nothing but it's a bit of a hologram a currency a hologram that the central banks according to nomi prins interaction but collusion all the central banks collude to keep this floating policies game going which is different than what we used to imagine the global economy work and more countries were competing for export prowess and then trade would settle ultimately with the gold standard that was the way things were for a while then we went into this now all fear of money backed by nothing now we're entering a period where that ponzi scheme can no longer exist it's run out of runway there's nothing more that these countries can do to boost exports they've already sacrificed their fee out money so the next thing they're going to throw into the volcano of self-sacrifice would be there are a condom ace and that's why concurrently a couple of these countries are buying lots and lots of gold and purple preparing for this moment of ultimate bonfire of the bonfire the money's yeah it's

a bonfire the money is and at certain point there should be game theory that comes into effect here because if if this global us dollar reserve system is falling apart why waste this money trying to support your own fee out of un rather than just buy gold or buy a big queen because mcquarrie security says china is unlikely to let the un slide get out of control busy as it could lead to capital outflows and sharper depreciation in 2016 chinese authorities unloaded about $188000000000.00 of treasuries 15 percent of the total as a un thank almost 7 percent amid capital flight so they see that perhaps happening again china of course has a currency peg they don't want to let it float freely and be easily convertible they're trying to defend this pag and the pag always ends up bankrupting a nation to try to do this and try to sustain this where they should just take dollars by bitcoin by you know gold well yeah the pace usually almost always collapse you know what's interesting about. chump is that before trump was in

office this cozy relationship this symbiotic relationship between u.s. and china where they were allowed to export their way into growth at the sacrificing american jobs in america shipped their jobs to china in exchange for really cheap t.v.'s and that was the quid pro quo and then trump actually kind of upset the apple cart you know he's an anti elitist he's anti-globalization and so now he's cause chaos so is this a good thing or a bad thing i think ultimately it's a good thing because america is being drained of us economic vitality were all countries around the world by a codger a of elite central bankers who are simply using the globe as their massive slush fund to hide all their garbage trades and get bail outs whatever they needed to do and now we're into a new era it's quite ironic because of course here in new york city the biggest buyers of real estate he is a real estate developer he builds products he builds apartments he builds luxury hotels and the biggest buyers are the chinese are you know foreigners who are not

american because americans don't have jobs they don't have massive wealth like the chinese do so it's against his own self interest really to stem the flow of our jobs our wealth overseas but again back to these nation states in the currencies you know again we go through periods of time throughout history going back thousands of years to the point when china was the empire a couple 1000 years ago and they were the leaders of global trade we've gone through many many many cycles many different global currency grids usually backed by gold or tally sticks or something else you know there's always been something but now the u.s. is the empire we have the u.s. dollar and it's just the u.s. dollar backed by nothing but the pentagon and now we have this headline bitcoin threatens to take power from the u.s. federal reserve this is from forbes and this is following up on that brad sherman piece congressman brad sherman of california who represents los angeles. yes and

we've talked about this we talked about this when we were at the magical crypto conference in new york in new york city last week and big queen which is roared back over the last few weeks after what many feared was a terminal decline since its peak in late 2017 has been called a threat to the existing financial system and the central banks that run it though these claims have in the past been largely fringe ideas of course you and i here and kaiser report have said that for years you said that you can look at our documentary series to the moon and we could see that you were saying that in 20112012 but here forbes is identifying the fact that now us democratic congressman ben sherman has urged his colleagues to consider banning big quite encrypt their currencies due to the threat they pose to u.s. international financial power saying big queen needs to be nipped in the bud and i want to say it can't be nipped in the bud at this point because it's too late i

think the fact that as you and i have been covering the fact that russia china and several other nations to are for the 1st time of the past few years accumulating massive quantities of gold and publicly china only started publicly announcing this for 5 months ago that's the beginning of the run to big queen as well is this is the sign that the trust is gone never i hear the name brad sherman now in my mind there's a soundtrack that goes down. you know it's like the story takes a turn a politician starts realizing that the game is over and the nation state is finished and that field money is over and that his power base is going to go the way of the dodo because it is now firmly in place intractable you can't get rid of it it's part of the fabric of our reality and it's going to succumb it's going to.

