrase currency war as jim record says first of currency war then you have trade war then you have a hot war same thing happened pretty world war one three world war two hello world war three there's everything was going on the guy's report thank you max for the second half a whole lot more. economic down in the final. and the rest. will

be a prickly. i think the issue of privacy the issue of surveillance hasn't gotten enough coverage in the mainstream media i think the majority of americans don't know what's going on don't understand the significance of what's come out this summer i don't think it necessarily they need to hear about me and my story because love of it is one small piece of a much larger puzzle but what i do think that mainstream america needs to hear

about and then her stand is just to what goo links our government is going to conduct surveillance just how much information they're actually collecting and storing in some cases for years you know these are very significant problems these are the types of issues that can do a democracy like ours. welcome back to the kaiser report imax keyser time out in los angeles to speak with wolf rector of testosterone pit dot com wolf welcome back to the kaiser report. you know max thanks for having me olive being on your show tonight wolf rector how is the federal reserve like dancing chickens. well that story goes back to a movie called country war two characters the main character and his

buddy we're talking it's a buddy of us telling this story about a. guy who was saying was to get chickens to dance at a carnival and come to find out he had one hand on the stage and the hand on the burner and heating up the chicken heating up the stage and when the chickens when their feet got so hot that they couldn't stand it anymore they started dancing yeah i remember back in time square back in the one nine hundred seventy s. they used to have dancing seconds and they outside on the street and these little kiosks you worked on an electric hot plate you put in a quarter and the electricity would go through into the feed of the chicken and they would start dancing but you're saying that the dancing chicken syndrome applies to the federal reserve bank i assume what you're saying is that they just got to keep feeding it more quarters they got to keep printing more money they got to keep this to condensing that's right and it's actually the. feds turning on the

heat underneath the chicken and so. the issue with the chickens is they don't jump off the stage and not smart enough to jump off the stage so and ben bernanke is counting on it that we're not jumping up that statement of course why is it if your feet get to jump off the stage do something different and so ben bernanke you with his policies and and full effort to reduce interest rates long and short term to near zero has made life very miserable for a lot of. people that depend on it depend on income for many life insurance companies and other organizations pension funds social security. and continues to do so and nobody's jumping off the stage ok so this is actually to keep on the zoological theme here a variation on the frog in the boiled water there where they keep turning up the heat but the frog doesn't jump any bulls themselves to death that's another

variation so the fed policies are essentially killing us now zero heads estimates that central banks around the world have created eighteen trillion in debt since the lehman collapse but managed to generate only one trillion in g.d.p. growth this is the most lopsided debt to g.d.p. growth number ever seen in any economy ever in history your thoughts well that is certainly true and it's a big issue there are two elements two big really three elements in it on the consumer side consumers have actually marginally reduce that debt just a tiny bit but governments and corporations have dramatically increased debt and terms of corporations obviously they they haven't done anything productive with them they're buying back shares they're paying dividends their share buybacks pay mostly for their shares that they have recently to acquire companies and pay

a corporate. executive benefit plans and so it doesn't go back to their corporate debt didn't go into building factories or appliance or infrastructure it went into wall street engineering and it didn't produce any results as we can see. and on the government side they have obviously borrowed a huge amount of money but as we have seen in japan for example the biggest bar of them all they have had a very lackadaisical economy for many many years and they have been. part forty to fifty percent of their entire budget expenditures every year and it's the most gigantic stimulus package ever and the economy just hasn't really grown yeah that sounds about right yeah there was a great editorial incident in this week's often at a time to said that it's all you downsize the financial sector it won't get any g.d.p. growth because the too big to fail banks in the united kingdom in the united states they're designed the banks are gobbling up all this money and they're returning growth they're keeping a lid on growth and until you get rid of them you won't have any growth now the

n.s.a. spying scandal when it emerged it was revealed that national spy agency across the world are actually spying on behalf of the n.s.a. is this the same case for central banks are the bank of england and the e.c.b. working in effect for the fed wolf well that's an excellent question. i wish i or i said he wanted the fed someplace to do it to know they are there to transfer but one thing we know for sure. who the fed is working for the fed is working for the companies that own it and the fed the federal reserve system the united states is owned by private companies and they run it and so their fate will do what what's best for these companies and includes goldman sachs and all the big banks around the country and some institutions like general electric and those formally also and iran so whether the other central banks work for the fed i'm not

sure but they're all working together that's for certain well not all of this if you listen let me point out something here because in the united states they just went through all big wrangle on raising the debt ceiling and now they go through the same thing in a few weeks time they want to raise up seventeen trillion and beyond simultaneously mark carney the new chair at the bank of england said that he's going to expand the bank of england by. and see it from something around four trillion pounds to nine trillion pounds so is that obvious that that this whole debt ceiling debate united states is the off draft is going to be dumped into the bank of aim of the bank of england is da going to be a toxic waste risk dump and one of the primary beneficiary of that will be the federal reserve bank of america which if they have trouble getting through that debt ceiling there is going to dump the debt on the bank of england's balance sheet and of course the bank of england and the u.k.

