max kaiser this is a kaiser report you know things are not what they seem. so i said. well max you've often talked about the me mcconnell me and the you know the economy getting ever lighter and lighter there are more and more intangibles and this is shown in this chart 84 percent of the s. and p. $500.00 assets are now intend to fools this is a chart of the corporate balance sheets are more knowledge driven s. and p. $500.00 company assets in trillions of dollars and as you see the tangible part of companies they just increase slowly since 1075 when 17 percent of a company's assets were intangible back in 1075 and now it's 84 percent companies

used to make stuff and they had value terms of the factories and their employees and their trade deals etc but now we have a situation that chart shows 84 percent of the value intangibles or the knowledge based on knowledge so take a look at tesla for example they must has knowledge about how to go on joe rogan and promote his means he has knowledge about creating means he has knowledge about branding he has knowledge about interesting engineering ideas but the actual book value of the company itself is nowhere near the hundreds of billions of dollars we see in the stock market that's true across the board for every single company really in the s. and p. $500.00 they make their cash flow on the ability to game the system and to exert arbitrage spliffs on the data that's being rolled on the various cash tasks of different banks and like you have on lost so

eloquently demonstrated on the joe rogan show so this is interesting use the word knowledge because you think about knowledge any think that it has some basis in some kind of foundation of wisdom but this is knowledge about how to use artificial intelligence and knowledge about how to use propaganda knowledge about. do you subliminal advertising that it's evil evil or they might as well just replace intangible with the word evil well i don't know about that but certainly it is an interesting time and we do see it you and i grew up in the 1970 so we saw what it was like to have a more tangible economy and that could be part of why so many people are having a meltdown while we are having problems domestically in the united states in terms of the economic disadvantage you know and the inequality growing so you know it's not like an intangible thing as you mentioned tesla is worth $400000000000.00 based on one guy you know it's not his team of engineers it's not

all that other stuff is just this one guy so you know you don't have to manufacture something to be worth tens of billions or hundreds of billions of dollars right well how to get the valuation you get by multiplication of stock price times current number of shares outstanding and if you have knowledge on how to buy back your own stock and pump up those stock prices and executive stock options then you have a hierarchy where you actually didn't create anything for the economy you didn't engage in any capital expense expenditures a cap ex to expand your company in any way then what will happen is what will happen the i.b.m. you know they want to the whole stock buyback routine then eventually played out and the car companies a shambles or general electric general electric is almost absolutely out of business by trying to push me a miss instead of products we'll find out one day if there's any if the fact that there's no there there matters at all it's also coincides 1975 we had only been off

the gold standard for a few years so the global economy and global trade used to have more there there because if you sent us your oil or you sent us your manufactured goods you got gold back in return now you can't fluffy paper and that could disappear you could be cut off your whole nation could get cut off from the swift grid so your paper. might not mean anything your gold had you you know exchange goods and services for gold those would always mean something and it would always be fungible but let's move on to another thing that's going on in the markets about this you know we've had intangible now we have the issue of inertia and the investors are pretty angry well investors vent frustration over fed's balance sheet inertia well apparently the fed balance sheet growth stalls max and you see that in the little top bit of the chart it's stalled and what do we always say here on kaiser report you can't taper a ponzi and that's tapering a ponzi you have to keep on feeding the ponzi scheme you have to keep on feeding fresh new debt credit and cast so if you're not doing that then it all comes apart

well the core intangible all asset of the american economy is the u.s. dollar that has no intrinsic value it has no value at all really and the country itself is mired in debt right so it's got negative value their acts are going to go to negative interest rate so the as you point out the only mean value of money particular burr in the ponzi scheme that comes with a massive multi-trillion dollar printing schemes. to be illusion of a working economy and if that money spigot is turned off it's like turning the off switch on the whole the ground that is the american economy they were active economy if you put all those names together right that's it was a holy ground and that is the u.s. domestic economy it's a $25.00 trillion dollar hologram composed with entities like a tesla or a general electric but our teams within the whole of gram if you turn it all off by

cutting off the money supply then everything disappears overnight well the chief me maker of all is of course how fed chairman who has created the best me most of all the educated the world instantly at the same time so everybody got knowledge at the same time of what this money printer go but it does. in order to keep up well keep this wealth and income gap that a lot of people around the world are really starting to take issue with that money printing that these investors demand hedge funds and private equity and friends of the fed demand is also causing the threat of inflation everybody's wondering whether we're going to have inflation or deflation whether the fed's printing is going to cause more place in our if it's going to cause inflation some people like re deleo and gun locker saying that inflation could get up to 10 percent well here is adam back with a tweet about our guests michael saylor of micro strategy he says we just

