stacie yes the g. twenty was earlier this week there's been so much going on and of course we're getting to it now but i'm going to look at this headline here because it's quite remarkable about the g. twenty what their sense of what was happening there g twenty summit top agenda item by buy american empire we here at kaiser report have kind of been covering this for the past few years the sense that the events we're witnessing in the world whether it's the economic crisis the global financial crisis the war on terror all this stuff is really about a disintegrating empire it's not unique there have been many disintegrated and disintegrating empires throughout history and this is just another time. every single company all sorts of businesses industries corporations rise and fall and this is what we're going through but at the g twenty. you know it was very awkward g twenty because there are all sorts of trade wars and. was hoping to get

out of there in any way right before the g twenty china's ambassador to the u.s. . warned that the lessons of history show trade wars can lead to catastrophic shooting wars this is something you and i of course and our guests have said on the show trade wars lead to hot wars and this is what china just warned of the u.s. on the eve of the g. twenty summit apparently they you know there's a ninety day cease fire ok and the tariff war but this sentence this paragraph i'm about to read really struck me the problem is that washington is demanding the impossible it is like as if the united states wants china to turn the clock back to some imagined former era of robust american capitalism but it is not in china's power to do that the global economy has already shifted structurally away from us dominance the wheels of production and growth are in china's domain of eurasia. a

china at a previous g. twenty meeting was saying that he stood alone and was for globalization and then trump came into office and trump you know put out a message that he was going to attack the globalists and reading into diego globalization and introduce that i would call neo mercantilist a more you know all these trade deals will be cut bilaterally and there's going to be get rid of the super not super super natural supra massive natural thinking you know marvel comics' there for a second supra natural globalized the world bank i.m.f. and other credit institutions and so brings us back to china and america because these two are intertwined where the chinese exports to the u.s. and the currency peg member before trade war leaves a hot war there's a currency war lease a trade war these the hot war and the currency war are been going on already with the china peg artificially low to get their exports to the u.s. in a way to build their economy and then the u.s.

it worker was losing their job but they were paying less for chinese made stuff and so there was a symbiotic relationship going on so if the question is who's going to be a twenty first century empire and who's going to lose if it's going to be the u.s. or china my thought is going to be coterminous and that both the u.s. and china are going to fall apart because they are both equally contingent on the other they're mutually contingent on each other to succeed and there won't be one winner or another i think that what we'll see is as we get into north near neo mercantilist on a situation with more of a gold backed reserve currency in those countries with the most gold are going to do the best so china's been buying a lot of gold the size russia and the u.s. has eight thousand tons they same for nox what they've been leasing and selling a lot of that so maybe they don't have that much gold and so i think that's going to be the determent going forward is gold not this. globalization

via china well we have no idea whatsoever what the future holds and nobody does so anybody who tells you that they know what's going to happen next nobody knows right now at this moment it's similar one can see as what you would see on the african savanna when the alpha male the the lion the big lion who has his brood and he's the king of the jungle. but there are always younger lions lurking around the edges waiting for any sign that lyons not quite as strong as he was just the other day and i think that basically the u.s. has had a lot of weapons whether it's nuclear war or the swift and the us dollar system and you know we grow our old and said here swift and it seems like you know the first time we polled you know pulling iran off the global financial grid like the first

time we did that was like it seemed to work and you like or a well that was so easy like now we're going to just lie back and not work out and let all the young lions get stronger well we just like our stay lazy and just pull people off the grid but you get too close to one of the other powers say germany and germany says well we're going to develop an alternative to your us dollar system and you're swift system so these are the sort of movements are starting to see didn't start with trump and it didn't start with obama but it's been a long process it's a matchup as us versus china and nobody knows the future except the scientists of recently discovered that the mind actually to concoct the present must make certain guesses about the future so we are kind of entering into in an era where people are into it in a knowing the future and we can prove it scientifically but having said that the thing that america has over china is speed to china is heavily bureaucratic it's

communist i mean even the guy who runs alibaba as a fricken communist jack ma and they are slow and us i guess are completely disagree have you ever watched you tube videos of them putting up a giant high speed rail train between shanghai and beijing in like three days like that is way faster in fact i'm going to point out a recent report by the new york times starkly illustrated the changing contours. in the global economic order it confirmed what many others have observed that china is on the way to surpass the us as the world's top economy during the one nine hundred eighty s. some seventy five percent of china's population were living in extreme poverty according to the new york times today less than one percent of the population is in that dire category for the us the trajectory has been in reverse with greater numbers of people subject to deprivation we see the u.n. special rights the human rights repertory coming here to look at extreme poverty

