you know is the moral hazard right moral hazard is an issue and we're going to show you how that plays out how that has trickled down to the rest of the economy as we predicted here in christ report when people were piling in on their robin-hood up into her it's a bankrupt company now we see amateur j.c. penney traders beg judge to save them from wipe out this is the story of american financial markets since especially 2008 they are only acting like the leaders of our financial system like j.p. morgan like jamie diamond and amateur investors who loaded up on j.c. penney shares as a reseller went bankrupt 'd are now pleading the judge to spare them from a complete wipe out quote i hope and pray for you to consider the shareholders wrote 50 year old individual investor john hart and a letter dated may 25th one of the dozens sent to corpus christi texas based court overseeing the case in recent months so these days there's trying to get the court

to make them whole yes and well yeah that makes sense because they say that. the big banks they are getting bailed out you know they don't seem to make any mistakes remember last year we were talking about j.p. morgan they had something like 90 straight days of profitable day trading and you want to spend day trading now knows that it's almost impossible to get 90 straight days profitable day trading because j.p. morgan is able to use hedging they can hedge their bets to make the risk go to 0 so any time you can make the risk go to 0 and still have a trade that could potentially be rewarding that's a great trade if you're a professional bank like j.p. morgan or goldman sachs had a big quarter with bonds j.p. morgan had a big quarter with bonds that's because they're able to put trades on with 0 risk their hedging strategy is to offer a complete coverage and so that there is 0 risk and at the end of the day they get the bailouts of course but even the reach out person will not get the balance due

to mine that comes from the low losers on the retail trading that's where our capital comes from america that's where the money comes from it comes from the losers remember that because in the casino the the money that fuels the casino are the losers right if everyone one of the casino the casino of go out of business right they wouldn't have any money to pay out anybody so you need losers and you need winners and if you have the house like the banks who have 0 risk someone to a casino then you by definition must be the loser and the government of the courts are not going to help you well there are no losers on the keiser report we have money for everybody in our audience and you know according to this piece as we have warned here on report to the retail traders on robin hood i don't know who the regulators should be in this situation but they have been piling in to bankrupt companies as this article in bloomberg points out part is one of the growing number

of retail traders many driven by lockdown boredom and free online trading have piled into the stock market speculation by amateurs is nothing new but. for the 1st time experts can recall investors are buying shares of even bankrupt companies hertz global for example driller whiting j.c. penney have all seen their stock price surge in recent sessions despite being in chapter $11.00 and then they go on to speak to a chapter 11 bankruptcy lawyer as we've told you here on kai's report like you get wiped out that's what happens in a bankruptcy situation. but mom and pop investors who insist on betting on struggling companies will be well advised to stay away from those in or near bankruptcy said fred ringle a partner and co-chair of the bankruptcy department law firm robinson broad leinwand green genevese and block people who buy equity hoping that they're not going to get wiped out in a bankruptcy just don't understand the process or they don't watch kaiser report well you know this is an extension of the opiate crisis you know the the big opium

manufacturers in america oxycontin so the heroin producers they you know they got millions and millions of people hooked on heroin and those people now are hooked on gambling so and so forgive porn so you have a country that is essentially the general right there's got gambling. the heroin addiction and porn addiction right so that's the vast majority of economic activity which is going quarter to g.d.p. by the way so if vice could maybe triple then the debt to g.d.p. in america would look better everybody has a different opinion about what is vice and what is not but nobody can differ on what the free money has done and the moral hazard of bailing out so this is only a natural evolution a natural response to what they've been noticing since 2008 when goldman sachs packaged all those fraudulent mortgages into

