find out what's really happening to the global economy with max keiser there are no holds barred look at the global financial headlines tune into kinds a report on our. i know c.n.n. m.s.n. b c fox news have taken some not slightly but the fact is i admire their commitment to cover all sides of the story just in case one of them happens to be accurate. that was funny but it's close and for the truth from the might think. it's because one full attention and the mainstream media works side by side with joe is actually on we're going to be ok. and our teen years we have a different brain. ok because the news of the world just is not this funny i'm not laughing dammit i'm not high. i'm ok.

you got a sense of the jokes well handled and they said ok. ok i marinated this is boom bust and here are the stories we're tracking for you today . first up these debt has been downgraded but doesn't matter it's the question on deck and wolf one answer coming right up plus cornell professor david column is here in studio today dr call him will walk us through his twenty thirteen year in review exciting stuff you won't want to miss it and plastic money who want to bunk it apparently the bank of england will be issuing palmer bank notes racial currencies and i discuss the day's big deal it's all coming up and it all starts right now.

hello there and now the rating agency standard and poor's has downgraded the european union's credit rating s. and p. cut its long term rating on the e.u. from aaa to double a plus and has maintained its short term rating at a one plus now however if history is any predictor as to how investors will react to the downgrade then we should expect too much in terms of the market's perception of the e.u. now in two thousand and eleven s. and p. downgraded their rating of u.s. treasuries and a rally in u.s. government bonds ensued in fact it yields on solver and security moved in the opposite direction from what rating suggested in more than half of the thirty two upgrades from last year. elsewhere existing home sales in the u.s.

declined for a third straight month the national association of realtors the sales of previously owned homes dropped four point three percent in november to an annual rate of four point nine million units now this is the lowest pace of cells since december of two thousand and twelve and the existing home sales number was well below expectations a reuters poll forecasted a median sales pace of just over five million units this is the first time in twenty nine months that the year on year comparison is negative and they are economist and they are economists lawrence unit told reporters quote it is a clear loss in momentum from home sales interest rates on mortgages have risen sharply since may that's when the federal reserve first hinted it would wind down its bond buying program. and finally higher mortgage interest rates could have cooled the pace of home purchases while the october government shutdown that also may have deterred some cells and now finally this is the final out of korea

overstock dot com has become the first major online retailer to accept big coin overstock c.e.o. patrick byrne said in a statement to market watch quote i've come to understand better and decided it's something we do want to be associated with now byrnes went on to say money is chew it porton to leave in the hands of government officials and the long run value of all these go to zero now overstocks project to accept the big coin is in its early stages and the retailer has not decided whether to allow payments via third parties or whether to create its own system but overstock expects a team of six to twelve people to formulate the company's bitcoin strategy shares of overstock which was founded in one thousand nine hundred seventy and went public in two thousand and two have doubled this year. well there you have it we're tracking these stories and keeping you posted on all the latest as usual.

twenty thirteen what a year it has been now from the syrian civil war to n.s.a. leaks from twitter's i.p.o. to bitcoin media now there's been a lot of a balanced reflect on so let's you know first and foremost take a look back and see what insight we can gain for the year ahead now i'm joined now by david colum law professor at cornell university and author of the year and review you can find his review process at peace prosperity dot com dr cohen thank you for being here and it's a pleasure to have you and first and foremost i want to open up. by talking about your your interview and in the nine you talk about the ninety nine percent and there seems to be a bit of overlap between your ideas and those of it was elizabeth warren which was

interesting to me at first coming across how much common ground is there between your thinking and the income inequality and elizabeth warren thinking oh i like to lose a bit because i think she's honest i'm also wrong paul for what you got but some people's attention. i think elizabeth is honest i think she's been faithful to the idea of protecting the consumer. i would worry if she started showing signs of trying to redistribute wealth aggressively i'm not a big wealth distributor i think the economy does that well if the economy is running well which is the part i would argue with. you know you talk about your personal investments in your or in your your and review and how they fared this year so far and you were heavily investor one of the straight cash precious metals and energy why these three sectors particularly. well first the absence of a sector i still think i could use are in trouble i think we've got some serious

serious down. side to head i have been on the equities of a generic type since ninety nine or so so i've been completely lose the strong gold position which was a severe beating this year and you know people say buy and hold but but then when you have a bad year they say oh you're an idiot. the precious metals because i think the fed is is is a reckless bunch of characters who i'm not sure are above average i.q. at this point so i really have. very low opinion of the fed and i think they're going to do some damage so i have to protect what you said that your you underperformed for twenty thirteen by a wide margin now does this have anything to do with you being so concentrated in certain sectors and not as diversified is somewhat recommend one be. i am and so on and a burst of five that no one would recommend. yeah it certainly is because of a fifty percent position in gold and then last year was weak but it's still in the