is the worst regulatory environment in the world where most of the financial fraud and financial terrorism takes place so they always see though an exact correlation between debt ceiling bank of england total collusion these bankers are completely working for themselves have nothing to do it's generating g.d.p. it's a complete fraud your thoughts. i totally agree and that is there are colluding. if one central bank ever stops printing money and buying crappy bonds another wall will pick up the pace and right now of course the fed stopped buying and printing the bank of japan has jumped and big time. e.c.b. has backed off just a little bit in the bank of anyone is no contemplating further expansion is there so yeah i mean it's. if one bank just one central bank just slows down a little bit the other won't pick up the pace so there are colluding they're all sitting together in conference to this. bank of international settlement on its

board all the major central banks central bankers so there are definitely clothing on these issues i would imagine if i'm looking at this in terms of connecting the dots between the fraud between the central banks my guess is that the next economy to have a massive social unrest problem will be the united kingdom and mark carney will be forced to climb down from this nine trillion dollar debt assumption that he's put forward into the public domain when there's blood in the streets and then that debt which would have been on the bank of england's bounty will be a part somewhere else and as you point out the top of the show is the dancing to consent room or the boiled frog syndrome the public's being lall into a state of perpetual surveillance of martial law by the central banks to hide debt bought my question to you is what do you think about my guess that the next outbreak of blood in the street for bankers will be the united kingdom your

thoughts. well i hope not. i don't want to see blood in the streets anymore right now we are seeing blood in the streets in france so what if i must i must interject here because the economist magazine last year ran something called the social cohesion index which is. an attempt to figure out where the social unrest where the blood in the street will happen next so these bankers are banking on blood in the streets they've got contracts based on blood in the streets their entire raise on debt is based on creating blood of the streets so why should we not be in the game of trying to second guess where they next will attack what's the big deal they want the blood the streets they profit from the blow in the streets so why are we so hesitant about calling them out on it they want the blood of the streets right here in the u.k. because they profit from it so let's be honest about it let's be honest well why are we has it done it was well your thoughts.

i hate to predict the future like that and i can definitely see blood in the streets we are seeing blood in the streets right now and and it could very well be in the u.k. it's more dependent on finance and any other major country so if there is a big problem there. and it's likely that there will be i can i can say all right wolf let's talk about the economic fallout from the n.s.a. spying has put a halt to the latest trade pact with the u.s. china has halted purchases of u.s. tech products what sort of losses are we looking at for the u.s. economy as a whole as a result of these n.s.a. spying revelations from snowden on in the tech sector i think there will be there will be major repercussions and i b m for example already announced that sales of hardware in china have collapsed by fifty percent last quarter so there will be so we already know in the united states that chinese manufacturer huawei of telecom

equipment has been banned you can bet can't sell telecom equipment in the u.s. simply because of their spying equipment built into their systems so the question is what are companies and governments going to buy to to run their infrastructure and they have to buy. some more so if they don't buy from i.b.m. who else are they going to buy from there's chinese manufacturers the european manufacturers. the question is who can produce what these american companies are producing and some of them have competition overseas and some don't so oracle has competition over seas. you know apple has competition over seas some other companies may not microsoft you know its windows software system has a back door and it communicates with the n.s.a. but what what options g.s. corp emmett's owns it isn't the obvious option to go to open source this is why you

have companies like redhat which is based on the open source technology from linux which was took the internet by storm a few years ago it's now running most of the backbone of the internet wasn't china just say we don't want proprietary code from i.b.m. anymore it's full of bugs and full of warm buffet coersion style banking terrorism we're just going to create open source technology want to one of these countries go open source and they're doing that the problem there is that linux too has a back door and there's a sign to security kernel for for that program many years ago and it was incorporated that manages linux is that it's not hidden that you can see the code so if you're an expert programmer you can see it and you can deal with it now i.b.m. is selling linux servers and they're there in partnership with wreckage and they're selling linux service but those have crashed sales are very important point wolf is that even linux has a back door with the n.s.a.

but it does have some transparency attached to it that's a very interesting point listen well for it to run a time we'll have to have it on again soon thanks for being on the kaiser report thank you max. and that's going to do it for this edition of the kaiser report with me max keiser and stacy herbert i'd like to thank our guest wall for a drive to start strong dot com if you'd like to get in touch tweet us at kaiser report into next time ask how does one buy off. i want to. pick up something that is quite simply. was no way over. clearly they were just at the wrong place at the wrong time. and sold to the u.s. or turned over to the u.s. for. the soul that could be buried

a lot i. was saved with great over. until it wanted to turn me into a terrorist they wanted me to admit that i was a member of al qaeda the taliban that i fought with them. about time i didn't even know what al qaeda is nevertheless there are people all. grave enough to start a fight. or something is going to be done that's going to be done by me and it's been a short amount of time to do it but it's going to impact me i'd be prosecuted but it's going to impact. the wife my daughter. the one time a truck. on our tea.

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