kaiser this is the kaiser report oh wow what a gorgeous setting this is we are in malibu california by me you can see the malibu pier stacey why are we here well because the yield curve has inverted that's a good reason to come out here right because things could be on fire this by the way our friend lives here this is his house and her house there this is their backyard that's the pacific ocean and these hills were on fire in two thousand and seven and i'm going to show a photo here from what it looked like so when the world is on fire max this is proving to be a safe place because of my will to break out the marshmallows. well i do want to look at this chart here treasury ten year yield curve inverse for first time since two thousand and seven and of course we all know what happened right after two

thousand and seven the gap between the three month and ten year yields whose inversion the seen by many as a reliable harbinger of recession in the u.s. vanished on friday as a surge of buying pushed along and rates sharply lower so that's a three month yield and that's a ten year yield well it also demonstrates trust between banks started to break apart and you know this was the beginning of a major credit freeze and the beginning of the global financial crisis the g. f. c. and the beginning of the massive multi-trillion dollar bailout was needed to keep the banks from having to declare insolvency and remember a time that we were all told the guiding principle is at the start that the banks are insolvent and. don't think of them as being insolvent they're illiquid dust why we need to print seventeen eighteen nineteen trillion dollars to keep them liquid stop that they're out of business it's not that there is solvent it's not that lehman brothers is bankrupt it's not. the new lehman brothers is bankrupt it's just

a short term funding gap we need to print this time off to fifty sixty trillion dollars it has been noted online that when they yield curve did invert in two thousand and seven things were quite normal for oh about four to five month and everything seemed fine nobody over reacted and then lehman brothers collapsed and then credit burst like two thousand three hundred basis points so that was the credit crunch where they said there was an absence of liquidity but of course to keep any of this global debt ponzi scheme going of course do need some wealth creation wealth production and we've relied on china and germany to do that so here's a headline out of germany which looks a little bit ominous how much manufacturing activity has not bottomed out yet in the euro zone as new export orders continue to fall manufacturing activity in

germany is falling to levels unseen says twenty twelve this is bad news for g.d.p. and business investment firms are also less capacity constrained h.s.b.c. says that's this last year as you see it's looking pretty model this picture. but do you do you actually need some growth somewhere what we've been seeing in the last couple of days is this idea where you profit less prosperity you don't need profits you don't need corporations operating profitably to create prosperity corporations can continue to operate at a loss and definitely banks can continue to make bad loans and definitely countries can continue indefinitely as long as you have central banks there ready to print money to help them roll over their debts and the central banks themselves are insolvent the federal reserve bank the european central bank the bank of england the bank of japan they are fifty sixty seventy percent levered. just much more

leverage than long term capital management ever was much more leverage than lehman brothers or birth stearns ever was that is the most leverage hedge funds that we've ever seen in the history of skullduggery but it doesn't matter because they can print and buy back their own in an infinite cycle profitless prosperity and then one day like wild. over the cliff chasing the road runner there's a moment of recognition and. there you go it's all over now who's going to come to the rescue this time obviously not the central banks because they say they're going to do negative interest rates so we'll see. negative interest rates where they just take money directly out of people's accounts beilin as it's called but you mentioned the profitless profit process profitless prosperity profitless prosperity of course we recently discussed the flow list rally. there the equity rallies don't require any new inflows it's just them eating

themselves has to share buybacks but you know the real economy as you saw the manufacturing is declining rapidly in the euro zone in particular in germany which is to produce produces every high end good in the world or. high tech product. but there's also signs of recession here in the u.s. in terms of the meat space and the sort of retail sector anybody that has to interact with a human being but the services sector has actually been doing very well and that's probably why the rest of the economy is doing so badly as our frequent guest steve kena said you know the the fire sector of finance insurance and real estate are you know suck wealth out of the economy they don't add to productivity they don't add to real wealth so finance and insurance hit it out of the ballpark no slowdown in the huge services sector revenues in the major private sector services categories there was six point. three percent in q four twenty eighteen compared to the same

quarter a year earlier to four point zero one trillion dollars not seasonally adjusted reaching for the first time four trillion dollars according to the commerce department so united states has about a twenty trillion dollar economy and that it's finance and insurance that really really did the best banking revenue is up ten percent and this is the biggie among biggies in q four revenue eight percent for both finance and insurance year over year to one point two four trillion for the year twenty eighteen revenues were seven point six percent to four point eight four trillion this amounts to a whopping twenty four percent of g.d.p. and thirty one percent of all services so the finance and health insurance sector are doing very well sire economy would that would be financed insurance and real estate this is growing and as you point out it's not productive according to steve king or michael hudson he wrote a book called killing the host and he made the model that this economy this sector of the economy the fire economy is the parasite of the economy that feeds