black this year was a complete disaster. i try to get it right about once a decade so for the last fourteen years i've averaged compounded nine percent a year so i've totally own the s. and p. the million dollar question for which you will run into people who say that that i've simply blown at this time is is have i overstayed my welcome in gold until the fed starts acting responsibly i'm going to overstay my welcome and go home now you have a quote from your piece in forbes and you stated more than one hundred percent of the equity market gain since january two thousand and nine have happened during the weeks the fed purchased treasury bonds and mortgages now how think of the role has the fed played in the stock market gains for this year and stock market this year. i'm not qualified to answer that question i do know that that that they're pumping money into the system they're attempting to alter the price of credit the credit

market is the most important. in the world bar none there is no market more important and in. my lack of respect for these guys it's because. because they're there subverting price discovery in the debt market so the buyer the creditors are are trying to haggle over what's the value of credit my savings are worth something except the fed renders them more false because because they just provide an unlimited credit now speaking of the unlimited credit or quantitative easing which i assume you're talking about i want to i want to focus on this for a second we have a graph that we're going to pull up now if markets again if markets are all about q.e. then you would expect hughey and multiple expansions to be positively correlated now check out this graph we have very here this data that's now what we're seeing according to the graph and the chart here that shows p. e. ratios declining the first two years that q.e. for multiple expansion set in this suggests a lot of big gains were based on earnings growth and not q e how do you explain.

the yellow planet cancer yellow plots is the ratio p. e. ratios are a fiction to me they're so contorted. is actually stock when the other day told me that he estimates that thirty percent of the p thirty something earnings puffery is coming from excluding items as one off items and so they're taking operating expenses and writing them down and pretending like it's something special he estimates is thirty percent they use forward earnings which invariably are profoundly optimistic and by the time the forward earnings start to show up to be flawed they then roll it over to the next year's forward earnings and so if you go to a shiller p. e. what you find which is a backward looking p. you find that the market's an estimated seventy percent overvalued so if you think this forward looking about swear it's intensively flawed it's always too optimistic it's it's a bad show they're inventing the numbers so they have numbers for earnings through

last year. in previous years and they're choosing to use the ones that they get the fabric so it's really bad now we're in uncharted waters in terms of fed policy were you surprised by the market's reaction to the q.e. taper. you're setting me up here no and the reason i'm now on is because i think the market had full protection that day that day that you bring it down to i think the fed by whatever mechanism they use probably pumping a lot of money into the banks that they made sure that their first shot at the taper did not lead to a headline what about today today we did pretty well i don't know how long i want all i know is that we're still printing tons of money the interest rates are still near zero and so we're still not even in the same zip code of normal behavior. now you write about how interest rates are low only because the fed like you say they are keeping them down by buying these bonds but is it really a case that interest rates are low because the fed is targeting zero interest rates

by buying bonds but it's not you know you can't target through another means well they jawbone it right that's their favorite line and say look we're going to drive interest rates to zero or near zero and so then the leverage speculators which are borrowing money from the feds can say whoa the feds got our back so we'll buy bonds and even though no one in their right mind would would lock in a three percent return on a ten year bond but but they do because they know the fed's going to protect them and so you have to fabricated the marketplace and if the if they ever lost faith that the fed had their back would be a catastrophe. i think it will happen and when i never say one but you think that this well it has to happen i think the free market is a force of nature at some point it will sort of rear up and when the fed will be shown to be a relatively. incompetent player when when when this force of nature finally shows up i think ok now given the fact that the fed has increased the monetary base by

more than three. really in the home purchase three trillion over the past few years are you concerned about inflation terribly terribly so it's i had the sapir for me this year and i talk about this new year in review one place that inflation is lurking and i found some software couple of characters who are really trust their judgment and they bought it and that is through the last twenty or thirty years we've compensated people using promises so will say you're going to get more pension you're going to get health care we've promised some promise and now we've got these unfunded liabilities which by the way are estimated to be two hundred trillion dollars and so if you back out you say how much per taxpayer is that it's two million dollars per taxpayer of unaccountable promises so then the question becomes what's going to happen when all those promises start getting cashed in that's a lightning play well that's what i want to talk about but we have to go to break right now but we'll continue this conversation stay with us because coming up did the events of two thousand and thirteen so the seeds for the next crisis we'll be

following up with david about possible dangers that are a lurker to head plus wrinkle bills in the washing machine may be a thing of the process rachel carson is not discuss the move to a plastic currency in today's big deal and as we head to a quick break here are some of today's closing numbers stick around.