have the awful realisation that we are sitting on top of a $500000000.00 ice cube that is melting said michael saylor on micro strategies $425000000.00 bitcoin by this is not a speculation nor is it a hedge this was a deliberate corporate strategy to adopt a big queen standard i think this is for someone a moment in this it marks the transition and the inflection point where we go from this story about deflation to a story about inflation because corporations up until this moment have been using that cheap money to buy back their own stock and boost executive stock options and basically gaming the system and encouraging the central bank to print trillions and trillions of dollars what michael saylor of micro strategies and his team have realized is that ultimately this is incredibly destructive to the dollar and the dollars purchasing power will crash as it has done in other countries like

venezuela in some bob way and therefore it's prudent to prepare for this collapse of the u.s. dollar by owning the hardest possible asset that you can and that means bitcoin and he very eloquently describes why. big question is much harder magnitudes harder than gold and we'll get into that in a 2nd half but i think the importantly what this signals is a really a watershed moment to going all the way back to the 1980 period when we saw the beginning of this bull market in the bond market which has now been going on for 40 years and interest rates have been going down for 40 years and we've had this this inflation deflation story and that cycle i believe now this is the top of the bond market finally with this micro strategies by bitcoin so he's protecting the company by converting the dollar treasury to bitcoin is 5 $100000000.00 ice cube that is

melting so here's a tweet from ice cube who perhaps one time was worth $500000000.00 the rapper the rap star and he tweeted a link to the photo of the deficit mess by stephanie calton m m t modern monetary theory right. where the vast majority of people are looking at the situation and seeing this rise in wealth and income gap especially the wealth gap and why is the wealth gap happening because of the cantillon fact we have a class of cantillon heiress who get fed all this free money from the fed the fed buys their corporate bonds above par so they're paying above market rate and what we're seeing is people are starting to think well if the feds printing them free money why don't we get free money like give us free money and then we could compete with them so he ice cube tweeted america loves to cry broke but in america

money does grow on trees right so this is going to be a very confusing time for a lot of people because they don't understand that the can till you marriage did so in a way that was subversive and undermine democracy and so m.m.t. or modern monetary ferry is not the solution to a club talk or say. it's just trying to grab some of that kleptocratic money for your own but the kleptocrats are not going to give you any sadly ice-t. that's the truth. it's ice cube ice q. ok fine. you know but this is the way every single banana republic starts the oligarchs take a huge amount of money they becomes corrupt and they plunder the state then the people rise up and they throw them out and install a dictator who will then give them free money and then it all falls apart that's that's kind of the the path it takes so the people are now starting to rise up and

say hey give us a free money because we've sat here for 40 years waiting for our free money even giving free money to these bankers and your friends on wall street for the last 40 years where's our cut we're finally ready for it and if they go down that path if it doesn't solve the problem of wages as i've been saying now for 20 years if you're sincerely interested in the left wing. policy to combat the kleptocrats you need to tie money supply with wages if money supply goes up by 15 percent so to wages that's the connection you need to make and there would restore balance to the economy and it would get rid of the can tell you there to a large degree but since labor has no organization and has no representation that's not going to happen either well we don't have labor we don't produce anything we don't make our cars here we don't make our stereos here we don't make our anything here everything is made in china so you know you need to create wealth in order to

distribute wealth so if we don't have any wealth creation all we have is free money and you know only a small group of people can live off the labor of you know a 1000000000 chinese like you can't have a huge middle class in the united states off of that michael saylor and micro strategies they're not philanthropist they're not doing this because they are you know egalitarianism guys they're doing it opportunistically because they see that the tide has turned and every single company in america is going to come to the same conclusion and we're going to talk more with michael saylor in the 2nd half on this so don't go away.

wasn't underneath the nose you know born is just a lot to nationalities. as a. 2 commentary this is. congress don't want to times we can do better we should be. everyone is contributing to your own way but we also know that this crisis will not go on forever the challenges created with the response has been much so many good people are helping us. it makes us feel very proud that we are in it together. time after time called parisian to repeat the same mantra sustainability it's very

important to excel or transition to sustainable transport sustainability stay number man not be more equitable and sustainable well. they claim their production is completely hama's. into the models and. companies want us to feel good about buying their products while the damage is being done far away and this is something i'll just doesn't want anyone else i mean look. this is the moon and news to me didn't anyone and i'm stunned. understood so when. welcome back to the kaiser report by max keiser time now to turn to michael saylor c e o of micro strategy who bought $38250.00 bitcoin for

