that happened in one nine hundred seventy one if u.s. wants to win trade war got to fix the u.s. dollar system and luke roman provides a link to this chart from the washington post the economic policy institute and it shows that when companies put the brakes on worker pay growth and productivity in our early compensation since one nine hundred forty eight you see the yellow line is productivity and that has increased by two hundred forty six percent since one nine hundred forty eight and yet compensation split off their. own to seventy one when the breaking point happened and there's now a ninety percent divergence between the two what happened. i think we all know that in august of one nine hundred seventy one richard nixon took the united states off the gold standard because it didn't want to pay the united kingdom three hundred million u.s. dollars worth of gold which is them backed by thirty five dollars thirty five dollars per ounce of gold that the united kingdom wanted for their trade deficit

it's also important to note that we've been talking about warren buffett is annual letter and all his earnings reports you know he's he's down big time twenty five billion in the last year it's also important to note that he says he keeps on pointing to one thousand nine hundred two as when he hit the first time he bought shares in that how great it is and he's done wonderful and why can't we all do wonderful like i have dodd but you notice like when he said mohnish in people to invest in u.s. companies the average worker has less and less they're getting less and less of the cost of all those companies he's invested and we're right in seventy one is the gold standard is. us is no longer a gold backer scene and anyway right becomes purely a money currency and the world becomes financial in a way that saudi arabia is opec defied other words you know in opec they don't need workers they don't need taxes they just pump oil when ever they need to increase the wealth of the princes so in the u.s.

after nine hundred seventy one workers were not required it was just a matter of printing more money so you had the rise of the financier's like warren buffett who were at the first in line to get the printed money they can tell in effect which we've talked about on the show many times and workers are on needed workers are less needed now than they've ever been because the folks who print the money when they want more money they just print more money they don't rely on workers to go and produce stuff that they have to go on the make a profit on the stuff they sell you don't see that in the car industry anymore it's become financial you don't see that the property market anymore it's been a financial as you don't see it in manufacturing in the u.s. has been exported to china. and financial eyes commodified securitized. american as a workers completely redundant the same as they are around the world so the wages are converging and they converted to wages in china so china wages are roughly i think four or five thousand dollars a year this is where the american wages are headed and there is no kind

of resistance to this because there is no understanding even of how the economy works much less putting forward a policy that would combat the current mel architect situation i might add also a very crucial ingredient to this and why this is able to happen is the element of transparency or the lack of it around the world which every country name any single country on earth and they will all know what an ounce of gold is worth and they would have all known certainly back in one thousand nine hundred one ounce of gold was worth so the average worker working in any factory across america or anywhere else in the world for that matter would know what their labor was worth in gold they would already be doing the conversion in their head of how much gold how much gold would it take to buy a house how much it was my wage taking to buy

a house or buy that gold so they could always know now we have. a pure feel so nobody knows actually what the inflation is the central bank and the governments who they publish the inflation reports they always leave out anything that is moving up too fast in price they just do have donek adjustments if the price to stick is going up they assume you buy you know you know peace a ham instead you know whatever price is going up they just say well that price is not going up and that person is going to eat that instead of the meat so therefore it's easy for those who are getting the free cash from the fed those closest to the central bank they know how much actually inflation really is they know how to protect themselves they're the ones able to run off and basically. deceive you the worker there because of course they want to get away with paying you as little as possible so that's the result of of the ignorance caused by the

lack of transparency in our monetary system right but what people do know is their monthly credit card debt which they pay off the minimum and they keep expanding it through credit cards or student loan auto loans mortgage loans so that instead of thinking in terms of well my net worth is this amount per month or i have such and such you know number of gold ounces they know that ok i own my credit card debt of thirty six hundred dollars this month if i make this thirty six hundred dollars a sponsor i will be allowed to live another month they won't be forced off the grid i won't be forced to live in my car i have no savings my job makes it possible for me to keep the minimum credit card debt paid and i'm just one one paycheck away from being homeless so this is not unlike people who would live on in a sleigh you know this is