a fraudulent derivatives product they got bailed out got bailed out warren buffett got bailed out all these. got bailed out so of course the mindset is going to happen whereby people in the economy think they also will get bailed out and that they also deserve this free money here is a headline out of the crypto space. kind of because it's a guy who applied for a fraudulent loan now most of those loans from the p.p.p. the free money $500.00 something 1000000000 thrown around the economy i'm out of dollars and my printer but the feds printer and the treasuries printer never dies texas man's alleged use of p.p.p. funds for crypto instead of barbecue has feds asking where's the beef a 29 year old texas man is in a one trouble after being charged monday with siphoning nearly $1000000.00 in payment protection program loans meant for a barbecue company into a crypto currency trading account so this guy joshua thomas a gear ace he applied for a $1000000.00 loan for

a texas barbecue and it turns out there was no company called this you register it just to apply for this loan he had no previous taxes ever paid no employees and he instead bought decline or they don't mention which quincy bought but he speculated in crypto currency desperate currency asika fatman scam right you know like they just put out this really vaguely. so worded document like say your honor start your own accord here we thank you if you need money you know figured out we'll send you some so then the government sent out a bunch of money and then they came back and said wait a minute we're actually going to put you in prison all right so the casino go away so member i just described because samael of america this is the gulag this is the good like part of the government arbitrarily arrest people but the middle government what they can still trade day trade that's a great thing about the american presence of they're going to do is they training so they can make money for their g.d.p. while in prison because they know go away you heard it here 1st well overseeing the

casino good why are of course the central banks working hand in hand with some of the treasuries around the world this is. coming. down at some fair you know i mean plucky is just trying to do his job you know he's passed egg laying eggs but he still does a good job as an economist and the stories of the son plucky to the casino girl like absolutely no reason so we were just talking about this guy with the barbecue and the fake barbecue applying for a fake loan for a $1000000.00 he's now facing charges of money laundering and wire fraud all these sort of things who knows how many decades will face behind prison but what i was saying like with these central banks and the moral hazard they've created within the economy and we've quoted frederick boss yet many times about when plunder becomes a way of life for you know people in an economy then you create a moral system and that justifies that so here is the largest bank in the world and

certainly in america and that is i j.p. morgan has been a big reset the end of a cut of these 500 and something 1000000000 and p.p.p. loans the fact that banks are siphoning money off of the relief program is thanks to the fact that the united states had no existing public infrastructure ready to quickly get money. out to struggling businesses when the pandemic hit banks stand to make $18000000000.00 from cares act in fees that's money taken directly out of the $640000000000.00 pot of funding congress allocated to the program so of course you know they're taking $18000000000.00 member they made a huge fortune as well during the 2008 financial crisis and because we bailed them out and here they're getting a cut of this bailout j.p. morgan just reported the highest ever a quarterly profits in their history so you know this is why you find guys in

texas creating fake barbecues and orders to get a $1000000.00 loan they feel like well jamie diamond can do it why can't i yeah back of the depression remember f.d.r. printed a lot of money and they went and built stuff like roads and bridges and museums and radio city music hall and the exxon building dams down that's right and then during this depression tape big the government prints a lot of money and they gave to jamie diamond and then he buys expensive toys with it so that's the best the government policy to get us out of the depression a psych ok there's an opiate crisis give me more money and they'll keep it oh there's a economic crisis give jamie more money oh the us companies are going bankrupt you jayme more money so jamie just gets all the money and he just puts it in the bank and sees walks around and says well you need to give me more money that's the only solution that's the or over there at blackrock where they buy the government gives them money to buy their own repackaging of the stocks that they themselves own for

themselves wow what a great idea. so then people in america look at that they say wait a minute this is the biggest corrupt game i've ever seen ever this is more corrupt than nero this is more corrupt and collegial this is more corrupt than you know the most corrupt. rapacious bull. thirsty potentate that's ever existed in man kind's history is the wall street and washington axis of blood and cash and so the average person in america saying well can i at least a 10 bucks for a cup of coffee and they're like off to the gulag with you plucky. this is plucky he'll say to the casino. can you money to pay i.r.s. . right so he put his word stay out of the casino gulag. don't do