$425000000.00 cost averaging every 3 seconds in over 88000 trades michael welcome thank you match great to be here micro strategy is the 1st s. and p. 500 company to essentially adopt a bit coin standard or something close to it what was this let's revisit your road to damascus here years ago you had tweeted that bitcoin would go to 0 now what so what changed your mind i didn't really tweeted in 2013 i didn't i forgot about it and then 2020 came along and in 2020 we watched the shape recovery and wall street we watched an l. shape known her career on main street. i looked at my cash and i realized my i had $500000000.00 accounting was going to melt away and my understanding inflation flipped then and i realized that the real inflation rate is the asset inflation

rate asset inflation rate was looking like 25 percent this year and looking to be 10 percent or more in the next 3 or 4 years and i just imagine losing $50.00 to $100000000.00 a year in asset inflation and set out on a scary us journey to try to find something to do. and eventually don't lead me face you know to precious metals or bitcoin and analyze it all. i looked at bitcoin and i jumped through hoops wondering well what big coin well we're not a crypto currency replacement and i think the thing that really was a big big decision point for me as i realize a bit quine is more than 90 percent of the market for true for work crypto currency which meant it was completely dominant and then i realized that all the hard forks that had taken place in 2017 had merely made the point value proposition better and they had made sure that it had gotten out of its adolescence and start it if i was

making that decision in 2014 or 2013 before the hard forks and before declaring cash bequests be and all that complexity and if i was making the decision before i saw all the institutional great cost go to enter exchanges come online it would have been very difficult and i don't doubt i could have done as a public company officer but i think in 2020 i finally had as a security that i thought i could invest the treasury and because of those things the moment this news broke and i looked at it and a lot of things are answer my mind and one of the things that popped into my way of thinking is that there's a company with a big cast position and every single company that i've been writing about the last few years a big cash positions they. end up buying back their own stock and a lot of times they finance these purchases because interest rates are near 0 or as arrow and you can borrow money at near 0 percent buy back your own stock of course

this diminishes the shares outstanding it gives a big boost to the stock it gives a big boost to the executive stock options and i and i see what micro strategy is doing and i thought wait a minute. is this a turning point in terms of inflation because that stock buyback only works if you can get away with that without any inflation i know i.b.m. went through a big stock buyback program at eventually it worked against them so i guess the question is on a corporate strategy level eat it not for the stock buyback and he went with bitcoin walk me through that decision 1st of all i think if you're sitting on cash you either have to buy equity with it or you have to buy some other asset with it if if the inflation rate felt like 3 percent then your cost couples 3 percent but this year the inflation rate seems like it's going to be north of 10 percent for

the next 5 years so your cost a calculus north of 10 percent if your company's not growing its cash flows faster than 10 percent then if you buy your company stock then you're actually going to be deluding yourself and so a low growth company and a high inflationary environment buying a stock back that's a losing proposition and on the other hand if you could find out well there are huge company that had you know 20 or 30 percent cash flow growth that was not overvalued you could buy that maybe that's good but you can't find those today we actually looked at this and we said we have to do this movie we have to do in a respectful way to our shareholders so we actually announced we were exploring it 1st and gave her body a chance to digest that then we announce we bought 2 $150000000.00 of bitcoin. and simultaneously we made a $250000000.00 tender offer to our shareholders at a premium so anybody and our shareholder base that disagreed with the big point

strategy and wanted to tender for cash had the option to do so we let that tender offer run we only had about $60000000.00 worth of shares tendered we took we took that share count out and reduced our are our shares outstanding but then we took the extra $175000000.00 and we reinvested that in bitcoin so that over the course of 6 weeks we substantially converted the entire $500000000.00 into either bank or to equity you know my investors would say why don't you just give us back all that money and buy back $500000000.00 worth of stock and the answer is if i didn't capitalize the company so that we have no treasury assets left if we run into a problem that we could be insolvent you know like i have a bad year i don't make 50000000 i make 10000000 i run out of cash i can't make good on my obligations to my customers my employees my vendors my counterparty so

you can't dick out the lies and institution that you wish to last for the next 30 years and that's the problem with buybacks exclusively they put the company at risk we've seen in this town downturn companies are short of cash and they're highly leveraged and a lot of are facing huge problems so now but again on a macro economic scale here at that you are kind of making a bet and in terms of the re-emergence of inflation and a big way you use 10 percent inflation number at the fed says are trying to shoot for 2 percent there's a disconnect there where their methodology has been played up by many folks they don't include in their basket of inflation things that actually go up in price it's a it's a misnomer it doesn't really catch inflation of course being an executive a. a company like yourself you can't drink the kool-aid and go along with the program you've got the liver results for real so is tell us about this inflation rate it's really 10 percent i mean if you look at right and number the best my 1st

