we won't go into the. station that's a tedious story to cover as well so let's talk about the flow lis rally that is the title of this episode and first i want to look at a head was actually a tweet from matthew dowd who's in the space and he says so many people surprised that rich people have been buying credentials wait until they realize how our money works ignorance is bliss' until it isn't of course you and i here in price report have been talking about this and it's a very interesting story it's much more fascinating than most other stories and that's a cantillon effect because remember that you know the masters of our financial universe whether they're in the treasury department's the presidential palace or the federal reserve white tower or the ivory tower you know they will say that they're printing money exclusively for the top you know point one percent the bankers that is you know victimless crime this nothing bad that happens then but in

fact the control and in fact happens and we see the likes of the yellow vest movement we see the consequences of the wealth and income gap and that is what this guy madela saying is when people are shocked to discover that the wealthy are buying their way into these universities the same thing is happening all around you is the wealthy are wealthy partly especially now and that stays aid is because of the assets that the federal reserve is pumping up well the cost of bribing your way into a college is something like five hundred thousand dollars now put that into context the central bank says that they reached they print money is to stimulate inflation that there's not enough aggregate demand and the prices aren't moving and yet the price of bribing your way into college at five hundred thousand dollars a clip surely shows that there is an inflation the cost of health care skyrocketing costs of education even without driving away in is skyrocketing there's purchasing . power collapse which is the same thing as inflation and the central bank but

that's sort of intellectual cover that they say that they're doing they're printing the money to stimulate aggregate demand that's what they will write about the wall street journal what they're doing however is they are using the central banks as a transfer mechanism to take billions of dollars from savers and workers and put it into the pockets of charlatans crocks speculators spin hollywood celebrities except trying to bribe their way in diving league i mean that's that's what the central banks function is at this moment as a transfer mechanism and then the intellectual mean that they put out there to try to cover this crime is to say that they're trying to stimulate aggregate demand it's yes and it's also we have this notion of a meritocracy not only in this educational spacy rise to the top only because you weren't it but a lot of people think that they are somehow uniquely endowed with great business

intelligence if you see that in the comments sections on anything having to do with housing bubbles that they think that the fact that somebody one of those public housing that margaret thatcher sold off to the speculators in the eighty's right now those prices on those houses are going up eighty thousand dollars a year and they think that they're uniquely endowed that they somehow have achieved this and that they are uniquely qualified to receive this wealth free from the rest of the economy it's the money printing that's causing these housing bubbles in the cities and in the stock markets and so i do think you do see this polarization that's part of the polarization there are many reasons for the polarization but one of the reasons is this and i think if you look around the world you do see a conflict emerging between that the the winners of the cities all the winners in said. cisco los angeles new york cleveland chicago any city you know they voted for

hillary clinton and she called them the winners the losers outside the money printing the last to get all that new money they're the losers and they're angry and you know the winners control the media so they'll say well those people are races. and we should basically lock them up and do platform them but at the end of the day maybe if we stop printing money and giving free money to just the people who live in cities and actually just either stop printing money or give money equally that everybody well it ben bernanke he had to deal with the guy who heads up citadel capital ben bernanke he gave this guy childer million dollars to buy an apartment in new york essentially right and he took the money and he bought this apartment as the most ever paid for an apartment and then he turned around and hired ben bernanke he to work for citadel capital once he left the federal reserve that's. right i mean that now he's leading the charge because new

york city because he doesn't live there in new york city he lives in chicago but now they want to start taxing people. basically property tax on people who don't live their wealth tax some people who don't actually live there in new york city so don't pay state or city taxes so his property he bought for two injured fifty million dollars he's like he's five he's leading the charge against it but you know despite all this money printing and stock prices going up higher and higher and higher and higher here's a tweet from tracy alloway another analyst warning of the flow lis rally citi group joins goldman and j.p. morgan and warning the equities rally hasn't been matched by inflows into equity funds buybacks not investor inflows now drive the us market and you know for me if i look at this it goes exactly with that can tell the fact in the central banks printing money only allowed to go to a certain segment of the population is we have a flow list's economy that money is not. circulating we have you know the.

