we going out and that was the 23rd of march between more or less the beginning of the year and the 23rd of march markets sank the s. and p. lost a 3rd of its value you had gold was just absolutely knocked down i mean certainly the open interest was not down to the price was a lot more resilient than you would have thought and so there were various things that really were hit i mean even a bit coy and sort of was pretty weak in those in the at that early time but then on the 23rd of march something happened and that was that the fed made a statement which basically set we will throw however much money it takes at resolving economic problems and at that moment the markets switched from being worried about deflation to suddenly thinking the outlook is inflation the s. and p. took off and we are where we are now gold and silver took off the gold silver ratio

collapsed from 120 down to current 70 ot that current took off oil took off so there was that moment and i think we discussed this in an earlier. cost with the video with the when go dipped in april because of delivery problems on cemex but apart from that oil also basically took off so did copper dock to copper which tells us that. you know the outlook was considerably improved after the fed turned around and said we will print whatever it takes and it was also the day when the dollars trade weighted talked and it hasn't really stopped falling since that so 23rd march i think is the date we should all put in our diaries that was when the world changed and it is so remarkable that any idea that for example gold is had a wonderful run today it is down nearly a $100.00. oh that's the end of the run forget it it's not things have changed so i

do goldman sachs but i would be a bit more specific about actually what has happened right well that that was caught up caught on by the financial press the mainstream financial press the economist magazine out of front page cover story called free money basically the. headline when government spending knows no limits right so now the cat's out of the bag that governments are going to keep printing money ad infinitum to support these markets and as you point out the the switch happened as being well run a deflationary world possibly being in an inflationary wall but that that seems to be hasn't really been completely caught on by the bond market yet right because the bond market still reflecting this deflation trade and what is it really

going to wales are generally going to come off alister well the bond market is reflecting waste of money which is just being shoveled into financial assets and particularly u.s. treasuries by the fed through cost to d.c. so that's why bond yields haven't recovered it is served porton for the fed to keep these bond yields less because if they fail to do that the funding crisis that the us government will find itself in will be completely intractable so it is absolutely key for the fed to keep interest rates funding rates down to keep financial financial assets bubbling they failed to do that because they've committed the dollar to doing that like they will print whatever it takes to keep financial markets running then if they fail the dollar will fail as well and again we've discussed this because this is a dead ringer for what john wrote it. exactly 300 years ago so let me pick up on

that date of march 23rd because i've also kind of mentioned this on kai's report rice said something happened i didn't specify that date of march 23rd but that the mindset the psychology of the global investor class all participants in the economy in fact changed just like that day in august of 1981 when basically the u.s. went bankrupt right they failed to pay back in lent the gold they were due and instead pay them in dollars and we went we close we shut the gold window so you know at that moment nixon nobody really knew if this thing was going to survive the whole system because this was a shocking moment in world history it was the 1st time in thousands of years that we were on a global feel standard so i kind of feel like that the psychology snapped and changed where all across the world we all kind of adopted this m.m.t. and next stage of this off system is like i saw so many people saying why do we

need to pay taxes anymore if we could just print the u.s. government borrowed 3 chilean dollars in the 2nd quarter alone i think in june they borrowed as much as they had borrowed the entire existence of the united states so you know it is this is a psychological change of shift in the whole mindset of the entire part all the participants in the economy yes it is what you're describing i think is the reaction of government in particular that 19 government has actually no idea what's going on it only understands when something is actually sort of hits it in the face and that's what kind of it 19 did it before then and lots of people in government well if the government we have the seizure in the repo market in september last year when it ran up to 10 percent the other thing of course is that we had trade wars between america and china now that really did do crosspost or trade if you.

things like indicators like. shipping rates and some so forth just completely collapsed so we already had the makings of a downturn in the economy which actually matched very closely in terms of its character what happened in 1929 check this 929 was the end of a long period of credit expansion back credit expansion 929 toba was when congress passed the smoot hawley terrorist act. that was the month went from the previous attempt to high the market fell 35 percent literally by i think it was the 11th of november awesome ducked that's actually very similar to what happened to the s. and p. between roughly and january and march you know last assert and now we've got the rally the rally is taking us higher than the subsequent rally in 192-9930 took the dow but you can see the characteristics the underlying

background what's happened to the market is just so similar and then we think ok what happened after the rally after the rally that was more or less when president hoover signed smoot hawley tariff act into law the market then went down and down and down and by roundabout june july 1982 the dow jones index had lost 89 percent of the value from his high so we've got in terms of what's going on in markets actually quite a similar situation what has it done as done is it get that bit and it's brought forward a lot of the disaster that we would otherwise face perhaps in the in due course it sort of made it hare and now this is very serious and of course that's the bit the

governments cannot see they don't understand actually there's a far more deep and worse condition behind it because of that parallel i've just made between now and 929 so we are in really extraordinary times now the next thing that happened after the 929 crash and then we started sinking in 1970 to 932 was back started going out of business now at the moment i'm. writing an article on the g said it's the globally systemically important banks and they are some of them are in deep deep trouble and we can see this from the point of view of the relationship between their balance sheet assets and their market capitalization in the case of one back which i won't name on this channel but it's a major european back the current rate ratio is a $118.00 times i just think about that this is really

