the rights of nations that self-determination. and there you are you are right up to date with the world of news i'll be back though to freshen things up the latest news headlines see you at the top of the hour. but. prescribe medication is widespread on the u.s. market and a frequent cause of death at that point in my life i just felt like everything was

ashes my family was literally coming unglued i had actually planned. to commit some sight what or who has made antidepressants so commonly used we were doing what the doctors told us to do we were being responsible and what the real side effects. was chemically altered what i did was on a cocktail of lethal drugs. just because something's legal doesn't mean it's. hi there this is a kaiser report kaiser there's a strategy and betting called the market gail yes yes the mark betting strategy

that's like if you're at the roulette wheel you bet on red you lose you bet on red again and you bet on red again any better until you went hopefully don't run out of money before anyone is famously used on wall street by firms like goldman sachs who make bad bets but since they have an open cash window at the fed with unlimited funds and zero percent borrowing rates they never run out of money that's why from like all the sachs and j.p. morgan can report thirty sixty ninety one hundred twenty straight days of profits on their trading portfolios because they don't take any fricken risk what about people that are not so smart. so. you know i'm just responding to this story they are one of them may i realize the juxtaposition of that word and the introduction may have been confusing but you know what i meant you're talking about my first headline but yes while you were talking about this martin gayle betting technique you referred to goldman sachs but the most famous one last

long-term capital management your guests in the second half jim records he was their legal counsel for a long term capital management the my eyes that he had to unwind norma's spaghetti plate of nonsense and that's right they kept doubling down and doubling down on the ruble they kept deviling down on the ruble i think they were going along in the ruble kept falling was a perfect example because what if the fed do the fed actually lowered interest rates to my point that the fed is an open source of funds for scoundrels so jim rickards a long term capital management made a huge error and instead of paying for that error they went on again and again are you gal this nobel prize winning economist martin. you know option pricing volatility ok they have an open cash spigot at the fed at zero percent interest to fund their mistake yeah they're all working again creating massive hedge fund frauds again and that story had repercussions in two thousand and eight of course because all the other banks on wall street are one united to bail out long-term

capital management i think it was jimmy cayne bear stearns who didn't participate no let them go bankrupt and of course they weren't there for him when he went bust or maybe it was one of the other big fault lehman was the hold out he was there and then they took lehman out back in two taps to the back of the head on water street and it was done lehman so here's the guy did not get bailed out but he and he paid for his mistake and it's a good lesson because he had had thirty percent return. like the decade before he went bad ok so past performance doesn't necessarily mean future before myself and i try to explain that to me before in a different context investor who lost millions finally gives up on this china bet mark hart spent seven years and two hundred forty million dollars waiting on a crash in china's currency he lost sleep he lost clients there lost to sanity and

now he's lost his conviction partly called for more than fifty percent yuan devaluation last year has turned bullish on china and its currency he's the forty five year old founder of cory n.t. advisors in texas and he bet big on the sub prime crash won a lot there for his investors bet big on the european bond collapse as well he won big there as well then he lost big on this trying china yuan bet he assumed that china would not that they would want to devaluation partly to stop capital control but to be more competitive and this past week by the way or last week was the biggest surge ever and yuan so he picked the right time to step away well you know another martin gill betting failure was bernie madoff is like you know a big bet on the euro euro paper and believe it doubling down on what you're talking about john chorus of m.f.

global i'm sorry i don't like all these current there and i think the fifty two playing cards of financial terrorists if you keep track of all those terrorists in cool hindsight the forty five year old founder of korean t advisor sees last year's group of twenty summit in shanghai as a key turning point like many investors suspects the meeting resulted in a tacit agreement among world leaders to prevent the yuan from tumbling he calls it china's whatever it takes moment when policymakers resolved to prop up the currency at any cost i believe that's a reference to mario draghi talking about whatever it takes he believes that. in fact china determined that they would do whatever it takes and in fact the article points out that china blew through eight hundred billion dollars in reserves propping up the yuan during the mass of capital flight yeah but they learned during the asian financial crisis remember in the late ninety's these asian countries ran out of capital and they suffered catastrophic calamity as

