and gains from it equals betrayal. when something find themselves worlds apart we choose to look for common ground. the benefits far outweigh the risks that's the ruling of the european medicines agency on the astra zeneca vaccine days after countries had suspended it amid blood clot fears also ahead. if you assume with when i was a child and we had arguments in the court you know we were saying that you flimsy of me and sticks to you. a lot of your putin response to joe biden branding him a killer in a recent t.v. interview we contrast the american president's words to his recent promise that diplomacy is back. and the democrat run u.s. house of representatives rules to handle 2 and a half 1000000 undocumented migrants the chance to get citizenship under

a new dreamers bill. those are world news headlines for this hour on behalf of the internet international team thanks a lot for watching and we hope to see you again soon. max kaiser this is the kaiser report some much to get to important stuff let's check in with stacey maxwell we have a headline here suggesting that the bank of america analysts are ready to take on the widow maker and that is betting against u.s. government bonds which have been in a bull market over what 45 years something like that a long time many decades so bank of america we believe we are at a secular turning point for both inflation and interest rates with quote new

central bank mandates excess fiscal stimulus including u.b.i. less globalization fading deflation from disruption and demographics the 40 year bull market in bonds is over they say they say it's over max and he is there to start looking at that top dark blue line is deflation assets and how they have performed over the past few decades and they outperform the inflation assets we've been having deflation they say and they count inflation assets which they predict will outperform the next 10 years commodities real estate tips e.a.a. f e us banks value and cash which is where to put cash of course in inflation asset. is europe a strong australia and far east deflation assets are government bonds us and investment grade s. and p. $500.00 u.s. consumer discretionary growth and u.s.

high yield bonds. well this is the big one the big onto a lot of the big bull market over the past 40 years that has been the foundation upon which the economy around the world particularly in the united states has been built because with that big. deflation trade as it's being referred to you end up having lower interest rates lower interest rates that's the key that's been keeping the american dominance rolling for 40 years because every time there's a mistake like in 2008 for example or the dot com crash or the stock market crash of 1907 or the bull market crash of 1993 the answer has always been to extend and pretend and that means to extend the maturity out to longer maturity date. and watch bill's maturities rise in value because the central bank has been

instrumental in assisting in this bull market in bonds by purchasing a lot of these paper to keep interest rates artificially low and that's the story of the past 40 years if bank of america is correct and the bull market of bonds is over and interest rates are going to start going up that means that pretty much 90 percent of the american economy in the global economy will start to become insolvent so they're basically identifying trends that you and i have pointed out here for the last few years and increasingly making a focal like the globalization they're now seeing that and that's because of the city's trap america doesn't like to see china overtaking it but it is overtaking us so we will withdraw from the world we'll try to make sure that nobody else can trade with china will introduce tariffs on china as we have done and biden has yet

to remove the tariffs that trump introduced on many of the goods coming out of china we've introduced tariffs on on goods from canada and europe so i'm not sure if biden has yet considered even removing those he's also saying where there's a feeling deflation effect so a lot of that deflation effect has banned from the central banks have you as you've identified because central banks can't print money they can print credit and the credit is deflation because they just that credit can never be paid back so therefore it's always deflationary it's going to collapse all the time but also that technological advancements have created a lot of deflation and those are going to be over necessarily because of of the fact of deagle bliz ation and then demographics so the boomers are dying off but. lindsey are inheriting their wealth they're also well they have their own entire

economy strong a structural economy based on like bitcoin and digital assets and digital existence if the u.s. wanted to take another route here in 2021 and instead decide that they were going to try to compete with china by biting the bullet and taken the hit to the economy by introducing manufacturing back into the economy and a more prudent lifestyle to try to rein in the excesses and to go head to head with china on the competitive basis that would be the smart thing to do but instead they're as you point out there de globalizing they're withdrawing they're shrinking because china is moving ahead and they're becoming belligerent and what usually happens is as many have pointed out currency war leads to trade war leads to a hot war so the u.s. sadly instead of just out there competing with china like ok you know what we you guys are tired of you out competing us we're going to compete they're going to

probably big you know violent which is sad but protectable you know they're also pointing out there that you're starting to see for the 1st time fiscal stimulus from the u.s. government and so he spend you know credit stimulus from the central banks or money given to bankers who then don't circulate the money and that's why we've had the money so velocity collapse and that same time of this this this huge surge in deflation assets deflation was remaining while banks just the wealthy the financial system hoarded all that credit they didn't spread it to the ordinary person now it's spreading to the ordinary person they're having air drops in their bank accounts almost the hope quarterly at this point but soon they're hoping many in congress are hoping it'll be monthly or even weekly that people will be getting like $2000.00 a week which of course is like far more money than me. most of the world makes but here and far more money than the rest of the world makes actually going out and