a slave mentality that people offering you the debt are the people that own the socially the company store where you do your shopping in the give you a great deal on some essential oils and they'll give you a great deal on things to keep you sick and unhealthy like high fructose corn syrup in the case of coca-cola thank you warren buffet but you won't be encouraged at all to have financial sovereignty individual sovereignty freedom in any sense of the word or dignity so remember productivity growth is you the worker how much you are producing per hour work and that is going up every year relentlessly that is also kind of matching the decline in yields the whole way but you're not capturing all the wealth you are creating you're getting paid less and less actually per hour whether or not on paper you know there. giving you a two percent rise every year and i can automatic two percent increase in your pay but in fact all the inflation and the wealth you're producing is actually

increasing every year so i want to turn stepped out of doing any media any more but he has written this recent piece which is probably some bloomberg essential banks are the only game in town we've lost relying on monetary policy to prop up asset prices and smooth out global volatility is a recipe for disaster and he knows that just since december twenty eighth seen so two months ago central banks have collectively injected as much as five hundred billion dollars of liquidity to stabilize economic conditions the u.s. federal reserve has put interest rate increases on hold and is contemplating a halt to its balance sheet reduction plan other central banks have taken similar actions fuelling and a new phase of that quote everything bubble as markets careen from december's indiscriminate selling to january's indiscriminate buying right this idea of quantitative tightening as a hoax there was no tightening on a global basis it's always been expanding and it has to always expand digital money

not cash like gold but digital digital ponzi scheme that has to keep expanding and fifty trillion is now the global dead officially of course it's much higher than that the global the revenues market is in the quadrillions there's no countries like japan are two hundred fifty percent debt to g.d.p. countries approaching one hundred percent of g.d.p. some countries interest on their debt is approaching on a percent of their g.d.p. so there is no there is. reconciliation of the debt bomb and there is no purchasing power to be gained by any worker whose productivity is going up because they're being paid less on paper looks like oh my productivity is going up but because you're doing more output poor and less money but of course than that if you that's. your model than than prisons are the most productive work environment you could possibly have enough of course the prison population is exploding because it's very productive according to the overlords so das's also

responding to the fed saying that q.e. will essentially be permanent now and it's not just for emergency situations and he says that in fact lowering the costs of money and increasing liquidity may reduce rather than boost economic activity lower costs of capital encourage automation displacing workers and reducing bargaining power for higher wages the problem is compounded when low interest rates encourage investors to look for to shares for income that forces companies to increase dividends or buy back stock frequently by reducing their workforce to improve earnings and cash flow and we saw that now kind of that's been the game for the last since the financial crisis is just buy back more shares buy back marsh areas and impose austerity but what we've seen instead is you know just the hollowing out of all these companies and that's you know this is what the fed is meeting with there's this is why they're saying we're going to do permanent q.e. is because now we have zombie people literally addicted to opioids most of the time

all these former workers and then we have zombie corporations with backed by zombie debt. and where do we go from here but permanent q e. right so it's like it's like climate change for the economy the climate keeps forcing more and more animals and life species onto ever smaller plots of land because it's becoming . happy to be all parts of the globe are shrinking and similarly in the financial markets those areas that are able to let's say jack coerced dividend through to keep the ponzi scheme going ours are shrinking the these companies are losing their aaa ratings or double a ratings or single a ratings they're all becoming junk to go with the agricultural and food crisis and the climate crisis so it's it's like when you see a tsunami and all that garbage is in the tsunami and washes over this is kind of

like the global quantitative easing market it's just a tsunami of garbage. and i'm going to read this last quote from das because it's quite important in this arena of trust the currency like bitcoin and gold with no counterparty risk an over reliance on central banks or bates the crisis of trust the emphasis shifts from elected governments to unelected finance officials reducing accountability and undermining democratic forces that allows other economic actors to avoid dealing with the real issues it creates the impression that the central banks favor banks and the financial system rather than the real economy so we're there is an absence of transparency we only see that there's four trillion dollars in debt on the balance sheet of the fed we don't know who that's been shifted to what it is how bad there how toxic that debt is who also mostly is the guarantor of that bad debt i.e. the taxpayer who is already burdened with all the costs of propping up the

financial system oh right and they threaten financial collapse if they don't get more money printing so they there's an easy extortion problem well we've got to take a break but when we come back much more coming your way don't go away. you know we're number one and. you know me. we also number one. to dick. armey also so much you shall before. he will you so incredibly well you got to we can jump shot in order to escape.