consume every fear currency out there is going to concern miami 8 percent of all the all the coins out there and brad sherman is like has a moment you know the camera swoops in like a massive pan onto a close up a breath of disguised brad sherman and the music comes up don don it's like almost growing corn zumo. it's like yeah doug you're frickin moron we've been saying this for years it's hard money i k i want to turn to his actual quote just in case you out there listening or watching this do not have not heard it we had played it a week ago but i'm going to read the text again just to show you the significance that he uttered these words in public is just like always says things he's not supposed to say you know anyway i love to hear these words it makes me feel so good ok here's the quote here's the quote max an awful lot of our international power

comes from the fact that the us dollar is the standard units of international finance and transactions clearing through the new york fed is critical for major oil and other transactions it is the announced purpose of the supporters of crypto currency to take that power away from moscow to put us in a position where the most significant sanctions we have against iran for example would become irrelevant of course that would restore us to what the founding fathers george washington as he you know left the i think it was in his last inaugural address or when he exited the white house he said basically we should have trade with all nations and war you know in foreign entanglements with none yeah the dollar is an edifice that is getting ready for somebody to scream pool it . is setting into the controlled demolition phase and we won't be seeing much of that much longer and because it is in the ascent i imagine some point 2019 a major central bank. announcer building

a huge position because and then it's going to be the hash wars where nation states are going to be mining for strategic purposes. quintuple surprise goes to 150 under 200000 cetera we did hear a rumor here during block chain week in new york that bella bruce is mining they are mining big queens so there is one nation mining big one brad sherman said the advantage of crypto over sovereign currency is solely to aid in the disempowerment of the united states and the rule of law which is remarkable and about this quote anthony promptly yano of morgan creek digital assets was asked on c n b c what he thought of this pomp is a good friend you can follow him on twitter pomp while he said this is his quote on c.m. b c while many people will claim brad sherman doesn't know what he is talking about i would argue that his statement highlights that the congressman knows exactly what is happening promptly on a row in a blog post sorry it was on c. and b. c. he wrote this he says the increased probability that we are moving to

a war old where non sovereign currencies are the default and it sounds like he is scared though to make clear this is not anti united states are anti-american this is anti current club to craddock america this is pro constitution which guarantees free speech and remember that code is speech and therefore is protected by the constitution and therefore as part of my alienable right to pursue happiness liberty and freedom as an american embrace hard money because as a says in the constitution to embrace hard money gold to exert my rights as an american to free speech slash code and we only have 5 seconds but i'll say that it's beyond american it's just the fact it's beyond truth to k. it's just the fact this is the fact and you have to get with it you have to buy gold and queen or hang on to your other for don't be fact challenge and don't. by

and to try to stick a lesson to stacey i do stay tuned for the next bet after the break more coming your way. 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 stay in the home field where everything is familiar on the other i wanted a new challenge and a fresh perspective from i'm used to surprising people and i saw one on t.v. . i'm going to talk about football not the or else you think i was going to go. by the way ways and such like here. this

footage is unique because the zoe tribal lands are normally off limits to the public eric's allowed in because he's listened to his personal doctor. people here know him simply as dr eric he's rich famous some always on the move saving yachts and flying aircraft that. he's considered one of the best neurosurgeons in brazil. that's happening amazon. hours or so since. going to busy when nothing's going to do the population nothing much is going to people i'm a zone. when

gold made goods manufactured and sentenced to the public wealth. when the room in clusters protect themselves. with the financial merry go round of lives only the one percent. we can all middle of the room signal. to. the world. 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 faithfully implemented for inside venezuela things are different we're going to announce sanctions against petroleum to venezuela associated. famously have

a supplement goes. down person political battle to stay on the path to the madness of the moment the focus of the who story is a new nixon called 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 now making the economy of venezuela screed. least we.

welcome back to the kaiser report imax keyser time now to turn to jack mahler's of zap a lighting network wallet for the community jack welcome thank you max thanks for i mean it's great to have you on i'm glad to be here i'm a big fan of the kaiser report your youthful your full time you've got to zap ok that's me jack tell us about 1st how to get into because my father actually so i have a really big finance history in chicago my dad was one that got me into it in 2013 he ran a futures brokerage for every currency trader and he saw the coin as a big opportunity that it began to be so amazing amazing is that it is an enormous

financial hub in this country and the future is in the chicago options exchange and and you're part of that culture it's a real culture in chicago that whole part of the economy is amazing talk to us a little bit about the zap on lightning what's that all about yes well so big corn and this whole watching technology has some technical limits and lightening its ambitious goal was to increase the transaction throughput of the network right and so zap we want to take a lot of this fancy protocol work that some great developers are doing and humanize the tack and make it relatable make it translatable and a lot of this fancy stuff turned into buttons that people can use and make the coin more retail friendly and usable for everybody and why does that lightning matter well if we want to scale this technology to some of the ambitious use cases that people in vision and i mean traditional commerce internet commerce or even just fasten a fish and settlement right increasing the velocity of the asset we saw this with clearing houses in the o.c.c. in chicago and how other assets have increased velocity and efficiency and