working really hard in a factory all day manufacturing all the goods that we're buying whereas you know basically they just want to pay several times the global average salary for people to just stay home forever a turn of the from from from here on out in terms of how the structure of this economy is going forward because once you get that free money once you live like a banker who's going to ever give that up well i mean make a good point there that you have a situation now where all the money printing that's been going on with a credit expansion as as you point out in terms of what central banks do has also seen record lows and money velocity right the money just is parked on the banks of the banks keep it essentially and they keep it and they buy stuff for themselves but to put it in the base most basic terms they don't want to distribute it they'd rather as a matter of fact a slight a stimulus check a corner go out of the banks now they're holding onto it they're not going to distribute it for other week or so simply because they like to get it and use it

and spend it and give themselves bonuses and buy apartments and yachts and stuff that's the only reason so the government is saying you know what there's no way to rein in the bankers eric holder said they're above the law we can't prosecute they're made men effectively like in the mafia that is the american economy so they're just going to print money and air drop it with the stimulus checks and that's going to have the effect of causing a real inflationary nightmare and the bond market to tip over into a secular bear market and rising interest rates which will be the final nail right that those stimulus checks a lot of it being held by the major banks kind of like in a robin hood way you're front running your trade so i think they know before they released the money to you that you're going to mostly go and you know speculate in the stock market so they're going to front run all your trades so again of course like like we have in. sieved any stimulus ever in this whole pandemic and we won't

but our stock portfolio our house price has gone up far far more than any of the stimulus so that's the way this unfair system works of course right you know how back in the day the eighty's and early ninety's there was a term herd often called check kiting check kiting kidder peabody was busted. they in turn went out of business or bought out that was the stock brokerage yeah yeah and so what they did after they got rid of the competition or peabody they may check kiting legal and that's check kiting so the government sends the money to the banks the banks check the sensually they as you point out they use the money 1st to the front runner everybody else so a lot of this is by the history of the past 40 years during this bull market is that banks figure out new ways to rip people off they get caught and what they do is they change the law introduce new laws and if there is any problems they extend and pretend they just make maturities longer and the coupons lower but now it looks like that big american game of fraud which is the american business model is coming

to an end well here's another remarkable story this one is so crazy because ok so we have all of the stimulus checks thousands of dollars member income is up 14 percent in the past year mostly because of transfer from the government to the people and it's something like over 20 percent of all income now is provided by the government then by then promises to wipe away student debt and those you know debates whether he wants 10000 truck she wants 50000 wiped out so huge amount of money debt deflation disappears now representative ilana omar this is pretty remarkable i introduced she said the rent and more gives cancellation act which would permanently council all rent and mortgage payments until april 2022 anybody who hasn't paid their rent or mortgage. for the past year and many people haven't and some suckers did choose to pay their rent or mortgage and they could

have just not paid it because apparently all of that's going to be wiped off whatever you owed they're just going to cancel it permanently and clued in for the next year ahead lots of people are in the comments on this and gas stick it to the landlords yes you know warren buffett and blackstone big lamers yes stick it to them well if you read further down basically the taxpayer is going to pay those landlords right the taxpayer is going to pay all the student debts right. because all that money went to the universities and the and the administrators right they've already collected the cash from bought houses or or stocks or whatever so they've had it that cash is being paid off the debts are being paid off by the taxpayer here the taxpayers going to pay off all the rents mortgages so pretty much everything in the economy is state owned all the bonds are state owned all the debts are stay own the houses mortgages are state owned student debts are state

owned so that's the situation we find ourselves and what you're describing there the minimum monthly payments the forgiveness of rent state ownership of everything i actually read a book in college that explained the whole thing and they kind of like lay down exactly what you just said it's it's not read off and now it's kind of famous so it's called a communist manifesto and it explains this exact political theory well i mean our founding fathers well again you're not allowed to teach the founding fathers in america anymore but nevertheless they did predict that once the once a taxpayer once the citizens realized that they could control the printing press then we were doomed so i'm just saying like once you give people free rent. and once you give people free you know monthly weekly payments until their bank account where they don't have to do anything like who doesn't want that right to not pay a mortgage or rent i love to pay be just people send me money for no reason like i

would love that but you know i just think once a set sam is going to be hard on line just like q.e. is hard to unwind these sort of policies will be hard to unwind well comrades are going to have to take a little break but when we come back much more coming your way ski don't go away. always gauge with baited or confrontational. don't get into any conversation or start answering questions just ask.

if. you're more likely to walk free if you're rich and guilty if you're poor. you got 2 eyes 2 ears and one mouth. so you should be seen in here and a whole lot more in your sand if you don't take that advice easy going to dig yourself.