extraordinary one euro is right off on the balance sheet creates 118 euros worth of pain to shareholder this is gearing we have never seen before and that bank isn't the only ones there are a number of other banks in the euro said the other thing that's happened of course is that the attack on hong kong the financial and verbal attack. really from america to which china has not acted sensibly that we must admit but what it's done is it's undermined the share prices of backslid hong kong shanghai bank and standard shot back which are pretty sure banks and then if you go look at the chinese banks what we find that the big 4 chinese j 6 yeah share prices of all plummeted after no national rally from that march 23rd date which peaked on i think it was the 7th of july and since then it has just collapsed so we have

banking and systemic problems in the making and nobody so far as i can see is paying any attention to it this is an exciting story but we pick up after the break allister you know you got me on the edge of my sea don't go away we'll be right back with alice macleod with the guys report don't go away. no team no crowd. no shots no. action well to be. going to wells track no arrests were. points your thirst for action.

an entire village in alaska has had to move if another country trying to wipe out an american town. we do everything in our power to protect the. water then escaping climate change was the same threat right now alaska does seem some of the fastest coastal erosion in the world we lost about 35 feet. 35 feet of ground in just about 3 months while we were measuring. it is fast and that means the river is $35.00 closer than how in love it was the year before i think we're a part of america 1st for murmur across. the world is driven by a dream shaped by phone person at those great. dares

thinks. we dare to ask. welcome back to kaiser report summer solutions without a cloud m.x. as they say out there let's get back into this story you know me ask you this so you make the comparison to the crash of 29 and then the early 1930 s. and then the rally and then the smoot hawley was passed and then we went back into a huge fall 85 percent top to bottom contraction in the dow jones and you make

a comparison to what's happening now now of course during that depression of the 1930 s. that was a d. place mary day pressuring which is different than an inflationary depression what they saw during why mar republic back in the twenty's so what we had to get to here is going to be a deflationary depression because if you say banks are failing bets sounds like deflationary depression but you know what what about the other side of the coin here where the money printing is attempted on this gargantuan scale and we go more like oh why one republic type d.l. alister ok what we've got to do is to separate out this problem into 2 components the 1st one is the problem the banks have obviously if i know that these banks have much during the directors of these banks also fully aware it is scary and this is why if you look at the growth of back lending it's actually started to tail off and if anything is beginning to contract. the problem they have is that they can't

really contract bank lending without creating whites go bankruptcies but equally they can't go on just increasing back lending so that's one problem that's the deflationary aspect that you were talking about the inflationary aspect is really when you come to the set the fed is desperately trying to get money into the underlying economy to rescue production chain's. companies which. well lots of people to stop them going bankrupt and so on and so forth the problem they have is that the banks won't transmit the money so the only way they can do it is to do it via helicopter in money through their u.s. treasury for example and following that route so we have got 2 elements in this we've got the deflationary arguments i we have got the inflation reanimate now the way it will be resolved in my opinion is that we will have a systemic crisis and the systemic crisis means that the fed and the u.s.

treasury and your case well end up basically taking control of the whole banking system will be doing same in our country the euro zone will be staying the same that japan will be doing the same china will be doing the same even though they're already there ready so what that then means is that the politicians and the planners can instruct the banks basically to transmit money into the economy and to distress borrowers into. you know sort of raise raising consumer loan limits things like that whatever it takes remember that was what was said on the 23rd of march so they will prevail but in order for that to happen the banks will fail 1st the bit where buybacks are cautious because they are over leveraged and they are frightened of going bankrupt that is going to happen that is going to get out of the way and then the fed can do its best to try and get money into the

underlying economy but that's not the only problem they have because if we have a banking crisis a systemic crisis such as i just described and believe you me it's very hard to see how it will not happen then we have to ask ourself selves what happens to financial assets those lovely bones there's 0 or less than 0. in the euro zone u.s. treasuries which yields and i see the euro has just been rising point 6 something percent for the 10 yes what's going to happen to allez well foreigners are going to be looking at that dollar holdings and they're going to be saying we got a bit too much of this we've got problems back at home we need to reduce our dollars keep a bit of dollar dollar liquidity but we can liquidate fairly as we don't want to have anyone else's bombs it makes no sense at all so we're going to repatriate our money. then you will see that the dollar falls further and it begins to impact on

this problem the fed has and that is how to keep financial assets maintained as high levels so they can finance u.s. treasury debt. and the answer is that at some stage that game is going to fail and when that gain fails then the purchasing power of the dollar will go down with it so this situation which started on the 23rd of march well i think evolve into a banking crisis and then the through vogue and to a currency and market crisis and we've got that ahead of us and it will not necessarily take very long for the whole process to compete but whatever it takes of course is also war and we've had many wars from america in the past few decades whether it's iraq afghanistan libya somalia yemen but there's a tiny countries the whole country will galvanize if we take on a nation like china a 1400000000 people with

