and bust i thought this was an interesting tweet to kind of look at the whole situation is from roy savant who we mentioned in the last episode and he was so prescient about this pandemic situation when he predicted sort of a pandemic basically that negative rates were signaling that he predicted that last june or july he says i think we have just witnessed the end of the petrodollar system non us countries will soon see a new unit of account medium of exchange and store of value a new bretton woods that will not be decided in america or by americans right while all the key players necessary for that are involved right now saudi arabia russia and united states so the petro dollar of course was established in the early 1907 days with america and saudi arabia when america defaulted on its sovereign debt remember richard nixon defaulted on the dollar default on the treasury market and we went on the petro dollar standard because america had to close the gold window

could no longer fulfill its obligations to its creditors this was the beginning of the petrodollar era and the beginning of all things everywhere are being priced in dollars oil is being priced in dollars all commodities are priced in dollars they gave america the us empire of debt it gave america the world reserve currency it gave america what's called seniority which which is basically they get a cut over every transaction ever done anywhere in the world every coil trav if japan wants to buy oil that the buy dollars 1st and then buy oil for example so they have to give america a commission they get a cut that's a huge source of revenue for america now with saudi arabia and the us have been at loggerheads down for a couple of years that relationship has been strained and saudi arabia is i think you're correct they threw a hissy fit they said we're going to just want the price down by $10.00 for oil because our cost production is not even $3.00 a barrel and so i think they thought everyone would just step in line. then russia

said whoa whoa whoa whoa whoa whoa hold on a 2nd they looked at the numbers and i said what about in our cost of production is actually higher it's like $7.00 but america has 50 dollars or so and we have no debt the saudi kingdom has a huge amount of debt and we have a lot of gold we could actually participate in this global geo political oil poker game very very we got 3 aces here and now i think roy is correct i think the u.s. dollar loses its status as the unit of account in world reserve currency something else is coming it won't be u.s. dollar it could be another country's currency or another consortium of countries developing some other currency backed by somebody else's oil or gold etc just to make clear that in russia the breakeven point is about $15.50 because there is an 8 $1.50 cent tax on every single barrel so you have a cost of production that's about $7.00 but they add in the cost of the tax just like in the united states about $50.00 is the break even and that includes a tax of about just under $7.00 obviously since we went on the u.s.

dollar standard and we were untethered from cold then we could control everything because we could print as much debt as we want and nobody really knows how much debt we have and that's why we have the repo market situation that's why we keep on having boom and bust that's why we have especially at the bus like radical bust because people are when sort of crisis hits whether it's the subprime mortgage meltdown or now the fracking sector meltdown like people are uncertain how much debt is actually there because nobody knows and now going back to what's happening in the geo political oil space lattimer putin dumps saudi arabia's crown prince mohammed bin salman to start a war on america's shale industry that's bloomberg take i responded with the red queen was at war with shale long before this headline oh right i should mention that as part of the social distancing that we're practicing in the pandemic we've built a studio in and. actual tree house slash studio and you might hear

a couple of birds tweeting in the background because we're living with the birds in a tree house to practice good social distancing during the pandemic hearing them as a good sign because this is a sign that spring is here and perhaps we don't know but then perhaps the couvade 1000 coronavirus could disappear. yeah so with a shell industry in the us and like i pointed out recently you know there's no reason why russia should subsidize american shale industry if there were no rush has been saying now for 20 years you know let's be friends let's do business let's grow together and about america needed a scapegoat for hillary loss and 2016 and everything that's gone wrong with the us they like to blame on russia and now they're at the very tough spot because russia is not going to be lobby to help them bail out america's shale industry ok fine i mean that's russia's position i think it's a smart position and the us as you point out the shell industry has been

a negative cash flow negative energy industry since its inception shale ministries never made money some are made profit doesn't even make revenue but let alone profit the amount of debt required for shell is all was the interest on the debts always been greater than any any of the any of the cash that's come out of these things and it takes more energy in for a shell rake than energy comes out its energy negative we cover that extensively on our show of course we then got blamed for russia gay and d. and i report says you know that because guys report talked about the shale industry but the markets are telling us that we were right as we see with this headline here crash in energy junk bonds s. and r g 2027 bonds dropped by almost 50 percent following oil price rads that looks like the bond market which are supposed to be the smartest investors of all that they decided that well you know what kaiser report was right all. all of this time