there are lots of hundreds of thousands of americans living i want to two dollars a day so it's going in the opposite direction one nine hundred eighty s. of course is when you know china started to break be brought into the world economy into the w.c. oh it was the u.s. elite who gave them all this wealth and gave them this opportunity by you know wanting to siphon off the wealth of the united states and take a greater share for themselves but you know u.s. can give us and the u.s. can take us away in the case of china so if they want to remove the subsidy the china subsidy as you know you're going to sign economic go into reverse and that's a heavily indebted country so they have more to fall down the debt you know elevator then elevator shaft of debt china can go down there i say they go down that fast that's where they have the speed they'll collapse their debt ponzi scheme will collapse faster than america's debt policies game and therein lies the edge of the american empire yet to maybe pull out those ahead of china in the twenty first

century well of course you know i didn't mention payment system and global settlement system our friend safety and i would say bitcoin is going to be the international global trade settlement system and it would make sense because a lot of the imbalances in the world have arisen because of the u.s. dollar system that nobody you know the u.s. dollar the national debt is a prob. but so is the huge surplus and china and germany those are destabilizing to the world economic order so when i look at this speaking of unstable u.b.s. as paul donovan wrote i come to bury bitcoin not praise that the evil of bitcoin lives on he wrote the bubble took from a large number of bubble buyers that money was given to a small number of bubble sellers this concentrates wealth and changes how money is spent people who lost money in the bubble suffer a negative wealth effect they may cut back on spending loss aversion no one likes

losing money may make the spending cuts worse well it misses us no moral high ground to make any pronouncements whatsoever on the global economy or global banking system nor does any of these mainstream high street banks because they're all including u.b.s. been caught in major scandals money laundering scandals they've been bailed out u.b.s. was bailed out to the tune of billions of dollars and now there are to say this to pay because it's not going to bail out u.b.s. ok nobody's bailing out big point because down from the high is anyone there bailing it out no because it's it's anti-fragile this is just making it stronger every day that it goes forward manges stronger against the charlatans like u.b.s. the crooks like u.b.s. and so these guys have a real problem because you can settle hundreds of millions of dollars of the traits instantaneously for pennies and u.b.s. will charge a millions their business model is like the in a buggy whips in the face of the model t. henry ford's car so they're on the way out that's the legacy you know they should

just and we've covered that that can tell in a fact that can tell and a fact is is that all the money printed to bail out the likes of u.b.s. he mentions the evil bitcoin lives on i want to note in an article about this u.b.s. executive paul donovan blast between against a script as a fatally flawed they and their piece by say last month a french court refused a request by u.b.s. to drop money laundering charges against the bank which would result in paying almost sick. billion dollars in fines so again that the bank is used for money laundering the bank you know luckily they the c.e.o. of u.b.s. america had a very close relationship with obama otherwise they probably would not even be able to basically perform any banking services here in the country at this point because he did let the department of justice overlook their crimes but the fact is that you know the evil of of of u.b.s. and the banking system the legacy banking system lives on for this moment but i

think they're not going to collapse together because it's going to continue to rise and u.b.s. will fail yeah he's projecting his own shortcomings and evil this on typically things take a look in the mirror to truly understand or evil lurks in the world it's not going well you know that sentence the bubble took from the large number of bubble buyers this is big and money was given to a small number of bubble sellers that's that stood out the most to me because there was trillions of dollars created by the u.s. fed trillions of dollars created by the e.c.b. and it was given to a very very very very small group of elite bankers around the world that was permission less in a different way they didn't ask our permission to print us money and give it to those people there was you know we were the helpless sellers to the banks of our or our income our wealth basically they've destroyed it through the inflation that they've created in order to bail out the likes of u.b.s.

another throw another bank around to the front of the fire all right we're going to take a break and come back after this break you're more. hope it isn't because some job point spread political allegation that it's most almost all. meaning. any politician.

is going to. treat. these industries. simply ignore. the.

economic consequences. of. social social activity nobody wants to see. welcome back to the kaiser report by my skies are times out so we turn to our conversation with kate the long twenty two year veteran of wall street now leading voice in the world except on currency the last segment we discussed was happening in wyoming and then we're going to talk a little bit about what's happening on wall street in relation to bit coy and i'm going to get to read hypothecation in a second but first you were recently on a panel with the f.c.c. s j clayton so unpack for us what's going on there his views on trip the currency the f.c.c. is obviously get i'm sure involved. well there there the f.c.c.