a massive military so we've everybody's noting this trade where we're seeing smash and grab the united states is just massing and grabbing things like tick tock bite dances the company that owns that because they're better they've produced a better product than what the american companies have been able to wawa same thing so are we going to see possibly a hot war and wouldn't that of course enable the fed and treasury and everybody to do whatever they want because obviously in a time of war all everything is on the table thus a difficult one to answer i think there is no doubt that when you get financial instability and when that financial stability the kick in a date leads to. you know people starving literally which could be the result of this crisis on that basis yes you get political disruption and very bad political disruption. one of the way in which you avoid it being a civil disruption is you attack firmus and whether that's going to happen or not i

don't think at this stage we can really say but there is no doubts that the american. if you like langley the deep state is still pursuing those sorts of tactics and i just wonder whether you know how long would it be before they start to say what we're going to take had to go nuts because he is no longer allowed. if ed again refuses i.m.f. money then i think his days will be numbered as far as the us in a deep state is concerned so we've still got that sort of behavior what my hope would be is that this crisis gothia though it will be actually puts a lid on that sort of behavior that will be other priorities. effectively watch we're talking about is the states going bankrupt when its money no longer buys anything the state is bankrupt now we can help that i'd it's it is more than

a help i would mitt that some wise heads would. arise from somewhere and take control of the situation and with the public's blessing because at that stage the public will be very very much aware of the mistakes of previous administrations actually plot a course out of it i mean this is what gemini did with the daycare hot after the 2nd world war i mean as economy minister he just took control of the whole thing and he told his military superiors the british and the americans. i don't weigh rationing what you don't weigh the rationing that was in 1948 in this country we still had rationing in 1954 so you've beat someone with imagination to deal with this at the moment it's difficult to see where those people law we've just got to hope they would arise but i think you'll think said earlier about the treasury going directly to the people bypassing the banks so another way and i've heard this

from a different quarters and another way to describe that would be they're going to nationalize the banks and so that does play in also to your think your idea where governments start to become more autocratic in terms of their how to deal with these problems you describe germany in the world war after war to accept or and that these measures autocratic measures were taken so are we politically doesn't look like. countries including the u.s. if the u.s. nationalize as their banking system and it's run out of the white house that becomes very autocratic is that true ouster. is so socratic but i if you have got as i believe we have had the baking solve a complete systemic disaster amongst big big and small banks and you know you got to look at the numbers to see if this is a very serious risk and not only is it a risk it seems very unlikely we'll get out of it unscathed then you can see the nationalize of nationalization of banks it's going to be happening everywhere. to

have been stories that what the central banks really want is to take control of lending away from. from the commercial banks and certainly the way the e.c.v. has spent a lot about the commercial banks in its network and remember it's actually one step removed because the relationship is always between a national commercial bank and the national central bank the e.c.b. is like some sort of god like figure in the background. you know as a running everything but the e.c.b. would like i think to have more direct control over economic events because these people believe that if you just inject money into an economy you will rescue it even though classical economics tells you that that is a lot of hooey but that is what they think and i think in a sense when it happens the central bankers will shock their shoulders and say well

say the v.a. but at least we've got better control over a fence now and i think that's going to be the way they look at it these are summer solutions so for the ordinary person out there watching that how do they protect themselves what should they expect in the future is there going to be another post bretton woods sort of post agreement global currency greg what's going to happen and what should they do i don't see sort of another bretton woods what i do. ca is a crisis that surviving so rapidly that the web really be a consensus as to how to deal with it otherwise other than for goodness sake we must not let any banks fail i think that would be the one point of consensus in the whole thing as for protecting yourself of a some of the anything i can suggest is get out of finance and step 2 ways in which you can do that one which is not controversial in my view and that is to have some golden sofa and the 2nd is probably a bit more controversial but i think you understand and that is have

a look at that point all similar restricted main self owning money i mean restricted in the sense that they can't just be printed willy nilly so you've really got to get out of fit and depending who you are if you are let's say you know a millennial who understands technology your choice may well be scary because if you're a bit old and does the fuddy duddy like me all say well that's going to come back as money. i would say that's you know that's that's what all your view is should really look at right let's talk about elvira noble ina over there at the central bank of russia buying 520 tons of gold just over the last 3 years awfully good timing on that well piers 3 series the charles de gaulle figure remember charles de gaulle guy france's gold up before nixon close the gold window britain of course was left holding the feet out back your thoughts alister. i think it's a very interesting comment. that the head of the russian. central bank is

a very interesting person when she was fast appointed i don't think anyone really thought this is a serious appointee is just. hussein's economic advice being promoted but actually she's dealt with a banking crisis there was a huge great banking crisis after she came in she reformed the banking system and that was ready quite an achievement. i think the policy on. it's a far as she has anything to do with it almost makes her a sort of prosecco austria in the sense that she ought to stab the for just say off someone else is paper currency that's an important point for the russians now fair enough all right alice macleod thanks for being on the kaiser report that's my question irit and that's going to do it for this edition of kaiser report summer solutions went back to stacey once again i want to thank our guest from gold money

dot com if you want to reach us on twitter it's kaiser report it's all next time by all. of this connection to the last campaign asked for the last 70 and seeing and on the day today for the that's.

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