but you know a lot of people criticize a big point as too volatile but look at the o.l. junk bond market for the shell of history it's incredibly volatile it's going to go the way of enron remember enron was worth $80000000000.01 day and then it went to big fat goose egg the next day worth 0 the shell american shell industry junk bond market's going to 0 because this was a farce this is the shell american shale hoax it was and it's just going to 0 that's all there is to it now going to bail it out print tons of money probably that's just going to make the dollar worth even less than it is right now world markets and jack the price of gold up oh who owns a lot of gold home russia also put this into context mohamed bin solomon has overthrew an uncle or cousin he's got like 5000 uncles and cousins who are princes and so he's got to keep that economy stable because he's got 5000 people and his family wanting to overthrow him and replace them just as he had overthrown somebody

else i think he's in the process of executing 4 of his cousins around close at the moment in now it's so he has a situation that's precarious there and he has a huge population that needs to be fed so you've got that situation and lots of debt in russia if you got loads of 4 x. reserves loads of national wealth 3 serves loads of gold and loads of resources and you know saudi arabia relies on 87 percent of their imports are our exports sorry art our oil and about 53 percent and russia is oil and energy related so they're a little bit my more diverse it should probably be more diverse but in terms of the u.s. and all of this debt like we could we could have thrown it we did get a free ride ok we got a lot of free stuff but at the cost of manufacturing and. you know instead of building boondoggles like this fracking which never made sense we could you know we

have loads of episodes you can go look at the past episodes where we go extensively into why it makes sense but instead of wasting half a trillion dollars that investors are lost in fracking we could have built you know infrastructure we could have built high speed rail we could have bought you know spent on you know electric power grids everywhere we could have done something else that would be useful in the long run and then stiff everybody else with the bill you know mostly china and japan that own all our bonds so we could have done something else with it it just seems a little bit ridiculous that we didn't write let me explain. america is run by an glorifies salesman. to europe and the rest of the world tends to respect bureaucrats civil servants there's a big difference so the key to sales is developing urgency to get someone to believe that there's an urgent reason for them to act for them to buy what you're

selling in the case of how did america get wrapped up in the biggest boondoggle in american history the half a trillion or trillion dollar shale fracking boondoggle is because the sail from a wall street bank was so compelling and the pits goes like this i can sell you a 1000000000 dollars at the shell projects right now by by simply giving you the following pitch stacy write a crisis america needs to be energy independent. because of the terrorists. now that's all i need to say and you're going to start writing checks and by the way we're going to sell bonds that pay 12 percent 13 percent 14 percent you're going to make a killing right and that stupid celtic make unfortunately the joke well there is some value of course i think in for national security for any nation to have energy security any nation to food security. and then it's well it has no food security

they import everything puerto rico imports everything that leaves you totally vulnerable to a global debt market so anybody should consider that but they haven't been honest and a lot of people have thrown money into it how they said this is like a war bond this is a national security bomb this is an energy independence bond you know you might lose everything but we're going to be number one no no no. it's energy independence was the sale and but energy independence could have come from the same amount of money by building renewables. the money that went into junk bonds for fracking could have built a sustainable renewable energy infrastructure in america of solar wind hydro well i did because the pitch for energy renewable energy is not exciting to a wall to a drunk wall street broker hangout of harry's bar in wall street it's not exciting to hear about renewable energy it doesn't get them any closer to having exciting times at night guaranteed by the fracking salesman well that sector is seemingly

dead now and finally i want to turn to you with the saudi aramco of course because you talk about bankers and that was sold to the public markets just recently oil price melt down saudi aramco has lost almost $500000000000.00 in market cap from its all time high in december nobody knows the oil sector better than the saudis they were dumping at the right time of course this is very volatile now up and down but $500000000000.00 is. a little bit more than not the loss is cumulative in the facking sector by the way right when we mention russia bug earlier he said when that thing spike that was worth almost 2 trillion that this is the greatest short of his lifetime once again you know he was right this is it's a short sale today it's going to you know goose egg on a 0 so he's a picture of oil anyway we're going to take a little break and when we come back much more coming your way.

oh. please. and very well might continue watching us and see us. budget we talk about trump he's gonna demystified so political space if you weren't clear before like these folks are no better than us so you know i you know you can reach out to friends say

you know take responsibility maybe run for office at the end of the day you know i don't see how we move a lot a system where these people get away with you know misrepresenting us why not step up and do it yourself. blushes and thanks it's only cheek a total moron of each to cut the host for a team you'll be set it's not that it seems that only shooting against. them into. beautiful goes you know i said it it actually should make you a little bit out of my skull but i'm commenting that in the scheme you need to show . that you really should at least.