like along in a month alone. yes a month of sundays so this is somebody woke up to a fit is at the root for. what i see images and hear things what their doors. are see people who are afraid not to see these young with some women anyways purposes and i see those i see really scared. scared to be losing. it all they have a hole or that is the color of their skin that's all they have going for themselves to their white skin. what do you do before you came here where did you work before you came here when you lived well death row in many us states capital punishment is still practiced convicted prisoners can spend years waiting for execution and most of the time the victims' families they are very much in

favor the death penalty there are some people that because of what they did have given up the right to live among us somebody even proven innocent off two years on death row and how many more exonerations is it going to take before we as a society realize that this is not working and we actually do something about it. to. keep me. out cause i'm not. there now come.

welcome back to the kaiser report imax keyser it's time now to turn to richard failed he's the author of transparency games how bankers rig the world of finance i've been following richard on twitter for quite some time he's very knowledgeable great them on the show thanks for coming on richard thanks max for inviting me all right let's get right into let's talk about deutsche bank they continue to make annual losses but they recently announced they lost one point six billion on a bond trade what's going on is there more to this story maybe that they're hiding richard clearly they are hiding more which the really important part of what they call the berkshire trade is the good the trade not only from the market in terms of investors but they also hid the trade from the regulators so

that the bank regulators were completely blind to the existence of this one point six billion dollar loss. and we're talking that was put on the books a decade plus ago right so it's referred to as the berkshire trade is not a reference to berkshire hathaway berkshire hathaway it was took a position there was supposed to hedge this board for the bush or tree tree that was put out by torture bank consisted of seven billion dollars worth of municipal securities that dropped in value but they were supposedly hedging by having bought a credit default swap from berkshire hathaway in fact bursar hathaway reports that they lost fifty million dollars on this trade is one of the interesting things is they have claimed to have lost money as did deutsche bank suggesting that it had to wasn't anything very good either. right you know looking back over the the heiress

you know we hear stories about banks and gave them trading in the trades or head members of the as a two thousand and eight crisis we have a rape of one l. five scam from lehman brothers where they were hiding all kinds of stuff from from regulators and this is just so systemic and demick in the banking industry why why why doesn't this stuff get caught by regulators more often it seems as though. almost every single day we hear about a bank committing a major fraud want why their why aren't the my our regulators so resid to reticent about going after the stuff richard. two reasons for their residence the first of which is states literally do not have the information they need to be able to find this in terms of a transactional bounce you remember the london whale with b.p. morgan yeah they hid what was

a six point two billion dollar loss from the regulators and the regulators literally testified they had no idea that this position even existed ben bernanke in his last year is that chair testified that the regulators do not have all of the exposure data that banks have so that the ts the regulators this is cannot run the stress tests themselves as a result the reason why so we're down what the banks tell them is the result of the stress test for talk about not being able to find anything. create tests that you can't. design for the banks the past you know they buy the regulators just they don't want to find these frauds if you go back to two thousand the biggest concern that the regulators had was contagion is take down one of these two because they

all banks it would bring down all of the rest of the too big to fail banks. and therefore excited we're going to turn a blind eye to anything going on it could be our banks yeah i think you're making some instant points there let's let's unpack that a little bit so in other words there's a disincentive for regulators to recognize fraud any anybody with who's had any experience at all of finance and they read the financial times you can read all the time about trades being done and about products being launched and about securitizations and collaterals ations that are being done by various banks and he can do the simple arithmetic by reading the financial times and you can say oh that doesn't add up there's a billion missing that's five billion missing it doesn't really require a huge amount of ackman to spot fraud but your point is that the regulators are disincentive eyes to prosecute fraud in part because of what if you if we recall

what eric holder said when he was serving under barack obama that the banks are essentially above the law if we were to prosecute banks for criminality we would threaten our economy i mean that's you know that that's pretty. i mean is there any wonder that there is social unrest around the world if you have i mean the liaison or the occupy wall street people if the attorney general says the law doesn't apply to banks stealing billions how can we expect people not to be upset by that richard you are exactly right the response to the financial crisis could not have been worse the first thing they did would be change the story contrast used to be. that. you took the office we protected the bankers from the wasps. all of this gives rise to the response to

the financial crisis was keep the banks in business same them at all costs what this also meant was we can't prosecute the bankers for fraud and the classic place they committed fraud was in almost all crime securities they put more and is into these securities that did not meet the representations that aig bought the mortgages and the underwriting standards that were supposed to have been applied. the federal reserve and the rest of the government in terms of financial regulators has been covering up for the banks for the last decade because he'd understand that if they ever disclose what's really going on they have to close all those banks what they lied to the american people about and they did this in europe to where they lied about the fact that they don't have to close the banks immediately

