welcome to the kaiser report i'm max kaiser let me introduce you to the portrait of uncle sam a desperately handsome man back in one nine hundred seventy one an old scary hagin if you care to look in the right place you see back in one nine hundred seventy one when uncle sam was that handsome young man one wage earner could support an entire family in the u.s. economy incomes were growing for all that america was an export powerhouse were dreams could indeed come true it was then that nixon decided to close the gold window and turn the monetary system into a painting on a dollar bill and in exchange for this deal with the devil the u.s. economy would never age we were told we could lead lives to balance currency

without cost. i've got news for you the portrait of uncle sam has been hidden in the basement of fort knox behind the barbarous relic old gold and that portrait of uncle sam my dear people shows a tired haggard and old dude from monetary to boucherie fiscal murder empires of dead and banking immorality oh what a fantastic story stacey has a terrifying story and in fact our headlines are the proof of this horrid looking old man and these portrait of ogle sound the first is a tweet from the wall street journal and it says more companies in the u.s. are closing than opening the tweet also includes this chart which shows the blue line is the entry rate and the red line is the exit rate and it goes back from one hundred seventy eight to present so you see that blue line of the entry rate is you

know a new company formation and there's less and less and less than one hundred seventy eight yeah i love this idea of compare it to portrait of dorian gray obviously a famous story of a guy who makes a deal the devil and his portrait ages but he remains young and nine hundred seventy one the u.s. actually made a deal with the devil by going off gold and embracing fee i've heard see but the statistics they charge the reality on the ground the economy is collapsing wages are down manufacturing is down the chart you just showed shows horrid economic decay so that portrait of uncle sam in the basement or in the basement of fort knox behind the goal is looking a horrid ugly and balanced and so it's only a matter of time now as i as i understand the story before these two things are reconcile in a most unpleasant way yeah i did that and doesn't want the dollar stab itself to death and it will be found on the ground and the floor of the new york fed or there fort knox you know in the warehouse next to all the gold and gold will be there the

chinese are going to show up looking for their money that the u.s. . owes them and they will get upset and or it could be germany you know germany is owed tons and tons of gold is held in the new york fed they could show up and be so angry that there's nothing there but a bunch of money that they start to stab uncle sam's portrait and lo and behold on the floor is the reversal good old uncle sam having spent all that gold many years before and the world recognizes that this has been a horrible ugly travesty of course in the original story not your uncle sam version but in dorian gray what he did is he sold his soul to stay young looking and that no matter how much debauchery murder or anything he would do in morality it wouldn't show up on his face but it would show up on his portrait and it was turning into an uglier and uglier thing well here in the u.s. they also do the same deal once they switched over to feel currency all fee at back

by nothing then all the bankers of private equity firms the hedge fund everybody started committing fraud and thinking it's not going to show up in the portrait of the u.s. economy because g.d.p. would always rise of it always look fresh and healthy and wonderful but behind the scenes of course gold and all of the cities like detroit falling apart though if you peek into those cities that's like looking at the portrait of dorian gray it's like. exactly the dow jones is making new highs but at the expense of sacrificing detroit sacrificing michigan sacrificing baltimore sacrificing industrial areas of the united states sacrificing the end of the entire state of california which is dow having its worst drought in history thanks to the sour on sustainable immoral economic model that is the us resulting in this bifurcation of reality and portraiture resulting in this reconciliation at some point where the old hag uncle

sam reveals himself to looking like some monster for. well now i want to look at some of the debauchery that has been going on in private equity and hedge funds the headline reads hedge fund and private equity fund rent seeking high fees crappy performance so this is from e. smith in naked capitalism and she looks back at there was actually a paper in the one nine hundred eighty s. a short paper published in the early one nine hundred eighty s. by robert joseph locke in shock and life are discussed with some puzzlement that the asset management industry delivered negative value meaning it was extractive they seemed perversely optimistic that investors would over time realize that fact and industry would shrink so they thought people would look at it and say well why am i giving my money to a private equity fund or hedge fund because i just lose money but instead because of this portrait of uncle sam this confusion that people think uncle sam is getting

away with all these crimes he looks great he looks gorgeous this is the way to make money but in fact people kept on piling in fact more money was piled in into private equity and hedge fund fraud and debauchery right in america and around the world really investors are synonymous with amnesia this is a story you could write every six months or every year that people are waking up to the fact that hedge funds underperform the mass market have done so for decades but that story is written every single every single year that story is written meanwhile over there berkshire hathaway warren buffett's company he's been quietly compound in money at twenty percent for thirty years is the best performance ever in the history the world by doing absolutely nothing but buying large stakes and predictably predictable earning companies like coca-cola i think maybe only george soros beat beat beat them over a certain period of time but hedge funds are ninety nine point nine percent of the time underperforming those two guys and because they simply cannot match