get into a spot to the south korean users tell them not to be some corner. of the british mist of last time i lentulus your bits. welcome back to the kaiser report i macs guys are time now to go to bed fire stein author of plan a ponzi welcome back mitch great to be here max thanks for having already i've got

an interesting introduction for you here today the whole idea of plan a ponzi of course goes back to 1987 crash and the beginning of the federal reserve put under alan greenspan the idea that the central bank as an act of a central bank was always going to come to the rescue because ultimately this was one big enormous ponzi scheme now this past week or so we've had the death of mach's on the sea though a famous actor and his famous scene was playing chess with death in the movie the 7th seal i would like to possibly suggest that right now the policy of bailing everybody out from the central bank is similar it's like playing. chess from the movie the deer hunter where it's russian roulette essentially and eventually of course the end is the same complete obliteration

mitch is this russian roulette basically gone wrong with the constant bailing out of central banks around the world as part of this planet ponzi that you've been documenting for so many years mitch you can never see her on the back you know and all that happen is the enormous amount. of increase exponentially so now the federal reserve is a panic desperation move coming in and they cut interest rates by 50 basis points the bank of england followed suit by cutting rates their bank of japan buying all equities central banks think they can make the coronavirus go. the way by buying equities and spending more money this is a fallacy it'll never work the problem that we have that we need to identify is the fly shot and a demand shot simultaneously the same time coronavirus was the trigger it was

during a match in the tinderbox that the central banks around the world have homes with liquidity aka petrol high school project to all and now it's gone up in flames we're seeing a whole back in stocks right now i think we've got a long way to fall towards the bottom it's not a good big good bye. i think valuations were way too high we've discussed before buyouts like word and credit will be the one wall works we've already seen corporate bond market he's off a bit but i think things are going to get much worse because all the dumby tide goes out we're going to see. the precipitous decline in oil prices it's going to accentuate the collapse of the pond. shell oil this.

i think we've got a lot of components here look at part it is a big one and i think the lack of liquidity in the markets once you get involved those are going to make the decline even larger and the loss is even larger which will cause bankruptcy even a cascade of bankruptcy i mean it really is not a lot them martial law they owe or trillion dollars in debt that they were never going to repay before and this now the country is closed for business and as we know their g.d.p. for the past 18 years has been. the worst in the world. so but their debt is the highest in euro problematic many different. view now we've got to see about a way out of this problem you know like the bad. larry summers and the same people that created this mess central bankers want to tell you it's all. coronavirus but

it's absolutely not it doesn't really. moral hazard caused by the global central banks enabling reckless lending practices the companies organizations and. entities we're not we're not we're. seeing we're lowering interest rates again and this ratio of the middle class we've seen wealth inequality and shatter new record right let's talk about this idea the difference between a demand shock and a supply shock so everyone is familiar now to say wall street bankers with a demand shock and lowering interest rates and flooding the market with more cash cures a demand shock there's no absence of people looking to get on debt and expand their credit cards and expand their debts on their balance shape if we just make money available for

a as far as this global pond is game they'll always be people lining up to take the free money but this is this is different now this is as you point out a supply shock when the supply lines from china are cut and stuff is not apple store you can't print that you can't you can't solve a problem by printing money because it doesn't matter the goods are simply not there mitch they think that they can buy all the 3 d. printers and create the stuff i think is absolutely ridiculous what they think i mean with the supply and when you think about it this was the whole idea behind the obama you're where they are. so they outsourced 98 percent of the inner chemical components antibiotics to cheaper per duction in china so we are we are actually relying on china to buy necessary men that we need or we could cut off any time production around the world shut down and everybody

throw my. beholden to china that's not a good position because the politicians in washington strom and westminster strom were too busy with other matters that were not relevant not helping needed by the aisle to line their own pockets rather than ensuring that the people they represented which they did represent would be out of harm's way should we have his speech and he planted which we don't this is a much larger problem we've got critical infrastructure industries that now are all outsourced to china where this problem originated as you call it the ruhani virus you're a race right well i mean i don't know why they call lyme disease lyme disease because the start of than lyme connecticut and most diseases are named after their origin where they come from but let me ask you this because you're in the banking business and i been in and out of banking and finance for 30 years and so i'm curious what

your thoughts are because they will come back with some kind of package of financially engineer solutions and we've seen negative interest rates in the last few years that was a new thing that was invented just a few years ago it had never existed before what i want to get a bit reach into the bag of tricks what kind of programs are inventions well they come up with trump is proposing a cut in payroll tax that seems very minimal not going to do much to get steve a new kitchen a farmer i believe is a goldman sachs guy he's a financial engineer they will charge some outlandish absurd financially engineered solutions to this any can you give us any idea what might be cooking in the back rooms i've mentioned this before and it's pretty much happened in europe and throughout asia and the bank of japan which is the major. purchaser of the e.t.f. products is exchange traded funds stocks and national bank fine stocks e.c.v.

