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 is 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 nine hundred forty two as when it hit the first time he bought shares and 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. the u.s. 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 an 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 the cantillon effect which we've talked about on the show many times and workers around 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 in the manufacturing in the u.s. has been exported to china. and financial eyes commodified securitized. american workers completely redundant the same as they are around the world so the wages are converging and they converted the 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 what ever a 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 what it 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. 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 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 a 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 and will 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 to another headline from an old regular gas of price report who's kind of stepped out of doing any media anymore 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 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 it has to keep expanding and fifty trillion is now the global dead officially of course as much higher than that the global the revenues market is in the quadrillions there's no countries like japan or two hundred fifty percent debt to g.d.p.

countries approaching one hundred percent the g.d.p. some countries interest on their debt is approaching one hundred 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. model the then 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 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 the happen 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 in the climate crisis so it's it's like when you see a tsunami and all that garbage is in the tsunami in a washes over this is qana 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 all timidly 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. where

did you work before you came here when you lived. in many u.s. states capital punishment is still practiced convicted prisoners can spend years waiting for execution but most of the time the victims' families they are very much experience with this but there are some people because. what they did have given up the right to split among us some are even proven innocent after years on death row and how many more exonerations is it going to take before we as a society realize that. after the previous stage of my career was over everyone wondered what i was going to do next the ball different

clubs on one hand it is logical to sit in the home fields where everything is familiar on the other i wanted a new challenge and a fresh perspective i'm used to surprising people and i saw why not if you think. i'm going to talk about football narvi or else you can think i was going to go. by the way ways of that slide here. the maturity turn the slums go in and you may never get out on top of the most of. my teenage gang rules here. one of the few moves then let's remind him of those who were who were simply but. navy will be very strong will come out. minus

a murder zero one on the news that has to be santana and melanie meant nothing new for. you and you about the mccain. welcome back to the kaiser report imax keyser it's time now to turn to richard phil 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 to have mom the show thanks for coming on richard thanks max for inviting me all right let's get right into it 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 is the really important part of what they call the berkshire trade is the trade not only from the market in terms of investors but they also trade from the regulators so the billion dollar loss. and we're talking was put on the books a decade plus ago right so it's hard for to us the berkshire trade is not a reference to berkshire hathaway berkshire hathaway it was took a position that was supposed to hedge this board for the bush or true colors. municipal securities. that dropped in value but they were supposedly hedging by

having bought a credit default swap from berkshire hathaway in fact first or hathaway reports that they lost fifty million dollars on their street is one of the interesting things is they claim to have lost money as did deutsche bank suggesting that it had to us in anything very good either right you know looking back over the of the errors you know we hear stories about banks and gave been trading in trades or head members a as a two thousand and eight crisis we had a rape of no one else 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 what why there why aren't the my our regulators so resid to reticent

about going after the stuff writer who has 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 regulator answered in his last year is that fair testified that measured data that banks have so that the ts 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 to pass. you know about the regulators if they don't

want to arm brought us to two thousand and me the biggest concern of the regulators here was contagion down want to be too big to fail banks bring down holder breasted too big to fail banks. and therefore it aside we're going to turn a blind eye to anything going on in banks yeah i think you make in some extreme 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 it all the time about trades being done and about products being launched and about securitizations in collaterals asians 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 there'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 older 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. mean is there any wonder that there's social unrest around the world if you have i mean there's 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 if you were drafted.

you took the law office. we protected the bankers from their losses 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 all the sub prime securities they put more into these securities that did not meet the representations that. the mortgages and has been covering off 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 insulin bank can

continue in the existence in a way you can continue to provide payments indefinitely the classic example of the insolvent banks of showing this today is deutsche of it. start your bank huge derivatives portfolio there's no doubt it's going to bag was on the wrong side of every single track and that there are huge losses hidden in that portfolio and as they are and saw the current government isn't going to close them down if preferred first 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 of the 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 scenario 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 well that 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 bank's 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 globally for a whole host of reasons across the world. class two. the fact is we're going to. do when you're trying to figure out how to get the g.p. more into cities to stock derivatives we're going to. laugh. with that. system with that. right this is like that are the 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 a nickel or 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 exposure to deutsche bank at a level that exceeds the capacity of any of those banks to absorb the losses when doing tickets goes on or is 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 that there's no hole so under or with the holder who wants to move these banks when they see what the risks really are there's a run that has been the lie in the secret last decade remember when the stress tests first came out. remember when they said these banks could withstand the mantle armageddon. amazingly enough there was a man for me. because quote there are years i wrote you're going to cut it off they're all the over for another side man 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 stacey or i would want to thank our guest richard field his book and it's a really a fascinating book transparency games how bankers rigged the world of finance so i catch us on twitter it's kaiser report and i stand by. please. you know we're number one murder capital in united states we all slow number one. how many. among. you so incredibly well you got to we can jump shot in order to escape. like a lot. of them. at

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