it would be trading closer to $1800.00 without fed bond buying says society in general right now is that $3500.00 it should be at $800.00 if it weren't for the fed buying up all the basically the bad assets off the banks' balance sheets this has a lot of implications ok so without the money printing the markets would be 5060 percent lower ok that's point number one point number 2 is that asic until in effect that means that myself i own stocks bonds and gold and recording that means that the markets exist as a transfer mechanism so the fed can't just print money for me individually they print it so that executives buy back their own stocks of stocks that i own in the night benefit accordingly and as you point out 90 percent of the population doesn't have stocks bonds and these types of assets to the extent that those like myself and others might have and so that's the next point is that companies who buy back

their own stock and the executives around these companies say remember if you have options on your stock and the stock and you know guarantee there's no risk the stocks will go higher the options can go from a $1.00 to $100.00 or $300.00 so an executive can make $5100200000000.00 that's why we have so many billionaires in america is by playing this game of guaranteed upside by money printing and owning the options on your own stock and so if you strip out those numbers you would have markets that are a lot lower you'd have a lot more parity between classes in america you would have the wealth and income gap you wouldn't have the social unrest and you wouldn't have a lot of all these other problems so it's very stark very plain to see for those who want to say hey we're going to show you some charts to show you visibly how big it is but in terms of kind of a lean duck president coming in biden who's you know very very old and doesn't have . the senate and his leader says majority and the congress member jerome powell had

said last week that we need more fiscal stimulus because all i can do at the fed is create these can tell you an heiress and so here we're having a situation where there will be you know free money for the people because there's no you know you don't have a populous vibrant young leader who might be around for many years and you're going to like you want to be in his favor if you're in the senate might want to do some deals but there is no will to do some deals because you don't want to give the lame duck president any you know points that you yourself when you're in power want to achieve so you know this soc gen data again they said so the stock market the s. and p. 500 is that 3500 it should be at 800 and they say that the nasdaq should be closer to 5000 then 11000 which is totally remarkable and just to show you the charts on the s. this is the s. and p. 500 where it is and that's where it should be the red line if it weren't for q.e.

and nasdaq $100.00 you see the huge gap there and of course gaps usually close should this quantitative easing ever and if it ever can and right that that's like a whole nother story to cover but let's compare biden he comes into office potentially and this means that i believe we're going to see a repeat of 2008 remember obama took office and because obama was a pretty young guy at the time and didn't come through finance and he was. a law student and very good with constitutional law but he didn't know anything about wall street he kind of threw the keys of wall street over larry summers and all these other folks and they went ahead and they created the global financial crisis . after a fact that seemed to benefit the can tell you there's a remarkable way remember the billionaires after the 2008 crisis all quadruple or more of their wealth while vast swathes of american population live by. lost their

house so i'm pretty sure going to see a repeat of that by that's why they say from 11 years ago 2008 when obama was elected that's the point where it starts and that's those that the trillions of dollars you know that gap represents trillions of dollars trillions and that's why they're so wealthy and you're not and of course like as we've already covered on election night when you know it's like a few days afterward to determine to declare a winner but at that night when trump was ahead chinese currency crashed and then when it was biden it soared so you know that is something that ordinary you know the deplorable people across this country have to consider that this is the system they're stuck with for the next 4 years china continues to eat your lunch and you aren't even going to get free money there is going to be no m.m.t. for all there's just going to be more can tell you created and. soc gen also looks at the bond market and they're saying by the way that you know is the fed buying

all these bonds that drives the risk appetite which is directly then causing the stock market to soar so in the bond market this is what the 10 year treasury should be instead for their part the soc gen analysts using a mix of wheat glee macro economic indicators running back to 2005 took a stab at estimating the effect of the fed's bond buying effort on the benchmark 10 year treasury yield no they concluded that q.e. likely knocked around $180.00 basis points or $1.00 percentage points off the 10 year yield so again putting it into the storable context the 10 year yield in an american economy that is capitalist is foundationally constructed on a central bank and banking system feeding into the not for normal class the long term rates are traditionally and you can make a strong case for them to be without. equivocation around 4 to 5 percent that give