will start buying stocks in favor buying stocks or buying on right now that it's not a long time from now until the fed says well we're going to start buying equities so this is a problem because it's not capital with. we're all we've got to intervene and the need to lay price action you know the fire out of an e.f. 5 l. of the m h we're following it i thought negative you're going to bond markets so that means the e.c. we pay rates is rich is made to 5. 1000000000 dollars in low how does that help main street it doesn't. call you guys it's self interest you don't care what happens to main street does burn down long as they get paid what's next thing to pull out of the bag of tricks you know i told you you get a marginal marginal return for that increment you know now they have to spend $3.00

to make it makes no sense whatsoever they're burning the house down they don't realize they are burning down and we're not and very well right you mention the e.c.v. finance the takeover of tiffany's by showing a negative response effectively having the public financing kleptocratic concentration of wealth but what about the fracking industry it's never made any money if the cash flow negative energy flow negative and there are i think a trillion dollars of the junk bonds associated with that industry how they're going to handle that manage you're going to have a cascade credit fall and. oil prices should go much lower because you don't have demand we have and we're going to have an economic recession which we're probably in already or an economic crash which is going to push prices even lower now there is no war between saudi arabia and russia on the oil prices saudi arabia's plan was to drive all the shell oil producers back from and they will succeed of oil prices

stay down here then they'll be able to control the price if you like opec again dries out is almost healthy for go bankrupt we need 200000000000 worth of bonds starts to fall thing and we'll have bond armageddon we've been tracking this for a number of years deutsche bank they have a lot of exposure to these bankrupt energy companies a sarnie a very troubled bank and by some measures you can say it's an insolvent institution is deutsche bank going the way of enron in the near term mich. i thought you might have a lot of problems at one point they're off balance sheet derivatives 70 trillion so germany going to bail them out i'm glad the u.k. was smart enough to. see you but all the 27 other members of the club will get to pick up part of the bailout which is a big problem but i think the german government will try to hide last. doing the last couple of years if the problem is you see the repo market added to 'd

100000000000 a day it's still functionally broken recall mark doesn't work any more and they will tell you why. the discount window or borrowing a repro market is a big secret what we've got to do is and the federal. not a federal organization the fed got nothing federal government and it's not a bank we've got to sions because they're just wrote and it's fun right we've got about 20 seconds left one quick question. if you can the petrodollar this is the relationship between american fatty arabia we don't have time to get too deep into it but is it over well i think that's over but when joe biden gets elected michelle obama is right we're going to see things really is. oh wow then this misfire stein calling joe biden michelle obama when in tech and 2020 you heard it right here in the cons report mention thanks for being on the kaiser report thanks for having

that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert want to thank our guests mentioned stein author of a seminal important and translated into many languages planet pontine try catch us on twitter it's kaiser report and select by. good food descriptions sound up a tasing even for the owners so how to choose the pet food industry is telling us what to feed our pets really more based on what they want to sell us than what's necessarily good for the pet turns out to pick food may not be as healthy as people believe we have animals that have you know diabetes in arthritis they have auto immune disorders allergies we are actually creating these problems is a huge of

a democrat problems all of them i believe can be linked to very simple problem of diet and some dog owners so heartbreaking stories about their pets last treats the larger corporations are not very interested in proving or disproving the value of their food because they're already making a $1000000000.00 on it and there's no reason to do that research. budget we talk about trouble he's gonna demystified this whole political space if you were clear before like these folks are no better than us so you know i you know you can reach out to friends say you know take responsibility maybe run for office at the end of the day you know i don't see how we were a lot a system where these people get away with you know misrepresenting us why not step up and do it yourself.

to unleash the full power of the federal government that the sefer today i am officially declaring a national emergency the u.s. steps up its response to force the spread of the coronavirus following countries across europe and asia. while the trumpet. ministration also seeks to restrict medical imports from china which could cause prices in the u.s. to surge. and the base hosting u.s. and other coalition forces near baghdad is reportedly struck for the 2nd time in a week as retired tory attacks cause innocent casualties and your anger from iraqi officials.