the. predict. bill of the that is the heart of these markets there's only really one way to beat the market you have to go like it like warren buffett does which is the take he takes control of the market he owns the market he has the market he's not really betting against the market warren buffet is the market so like i said their departure e and crime of the hedge funds and their low returns nothing adds up two thirds of hedge funds fail but no more i just came out with a report and they also look at it and they find that shockingly pension funds are piling into it if you look at this chart this is from no more and on the left are the percentage of assets held by pension funds in various assets at the bottom on both sides of equities and then the gray is bonds light blue is property and the dark live atop is private equity and hedge funds where you see is that the assets under management by pension funds they put ten percent in private equity and hedge funds but that represents forty percent of the fees they're paying but they're losing money on that i'm paying more and more in fees so they're still piling into

that and what number concludes is that say in our view alternative assets as a group show consistently poor performance beta is high output is near zero it's not negative correlation with standard asset class is high return and diversification benefits are negligible pension funds and again it's where money goes to die it has been. twenty five thirty forty years since the modern pension fund industry came around it's always been a large pool of money run by somebody of low intelligence it's very easy to get a pension fund manager to buy a really bad investment they're not particularly smart people they get paid really poorly they just are sold toxic investments by sharpies on wall street and not only do workers get ripped off by their wages being destroyed by inflation destroying the purchasing power but then their pensions are stolen by the same people who are engineering his own policies so that's why people in america are living such horrible standard of living in the average net worth of americans been cut in half

in a last six years again but go on with this story and. a theme is you know you don't collect your pension for thirty forty fifty years once you start it so this is the door dorian gray the portrait is in the pension funds people don't know it yet but when they get their own will sound has not been so kind to them it's they they retire and find out oh my god this portrait of my future i had back then is haggard and old and deprived and decadent and decayed and an old ugly man on the ground for me to go to example is social security social security pays out money at the same time it takes in money and those two things are supposed to balance balance themselves out in what's called a good ponzi scheme well that good ponzi scheme is set to run out of money entirely in about eighteen months so the entire social security scheme in america is going to have to formally be declared bankrupt that's a liability that'll be kicked up to the federal government of hundred or so trillion dollars to add to the seventeen trillion dollars on top of the other

unfunded liabilities of another hundred or so trillion dollars that's why america technically is bankrupt so going back to this report about hedge funds or private equity one study concluded that investing in hedge funds produced from one thousand nine hundred eighty to two thousand and eight produced only the same returns as investing in treasuries meaning investing in stocks would clearly have been that handily so here they were wildly speculating deposits criminal fraud all sorts of crazy activity monitoring your pension fund and the haggard this is in is is hidden behind this sound looks great but in fact you should have just invested in the treasury if you would we have the same return oh yes it has from out of jurors tend to be corrupt they collude with each other they manipulate markets they work hand in glove with corrupt bankers like goldman sachs or j.p. morgan they would buy the same stock while selling the same stock simultaneously walled putting on

a hedge to totally insulate themselves against any risk whatsoever and charge enormous fees for doing. probably balance nothing they walk away with the eighty million dollar home of the hamptons for especially running a ponzi scheme and no it's great recently is that part of the scheme or pyramid scheme that is herbalife was the subject of two hedge funds trying to take it over there you have to essentially ponzi schemes financed by the federal government hedge funds trying to take control of a pyramid scheme herbalife so this is really the tail wagging the dog multiplied to an extreme level for so finally in this headline about this portrait of uncle sam what we have is s. and p. wealth gap a slowing u.s. economic growth economic disparities appear to be reaching extremes that quote need to be watched because they're damaging to growth said beth and both you know chief u.s. economist at s. and p. so what they found is that because of the increase in wealth and income gap it actually is causing slower growth it is harming the economy is causing not the young looking hot dorian gray but the old haggard uncle sam because it turns into

boom bust boom bust because the poor need to increasingly rely on more and more debt and also less and less consumption one once everything goes wrong and they're cut off from the debt so again this dorian gray isn't really a gloomy economy or is it the haggard old painting and that's in the attic so that moment reconciliation is fast approaching in the story at the end of the story when the really the reveal of the american economy local sam as being an old hag is shown and that'll take manifest itself essentially and i believe in a sudden burst of inflation so food and energy something triple in price and america goes down the tubes as we all knew what prices are going to go back to yes and everybody will be toothless toothless old hags well all right well stay tuned for the second half i'll be continuing my interview with nick lambert and david urban made safe.

a piece of legislation is terrible they are led very hard to take out a lens against a little money or a plot that never had sex with the target their lives let's have a little. glimpse of the m let's listen. to the.