anything. j.p. morgan while j.p. morgan the biggest u.s. bank just reported the highest quarterly revenue ever according to c.e.o. jamie dimon is common in the press release so of course this is part of that plunder of this p.p.p. that somebody is going to have to pay for there are more of these unaccountable spewing of money coming out and it is a cost becomes tawdry everywhere you go is corrupt and we see that in all nations are susceptible to it happens all the time we saw that in egypt when we went there after the revolution and they pulled the guy at our hotel said in amazement that his father had just got his license driver's license renewed and he didn't have to pay a bribe and it was the 1st time that happened and he was so shocked his whole life he knew having to pay bribes yet here you know it's like a child makes the barack look like mother teresa. certainly jamie diamond well we got to take a break and when we come back lots more coming away so don't even think about going

away. the world is driven by shaped. thinks. we dare to ask. this politically impossible in the united states to advise eating was anything that has the industry. that makes

a lot of money. i'm going to say over and over again we know what it is in these not being should much for one for one thing and eating less is very very bad for business it doesn't make anybody rich if people eat less. during the vietnam war u.s. forces also. there was a secret war. and for years the american people did not know. how much it is officially the most heavily bombed country per capita in all of human history millions of unexploded bombs still in danger lives in this small agricultural country. jordyn wieber it's happening. even today kids in laos full victims of bombs dropped decades ago is the u.s.

making amends for the tragedy and. help to the people needed in that little land on . my. visit. but in the same. scene that i don't defend but i'm before.

welcome back to the kaiser report imax keyser time now to turn to bob is a theoretical physicist 1st in engineering the universe and remaking my bob welcome philippic you are great to have you on i've been following your work for a number a year sia at conferences every now and then and this is great to have you on now the bitcoin hash rate is currently at $125.00 x. sas what does this number tell us both a technical level and then on a more fundamental profound level bob well at a fundamental level a hash is you know computation of one of the instances of a company which could be a big claim block right so that's a hash is. i have to look at the site prefix for x a but it's the 18 it's an awful lot of hashes per 2nd. so what this means is that

the we have recently had a hash read it just meant so every 2 weeks because it just sits it's hash rate target. and it went up by quite a bit no last though i have. difficulty readjustment what this means is that minors who are probably some of the most economically invested participants in the ecosystem are betting strongly on on bitcoin this means a couple of things that means so 1st of all there's a new generation of quick meant which is up to $100.00 terror hashes for 2nd per minute device at about $3000.00 watts. 2nd of all it means that those producers of bitcoin blocks have found cheaper sources of power you know there's been a gold rush of sorts looking for cheaper and cheaper sources of power you know the days of people mining in their dorm rooms or buying a couple of nines and putting them in their basements are over you know you just cannot mine profitably with retail extra city so that is a 2nd cause of the house rate going up and the 3rd set cause is basically just

confidence in the market right the these folks who are mining have deployed intense amounts of capital you know to the tune of many billions of dollars per year that they deploy to create because it blocks and you know the mining ecosystem is essentially making a long term bet and they are betting that this ecosystem is thriving and. the consequences that would come from not you know it's interesting because you often hear this idea from people that they calling is quote not backed by anything and yet it's it's backed by these miners in out that are converting energy to an confiscate a ball indestructible all units that we now know can be used as a store of value and and used as money and you mention how the energy costs are really so important to the sol thing as they are in all mining you know whether it's gold mining or any type of mining energy costs are big

components of that it appears now bob as though the center of gravity for bitcoin mining is actually now moving maybe away from china toward the u.s. because the u.s. is now got the cheapest energy is that correct can you fill us in on it's difficult to know there are not any large scale metrics miners are intensely secretive you know if you in the you know they team forty's if you forgot if you saw the gold jane right in san francisco or california you would go tell your friends. you keep that yourself so the miners are intensely secret they don't really publish you know where they're getting electricity or how but i personally have seen quite a lot of movement toward the united states. you know there's a great article by nick carter talking about the mining ecosystem and basically the mine ecosystem buys up the cheapest electricity that's around there are a lot of times and places that electricity cannot be sold at any price right sometimes there's over production and that overproduction you know where