on everyone it's growing in size and it's killing the host this fire economy the parasitical part of the economy is is killing the host and we are the host anyone with a real job that makes real stuff and tries to make real profits that's that's that's the host hosting this parasite called jamie diamond goldman sachs you know the hedge fund industry blackstone the money management sector you know they're essentially a cancer in the cancer is growing quite rapidly and eventually the host will be killed and then the cancer will die as well but not before it kills the host city michael hudson's book killing the host we've talked over and over about the cantillon a fact and our economy is no longer you know our. titian's fiscal policy trade

policy industrial policy no longer is ever even discussed it's all monetary policy and when you do monetary policy the only way the central bank can operate and try to help the economy is to print money and the only people they can give it to are those bankers and those bankers get it for a zero percent by the time it trickles down fifteen to twenty percent on a credit card for example for the ordinary person so they get all the tainted money with tainted with fraud and leverage but again here so the real economy donald trump has all these trade wars going on and the tax cuts and the tax cuts were supposed to bring some of the industry back to being in february the us posted its biggest monthly budget deficit on record last month amid a twenty percent budget gap widened to two hundred thirty four billion in february compared with a fiscal gap of two hundred fifteen point two billion a year earlier that gap surpassed the previous monthly record of two hundred thirty one point seven billion set seven years ago according to data compiled by bloomberg

so we're spending more money then the government is earning are taking in taxes a lot of it is obviously that cutting the corporate tax rate from nearly forty percent down to twenty five percent as are twenty percent twenty one percent has helped a lot of companies but while the spending on government spending is going up the revenues are going down so it's all entitlement programs which would include. stamps welfare medicare medicaid plus the welfare of quantitative easing that goes to wall street that results in people buying houses in the hamptons or there's a there's a hamptons rental the season. is one point five million dollars that's just for renting the hamptons plus for the summer so that's in title of programs are gapping up in the spending program because why not spend money if you're being given it as their zero percent interest rate as you point out for most people. the interest

rate apartheid. concept that i've coined is that once the cantillon reaches the majority of folks their cost of borrowing is ten fifteen sixteen eighteen twenty percent payday loans as annual was six thousand percent but they're still out there buying buying buying until such time as the cancer wins the buying stops and then you have the end game february short for help push the deficit for the first five months of the government's fiscal year to five hundred forty four point two billion which is up almost forty percent in the same period the previous years this is government these are in elite acting like this is the party's almost over so if you know if the free food in the free beer and the free stuff is almost gone i having the world's reserve currency you might as well just go spend as fast as you possibly can we see that we've covered this the fact that china in particular is accumulating massive amounts of gold rushes also to other nations are accumulating

currency so they've got to do they've got to pop in a different way america we've got eight thousand tons of gold allegedly well we certainly have other people's gold but we could seize that as jim records that suggested but certainly if your debt backed reserve currency is going to go away you might as well rack up as much debt as possible and give everybody a massive two year party you know for a trump that's his thinking he's like let's have a massive party he's gone bankrupt so many times so he knows how to do this have a massive party go crazy spend up loads of money and then go bankrupt and that looks like what the policy is to me at the moment well number of bombing if people sloan's you know. banks trillions and it's kind of like you know one of those game shows where the but how i know i'm right is the money velocity is zero anyway we're going to take a break when we come back much more don't go away.

breaks it killed joan. saying the numbers mean something they've mad at us with over one trillion dollars in debt more than ten white collar crime the. eighty five percent of global wealth he longs to be rich eight point six percent of the world market goes through the senate some with four hundred to five hundred three for truck and for circa two point one billion dollars a real park but don't let the numbers over. the only number you need to remember one one is the board commit one and only whom.

is your officer. going to get up off the ground serve began to. hurt them folks on the sounds of fighting him soon to be grown man like mislead essentially of his or her. twisted away from a kind of lunge for the web in one's midst and then when it happened on she swung at the observations didn't hit him i never saw any contact between the two any kind went back to where they were so the masters back here there try again fifteen feet apart at this point and that's when the officer saw his gun and he did it on three . welcome back to the court on mark's ties are time now to turn to nomi prins author of. polish and. no central bankers really the world

is the result of stone to understand everything about everything now we welcome back take you to be back o'reilly this is working together in a way that we've been talking about for a while but this gives the whole intellectual and scholarly background to it couple of questions. inverted for the first time since two thousand and seven is a recession imminent what does this mean speak on it ok well first of all your curve inverting means that we are going to get less money for the invest in u.s. treasuries in the future than we will in the present technically that's not a good sign it doesn't mean good things for an economy that growth is actually going to slow down in the future that is the definition of a recession negative growth going forward for multiple quarters that is what the curve is saying now in two thousand and seven when this started happening it was the beginning of a credit crunch that's right portend a credit crunch in other words our banks starting to lose trust with each other