circulation the velocity of money is that all time lows like money is not leaving their hands that can griffin so the world are just buying two hundred fifty million dollars properties and he'll pay five hundred million for the same property next year as long as it keeps going up and has a safe haven for it it's not going to flow into the economy right the money philosophy is dead right so the money velocity would measure of how money is being alone doubt from bank to bank to bank to bank to bank which is a measure of economic health is dead and if the money printing continues to increase so instead of asking the question why is the money not getting into the economy they're printing more of it doubling down on that mistake because they don't want to and they don't want to look at why the money is like getting to their friends that won't we that's what we're seeing in the friends god they buy a two hundred fifty million dollars apartment or they spend two hundred million dollars or four hundred million dollars on

a van. like was recently purchased i think you know the money is not flowing down to the economy because also you know as a banker that you're the ones that get the free money so are you going to lend to joe bag of donuts out in the street who's you know for a fact is never going to get the free money so you're going to lend to one of your friends i was going to be guaranteed to be able to pay you back that's where the money is staying circulating in the top of the economy because the way it's set up it's never going to flow to the bottom the era of cheap money shows no one knows how monetary policy works monetary policy is supposed to work like this cut interest rates and you encourage businesses and households to borrow and vest and spend is not really playing out that way and the cheap money era now into its second decade and most of the developed world and third decade in japan there's been plenty of borrowing but it's been governments doing it of course all the free money is going to the top. again it's not the same old economy they're not going to lend to anybody out there they're just going to keep it to themselves and lend to

buy shares back and lend to buy more property. not all around the world but in major cities where they know more of the free money flows into so if i'm a farmer and i need to irrigate my fields and i have a big tanker full of water and the tanker shows up and there irrigating my field into the irrigation system but none of the water is getting into the feel it's for some reason stuck at the level of the tanker and then i go over and i see that the guy who brought the tanker over to irrigate my field is selling the water to a banker on wall street who then is selling it to another farmer somewhere claiming that he's going to irrigate their field but somehow it never gets irrigated either it's in another tanker and then that tanker full of water is sold to yet another central bank or somewhere else in the world and they all work together and they all claim that there's no growth in the fields to the fields or dying we don't understand liquidity of the money is not getting into the economy because they're

stealing it and that is so fricken obvious how i mean they all see right she's smart she understands now a little bit how things work if she drills down into this she will find a best of vipers like she's never ever imagined before do it do it now oh well it's beyond that it's more like idiocracy where it's not even water they're pumping and it's just kool-aid and even if it it's because it's toxic fake that it's not it's nothingness and. that's why they want to allow it to go into the economy because the population basically knows it's all fake money and this article here points out that part of the reason is we have parliaments we have congress we have the senate and people the voters all those people you see walking around across the entire us they vote for those people to represent them but what the bankers have

achieved is they have the independence of the central bank they are independent. all you voters out there they don't abide by politicians they don't listen to politicians they're independent they just work for us they just work for this handful of guys mostly that work on wall street and that's who they work for and we have somehow allowed this situation where we say oh look we're so in all of them wow look how rich warren buffett he says that keeps making tens of billions a year he's like magically he's brilliant and one day that kool-aid will trickle down to us but the fact is because the independent central bank gives these people money so basically this article in bloomberg is suggesting that perhaps fiscal policy we set fiscal policy even in the constitution it says only that you know the federal government can the treasury can print money that that if a state chooses to it has to be in gold or silver because they can't bankrupt the federal government but now we have

a situation whereby bankers can print as much money as they want and it doesn't have to be backed by anything and they thus bankrupt the central government our federal government us the taxpayers are on the hook for it not look good point you know the banks can when they make a loan they print that money that's not from reserves they're not lending money out that's in the bank to a business that's come from deposits that they have no reserves they have negative reserves they just loan of when they loan out for a mortgage or a business they print money into existence that's why the debt goes to twenty two trillion dollars over time and you're right they are did steal savings alone trick old the old f.d.i.c trick is like you know the government's going to bail you out no matter how much of a serial fraudster you are and the federal government always belle's them out because who makes the regulations the same bankers yes but again that's why it's in the constitution the constitution mentions gold and silver as money only for the state if the state wants to trade with france and go into debt it must be backed by

their currency must be backed by gold and. silver so they don't bankrupt their citizens or residents of the other states of the united states so here we have a situation exactly what was warned about in the constitution and we have these people allowed to rack up as much debt as possible and we are on the hook for it that's. going to take a break when we come back much more. the reffing up of the muller investigation may have cleared the american president of treason and collusion but it has not got rid of critics determination to get rid of him is the american system capable of anything but settling ideological scores.

on the phone line a small fight will make an impediment in the moment one of them from appointments to no fems on one side of the fence a. lot of. that they had nothing. she was even. more serious. john bombard from the sun on my book to go to the british course that's enough for them. i mean they got.