lightning is that in a very cypherpunk way for declining all right now let's get into some meaty issues here because and we mentioned chicago we mentioned here you know background in that culture and you're working on it because derivatives products so many here that we're. derivatives i think 2008 financial crisis banks for fraud what is a derivative how can it be a useful tool yes so a derivative is a separate asset sometimes even a security that settles to an underlying underlying can be an actual physical it can be an index but it's used to transfer risk that is the original value proposition and the folks who created these derivatives was to allow the producer of the asset in agriculture for in chicago at least we're talking the corn soybean to transfer risk as they're not speculators are not market makers and they have a default inherent position on the asset and don't want to be so overexposed you know i think of it terms of similar to einstein you know he created the difference

between energy and matter with equals mc squared and a derivative for the 1st time your supper appears turning a risk separately like the options market was really built on the option volatility formula they they monetize or they quantify volatility and now you are buying and selling volatility itself many separate volatility from the asset and when you can trade risk independently sometimes that leads to a lot of problems because if one part of the market is hedge against risk of another is not it's a symmetric and that's how it led to a lot of these problems we've seen with the wealth and income gap and everything like that but when it comes to bitcoin you know to get to a mature state to get to a level where it's more widely traded risk management and risk tool development is essential and that's your background so you know when we were kind of leaving that techno cypherpunk era into this now derivative trading era which i think should be

a welcome model on many levels. how do you see the problems in this asset class it's a bring us a class in developing those types of risk management products well so as you know the monetary characteristics and policies that come with the. coins are fascinating in their new we have things like difficulty we have having some right what's a toshi did in this digital version of gold is fascinating and the production of the asset and what it takes to produce it in the risk profile on that is new and we need a risk transfer market in this asset we don't have a credit market we have no forward pricing miners are the only natural organic participant that we can use to actually price the asset bring in some more advanced market participants so what i'm trying to do is start this risk transfer industry with him because one analyze the risk profile of these miners and create a derivatives market where they can transfer that risk to some of the market participants are looking to make markets there let's talk about the difficulty

adjustment for a 2nd short for example recently when the price was cratering the difficulty adjustment went down and that is remarkable in any asset class. because usually in the gold mining in the price would crash and gold miners would go offline and then you would have a period of well now we're going to go through a recession in that industry which would take some time until the price recovers and then they would go back online so it's less predictable but it's very lengthy here this protocol responds within a $2.00 week cycle every 2 weeks the difficulty just was made and so it creates how do you see that now you're in this culture of derivatives and financial markets and chicago when you saw that that's unlike anything else in any other mark in the world and so how do you explain it to a picture 8 or you know it's been there for years like how do you explain because to a guy who's been in a legacy financial trader for a long time there how do you explain it well it's hard 1st of all but the points to get across are big coins defined scarcity and what traders know is assets that act

outside of a central party are and are uncorrelated from traditional markets that's a huge deal and then they wonder well how could not be accomplished right if oil were to see returns of bitcoin 1000 x. 10000 x. surely someone will buy my. house and will start all digging for oil and the stock to flow ratio and the issue entry annually will go up right and scarcity will be affected in the house once the toshi did is to cement the scarcity aspect to it inflation rate is predictable issuance is predictable and we know how much because it will exist in a year in 10 in 2 weeks and that's of absolute breakthrough and any asset class and any scarce commodity right every 10 minutes of issuance of corns and as the example you just gave whether it's gold mining or oil that valley to trough in terms of production financing and production that while swaying is take years and decades and so they don't focus on the that's not the complete inversion of what you'd

expect of any other commodity so how do you now let's you mention mining there and this is the only set of data we can use to price the asset so ok last i heard it cost roughly 4000 bucks to produce a pick line either in terms of electricity and in terms of the equipment is where away is that it is that number out dated a word or what is that number and is that part is that a key number for you or what are the numbers you look at no so what i look at as a minor so minor has a long bias on the asset there also inherently short difficulty and then their hardware position is interesting because hardware and expired right their hardware is constantly innovating and it decays with time it's analogous to a caution almost so trying to price that risk for a minor and product so right now the low saying food is this difficulty it's like the weather for corn farmer and trying to price that so for us we actually aren't interested in how much it cost for