crosstalk rules in effect that means you can jump in anytime you want. i am the president and i think a society. and big corporation kind of can do that to consume consume can do and the banks are trying to get all that all about money and i'm a family that for politicians writing the laws and regulations to tax corporate bankers. there's just too much is a society. that.

oh and welcome back we're back with more from david column and twenty thirteen year in review we've been talking about quantitative easing that kind of want to continue that discussion but move on to the hyper inflation scenario which is kind of scary now it seems the missing link in all of this wage growth that we've been discussing is people aren't earning more and you know inflation would cause them to cut back and the economy to slow rather than to expand obviously and accelerate that would obviously cause hyper inflation would it not hyper inflation and high inflation a different beast and so i never predict hyperinflation i do worry about high inflation i worry about hyperinflation but but but but hyperinflation is. everything sort of becomes one more and i don't know how to predict but can you expand what are your worries specifically with hyperinflation enough. wolf we have hyperinflation you end up with civil unrest you end up with you end up with

starvation you end up with with grinding poverty you destroy the fabric of society a real hyperinflation is is def the final and that's what we were risking in the seventy's and that's when volcker unleashed the hounds and said stop the inflation now so he's everyone's hero he stopped hyperinflation he kept it high inflation and . do you think we need it. yes we need to care and you don't see any. of its governors at this this point in time no because the fed is doing what the banks tell the fed to do because the fed is the banks write a fabulous federalist federal express right that's a trite phrase but it's true that they're there and they're nominated by the president who you know who pays his campaign funds but but but yes we need someone to come in but i think volcker even did it for the banks he recognized that even the banks were going to lose if he didn't get control of the situation so i wouldn't i wouldn't. necessarily either but i think the best. in the bunch he doesn't even get a gold star for me. now if you're thinking i'm cold. in general

oh gold gold was the most interesting market this year and i have never eaten so many bags of garbage you know what i was going to say. this year is cold but if you look at all the things that happen in goal every single shred of evidence this year in the market said that the demand for physical gold was soaring every bit of news coming out of the global precious metal system said the demand for physical gold was huge the only thing that seemed to fly in the face of that is the price so i don't mind owning gold now came to the difference between physical gold and paper gold. physical gold it has to exist paper gold it doesn't have to exist and something i've seen estimates that there's one hundred times more sort of paper gold than than than than than the physical gold backing and i think. it's a kind of a fractional reserve banking of gold i do not i read the prospectus when it came

out it had it right it was a bad joke the prospectus was a bad joke because i was interested in it and so so at some point if the futures market drives the price of gold to a point where the physical holder say that's fine that's like a ten cent loaf of bread in russia trying to buy it at some point we can have that kind of a discontinuity and like you said you were the prospectus but how does this this place physically in your investment strategy i i have over the last two years come to terms with the possibility and i wasn't this before but i've come to terms with the possibility. that we're seeing the beginnings of a change in the global currency regime and i think the next one this will be a bretton woods whatever number you want to give it but i think the next one will have gold backed currency and that's not going to be the us dollar ok now are you concerned with the with the problems of paper gold. the prospect of potentially being confiscated paper golem now though they can take that any day they want to

worry about the physical good physical paper goals this paper now as for cyprus we've already seen confiscation people. know it was physical is this physical gold physical gold and is this a possibility in america do you think this ever happened no because because we're one of the superpowers that took the physical gold from cyprus so i think rickards has this right we have gold that maybe we don't own but but we're not going to give it up either potentially so i i think we probably have vaults full of gold i'm not sure who has ownership of that gold i'm not sure i think the fed didn't necessarily sell it off but i have no problem imagining that we've leased it all away and then the the major banks the t.v. t.f. crowd his has all sold into the open market i know gold is migrating to the east in by hundreds of tons at a time i'll just hang out in the new york robin i'm thinking i think it's migrating i think it's actually moving but not necessarily from the now i'm actually not the

heart of the author of gold we had him on the street and in his book here it's an incredible thing that when they're paying off government debt at the new york fed they actually move from one side to the other right it makes you wonder about you know this but is it might actually be here in the us where it could be and it could be we just won't give it up now obviously we're talking about gold i want to move on typical and everyone's so excited about this the big. pick would be a way to escape potential complication. i don't understand because. there are too many bitcoin competitors already which shows you that the barrier to entry to low and so i don't see want to keep the competitors from eventually flooding the market and all of sudden it just becomes chaos. i'm sympathetic to the bitcoin buyers i don't like having stuff on the radar which is the bitcoin argument i don't like the u.s. dollar which is the bitcoin argument by. yes there's metaphors which people talk about to look mania bitcoin is the first i've ever witnessed that actually was of