geographically over trucks was historically has been china and the reason for that is that china built a lot of hydroelectric dams in the western part of china in the mountains. but that's not where the people live that's not where the energy is consumed and they did not build corresponding transmission networks so you know that it wasn't possible to get the electricity by and large from these these hydroelectric dams to be. aging so there has been historically a seasonal cycle typically in mining around the price of electricity because during the rainy season in china those dams are full right and so you can't just you know fill it up forever eventually the dam is full and you have to open the sluice gates unlike what the water go so you can either generate electricity with that water or you just let open the sluice gates and let the water go if you just let the water go this is an energy resource that is not being tapped at all and is effectively free right so that's what's been happening in china for years is that you know people in various mis apologies in china have gotten deals with the local

administration and been able to get access the sec tricity. china obviously has been quite hostile to because over the years and people are seeking out you know more politically stable areas to to do this and as you know big finance is getting more interested in decline obviously the u.s. canada you know western nations europe is a big target for this and what's happening is that. where are the similar source of electricity in the united states a lot of that so the source of electricity comes from aluminum mining actually so iceland in particular has a lot of geothermal atrocity and they consider aluminum to be their energy export right they had more energy you know to do it and so how do you export that energy it's not profits up possible to run wires from iceland's to mainland europe and sell the electricity so they use it to create a limit i'm illumined the cost of creating a limb is about 50 percent electricity in refining the box or. calling similarly is

an energy export if you're in a place where there's too much energy you can sell it so where in the united states is there too much energy we have a tremendous oil and gas industry here you know the natural gas industry is going gangbusters the price of natural gas is going through the floor in recent years. a lot of oil wells produce natural gas as a side effect and in the u.s. in canada there is a lot of natural gas that for one reason or another. cannot be kept because it's not profitable to compress it and store it and transport it or that it's intermittent or something like that that's a fascinating way to phrase it that it's an energy export and i think within those that kind of in a view of things it's a lot becomes clear now you are a theoretical physicist so this should be right in your wheel house and i got to ask you about quantum computers because this comes up a lot of people say oh you know quantum computers are going to challenge because next security etc what what where are we on that bob difficult question you know so we've built quantum computers in various ways i'm personally of the opinion that i

don't think we're ever going to see a quantum computer that can challenge because you know break that quaint keys. that said there are still a lot of interesting uses for quantum computers even if we can't write cryptography with it the reason is basically that. you have to create a quantum state with extreme precision and there is something at the called the uncertainty principle heisenberg's uncertainty principle if you create precision one variable you lose it in another. and so basically in order to create. a state that has the precision required to do a quantum computation to break r.s.a. or looked at curves requires a precision that is rather extreme than the number of decimal places you've got to get right is more than the number of atoms in the universe so this is just not practical i don't think we're ever going to see that there's another way of looking at it and that is in terms of energy costs to create that state. you know this in that quantum computing industry this comes out so what they call

a consummate error correction the idea being that i can create an imprecise state i do some computation i detect and correct the error. and this requires error correction to be very very good and even with eric rection i personally don't believe this is this is ever going to be practical don't quote me on that course i realize i'm on your show but. you know the research will continue. and the quantum computers we've seen so far are very very far from anything practical that would be you know a political to the quick. enough that's a great insight that we haven't had that level of insight yet and thank you for that so the honest general topic though of a 51 percent attack writes out this at the idea that somebody is going to dominate the hasp our. you know quintillion of hashes per 2nd our calculations for 2nd will fall into the hands of one player maybe a state actor or a group of state actors it's