has historically said that all crypto currency is except for because implicitly our securities and i disagree with that they've backed away from that and are now actually opening the door to the notion that something might change its stripes in other words it might have been a security when it when it began but like a theory i'm it's become so decentralized same with bitcoin it's become so decentralized that it's no longer a security also of course the there is a push to get financial is the sion of big coin done through traditional wall street products like e.t.f. depository receipts and that's it that's a big part it doesn't sound like the e.t.f. will be approved anytime release of the because they keep making noises about it like it's just coming it's just coming with us to get price discovery locked down not happy with how you're doing price discovery and what you think that they're

pushing it because they're doing due diligence or because it's an orchestrated campaign to kind of introduce more what i'm hearing you say there are more of the wall street products and therefore gain more of the product market share well it's interesting the f.c.c. has actually not been greenlighting this so they've actually put the brakes on it but i will say this that the moment wall street started getting into big. point with was when bitcoin peaked in price and in retrospect that's actually not a shock because the c.m.e. brought in the futures contract twenty thousand for big line and we're getting nothing but down texas then you had the backed announcement which is a sister company of the new york stock exchange and then when the f.c.c. chairman last week implied that the e.t.f. isn't going to be approved anytime soon guess what because it bounced so you know we can't draw our gross generalizations but i know the theory behind why that's indeed the case it's very counterintuitive a lot of folks would naturally think wall street coming in wait

a minute more demand for big quine but here's the challenge wall street coming in equals a lot of this three card monte that's practiced behind the scenes is being rehabbed off acacia and other tricks like that that that create artificial supply and one of one of my very respected wall street colleagues even said that wall street needs to fix bitcoins supply problem and he meant it in the best of terms because he looks at it as another asset that wall street can trade right now there is a wall street veteran who's in the space patrick byrne yeah i'm overstock dot com death and he went to battle with the f.c.c. over naked short selling and one of the reasons he was strong debate going and why he's launching his own platform securities krypto securities because he felt that he was a victim of this naked short selling and reg show as it's called he talked about the fact that settlement does occur for two or three days though even at that rate the settlements are not reconciled one hundred percent that's right so you have sailors to deliver mail to deliver sales are not massive buys yet and you can

conceivably have more people selling more stock than there is in existence that's right it happens right and therefore if you can print a sale out of thin air you can drive the price down that's right now we've had this discussion on the show before in relation to silver silver contracts and they could shorting of silver and there seems to be maybe you can clear up this argument because you are a wall street veteran you would know this. in a way the answer to this people say well for every buyer there's a seller and have a naked short sale but in fact with this. configuration as it is you can in fact sell contracts that are not backed by anything they are printing contracts yes or no yes absolutely yes exhibit a is that all food case where it was revealed that there were more than one third extra legal valid claims to dole who chairs then there were no food shares that were illegally issued an outstanding that was a two thousand and seventeen court case the i.m.f. has done some terrific work estimating the number of financial institutions who

report that they own the very same treasury bond rating on the train on the way here this morning about the fed's financial stability report that came out last week they didn't identify that as a risk issue they have no clue how many times the same treasury bond is owned by the same financial by different financial institutions ok that brings us to riyadh provocation and in the case of the london infinite re hypothecation right so many of the scandals of the last twenty years where there's a i.g. lehman brothers bear stearns the london whale it's on this. if it really hypothecation which basically means as you've just pointed out you can have an infinite number of owners of the same bond right you're lending the bond out as collateral in from a number of times and in the us i believe it's capped at one hundred forty percent of the fair market value of that security or something of that nature but you end up with people routing their fraud through london only becomes the hotspot the global ha spot of financial fraud for that reason but so here we are with bitcoin

and it is no counterparty risk it's hard money it's some money wall street gets involved but they're bringing in the products to bring in their bag of tricks that's allows them to react off the cape which is to lend multiple times the same asset right now which is a way in effect to control the place to go to control the price the price discovery right so walk us through a little. more how that works well there are lots of ways that it happens it all as you allude comes down to how the securities are lent and so if big coin if there's a coin lending market of which by the way there is a lot right now the c.e.o. of the new york stock exchange is parent was also speaking at the consensus invest conference last week and he said look there's an awful lot of coin lending happening that's creating fake claims right now and not those were his exact words but he's right it's already happening and and this is before the really big wall street money comes in and of course markets are forward looking so they know the

big money is coming in and so the price reflects an expectation of that but ultimately it does have to do with lending and here's why auditors don't catch this took me a while to figure that out why are auditors not catching this because accounting standards post lehman actually require that multiple financial institutions report that they own the same bond from their perspective as long as there's a different dollar of debt recorded against it than the balance sheets balance and everything's ok what that does is just inflate everybody's balance sheet but at a systemic level you have no clue how many people actually are reporting that they own the same bond or the same security or the same big coin until there's some sort of a reckoning event the financial regulators have no clue and to see f.t.c. chairman chris john carlos credit he acknowledges this this is a problem but it sounds as if the regulators and wall street and the fund managers are all taking advantage of what could stance