savers enough money to save for retirement if they work hard in the economy when the fed started buying back these bonds and dropping raise to near 0 they transferred trillions of cash from savers you know your mom and your dad out there they probably have grandpa they called you up and said hey you know my retirement account dropped 8090 percent of income that was this wholesale thievery going on by moving that capital to wall street and then use it to speculate and as i point out about their comment about risk the dea risking of the economy know that if you know beforehand. before the roulette wheel stops that it's going to land on red then you know we're going to put a lot of a lot of money on red when wall street knows that as as was said during the 2000 a crisis the news that goldman sachs got ahead of everyone else at the bailout was coming allow them to put go all in and they quadrupled their wealth overnight again so that that's money that's been extracted from the real economy using this

machination pass through a mechanism that looks like a market economy but it's actually a rigged kind a way to feed billions to your friends of course when you just talked about grandpa you know and their pension being eaten by the feds quantitative easing policy. i thought of cenk uygur of the young turks he tweeted that he was so glad to have like a grandpa in office and i say this guy still has to work because of the fed's q.e. policy like that's why we have this you know this gerontocracy as they call it here in america remember they're replacing capitalism based on supply and demand free market economics with what they call progressivism like so they're trying to base an economy on progressivism just bad economics they wanted to do mt they're not going to be able to do that but remember on the campaign trail in the very last

week what we're buying and then harris having to say they love fracking they love fracking and this is the bad economics that again kaiser reports been right for years on this because not only did the fed encourage this the growth not even encouraged but created the growth of this can tell you our class and encourage risk taking and forced pension funds into risky assets and they forced pension funds into private equity funds that were invested in what shale ok well you know biden love shell but i'll tell you what exxon mobil which used to be the biggest company in the world the biggest american company in the world and now it's being displaced by high tech of course but exxon warns of $30000000000.00 shell right down a decade after buying x t o again this goes back to that 2011 p.r. in 11 years ago syria had that all this cheap money the quantitative easing drove people into the shale sector which never made money ever even when interest rates

are 0 even when oil prices were over 100 even all of that stuff and they never ever made money so you know people tell us we're wrong and they'll tell their wrong for $30000000000.00 you know how much exxon how much how many shares are in pension funds in grandpa's pension fund you know they're having. right down there shale investment because of the patriotic fervor that was happening that and and this delusion that there was somehow that this was that a great investment because the yields are so high and blah blah blah 70 percent of our fracking rigs begin life negative cash flow and never make money the remaining 30 percent end up losing money within 3 years the industry as a whole is cash flow negative and is only exist for one reason to allow wall street to create junk bonds to sell into pension funds and they missed sell they did not state that those bonds if you look at those junk bonds for a pension for shayla history and those that they're all catastrophic play down and

they all will go to 0 and then what will the politicians say particularly those who are saying we love fracking oh that's right they forgot to take a pencil and a piece of paper and add 2 plus 2 and come up with for the politicians whoever's novice will say 2 plus 2 is actually. we're not sure so sorry. but sorry if you're sorry that you're poor i guess that's the that's the main with awake right now are your poor no it's called have fun staying or have fun staying for the main with awake so if you're in the shell business have fun staying for well energy stocks have lost 50 percent more value than the s. and p. 500 has the biggest drop of any sector going back to 1928 which was like just the decade before biden was born so i think it's like it's quite interesting that this is like a full circle that this this industry this era is over we're at the end of fee outs at 0 percent where 0 pounds were hit we've hit 0 dollars over by even came into

office $97.00 to just after we went off the gold standard so this is just coming full circle and we're going to sleep and who beats us in high tech of course is china and that's what the market said is where that's what the market said it has been decided and that's right i think the current whoever is there in the white house going forward that's a bit of a poisoned chalice because they're going to be in power during the worst collapse ever in history i think there's a 99 percent chance that well there's a 100 percent chance we're going to take a break and when we come back much more coming your way. the or tactics that can be used to get innocent people to confess to crimes they didn't commit i don't even think people in the u.s.