to. take. welcome back to the kaiser report i'm ask eyes are time now to go doused her macleod of gold money dot com as allah's full disclosure i have an investment in gold money and you know allister we turn to you for the macro picture the big picture the big geo political macro view of things welcome back it's very nice feedback thanks next aready let's start with mary draggy he recently said that negative interest rates in europe have quote worked quite well your response well

i don't think so cool i mean a tax on those it's just doesn't make any sense i think basically he's got a problem unless it is he's got no other country just printing money. trying to make money look as cheap as possible to get into negative interest rates trying to do everything to stimulate the economy and it doesn't work because all that happens is the money just ends up in the financial sector it ends up going to finance government debt it doesn't do anything to the underlying economy and of course meanwhile the you know the euro as in you wound up being diluted the upside so there's a transfer wealth if you like from the productive sector to the government and to lesser extent the financial sector right let's look at the verbiage for a second because these words are misused some would argue so when you say the argument for these policies are to quote stimulate the economy that's really

a misnomer isn't it because they are not stimulating the economy in the sense that they're making credit available to small to medium enterprises right. you know absolutely right i mean i used to do this in a keynesian sense that show i think you and i would agree is actually nonsense how could you stimulation economy by transferring wealth from ordinary people to the government i mean it just doesn't happen if there is a contradiction. this is the contradiction which the e.c.b. is having having to live with i mean i'm sure if you spoke to individual members of the e.c.b. you'll find that they're shaking their head saying well you know what else could we do this is terrible and nothing we do works and of course we realize what's going on but you know our mandate is that we have got to continue to print money to keep things go right and this stuck in this ridiculous situation right now out there

we've been talking about this for a few years now people say well when is this going to happen and correct me if i'm wrong but isn't this already happening when we say protests like the yellow vests in france burning banks down attacking food cats luxury restaurants attacking and burning the bank of france we see elvis asked just a pairing in london for the first time we sing this global answer action against banker occupation so isn't the result of this faulty monetary policy happening right now out there what i think it is the problem is that the people who are protesting don't actually understand money they don't understand why why and how they are being dropped by their governments and in france you got the extra program analysis that everybody is left wing profit is a deficit worse they just go no way to go intellectually in terms of understanding the condition that their government has put them it and asked for yellow vests i

think stacy very kindly treated some think. that there's a best protest in london but i think it's more to do with abortion not all rusted i mean these are crazies basically i sympathize with them because. nobody likes to be rocked but you know at least try and understand what is going on that's my message to the yellow vests or right and to your point there for a second they yell of vast and other protest movements around the world might not actually understand the connection to zero monetary policy and for that reason because they are a bit intellectually misinformed they resort to things like socialism which i very easy to explain but never ever works now i want to talk about interest rates for a second air so investors are betting that rate cuts are in the cards for twenty nineteen but the us federal reserve bank is also indicated that they may in fact join the negative interest rate bandwagon oh my god out there thought. well we've

had a lot of this stuff recently i mean they've been pushing m.m.t. as well i mean again the federal no hope i mean they started trying to reduce their balance sheet. really anticipating the day when they might need to expand it again and they didn't get very far with that before suddenly they had to put everything just you know to to hope that the problem that we face globally is one of cycles you've got the credit cycle which has no peaks i think that is becoming clear as we have seen that. the global economy is definitely slowed down but on top of that you've got to love the fact that his trade protectionists the last time we had a combination of trade protectionism and the credit cycle assets peak coming off a speaker was in one thousand nine hundred twenty nine and in october nine hundred twenty nine they passed the smoot hawley terry facts this is congress on the

physical october in the month of october when traders in the market could see what was happening the market fell thirty four percent and this led us into obviously the slump i mean between one nine hundred twenty nine and one nine hundred thirty two the dow lost. about ninety percent of its value i mean we face exactly the same combination today not obviously we hope that it doesn't so. if you like show that nine hundred ninety thirty two is a president what's going on today is getting increasingly difficult to argue that it you know that it is not a precedent it looks to me as if this combination of cycles could be extremely damaging to the global economy and of course the idea that you can manage your way out of the situation by fiddling around with interest rates m.m.t. negative rates whatever it might be is is a complete fantasy right let's talk about cycles for a second there is of course the business cycle and that would indicate that when

prices get too high and predicates too easy that there's a contraction and you have a downturn in a recession it's very healthy in a capitalist economy but we haven't had those in many years now because we have activist central banks that print money no matter what our keynesianism if you well and now my point is this that it makes sense there at an inflection point in a cycle and then you read the following china now saying they're going to get into the quantitative easing game so ok here's china now coming in going to print lots of money to keep the ponzi scheme going nomi prins under excellent book collusion lays out the exact way all the central banks around the world colu with each other there's never ever been nothing anything but a lot of free money for the last thirty years isn't this just going to prolong this extension of the bubble if china gets into the quantitative easing game alister well it's already prone to a bubble i say cool so we need to shore