question and then the 2nd kind of add on there is. are you the tip of the spear i mean these companies like apple and all these other big tech companies with hundreds of billions if not trillions of casts on their balance sheet that you characterize as a melting ice cube in the face of this rail inflation is this the beginning of a wave. of corporate of due diligence and prudence that you're obligated pearlie or shareholders to move into calling michael i think it is the beginning of a wave i think you'll see various groups 1st find out where the individuals and family offices 1st then you'll see private investors and private corporations 2nd and then you'll see institutions and hedge funds and then and you'll see public companies come and then after that eventually the smaller ones mid-size ones then the big ones then you know then the sovereign funds exciter are but with regard to

inflation yeah the idea that c.p.i. is inflation is a misnomer right as it is so it's a fallacy what you call if you think about inflation it's not a scalar it's a vector which means that there's a different inflation rate on different things there's a bucket and i'm out a market basket of deflationary assets like you tube and oberon and stuff you can get from apple and pandora and spotify and amazon and that stuff is going down i think it's manufactured by robots or a eyes it's getting cheaper. then there's another bucket of things that are going up 0 to 2 percent and they're lightly manufactured commodities and generics then there's another bucket of things going up 78 percent there are luxury branded items like a harvard education or a gucci bag or something that's so that's thought to be unique and then the the

highest inflation rate is on assets that are inflated between 8 percent and 25 percent you know and this is. stuff that i don't pay attention to most people don't if you bought a $1000000.00 bond in the year 2010 a page of $50000.00 a year in an annuity stream you can retire on it and this year you'd have to pay $10000000.00 for the same bond so it went up by a 1000 percent over 10 years and that means that it's been running an inflation rate of 22 percent for the last 5 decade the same you know the s. and p. and x. is about 8 percent for a decade truly scarce assets like beachfront property where you want to live or someplace that you really anything you want that's your i scarce is going up north of 8 percent a year in a good year and this year you know if you wanted to share of apple stock at the beginning of the year well it cost 3040 percent more now because it costs a lot more for all those in nobody's so i think you look at inflation is a vector and the assets that will allow you to never work the rest your life are

inflating your to 10 percent and the things you can buy like a domino's pizza and a you tube streaming free video is deflating if you wish to create a market basket of deflationary assets you can cart the inflation rate to be below 0 for ever but of course you know it's kind of like a jet i mind trick it's like i'd like to work make a $1000000.00 and retire and never work again i need to buy a bond for that these are not the droids you're looking for you don't want that on that's not for you somebody else wants to have on so based on empirical evidence we can say with a high degree of confidence that jay powell at the federal reserve bank is understating inflation by 8 and a half percent lace and that's the reality today and if people understood that they would understand a lot more about why these markets are doing what they're doing now you're not the only guy who sees this inflation risk paul tudor jones went long but calling famously a few months ago ray dahlia has piled into gold warren buffett dumped his long held

bank shares and went long a some go. miners and also japanese stocks kind of get out the dollar stand back and miller is warning about 10 percent in place and of course he was a partner over there with soros and renowned money manager so you have people in your camp and again i get back to the sea change in markets and we've had and you mention the bond market there as being priced in a way that doesn't reflect the real economic environment out there but it has been an almost 40 year bull market going back to 1980 so is this an inflection point or you know can we say based on wally's smart people in what you're doing that maybe the bond market itself is about to turn what are your thoughts on that i think it is because i remember i came of age during paul volcker's administration and i

remember 18 percent inflation huge and huge interest rates and then we just saw interest risk free interest rates mortgage down 6 us a boy if the cost 3035 years they can once they go below 0 what we have is a war on current sheep and not not like a war to make the u.s. currency weaker than the euro now warrant currency is anybody holding currency is getting attacked and so now that we're starting to realize that currency is being made toxic by the political you know financial policies of the central banks you kind of have to run away from that currency to something that's not toxic and i think decline is that nontoxic currency all right we're going to take care of this over to a park too but thanks for being on this parson on the cause report michael saylor thank you farai that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert want to thank our guest michael saylor of micro strategy until next time by al.

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when so many find themselves worlds apart. just to look for common ground. in the headlines the 24th of september germany is deliberately delaying a response to moscow's request to hand over data on the lead poisoning of alexina valmy in every possible way is the allegation russia's permanent representative to the global chemical weapons watchdog tells r.t. . deliberately delaying the process impeded the completion of the preliminary inquiry and brush that was held in order to ascertain whether there is an offense or not. french mayors condemned the health ministry for not consulting with them 1st and reimposing coronavirus restrictions across the country as cases spiraled since the national lockdown ended.