a miner to produce right now we're looking to price difficulty to market maker and build a market where they can then transfer that risk they can long difficulty as a casual product and because one can i suspect into that for a 2nd so showing that the equipment is. out of the money call options going to 0 so that's not helpful right then. sowers also saying that the energy costs are not the very bill you look at either you look at this difficulty had just been near their price transfer mechanism is based on that difficulty and you're saying the miners are short difficulty inherently airlie short difficulty so explain what you mean by that sure so just like a corn farmer like a miner of difficulty goes up difficulty is how hard it is to produce the big one if it goes up they're not going to produce as much coin right and so when they plug in their hardware they have a goal to produce x. amount of corn and difficulty is their inherent lee short because as it goes up they're losing value on their production right so they need to somehow offset that the volatility there is high and miners are more or less margin traders on the coin

if you look at hash rate on the network and its correlation to spot you can see these cash think tanks at times because they're totally naked swimming out there in the market so we want to be able to create a way for them to hedge that hedge their production so difficulty does run away from them to the upside that they can have a long difficulty derivative position that pays them out similar to the way the corn farmer would open a should get it or i said they're trading difficulty futures contract right away miners ahead at the moment it's a structure no because as i learned the hard way we have to build this market from the ground up even educating folks like citadel sasquatch honna some of the bigger firms in the world what difficulty is how to price it how to lay off risk and so it's been a very very interesting experiment so for now we're o.t.c. but hopefully one day this can be a publicly listed futures product is can you create a like a beta neutral portfolio of these types of assets in other words can you cap

a somewhat. you know pre-determined outcome if you want to go neutral for example possible i hope so i think that there's an array of mining financial products that we can create in theory you can also maybe have a spot hash. product where mining pools are allowing people to buy in and out of hash freight running on their pool so i think that it's an untapped market i think my no right i want to go to chicago signing i'm sorry i'm not at all. let me ask you this about proof of keys yes right this is another unique aspect i want to get your thoughts on this day in the financial futures markets the players have the ability to effectively asymmetrically issue but call it naked short sales or a limited counterfeited products you know a paper to manage the price and. we have a huge issue with this and we talk about all the time in the show. people like

chase mayor and myself and kate along there's got to be wall street history there's something different here because the cobbler's of last resort as trace mayor calls them have the ability to take their private keys off the markets and even the derivative portfolios ultimately they have to refer to something. it whether it's a 10 year note doesn't if they're if they're counterfeiting trillions of 10 year notes are still at the base layer some of those notes but if you have proof of k.'s that i can pull the rug out from underneath that ponzi scheme of derivatives bad derivatives let's call them is that adequately priced by traders do they are they aware that risk it seems like to me that they're not and or and 3 is that all the real risk yes it's a real risk are traders aware that i think that we're going through a huge education process and the type of sophisticated traders that we have in capital markets don't really understand decline and how the block chain is transparent ledger and we can have cryptographic signatures that prove solvency of

everything so i think it just is going to come with time it's something that i believe in i work on i'm very much on the long side of the debate right well i have a friend a very highly placed man in the space you know and he's been around for a while he tells me that the market is really unsophisticated and he says the people in chicago new york trying to create markets and futures and options and they are really unaware of what's going on here and the premiums are here and he's just scalping them you know you scalping the scalpers which is great to see and this is unusual because usually the other way around is usually wall street chicago figure out the game 1st and then it trickles down to joe baca down into the get scalped as you know is that true revolution yet the show you do how are you in demand in chicago i mean you down there like get jacked mahler's on the phone get him down here immediately we need to know what's happening are you man the see down the chicago i don't know i can't speak to that is do me. and you just really know you going yes i want to know the blackhawks i'm not

a hockey i know the car is not a load you know different madill i got to go jack i got to go black now snow i got i got to go at this interview is over thanks man cause report thanks oh ok great to have you back on the show all right this is it for this edition the kaiser pour with a mask guys or stacy i would like to thank our guest jack mahler's of zap and if you want to catch it on twitter it's cause report like somebody else. in the lakes isn't see it forms part of a high altitude nature reserve. it's one of the famous to turn into an easy is principle in which a way starts its journey. but

it can be some. kind of like i said. it runs 300 kilometers from civil system out there on to the $200.00 industrial facilities range the room is bangs. i'm out on your muscle. to do 3 things. i might get out of them and get the. room irrigated scoop of 4000 rice fields and supplies drinking water to 25000000 people. yes i. want to so many possible that i have but. we are not to shy to. to turn chinese navy into blue water navy

actually we have made it clear that if i need a century they will be hopefully. the military. would even crude the cost of the chinese navy. is really there's there's not much happening in the global economy as a result of the u.s. so called trade war just to put things in perspective most things. from china so united states are export is finished products of the same holds true for most things exported from the us to china so any tariffs on those products while they might affect price levels in the u.s. or in china and they might affect the level of trade between the u.s. and china they simply don't destroy the global supply chain so the rest of the world is hardly affected at all.

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