a distinction between what's going on in china or and what's going on in the rest of the world if you look at china as a relatively new economy government debt to g.d.p. is around about forty percent it's welfare commitments are not all that. great they have some but it's not that great is controllable so in the kit vent of a general crisis china actually is more strong financially than the welfare dependent states such as america u.k.'s italy france and all the rest of it the problem that america has if i can use it as a talisman for the rest of us because we're sad to say position is that america has not got it debt to g.d.p. of over one hundred percent on top of that she has got. a budget deficit at the top of what you call the business cycle i call it a credit cycle. at a time when according to keynesian miss all of europe as it were. the government

deficit should actually be a separate because of tax revenue and all the rest of it we've got a problem now that you've got a reversal going on in global trade flows so that the foreigners are no longer going to be financing the u.s. trade deficit what this means is that last year in other words fiscal two thousand and eighteen i think domestic investors have to find something like one hundred eighty billion dollars to finance the balance of the trade deficit this are the budget deficit which is not covered by capital recycling from the trade deficit now that's going into reverse if you look at the tick figures for the last two months around about two hundred fifty seven billion dollars has left the dollar america if you like now most of that mystically is in the private sector with only about twenty billion in the public sector by public sector i mean you know governments and sounds so forth but you can see that if that continues not only are going to

have to find the money for about one and a half trillion dollars of extra. government debt but you know go you know you got the foreigners buying it and we're still the foreigners the selling it so you can see. that if you look at the situation in china not good but it's not nearly as bad as it is in america a note also benches to suggest that we have the same problems here and they have the same problems in europe right they just talk about the budget deficit first second in the u.s. just the interest on that debt even at this low low interest rate environment is approaching half a trillion dollars so that's obviously not sustainable and when you can't even pay the interest on your debt that's usually when you end up in a hyper inflationary currency meltdown but to your point about china so if you're saying that in the ok corral of a weak economies and they enter the global economy shoot out that the one standing

is china it's not strong but it's what it is relative to the other other countries around the world outer yes i believe that is the case not the chinese can make some horrendous mistake so you know let's just put that to one side. but china actually has a plan which show i think computer going for a while and the interesting thing is that while. as you point out the budget deficits lead to huge great interest costs in america and you're going to get rising bond yields by the way as well as a result of all. the oncoming recession straight slump and i think it will be a slump. the situation in china is somewhat different because what they can do they have got enough gold to put themselves on the gold standard and what that means is that if they can do that successfully and this is not necessarily a straightforward. thing to do but they have got the means to do it because they don't have the debt problems and the government level they don't have the welfare

commitments that the americans that we have and so on and so forth they could actually put their currency on a gold standard now what that means is that the interest rates that they have to pay on their forty percent of g.d.p. which is. yes it would be types of the goat interest rate rather than. see which is collapsing interest rates and that's going to be a huge great program i think it and it in the coming year or two right that's incredible you know the fact is that even though china only has maybe less than half of the gold of the u.s. they have a fraction a tiny fraction of the debt so yeah i guess using those numbers you could come up with the idea of china going on a gold standard for a readily alright oil ouster macleod thanks so much for your time once again and being ami kaiser report it's my pleasure alrighty and that is going to do it for

this edition of the kaiser report with. max kaiser and stacy herbert if you want to catch us on twitter it's kaiser report in full next time by all. sounds it. was the way from. the office we did a kind of lunch for the web in one smiths and it would have been done. and i've.

never seen any contact with. any kind of went back to where they were so the answers back here there again fifteen feet apart at this point. three. zero. it will make this manufacture come sentenced to the public wealth. when the room in clubs is protect themselves. with the financial merry go round certainly the one percent. we can all middle the room signal.

is a tense situation in venezuela is still all over the news the problem in venezuela is not that socialism has been poorly implemented but that socialism has been faced only implement from the inside venezuela things look different we're going to announce sanctions against petroleum to venezuela associate. famously of a supplement to. the tempest and that political battle scene on the moon yet to come at the moment the focus of the who story isn't new makes him cold in henry kissinger to tell him that it would not be tolerated that in latin america an alternative economic and social system could take hold and therefore the policy would be to make. the chilean economy scream so wants to make the economy of venezuela screed.

israeli tanks lined up along the gaza border after jets attacked the palestinian territory in response to rocket fire we're looking at live pictures also. it comes as the u.s. officially recognizes israeli sovereignty over the golan heights disputed area on the border with syria washington's move was immediately condemned by the un the u. and the arab league. despite no collusion found between donald trump and russia by the investigation media hysteria isn't dying down with that let's now blaming trump for making them suspicious in the first place. i would like to congratulate the house for taking control of the government's approach has been an abject failure.