kid right on the street. first street. and i putting pictures. on our reporter's twitter. instagram. to be in the know. on the. audio in reality mediation is still there and it is killing our children they are dying of heart conditions i asked my leukemia but the authorities are still hiding the truth from us still and i don't know why don't they have children on their own because you heard so much to know the pecans protect our children so this.

is the media lead us so we need to be. by the same potions to cure the other party there's a goal. for shoes that no one is asking with the guests that you deserve answers from it's all on politics only on our team. welcome back to the kaiser report i'm max kaiser timeout a return to nick lambert and david ervine from made safe and acronym for massive rave internal disk secure access for everyone gentlemen welcome back thanks much on our discussion about made safe this new phenomenon sweeping scotland so just to review recap a little bit for those who missed part one give us the little twenty second version of made safe what is it made safe as intimate as it was supposed to be intimate

with and to be to be companies no one else will enjoy a veto so if i'm going to speak to your inmates if i speak to your note and i was speaking to you know to keep the corporate speaking to you and there's no ability to steal that information and sell it back to you if you're. to own to the meets if network of the safe network as they see or front of them can be deleted it can't be corrupted you do tobacco so the storage is on people's hard drives in this distributed network and to just sort of to be a part of the network you get a token you actually talk and you don't actually need it we're actually be able to do work and i'll get to them where everybody in the world will be able to join this network for free and use it for free care is one of my early things was some pearson in africa is given the ability to contribute and consume information and knowledge and leaps out from behind

a bush and his cure cancer the ears that are told that's the important thing information the ability to be sprayed for and prayed to means that we've killed much would innovation spread what it would but now you're cutting into the whole patent business so patents become intellectual property that is highly protected and the example of various plants actually in places like africa and are and being distilled by for. i'm a sort of goals and patented and then sold back to the very africa where they got it to begin with so in this kind of system that information goes into the network and goes around all the current patent laws become accessible for free and because it enjoys all these levels of encryption they can't get at it the same way they can't get out bitcoin because encrypted they can't get out proton mail which is a new encrypted mail service so encryption israeli the twenty first century. rallying cry for freedom and scholars is a place people rally for freedom yeah you're all about the freedom that comes and

really important the most the vote important thing but the safe network is based on not too busy and it's based on the does a call in the issues or things that can be found in nature so yes very very high levels of encryption but the ability for a computer to connect to a network of computers be taken as a computer be run and then given data through which often to make sure to sleep enough to the key to the network becomes almost like a why you thing and it's owned by no one so if you're going to network and speak tonight. we don't know you've heard on the network we don't know next on the network we do ignore customers we don't know any information about our customers and that's really important and it's never been done before because all of these even brought on any any system out there just know that says i'll give you security put your name you know secure or i'll give you security at logon to the several i control the most secure or pick your data on this it's really interrupted you're not secure because i could delete it so in

a safe network you decide to join we don't know you've done it the network knows you've done a perfect fool if they can it's a network you'd be a data on the internet with who you want to interact with no one can look at you and i guess it's scrubbed on the very first hope your data takes so your you can actually go through completely compromised with those that doesn't the network just doesn't care that sync up to all the way through so this is the implementation of exactly where the internet should have been the freedom for everyone it's the ability for us to communicate and put information on and consume information. from corporations and we i believe that it is the age where we have news that's given to everyone it's free of propaganda we're all controlled by his propaganda system and i would like to see something where you get a piece of news that says. three people were killed today angel was

a little one of them was a. soldier it doesn't matter i don't want this for my son once again it's a using distributed networking to disenfranchise all the gatekeepers in the middle man so that it creates sovereignty and freedom for everybody on the network and you guys are from scotland this is all happening in scotland of course i want to talk about royal bank of scotland for a second but before i do. we've got a lot of interest in that auction that when that happened there's the auction of the coin that there was some controversy about the auction can perhaps make you can walk us through the auction and what was the concern and what would you say to folks now that are looking for some guidance on this so i think i think what we're doing is where as a saying they're going to previous episode we were. kind of p.c.l. in the ability for users to buy these tokens which would give them access to services in the network i was in

a sale that was intended to take their t.v.'s. and reese went through it at six million dollars and five or so really can a wall up close and we were taking. participation in two currencies one was a master calling and the was calling and we anticipated getting i would see at least seventy five percent calling and the rest amassed according we feel that we wanted to support the mass according guys with what they were doing because we were using their. they are smart properties which is a way of them issuing our talk and before our networks launched so that the kurds will never worked like that it went so fast that we ended up with a fifty fifty split and as is obvious to anyone looking at the market cap master card is not to hugely liquid so what we've come away with is probably fifty percent of an ace liquid currency coin which is fantastic and we've got fifty percent of the less liquid. massaquoi which we're kind of holding for the time being and see