a must that the game fairy part of the big crime protocol precludes that from happening and in fact and the curious way you think about this and a protocol almost invites these types of attacks because the more attacks think as from people who think they can take it over then the security guys at the. asher it actually goes up as you point out the difficulty adjustment every 2 weeks ago up and therefore the security would go up and therefore the price would go up so it's almost like a red queen send drum where the more you attack at the harder it is to attack bob when you think not technically correct so if if you perform to 51 percent attack you had 51 percent of the hash rate basically what you're doing is the other 49 percent will still produce blocks and you're going to orphan all of them so your difficulty just would actually be down after that phase of an attack you drop by roughly a factor of 2 because only 50 percent that you want percent of the networks contributing useful blocks the other 49 percent of the blocks got orphan. but you know as mining

is getting more distributed you know more and more people are getting involved in mining you know institutional players are getting balls mining the us is getting involved in mining. there are more entities right on the more entities there are involved in mining more difficult it is to gather if you want percent. and you know we're entering an era with mining where up to now the m.o. has been to get continuous power you know you want that hydroelectric power you want 24 hours a day for the lifetime of the equipment and you keep running it out as miners seek a cheaper and cheaper power one thing they're going to start doing is turning off their quit meant during times when the tricity price is too high you know the you can think about like a geographic landscape right in the minors or simply filling in the very lowest lang's a core in water on a mountain right it slows down they suck up all the very cheapest power. that cheapest power is intermittent it comes from things like renewables solar and wind the sun isn't always shining the wind does not always blowing and when the sun is

shining those things often overproduce energy. and so the there's a now a duty cycle to these things this is been happening in the pacific northwest for a while. there is a demand price of electricity up there where the price will go down during the night. up during the day and so miners in that area many of them have been turning off their quit when the price is high so anyway you get more and more and more distribution while more people and it's more more difficult to suck up to 51 percent and now that they're also turning off their equipment sometimes they can turn it back on you know and takes a slight loss when their livelihood is at stake right when there's a threat of an attack like that at some point i do want to circle back on that 51 percent attack and the difficulty of just one question but not today we'll do that in a time i want to move on i want to ask you about hardware in the hardware sector so we've got bit maine was recently dominating and they industry looks like they're on the verge of collapse from what i understand are there other manufacturers to fill

in the gap and do we need more competition is this what you'd expect in the senate straight same's like game theory this is working in all layers of the stack bob. yes there have been more companies coming in. recently announced their i.p.o. their manufacture of the current hardware what's mine are right was started by the lead engineer but main leaving that main informing us one company that makes some very good equipment. there are a handful of other smaller ones but we're still kind of constrained by the fact that you know the u.s. lost its manufacturing base a long time ago and chips are manufactured and by and large in china and taiwan so even even if you have different companies manufacturing is probably going to have to go to taiwan and china to manufacture its quitman fascinating stuff last to be on again soon to follow up really interesting stuff out of power thanks to be on the kaiser report thank you and that's going to do it for this edition of the cars report with me max kaiser and safety herbert like to thank our guest babak al right

if you want to catch us on twitter it's kaiser report until next time. so what we've got to do is identify the threats that we have it's crazy to let it be an arms race in. this very dramatic development the only posts really. i don't see you. will be successful very critical time to sit down and talk. if you're born into a poor family if you're born into

a minority family if you're born into a family that only has a single parent that really constrains your life chances people. born into generational poverty. is a fight the fight every day soon you meet your needs and the needs of your family. during the vietnam war u.s. forces are also. there was a secret war. and for years the american people did not know. until our thelma is officially the most heavily bombed country per capita in all of human history millions of unexploded bombs still in danger lives in this small agricultural country. there even today kids in laos full victims of bombs dropped decades ago is the us making amends for their tragedy and

what help to the people needed in that little. a london police officer is suspended after a video emerges of him kneeling on a handcuffed black man's neck stoking a nationwide debate on the use of chokeholds also. i. protests in jerusalem as pressure mounts there on the prime minister over his handling of the coronavirus outbreak and his own corruption battle. despite the us having the most coronavirus cases and 2 days of record breaking new infections this week alone donald trump pushes ahead with getting students back in class within weeks and it's ignited a row over schooling versus safety.