they're not lending to each other and so rates start going up in the short term and you know we're overdue for a big credit crunch were overdue for a lehman brothers like. do what your bank looks like it's about to go under. much into this what are your thoughts well first i'll do it your bank is looks like it's going to go under and in some point go under for quite some time it was it was it was interim go to the first financial crisis or the beginning of it that also was part of the rest of wall street goldman sachs morgan stanley j.p. morgan and so forth so what's happening is this bank c.e.o.'s are not trusting each other as much but it's more than it was before the last financial crisis because then they were just mucking about with subprime mortgages and sort of leveraging lending to each other money in order so that for example lehman brothers could borrow money from j.p. morgan chase and they could buy more of the toxic assets that were created from subprime mortgages and so forth so all this lending happened on top of all of this lending to consumers on the back of that and that ultimately crashed in sort of the great mass of. implosion to which the fed came in and said all right we're just

going to make money really cheap so that if you don't trust each other at least we've got this you can get money from us it was zero percent interest rate and by the way we'll continue to buy assets throughout the yield curve to five years to ten years and so forth by mortgages will buy us treasuries so that we keep rates low throughout the entire you curve and that means that banks should technically feel like if they can trust today because they've got this money coming in they can trust him or they can trust in five years and ten years and that's kind of how things went for the last decade now what we're seeing is that wasn't enough a lot of credit has been extended because rates were so low to the corporate world to governments to consumer credits at an all time high and so forth so now banks are like ok what happens is that defaults what happens if all the corporate money lent out defaults what happens with all the consumer money that's like out there and all the debt defaults we're going to get stuck holding the bag again so they go back to the fed and they say to jerome powell who raised rates four times last year like this isn't really going to be good for us we need our money to continue to be

cheap we need our money through the yield curve to continue to be cheap so powell says in january ok fine i'm not going to raise rates he also said basically last week i'm not going to raise rates i'm not going to continue to buy assets or not to continue to tighten assets sell assets throughout the rest of the year come september everything is going to be cool therefore will ultimately an inverse and that's only because there's going to be more money supply coming into the beginning of it because rates are going to stay low and to the end of it because ultimately there is going to be quantitative easing or the ending of quantitative tightening which is going to bring you down in the long end so the whole thing is basically going to be more and more flat as opposed to inverted. the radically goal but that's that's alternately how speculation is done right so the there's a credit crunch or the fear of a credit crunch at the level of the banks so they go in and say we want cheap money the fed says ok. they will then say we want cheap money going further like you did

before the fed will say ok at that point the curve is going to kind of go back from being inverted to being flat or being steeper than it's been simply because there is this artificial buyer which the fed another central right in the case at long term capital management there was a global financial crisis in the case of the subprime crisis yeah the rewarding of bad actors resulting in the two thousand and eight global financial crisis and now you're describing how they respond to these crises but that doesn't stop the contractions of the global economy and my question therefore would be the introduction of negative interest rates seems to be the go to policy now but that is right confiscation. so that's exactly what's going on they've had no other game right they they rewarded the banks who had effectively screwed up the financial system they said it was in order to fix the economy there's actually no

relationship between what happens in the real economy and how money is created and funneled from central banks through the banking system into financial assets and into the markets there's like no relationship and fact and i have this on my twitter put out last week from the fed's own data st louis fed data they're pretty good data base where i looked at the change in g.d.p. as just one measure of u.s. economic growth it's not perfect there's many things wrong about that we could do a whole show on why that's not a good indicator of what's really happening in people's pockets and generally but as a general indicator it does this it kind of like ok i'm down three percent last year but it was down percentages before it it looks kind of like a flat line wobble right now if you superimpose upon that the stock market which does this you have flat line and you have upward straight line up for it straight line is what the fed has basically done with other central banks by providing money at zero interest rate cheap money to the financial system that. where it's gone it

has not gone into the real economy like right that really hard to me is not the indicator of what's happening with the distribution of this money to very small percentage of the population and you rightly can't tell an effect as we talk about it and the continuation of this forty five degree angle in asset prices is by another definition obviously a ponzi scheme and that if this city and jim cramer didn't throw a fit the time like he did last time or the central banks don't threaten to blow up the economy if they don't get more free money the result is a ponzi scheme but my point about negative interest rates is that this is something that's never been seen before up until recently it's not unlike a feudal lord or a king going from household to household and demanding tithing or money from the population is feudalism this is beyond just bad policy this is