a result that's why they went into this period of massive reserve. build up you know in china one to four trillion and yeah exactly but the people russia when there ruble was collapsing the liar at the central bank she did not blow through their reserves they they did a little bit at first but then she's like stepped away here he was expecting thing ruble did fall by sixty seventy percent when she stepped away from supporting it this guy was hoping that china would do the same allow for fully freely floating currency but they did and they've maintained the peg and in fact it's like seventy eight percent this year but this is like two stories and one story is about a guy who gambled and lost and then the other part of the story is what china is doing in their economic policy. sure i follow why we're covering the story i mean i get it china has an interesting way of handling their monetary policies but some lost a bunch of money even though he seemed to know what he was doing and why is that

a story it's a story because you're talking to the guy from currency wars you're talking about a guy who is making a bet on this trying to think they know what china is going to do next and everybody wants to know what china is going to do next because the petro dollar has ended as you stablished with jim rickards everybody wants to know what china is going to do and there is zero knowledge about what china is going to do in the west nobody understands what china does they don't understand the mindset of having five year plans ten years on i think is enough for because on this show we've talked a lot. about the shanghai cooperation agreement that's going one china russia around and they for more than ten years have decided that they're going to pull away from the u.s. dollar they're going to do one bill one road across your asia in asia they're going to put a knife in the back of the u.s. dollar and they're going to start launching a currency partially backed by gold i mean that's been clear anyone who doesn't

understand that has been watching the concert for i say this fella who lost all that money does not religiously watch the kaiser report that's his problem that's why he's down in his account if you watched our show he'd be like so many people out there fabulous lee wealthy on bitcoin gold and silver and then there's another element to the story of why he's now bullish on china and going along which relates to another theme and actual story an episode we recently covered which is infrastructure spend in america and in fact it's zero zero percent of g.d.p. if you take away depreciation so this is why he's going along china so this is why but he's a terrible indicator yeah but listen it's a positive story that china is spending trillions of dollars on infrastructure they're showing that they have faith in their own economy that they have faith in a bill any of their people to grow their own wealth america and it's all they are

extracting and we in the last episode we talked about private equity stripping it bare stripping the assets because they know nobody will do anything to stop them they are not investing in infrastructure because why would you why would you participate in the economy why would you work why would you get a job you know it's only sent overseas by the very private equity like thinking c.e.o.'s why would you invest in the infrastructure in the united states when you know that this is our system here where is china is able to do five ten your plants are able to have industrial palm. see industrial policy is considered communist and socialist here well china's like go ahead if you guys want to think that way we're fine with that because we're running away with all of the wealth and it's good for us that you guys think that's not a good thing to do now i understand that china is a should story but i'm not sure how and why you back into the story like the contrapositive indication by some failed trader because he's saying that i'm

a loser i was wrong about china this is my current china play why don't we assume developing long ago and i'm saying like i went to these two stories here china is a fascinating story of growth and then well them well this is a lot of money and the kaiser report covers markets finance scandal we've been covering for the past few years the funny people who have bet big along very a lot of people for the past ten years have been so hard so long against china they've lost money the act wins the carl icahn sort of guys of the world keep on betting against china because they don't understand it so i just thought it was an amusing story and i thought the information the data in here was interesting and i also thought because you were talking to the guy in the second half who wrote the currency wars and he would probably tell you that you're always going to lose a currency war if you try to get in there and i thought it was funny so here we'll move to a not so funny story because we have hurricane after hurricane hitting america disaster zone in florida texas all over the world and this is another interesting

story about how america decides not to take care of itself and this is oil companies leaking benzene lobbied against pollution rules apply benzene has been detected in the air over houston after four fossil fuel companies reported leaks of the highly toxic compound that can increase the risk of cancer even from brief exposure documents reviewed by the international business times shows that two of the companies exxon mobil and valero recently lobbied against an e.p.a. rule to prevent the government from more strictly regulating the toxin as it a fossil fuel group that counts through. he of the companies as members of the agency ultimately passed a rule strengthening overall benzine regulations but only after the company's filed critical comment letters the trumpet ministration and his e.p.a. has lowered the bar for these regulations so that they don't have to report during force majeure or hurricanes the release of benzene so right now is something like