what happens there but we've got reason to believe those guys are you know going going to do some but because things will next the next few months so right so so master cohen is i guess people call this big calling to point out. it's more of a oh well how would you describe it i would describe it as a way of integrating all those things into the book chain so you can just basically you know a lot of the things in the book that isn't similar to a colored coin concepts are probably a smart property a color coin so you take an individual coin and because bitcoin is being created on the hop for another million you know ten million coins or so over the next hundred years yeah this is an idea idea to pull one aside and say it has a limited supply right now and you can do a stock offering you can do a deal offering you know you can trade as a contract offering yours of course the same coin it's proof of. it's proof of resource versus proof of work so how does that work dave basically

the trick for resources as proof overtreat ability of data as what you're doing and we need so the network is the c.e.o. can you computer can it's the network and it's like us on call when it was and and it proves that it worked was it starts off as a small computer and with an infant and then it grows in rank it's given data and people ask for it and the network can tell the computer give that data and if it did get the data and i looked at it you wouldn't see fully and that's really the the proof of the chief ability of the it takes. the machine it's all tame it's all famous by the c.p.u. capability in the. then interestingly lou the network is intelligent as has know about. the network with all its power can be corrupted eater there has to be a human that those that are automatically hunted by the client so proof of resource

photos is. a more natural way because it's you're rewarding people for doing something that's good no to walking people for doing something which is for me you know what you're city and know the barman you know what just it was wrong for chording because there was no autonomous network a lot of data into logan to for any purpose in a secure and private manner but couldn't care that it's not. so because of a choice really how to use circular proof mechanisms and how to of these things which walks on the ten minutes and slips someone not to do and against the reality i think i've always tried to think about not systems work can remove much of numbers and number of sort of tangible find and security in particular in the corruption that's one of the issues with so many sea curves ok so you mentioned a couple times ants and colonies and the type of thing and we we seems like as

economics and finance goes forward there's more observation of the way things happen in nature in terms of the economics of like the economics of photosynthesis for example is a perfect almost frictionless market isn't it happens on the level of photosynthesis how do you mimic that how do you capture that frictionless trading and these ant colonies are now are known to be extraordinarily efficient and xander so do you draw on. trying to segue into royal bank of scotland somehow in every way if yeah i mean every natural system there are rats and the editors of life and this type of thing and royal bank of scotland h.s.b.c. barclays lloyds here in the u.k. you know i mean you know like your lower intestine has as has you know parasites but they're needed to some degree but when they take over the body you know you die

so here you have like a just b. c. . parasite clearly a parasite the chairman is out in the newspaper. saying that enough of those banker bashing. you know we paid our finest and let's move on now when you read something like that. does that make you feel like well you know the banks are going to start behaving better now so maybe we should just give up what we're doing though from a natural system perspective in nature any excess indeed leads to the demise of the species so something with the. sort of food supply the buy is stored food supply of money and should have to eat but we'd be kept to a life of eighty on the total system it was not at all on the also capitalist and on to every other system we could imagine so what adam smith a one of the famous residents of scotland well he better think would he be looking at this kind of banking system right now would he be appalled pull ups that the

thing about money and safe going is very. focused on us that to meet money is oil that drives an engine and if you have someone that keeps taking the oil i would know the reservoir the engine goes dry. so money finishers does a trans fair all product and service what would wait which was adam smith's real goal was i can see where you might provoke the lever for whoever much your previous before that that wasn't in somebody in the middle is going to double profit on it so the idea of money and if i think if we consider money only just on the oil for the engine it's going to florida court and if people are taking all of them have to stop them and making money for all money is a ridiculous thing it was it was illegal it was on t v but people they think they want to use or centrist use usually it was was legal up to the seventh. the poet to

make money money is a terrible thing you know i'm going to stop it there but one quick question one is a launch a test that one's up running. through yet another six weeks each so that's your we're all going to die so guys really guys report i get spicy about all right let's go do it for this edition of the times report of me my guys are staying over and i think our guest nick lambert and david irvine from a safe even ties to let's not go. to genetics but eugenics vulgarized darwin science and punishment for an uncommitted crying i was there are things to learn from pulling in eighty feebleminded still today so that if you don't know why he like you by still don't know why genetic improvement through forced sterilization the basis for nazi

ideology don't stop at just sterilizing not going to now go to the point of death. for years rarely discussed on till now i'd really rather not talk about that right . dramas that can't be ignored to. stories others refuse to notice. food has changed the world light snack. food picture of today's news. from around the globe. dropped.

mission to teach me.

security forces correct down on protesters in missouri where anger over the killing of an unarmed black teenager by police has boiled over for a fourth night journalist there are being threatened and told to leave the area. we report on the continually street violence word ten people have been arrested in the last clashes between angry locals and police. written considers sending non-combat troops to iraq were ruthless jihad as militants are tightening their grip western involvements bro.