a bully be called flawed that is a racket by definition that is how the system works and i'll tell you most people who work on wall street are well meaning and would be shocked if they really understood it there's not a lot of incentive to get out of your swim lane i did that not a lot of folks do not also a lot of incentive to look under the hood and there's a great job. delaware the delaware chancery court who gave a speech two years ago called the block chain plunger and he talks about how this technology is finally going to clean up the capital markets and he said to the buy side these are the the fiduciaries of our pension money our four one k. money our our insurance money our mutual funds the long only by side these are the folks who should be pushing back to really clean up all these practices because as he points out the the sell side banks like like the investment banks and like the stock exchanges are making a lot of money off this they're they're getting bit off or spreads and fees off

trading assets that don't exist right now and they charge of interest on the. imaginary securities that they're lending into the marketplace and it's a huge profit center for them now you did a podcast recently with trace mayer yes and this occasion topic came up and so there is an interesting situation that they claim because it will all three up on occasion all these schemes are enabled by the fact that securities are held in street name yet they're not held in the individuals that's right you know people buy stock at schwab or whatever that stock is sold in the name of schwab and swaps part of the racket account but you can take delivery of stock if you want to but most people don't and certainly on a pension fund the f.c.c. has made it really hard frankly they don't want people to take paper stocks or to get rid of the racket and tween the regulators and include the f.c.c. wall street and fund management but with big going i can take delivery of my private key people have their private keys yet if the majority of folks only because i took the livery of their private keys would it in fact diminish if not

eradicate or get rid of this risk absolutely it would be up not your keys not your under isn't an awful if this were the way to fight but absolutely libertarian if you're a normal capitalist if you're a you know you're right rational common sense human being you know a little while back you know that they're down there enough. i got a private king salute the last two years to jump over the bridge right yeah that is that is the answer and it's interesting because to the extent that wall street is coming in i think there is a hard lesson that's going to be learned by the wall street firms who write they don't certainly holding garbage every what if they've got all these contracts based on reading up on the cation level and suddenly takes the liberty of their keys they're holding squat right and in fact it can actually bankrupt them and it's an interesting question and i wrote a letter with with four others including two big core developers to the f.c.c.

a couple of months ago warning that if you're letting core market infrastructure get in and start creating wall street products which settle on typically a t. plus two basis again something that settles in near real time you're naturally going to have those timing mismatches and if wall street. doesn't acknowledge that there's this insidious riata cation that takes place which is very very difficult to detect right the auditors can't even pick it up so so at some point there's a reckoning event there's a run on the bank or there's a hard fork that that that reveals whether. or not is also another option that the know it's going to hard for it out of wall absolutely said of wall street give them a tremendous wyoming middle finger and say we're going to hard for you to death well and to use under a sense of uplift this phrase corp aucoin wall street will ultimately end up basically though the big corners the core holders will will fork off into their own

big coin and wall street will be left with corp aucoin which will go on a version of bitcoin but that fits into their their their categories but it's not i think going to articles call ripple. like there's only one out there corp aucoin will still back briefly got about thirty seconds here back to us launching to their intentions are honorable or we have to. watch the. watch watch our back both we've gotten some answers to some of the questions they are not going in with with leverage up front they they've committed at least in the contract not to rehab off the gate they haven't answered the question yet will they really have papa kate out the back and in the warehouse which is they're going to be where they're going to be storing bitcoin in an omnibus account going to be in the details on all of these folks would be great if they were a good player i would welcome them back and they're in a great position to help us because of their relationship with the new york stock exchange being a sister company to help us actually take the entire securities industry into

a blocked chain based settlement system so i hope that and very much encourage them to learn from what they are getting into with bitcoin and quickly pivot to where we really can get improvement in capital markets which is taking all securities putting them on a block to natively and then therefore cleaning up a lot of this mess to take a look thanks for being on the cause report my honor thank you all right now going to do it for this on the cars report with me nice guys or stacy her like to thank our guests along. so if you want to read just on twitter it's kaiser report and so next time by. the way to the united states is dangerous for most of the illegal immigrants.

crossing their fingers just a simple i want to. go to us to sum this up but if many of them look for refuge in the so-called sentry sites the drifter used to share information about undocumented migrants with federal authorities the best person to ask than call mom. policy to morrow and then head up next time i get i'm in a lot of class and they want that. they can't walk to the options to stay in the country with donald trump in the white house all over for the gravels. the who could be about to do. a sit sit struggles of many couples won't. deal with the push to put impulse response both of you up of up to the hope of. saying. a few there on the cheap. and then prove all the countries

let's idea is really their right to go to his country he said if we give them everything they do to pass. this country. this is what we don't understand how we are in such contracts. but i never said to the ones that i think. a. similar symbol. if the majority of congo were not that god can we believe again with the fall of the computer with the plane. would come back to the three story you had to see. you in the best. if you really.

believe you. know. what was up and that. the cat was. paris is on high alert as it braces itself for more mass protests this some today with so-called yellow vest demonstrations expected to bring the french capital to a standstill for a fourth consecutive weekends. it's the end of an era in.