three or four times safe levels there's no safe level for benzene but there's four three or four times acceptable that the e.p.a. is willing to accept for a human to be exposed to it right like that you can have two or three rat hairs in a candy bar but you can add like a hundred different writers in a candy bar not exactly so it sounds like an environmental catastrophe yep that's what's happening china's cleaning up there in my environmental catastrophes we're going the other way why don't we go to the second oh love more. this winter with me because it can all get

a little. bit what it was. last summer when you but i you. know both the weather but i guess sort of kind of. you. know but if you dump it out and just sort of. wear the blue and go get a just a good area for immigrants it's this we never really know sure but this is been a active area.

welcome back to the kaiser report imax keyser time now to return to our conversation with jim records author of many fascinating compelling raids like currency wars the road to ruin the new case for gold and the death of money i have actually read all of these books they're probably the only books i've actually read in the last few years because of my attention deficit disorder and i can tell you they're really good if you see what the airport. jim welcome back thank you max thank you for the kind words also all right we kind of finished up talking about north korea but i wanted before we get into that to touch on another topic here so

let's talk about the trump will have donald trump will have the opportunity to appoint five of seven governors to america's central bank governor serve fourteen year terms so trump will shape the fed for a generation. do you see this is significant is it significant and what are your thoughts on this jim yes and no let me explain why i said that by the way i work in article my news or subscribers or an article months ago called trump owns the fed i was the title of the article in people what the heck are you talking about you can see this coming as it's getting a lot of attention this week but you can see it coming my way so here's the setup so president trump gets sworn and margaret a president january twentieth. two thousand and seventeen there were two vacancies on the board at the time by the way there are only seven seats on the board of governors the board of governors runs the federal reserve they're all these you know as thundering herd of regional reserve bank presidents to leave them aside policy is set by the board of governors in washington there are only seven seats

there were two bacon sees once trump was sworn in why with the two vacancies it's because the obama administration messed up those vacancies had been there for a while but but obama thought hillary was going to win like why would you leave vacancies for the next guy with the answers if you thought the next guy was. hillary then then you were in safe hands she was going to appoint some you know ruben ask barbara been puppet whatever friendly faces well they messed up because they didn't think trump was going to win i thought she was my hands but the white house didn't so they gave trump a gift right off the ballot two vacancies and they would have filled those since long ago if they thought he was going to be president so within a couple months of being sworn in dan tarullo who was on the bose-einstein got through a can six and then stand fisher his term was that he's the vice chairman his term was not until next summer but he unexpectedly resigned for personal reasons and wished and well that that was effective almost immediately i think it's effective in a couple weeks so. others for vacancies and then janet yellen is term expires at the

end of january some effectively february first two thousand and eighteen that's not that far away there's all require senate confirmation by the way so jumps going to have to pick a new chairman probably by before thanksgiving so they can have the senate hearings in times confirmations so that personal be in place so that's how the progress that's five vacancies out of seven seats now of the two remaining seats one of them is jay powell who is a republican he's already on the trying to train so that leaves little brain or by by february first little brain will be the only ruben you know bob rubin you know protege brought by women accolade should be like the you know the maytag repairman a very lonely but she'll be the only kind of you know liberal progressive left honored you're going to have six out of seven republicans five picked by trump one already on board so trump owns that that now the question is what does this mean for monetary policy by the way i also told my readers months ago in washington

inside the beltway people get all spun up and they all talk to each other and they think they know what's going on because they all they're all smart they all talk to each other right they don't realize there's a big world out there but they were all sent jerry collins going to be the chairman of the fed i said no. oh so the next chairman of the fed is going to kemah war sure that's a separate story but all this cone stuff you know the president as gary cohn is gary coleman is the former president chief operating officer goldman sachs now head of the national economic council in the west wing so it's very close to the president you know as if goldman sachs didn't have enough power let's put them next to the oval office and so gary constantly says he decides that the best selection from their share of the fed would be himself caricom so the delegates all spun up in the. so called got whacked this one episode of the sopranos or the godfather you know it's a gary gary once in a where you know he got whacked a couple days ago because he disagreed with the president one of my favorite f.b.i.