confiscation of wealth by entrenched central bank class that believes that they are doing god's work as lloyd blankfein has said so when people on the street. or the arab spring or occupy wall street or they're torching down buildings that they're absolutely. justified in doing so just as they were have been justified in other periods throughout history were the monarchs. disenfranchise. the population the social contract the missing of interest rates indicate that the social contract is lost your thoughts there is no social contract between central banks and people for one thing there never was that all of the myth behind the creation of this money the twenty two trillion dollars of asset purchases that the central banks have done around the world to funnel money into the system through the banks all of that even though it was said to be helping the economy in real people not outside of that financial wealth have

grown substantially further and what the regular people have had to deal with is a crumbling economy is lack of money for for social constructive process what has not gone is infrastructure spending when it's not gone it's sort of more real jobs are more real stability like none of that has happened you look around the world clinton was president he said he wants to die and come back as the bond market because the bond market has all the real power so that politicians have abdicated the rule of politicians to the financier's that's been going on for twenty thirty years again this is a situation. contract being broken and we're going to explain in economic terms of financial terms but why are these politicians particularly on the democratic side they're focused on the russia gate hoax the complete nonsense because of their overlords the defense contractors in the war mongers who pay their bills of course we understand why rachel maddow loves war and pushes the illusion

that delusion but shouldn't they be covering real news like what's happening in collusion like we've got an entrenched monarchy that's broken the social contract and people are justifiably looking for heads to roll and there are no calls for example outside of any of those institutions you don't have people marching in front of the fed or in front of the bank of england you know asking what happened and how did you create so much money for this sort of class of people that already had it. like what happened there because you don't make a decision as a central bank to to give strings attached to that money and so you know that if we're basically dividing money created out of nowhere we're not even dividing at that point tax money or you're literally what the central banks did is created money from nowhere and provide it into a financial system that basically floated to the top of that system to people who are already entrenched politically already entrenched from being like the c.e.o. jamie dimon of j.p. morgan chase and so forth lloyd blankfein who became a billionaire after his company committed goldman sachs' multiple crimes and was

fined for multiple crimes did multiple settlements which meant nothing to them or to his ultimate individual bank account and that continues to go on so going back to what you said about negative interest rates and how that that sort of continues to increase this inequality and the general frustration everyone feels looking at it and wondering how it all happened because a normal person on the street isn't thinking about your own powell in their day to day life like who is drawn pow well he's the guy who's on top of the central bank that's continuing to push forward artificial creation of money for people that already have it and therefore taking it away from people who don't have it and will never get it right so talk to people about this and nine hundred ninety nine of them when you explain to them that banks are creating free money and causing wealth and income gaps and social unrest they'll say well how do i get free money. they don't they don't care about the social contract they hear about free money they don't have m s n b c and c.n.n. pushing the fake right that doesn't exist because if they were to stop for

a second and say wait a minute actually the real enemy within is not russia it's jerome powell is janet yellin it's james cramer it's c.m. d.c. it's j.p. morgan it's jamie diamond ok then that would be a problem because then the social contract to be so obviously broken at this point they do not have the number of police cops and military to contain the i. rage at that point yeah i think ultimately if you look at all of those people an institution you mentioned that's real that's day to day stuff going on going back to december jerome powell talking with jamie diamond that not being in the news why wasn't that and why didn't the news the sort of mainstream media talk about how we changed in january changed how all the sudden we're going to take money away from the banking system from the markets and now we're going to give it back we're going to make it more expensive to them now we're going to make it cheaper why didn't

that story get covered it's a very good question and if it did get covered you would have much more economic frustration which ultimately is what's behind a lot of people want change they would they know there's something economically unfair and they don't know where to point their fingers and is a problem that publicly we are talking about rachel maddow is a useful idiot for defense contractors thank you so much because reporting only friends thank you and that's going to do it for this edition of cars a report with me max kaiser and stacey over like this like our guest nomi prins to . try to catch us on twitter it's time to report in til next time. seemed wrong. but old just don't hold. any.

equals betrayal. when so many find themselves worlds apart and we choose to look for common ground. the 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 only implement for inside venezuela things are different we're going to announce sanctions against. the venezuela so if you. have a supplement to. get out of that. data to. the people of the moment the focus of the who story isn't new makes him cold in henry kissinger to tell on. social system could take hold and

therefore the policy would be to make. the economy scream so wants and making the economy of venezuela screed. the smaller. deals defeated leaving the.

field. if. you leave the south american country. in a fresh. great .