that magnitude right ninety fold gain in one year right i mean that's a staggering so many of us tulip mania now i want to move on to debt in terms of debt we're in right now but i get a sense that you think we're headed back into a crisis that's because of the level of private debt what in your opinion are the catalysts for such a crisis i think it's at the level every i think abracadabra i think deaths across all classes so talk to go on t.v. and they'll talk about how they have to get the consumer spending that consumers broke the consumer should not be spending the consumer should be stopping they should be consuming less they should be working harder they should be saving more and they're not and the idea that somehow we're going to bail out by getting people into hock again makes no sense the federal debt the federal in front of the liabilities are just so enormous we are going to stiff some people it's it's

mathematical guarantee ok i want to and i miss the n.s.a. how do you see the n.s.a. scandal impacting companies here in the u.s. i think there are the onus. of so in my review i sort of dig back and i post quotes from the past and they go all the way back to frank church when he was a senator in one thousand seventy five saying the n.s.a. is on the verge of turning us into a talent area and state and then all through the decades the whistleblowers have been out there and the it hasn't affected the n.s.a. so i think i think as we head into this digital world we're simply going to find out if we know how to handle it or if you know former stasi members say we will abuse this column thank you so much for your insight and your interview in general it's insightful in and of itself and having you here it's been a pleasure thank you that was cornell professor at. and your interview author david cohen thank you it's time now for today's big deal.

ms currie's is joins me now to talk about money of printing fun stuff now i'm playing with plastic god just has taken on a whole new meaning this week the bank of england announced that it was ship plastic money starting in two thousand and sixteen now the polymer banknotes will last about two and a half times longer and are expected to reduce printing costs mark carney the governor of the bank of england said in a statement quote insuring trust and confidence in money is at the heart of what central banks do polymer notes of the next step in the evolution of bank design and meet that objectives so rich will it turn to you now with

a move to make plastic money more readily available increase the confidence people would have in their money supply i think would increase the confidence i would have that my money wouldn't get torn up if i tried to rip it or that it might survive the laundry or something like that but i don't think that it would make people more confident in the underlying reasons why they they would trust currency in the first place right i don't think that it has really anything to do with central banking logistics and pragmatic i actually couldn't agree with you more on this one i mean it's kind of like seriously about what we're going to say is oh my god oh it doesn't tear i feel like. you're on and. so i mean there's a difference between being strong like in terms of not being able to tear it and actually having a lot of value so i guess you kind of resent the question to ask it anyway you do not see plastic money is the future of i'm going to buy it will be the future of printing currency but i don't. that has anything to do with the currency itself right so it seems like

a trend that people are interested in i mean ever from canada nicaragua to us trail yes they all have this currency already and i mean that's pretty cool i've touched it it's mine it fits in your wallet a little easier than it seems like the current pound notes too but i mean in terms of the united states when we tried to switch to the way the dollars people thought of them we the same reasoning right if they're going to last significantly longer than dollar bills but the problem was people didn't like the way they juggle jangled in their pocket they were to have annoyed i call them pirates ability because you always get them in machines yes i kind of like you're going to occasionally it's a treat but there's no question it weighs you down so the one good thing about this polymer based currency is it's pretty lightweight unlike some of the queen age because of the treasury begs the question should people start investing in plastic polymer we're going to go home or is a petroleum based substance you know as ever. there was do you think it's. the government should discourage the use of cash over electronic payments because

you know electronic payments can obviously be. more easily. i mean i don't know but a lot of people when the government discourages them from doing something it makes them much more likely to do it in particular when we're talking about things like the vertical or we're talking about people who are trying to do things outside of the scope of the government so i think no not really i don't think the government should be encouraging or discouraging anything like that one thing i will say is that crane says the company that produces a lot of really nice wedding invitations they also produce the paper for the u.s. dollar and they might have some issues so if you have a lot of money invested in cranes and wedding invitations i might suggest moving that money wow that is that is a tip and i have. to thank you my dear that's all we have for today but as always thank you for joining us but you can see. all of the segments featured in today's show on you tube at youtube dot com slash boom bust arctic we also love love love

hearing from you said please check out our facebook page at facebook dot com slash boom bust our teeth from all of us here boom bust thank you for watching the most the next time but by.

then you're going to like to call it face it's like you know. pleasure to have you with us here on our t.v. today i roll researcher. lead.

from behind bars to berlin former russian tycoon mikhail khodorkovsky is in germany looking forward to being reunited with his family following his pardon release from prison. defense after price eight in the half trillion dollars goes on they counted for less than two decades his policy to keep the pentagon running. friday prayers turned violent in egypt as police dispersed supporters of the president who were protesting against the law restricting demonstrations.