really get that the police are allowed to lie to the person who falsely fast actually came to believe the lie that they were told about their own behavior one supposed confession is taken the case is closed and nobody really can tell the difference between a good confession and one that is. well the demick no certainly no border is just blind to nationalities. as americans we don't come with me we took a back seat the whole world needs to be. judged . commentary crisis with this system to modern times we can do better we should be doing better. everyone is contributing way but we also know that this crisis will not go on forever the challenges create the response has been masked so

many good people are helping us. it makes us feel very proud that we're in it together. you know close will sleep will push through the door but. do you love a boy who was. sure. boarded up doesn't actually matter the age to put a gun most of. you got to go with us because all of these to do just about because those stories could be game we will see in the. vehicle is with it would seem the most serious but it's the most insidious some of what is in your speech come off and used. the 20th century was doing in a revolution the great depression and world war the 21st century of mental illness

. those aren't my words that's what surfaced some psychiatry's to tell us the only question is since it is a fact. welcome back to the kaiser report i-max times or time had to go to lynn all the lin all the investment strategy linda welcome to the kaiser report thanks for having me i love your show oh excellent so jerome powell is as we're having this interview he's testifying before congress and his one of his comments i want to get your comment on he says that fiscal policy is absolutely essential here he's kind of throwing it back to congress and saying you know we need to do a dress festival policy so what does he mean when he says that some of that has to

do with the transmission the transmission mechanism for you know the asset purchases that he wants to do so for example when the fed buys you know treasuries mortgage backed securities or apple bonds or whatever the case may be that doesn't make it out to the average person right so that that's that's mostly you know a liquidity boost up asset prices but you know you know large fiscal deficits whether it's in the form of stimulus checks or other things can get out to the you know the average person so basically that you know the federal reserve here they've already done you know wait wait a bunch of programs for monetary policy but they can't really target you know to individuals the way that the treasury can which is basically saying is you know if they want you want the treasury to do more of the targeting and then the federal would be to you know to finance that to buy the bonds as needed to maintain a little liquid treasure market it's an interesting phenomenon because he has been doing money printing over there at the fed by the trillions and trillions of

dollars he's saying now that we can't get individuals you've got to work on that over there and congress concurrently with that we see that the velocity of money has been collapsing for years up until recently maybe there's a slight. james we can comment on that what does that tell us when the fed saying we're trying to create inflation by printing trillions for years but if the velocity keeps going down are they hot damn they keep doing that what's what's going on here well so if you look at money velocity that you know that most refers to the broad money supply and the federally has partial control over that so when they print money that mostly gets in the bank reserves and the 2 ways that that broad money supply can increase are either banks lend it to individuals and corporations and use the broad money supply that way or the federal government runs these massive deficits that are monetized by the fed and of course this year we saw the 2nd of that so we saw you know the treasury ran very large deficits and

a large portion of that chese issuance was purchased by the fed so instead of extracted from the economy somewhere from taxes or lending and then put back an economy somewhere else it was extracted from nowhere as extracted from new dollars and then inserted elsewhere in the economy so we saw this big increase in the money supply but we haven't seen it you know we've seen a g.d.p. decrease this year because of the pandemic and because of you know there's a variety of factors there so there's wealth concentration generally results at lower velocity and also aging demographics in technology increases so we're seeing basically that broad money supply is going up a lot faster than g.d.p. over the long run and that's a recent philosophy caught out you missed a couple things there about bank lending and wealth concentration so the banks are not lending back france philosophy went back a lines to bank b. and then bank bailouts the banks say you know that creates velocity of money and