. because of the past with insurance and the fed is the lender of last resort and in so often bank can continue in the existence in what you can continue to provide payments indefinitely the classic example of the insolvent banks of showing this today is deutsche of it. georgia bank f.e.c. huge derivatives portfolio there's no doubt it's going to bag with on the wrong side of every single track and that there are huge losses hidden in that portfolio and as they are and saw that the current government isn't going to close them down if prefer to mislead investors about that bank. so you have something of a what we might call the red queen syndrome where to paper over losses the government the german government is allowing deutsche bank to essentially create

more losses and to try to paper over the previous losses we've seen this type of thing with barings bank before a collapse long term capital management before it collapsed most banks go through the same kind of pre-collapse an area where they have gaping holes in their balance sheet they don't want to disclose they take greater risk that gap gets losses get even bigger but now with these too big to fail banks in particular in particular with deutsche bank it's a bank that's so welded into the european economy and the german economy that like the two thousand a crisis like when eric holder gave the green light to fraud when eric holder said banks are above the law when eric holder error aided and abetted massive fraud in america the banks derivatives book has become a global liability and it's all dependent on getting extraordinarily cheap borrowings from central banks like the bank of japan richard if interest rates are

to go up even ten or twenty or thirty basis points the policy scheme that is deutsche bank collapses and i correct. yes and if they can't raise interest rates go. to reasons across the world. class to. the fact is we're going to. always do when you're trying to figure out how to get the g.p. more into cities to stock as we do so that kind of quaff. with that. system with that. right this is i say that her that sounds like a very tall order a given the overlapping books of these banks you know they all have counterparty risk with each other and we saw in two thousand and eight that when one of them becomes insolvent like a layman or a bear stearns the global banking system ceases to exist because of

a credit freeze the short term overnight rates between banks go up five six seven percent and you have essentially nucular winter in the banking sector requiring multi-trillion dollar a bail out facility from the taxpayer in america and around the world so yeah i can understand why they want deutsche bank to be in a silo and they want to just kind of implode and it's on its own and not have a contagion but that's an impossibility richard there's no such thing as a contagion you know my right there's no such thing as a sideshow and you have to understand the basis if you can morgan understand that as do the bakers that barclays cetera so they're going to continue to keep their exposures to deutsche bank at a level that exceeds the capacity of any of those banks to absorb the losses when doing tickets goes on just because this was. just the fact

fundamentally transparency underlies the entire system that a system is long as we have banks they can continue to take outsized bets on the taxpayers' dollars as soon as we bring transparency to their exposures what happens is the banks have to cut back and the reason they have to cut back is there's no hole so under or with the holder who wants to moon these banks when they see what the risks really are there's a run that has been the law in the secret last decade remember when the stress test first came out. remember when they said these banks could withstand the mantle armageddon. amazingly enough bacon was banned from their farm again. because quote of yours i wrote you're going to cut off their whole day over for another sidemen but i want to say goodbye for now thanks for being on for having me

all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert want to thank our guest richard field his book and it's a really a fascinating book transparency games out bankers rake the world of finance if i catch us on twitter it's kaiser report the next time. you know we're number one movie capital in united states we all slow number one her way to death. i mean you shop before. which for most. people you selling crack or you got

a wicked jump shot in order to exclaim. like a latina amongst all the women. so this is. at the rules for. after the previous stage of my career was over everyone wondered what i was going to do next. different clubs on one hand it is logical to sort of go from fields where everything is familiar on the other i wanted a new challenge and the fresh perspective i'm used to surprising. i'm going to talk about football not the or else you can think i was going to go.

by the way ways of the flying here. all my dough for sixteen months on a city. just far under former isis fighters and boarding a philippine naval ship. but not for me ned. he lives. just aren't abdulla still don't know what's waiting for them. because he will. be near family electrical. stuff.

up make it out of. them the way. the united states sees all options remain on the table when it comes to venice where they've also slapped the crisis hit country with more sanctions for not allowing u.s. aid convoys to enter. washington threatens to close chinese language and cultural centers across the u.s. well as forced teachers to register as foreign agents also ahead on the program this hour. tens of thousands of students skipped school in france and germany to.