tapes of the mafia where they had their way in a social club in little italy in new york they were to have john not he used to be the godfather back in the eighty's and he was talking about how he whacked this guy and he said you know the guy didn't do nothing wrong he just he didn't i asked him to come and he didn't show up on time so he got whacked he didn't do nothing else wrong and i love that line so it doesn't take much to get on the wrong side of the godfather it doesn't take much to get on the wrong side of the trend carrie kahn gave some interview to the financial times jumped in like it's he's out but that didn't change my estimate is they also can where she was going to be the next chairman so you're going to get all these are you going to get these new people in place they're all going to be picked by trump they were working on a package deal where kevin warsh wants to do kevin said i don't want to be chairman unless i have a voice and all the other seats right i don't want to be chairman of a board of both those and if you the white house are going to pick bozos then on the interested and the white house said ok let's talk and so they're working out like a package deal here's the problem. everyone debates vs hawk but it doesn't matter

the hawks are all duds you have to be because the fed screwed this up as usual the fed always messes this is just the latest episode of a long running you know drama but i said a year ago the fed was tightening into weakness so when do the fed tighten well go all the way back to may two thousand and thirteen the taper talk december two thousand and thirteen the beginning of the taper nov fourth two thousand and fourteen the end of the taper march two thousand and fifteen move forward guidance december two thousand and fifteen the lift off the first rate hike member that december two thousand and sixteen another rate hike march two thousand and seventeen june two thousand and seventeen two more rate hikes they've been going down this path of tightening for four years on the assumption that the us economy was strong enough to bear it's not the us economy is unbelievably we would come very close to recession the fed's preferred benchmark for inflation which is that the target is two percent they use a geeky thing called p.c. core price deflator year over year i mean we will skip the explanation but of

twenty eight different ways to measure inflation that's the one they watch the time series of data and that from january to june one point nine percent one point nine one point six one point six one point five one point five one point four it's dropped a half of a percentage point moving away from the two percent target no surprise there so the fed is going to have to flip to ease as well one of the reasons gold is going up because the gold market tends to be very forward leaning they can see the fed is coming as one of the reasons the euro is going up and these are all cause i'm in a while ago it was all based on i said they are tightening it a weakness you're going to screw it up you don't have to flip to ease and ease is going to boost the euro boost gold that's exactly yeah me jump in here you know your call on the euro a spot on for sure and gold does look like it is responding now to perception and the reality of continue to wait this there is a strength but like the velocity of money you know the. that chart where it shows

banks lending to banks lending to banks is dead it's been dead it's getting even more dead because the fed gives banks a lot of money various q.e. programs or ballot or some other schemes and they just deposit it back on the at the fed for a positive carry so right there just gaming the system of course the economy is awake because banks are leeches if you change the board of directors of the fed it's just like replacing one elites with another leech it doesn't matter they're all frickin leeches that cause the policies are going to change they're just they're dracula sucking the life blood out of america what's wrong with that statement well there's nothing wrong with a seven mm actually here's the thing you know when i do economic analysis they usually stop it like six or seven grade math i mean i can do calculus but most of what is put us is calculus is a waste of time because they're making a lot of assumptions that aren't true here's the thing about philosophy and you're absolutely right you know the the the nominal value of the gross domestic product is basically money supply times velocity that's all it is there's nothing else

there right so and they say well the fed printed four trillion dollars i said but i remind people for trillion times zero zero in those if you don't have the lost city you don't have an economy the lost city is not anything that the economists in the central bankers can control it's psychological how do people feel if you feel strong if you feel optimistic you know you'll go the borrow way way way i'm starting to run up but velocity is controlled into the to the extent the fed doesn't have to take the deposits from these banks are getting a positive carry and forcing banks to loan and take actual risk if they're offered a risk with rate of return why would they loan it out to small businesses so why doesn't the fed and these guys just say you know get out you know go lend money to businesses well they might just keep lending it to each other but but look you're right next to here's the thing the fed's going to get the inflation you're absolutely right about that they're going to get the inflation they haven't for the last eight years they failed they thought they would get that they believed in this phillips curve which is. our vision you know the film's curve is