with interest rates at 0 percent and with no blending from bank to bank the last it goes down that would suggest that there's no demand for money there's no demand for credit and here in the united states there. are millions of entrepreneurs who are always looking for capital to start businesses. and then you mention a wealth warning and so my question is are banks courting wealth in a way that they're not making it available to small to medium sized enterprises. which is walk us through how they're able to do that because if interest rates are so low as they are today and we know that there are millions of entrepreneurs who want to to do business what are the banks doing how do they get away with that it seems to me like they're doing something that is economically unsound or on the dodgy side of things or what do you say to this well yeah the challenge is that

when the banks perspective they just want to maximize their profits and so whenever they look at a loan they're looking at the risks and the potential rewards from it and so when you have very low interest rates you know the overall upsides pretty much kept the risk is still meaningful that they could lose the entire loan if it's a bad loan and so you know there are some places where we're actually seeing you know for example look at credit card interest rates they're extraordinarily high and that's because you know that's an area that hasn't really been held down artificially so that market jelly represents more the true risk of that sort of lending where they're lending out but then they're getting really high interest rates in return resume look at the mortgage sector or you look at corporate loans or you know smaller personal loans business loans basically that the race is pretty low and so the credit worthy demand for that is somewhat lacking and is the way that things are set up now you know part of why we've seen you know what many people have called a k. shaped recovery is that large businesses they could access capital markets whether

it's bond issue it's you know even with the fed you know helping to push down yields they can get access to capital whereas as you point out small businesses you know there is a lot more kind of a higher risk and they're more reliant on banks and just banks have seen it in their favor you know the cost. benefit analysis to do a lot of lending in that area they're worried about you know the cost of that business if they're going to be there or not and you know basically if you look at lowering interest rates in some cases it can be stimulative but only to a point because if you get to a low enough interest rate it's not like you know going from 2 percent to one percent is going to make you take out a loan they weren't otherwise going to take out so for example back when there was higher inflation and higher rates going down from 8 percent to 5 percent could be stimulative but when redound here near the 0 bound lower lower rates this increase reliance on monetary policy does this really do a lot is that it's not really getting out more into the economy right i get that

but what troubles me a bit is that banks are in the business of making loans that's what they do you know and they're not making the loans and some fine let's say i'm a shop owner and i sell tomatoes and i get wholesale deliberates metals from the farm and i decide i'm not going to sell my tomatoes today i'm going to hoard them because the price it's made us is going up then people end up starving so then there's a case to be made that you're that's a bad actor in the economy they're not fulfilling their role as a merchant so banks are not fulfilling their role as a bank when it makes sense for the government perhaps to introduce a public option and say look we're going to have a bank that makes loans that doesn't hoard the cast that doesn't increase wealth concentration and doesn't try to game the system all the time as we've discovered from some of these big banks that have to pay fines all the time for cheating this doesn't make sense to have a public bank like that i mean in europe for example you go to the post office and borrow money at the post office is also a bank and they don't it's just

a bank right we don't have any real banks in this country live and i think there's a case made for that even if that's the one policy option so far we saw this year is that they did something similar with you know the p.p.p. loan program but of course they structured it show went through the banks so banks got a cut of that it was. actually you know the fed i mean the treasury and the fed raise the backstopping you know the risks of the banks and so one way to look at it if you look at you know bank holdings of treasury securities they're at multi decade highs right now so basically instead of lending to the broad public banks are buying treasuries and lending to the federal government and then the federal government is basically you know running these big deficits and getting it out you know in some ways to the public so basically banks are lending but through all their only choosing the absolute safest assets rather then going out and lending to small businesses and other things like that of course it comes and individual banks to some banks you know these large money center banks for example are very

different than a small regional bank specialize in certain types of loans many of them for example at mit caught out in bad energy loans right there are some banks that specialize in that and they've been you know by basically making all those loans that so there they were punishment for actually doing the loans whereas other banks it is holding back and not lending at all so it really comes down to individual banks some of them are kind of you know more aggressive than they should be at areas that are just not economic and other ones they could be doing more and they're just choosing to go with the really kind of low risk groups of buying treasuries and holding reserves you know you mentioned wealth concentration and we talked about the dynamics of banks and the fed and how money circulates another term often heard this year and last few years is the cantillon effect ok this is speaks to wealth concentration and how this money does or does not circulate. is is is that part of the banking plumbing the that i can tell in effect is that an underlying cause

of a lot of. the wealth concentration but now we're seeing a lot of social unrest that's coming with that wealth concentration on that and the divide and disparity in society can can can we point to the console effect and say look this is a primary cause of this when i think that's a big. part of it yeah and if you look at you know over the long term we've had basically rising wealth inequality since you know about 40 years 45 years or so ever since around the mid seventy's it start to go up and you know there's a variety of factors for that there's fiscal policy there's monetary policy there's all sorts of reasons you know there's technology that basically takes something we've had a you know geopolitics this this big kind of offshoring movement we've had it really excel or it in the ninety's so all these factors are basically coming to a head over the past 3 years you know when you run into the 0 bound and when you know we are already off short a big part of our manufacturing base basically yeah if you're if you're if you're close to the money sources you're doing ok this year but if you work you know if

you're further from those resources you know many of these bins is out of luck right so if you're for example a large restaurant chain and you can access capital markets you can get the financing you need to stay liquid in this environment if you're a small kind of family run restaurant is much harder if you get financing and so you're further from the money source and so we've seen a very large number of closures for example of small businesses and and family restaurants they mention the early 1970 s. of course 171 next and close the gold window we want to at all fear out world and this was an echo in response to back in the forty's with the creation of the bretton woods agreement after world war 2 and trying to architect the global economy in ways and that that time it was tied to gold now the i.m.f. a week before said now they're looking to do a new bretton woods the global standard the dollar standard turns 50 what do you anticipate with this new bretton woods the i.m.f.'s calling about how that

changed things line what we're already seeing over the past couple years more and more kind of a decentralization so for example if you look at trade between russia and china over the past 2 years it's really the dollar ised so it used to be you know most like 80 percent to 85 percent the trade was in dollars and. past 2 years that shifted to something like 45 percent of their trade dollars in you know of course now we've seen iran for example potentially using because to go around and sanctions and so we're seeing more of these kind of off dollar channels already developing so my base case going forward is that that's going to continue in some way that we're going to see kind of a diversification in payment networks including for oil which is a big part of this you know petro dollar system now i think that there are these going to be these potential you know pushes for reform or in like a 2nd bretton woods to see if policymakers can try to unify that but that you know the trouble there of course is that you know now we have kind of increasing

multiple the world so why you know it can be hard to get countries to agree on things especially countries that feel that they're benefiting from the current system and so you know whether or not any of that goes through we're already seeing some fracturing and decentralization of of you know what how global trade is dot right hey we're going to do a 2nd part with you but that's it for this edition and thanks for being on land thanks for having me farai nothing to do for this edition of kaiser report with me max kaiser stacy never want to thank our guest len all the end of lent and an investment strategy and a nice time file. for . analysis still seems wrong why don't we all just don't call. me old

yet to see how he's going to come after bill and against me because of the trail. when so many find themselves worlds apart and we choose to look for common ground. during the vietnam war u.s. forces also bombed to neighboring laos there was a secret war. and for years the american people did not know. until our so much that is officially the mouth can rebound country per capita all human history millions of unexploded bombs still in danger lives in this small agricultural country jordyn wieber. even today kids in laos full victims of bombs dropped decades ago is the us making amends for the tragedy in

laos what help to the people need in that little land of mines. so what we've got to do is identify the threats that we have it's crazy confrontation let it be an arms race is often very dramatic development only personally i'm going to resist i don't see how that strategy will be successful very. time to sit down and talk. this is a story of women and women with troubled histories and complex court cases you know some really believe. out there. where nat. the person that. if she's innocent be considered the most dangerous of criminals she's in a still. mouthing off 23 hours of the day tell me that it's not enough and it.

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