a unicorn you can talk about it describe it but it doesn't actually exist in the natural world so and jenny i was going to like the last person who still believes in the phillips curve little brain or threw her under the bus well as one of the members of the board of governors she gave a speech couple days ago she said we as she is i give her credit for intellectual honesty she said we got this wrong we don't understand it and then her plate academic you know political way she said she said actually said the phillips curve is flat well it's flat summer curves sorry well so the point is i give her credit for honesty so the fed has got this completely wrong. but they're going to have to change it up they're going to have to get the inflation the united states is going broke now we can pay our debts in money that we print unlike greece which can print euro's or argentina which cannot print dollars we actually can print dollars the printing has not worked for the exactly the reason you mention which is the fed prints it gives it to the banks the banks give it back to the fed they are now spread the leverage of ten to one jamie diamond gets a fifty million dollar bonus for doing something that

a trained monkey could do but that's the system we have today it's going to change it's going to change because the country's going broke it's slow right now but you know there is a famous line from the sun also rises by ernest hemingway you know the conversation the guys explaining went back to said how did you go bankrupt and the answer was slowly at first then quickly jim was bringing in the literal like the fed can get inflation tomorrow by simply stopping their tendency to adjust how they calculate inflation to make it look like there's no inflation because they don't want to have to pay folks anything on their savings and they don't want to pay people their pension accounts they want to take that money came before them without you know stop adjusting what these have done to get jasmine's how you calculate inflation they just talk about they want to place it was false there are a lying it's a false bald faced lie they don't want fallacious they want negative rates they want electronic money they don't want sovereignty amongst individuals because they're frickin corporatist fascist. thanks that's what i say i'm sure you don't

necessarily agree with me but am i completely off track i'm making such a statement well i agree that job job one of the federal reserve since it was created one nine hundred thirteen is to prop up the banks i agree with that completely the bankers are parasites they're leeches i agree with that the fed is facilitating that i agree with that but the fed does have a day job and they need to and you know that leaves out all the different you understand you know john teller's method and have done a good just means different ways to measure inflation there really is there twenty eight twenty eight flavors of inflation so baskin robbins but but the point is the fed has as you're whether you agree or not there is a way they look at it and it's not working for them by the way i'll tell you how you can get one hundred percent place in fifteen minutes the board of governors goes into the boardroom of washington i've been in that room you close the door they take a vote they come out the chairman the fed because the microphone is ladies and gentlemen as of today as of now the price of gold was in dollars an ounce and we're going to use the gold in fort knox in conjunction with the treasury stand up to the

market and we will make it to a market in gold and if you think that price is cheap coming down i can buy it and if you think their price is expensive we'll buy it from you and if the price is fifty fifty we're a seller and if the price is nine ninety five we're buyer so like any market maker in the history of the world if the fed uses the printing press and the treasuries gold and stands up to the market at five thousand dollars an ounce guess what you just had an eighty percent evaluation of the dollar in fifteen minutes i was getting out of there anyway they did that in one thousand thirty want to live when they were thirty three thirty in the array and at that time so i wanted to get back to me on the guys report thank you we're going to do it for this edition of the kaiser report with me max kaiser as they say i would like to thank our guests the literary and new yorker reading them there unless just cast somewhere who has written such classics as the road to ruin the case for go there and see what you reach us on twitter it's kaiser report and it's all next time.

thank you for new to the game this is how it works now the economy is built around corporations corporations run washington washington controls the media the media control over the voters elected businessman to run this country business equals power boom bust it's not business as usual it's business like it's never been done before. no but i'm going to talk to a marshal in the. islamic states claims it was behind the munches to terror attack by the. front so kill the priest every time a terrorist attack happens all these people are out there screaming to go ice is so bad someone needs to do something against them and for me it was like yeah why you

don't do something. that. gives. your soul. into the opposite of that if you. let them check if the. chinese tough. guy has got a good cry. and you see him isn't the show. coming up on our t.v. even more sanctions donald trump finds an executive order placing new economic

sanctions on north korea. and the president of afghanistan praises the u.s. decision to send more troops to the country as the two leaders meet at the u.n. general assembly. then puerto rico devastated after hurricane maria beholds and leaving home the damage and the entire island without power. it's a day.