welcome back to the kaiser report i'm max keiser timeouts of the lights in derry carl denham chair of market hyphen techer dot org karl great to see you again you know good to see you too you know it's a long time no see well we need to pick your brain here the u.s. government has printed trillions upon trillions in the past 12 months is it really this easy karl are there any costs we might want to be with a literary out karl oh i don't know retail prices of gasoline have. kind of gone through the moon the futures price on gas is roughly doubled in the last 4 months and i can't imagine why that would cause anybody consternation i mean i was paying

well under $2.00 a few months ago and i just drove by the gas station a couple hours ago just to $69.00. i guess if you own a diesel vehicle it's not so bad because. for a volumes being all down and you know not so many people traveling with all the cool stuff that's you know the trucks are not running as much and so as a result the demand for diesel is a little less there used to be a much wider gap between those 2 prices than there is now but most of us drive gas for cars don't we all wait wait wait wait you too could have a electric powered vehicle. which works just great until the windmills aren't working and then. go a problem near to you're talking about some inflation or inflation is starting to make a south now and some my question is that for many areas during massive money printing there was deflation and that's what we heard all the time and there is a big debate about is it inflation is it deflation are they printing credit or are

they printing money but it seems that we've had an inflection point at same site whatever they were done before it's not exactly resulting in the same thing and renting a new era i think bank of america just set the 40 year bull market in bonds is over so they're also looking for a change possibly a secular bull move in commodities which would be inflationary. a bear move finally in bond prices what's different now than last year or the year before how come the money printing now suddenly has some traction col it's always a function of supply and demand just like with anything else and i don't know were these analysts get the idea that commodity inflation is starting looked at the price of lumber for example random board feet it's roughly doubled i'm not quite so sure how you consider that just a little inflation. i mean it's not a big deal if you want to do something like build

a house or put it to respond and you've got some rugged boards up on top and need to replace you know that kind of thing. so the problem with money printing is that the credit goes into the system. and it ultimately always ends up in the price level but the masters of the universe folks love it when it shows up in places like stock prices because boy that doesn't hurt you you know you go to the grocery store it doesn't do anything bad you're your grocery bill and it does wonderful things to all the rich people that have a lot of their money in the stock markets. there's this chestnut that it's it's beneficial to you if it shows up in your house price but that's actually false because you can't monetize it you need a place to live so if you sell a bubble house you have to buy another bubble house you gain nothing the only real way to monetize it is to die that makes your heirs happy with the appreciation a day get but it probably doesn't make you very happy so the the issue though is

that ultimately this all winds up showing up in things you care about. and when rates start to go up then you run into the other problem that inevitably arises which is that stock prices are essentially a discount on cash flow and when you get down to it that's what they are and when the cost of cash flow goes up because the cost of borrowing goes up i.e. interest rates rise then that multiple shrinks and so if we were to see for example the 10 year treasury you know trade at 5 or 6. year take 30 to 40 percent off the current price of equities immediately because most of these companies are fairly highly levered and the ones that have no assets behind it have nothing other than their operating cash flow to iran so you know and just real company that actually makes steel still has still to produce but

a 0 asset firm such as amazon you know people think of amazon's having you know they have all these warehouse of it well how much is a used computer worth in today's world what $0.05 on a dollar what you paid 40 year ago or 2 years ago so front sense of purpose is. it's an asset free business. have is that operating cash churn nets that's where their price comes from some many of these companies are for example air b.n. b. own style hotels amazon has just warehouses full of stuff it's essentially a software company and you write down the list. they don't own the cars etc so we are beholden to the very thin margins tied to technological all improvements and the ability to borrow money at near 0 percent for so many of these companies and as you're saying any uptick in rates at all it has a really huge impact on the operating leverage of just about every company out there because every company's become a software company in that regard as if as you describe but 2 things so if the past

20 years the central banks have been able to keep a lid on rates by doing things like quantitative easing and other a machinations of the central bank and 2nd of all the dollar has remained pretty firm throughout all this which way it doesn't show a lot of inflation in terms of where the dollar is out really necessarily so my question to carl is. you know we've been talking about this for years is the central bank finally out of tricks are they reaching into the magic bag of tricks and coming up empty finally and will the dollar finally start to also show that they've run out of tricks karl i don't know that they've necessarily or are tricks i just think they've run out of respect for its renewed they're going to continue to reach into the bag but what color balls going to come out of the bag you know this is not the 1st time the federal reserve tried this if you remember there was an entire era of great repression that happened after world war 2 they got away with this for 20 plus years they've built up enormous iniquities and distortions in

the system richard nixon actually book or new reports put burns up against a wall literally assaulted him. insisting that he he keep rates low for him and of course we all know what happened during jimmy carter's presidency when that didn't work out so good right ses there is a reckoning coming but do recall that during all that time it's the dollar never collapsed and the reason is that all the central banks around the world have the same sort of general concept of what they want to do so if you have the same kind of a situation arise for example with the e.c.b. . then the e.c.b. is forced into the same box that the federal reserve forced into and yet the dollar being a floating exchange rate currency yes it will probably decline from where it is now but you know people will even back in 0708 timeframe was was looking at the

possibility of a trade deal excretory at 40. obviously i didn't happen ok well when what you see is the mechanism doesn't occur you go look for why why why were you wrong and essentially the essence of it is that yeah they'll be depreciation but i don't think there's going to be a collapse in the price of the dollar simply because every other central bank is going to get shoved in the same box you know we speak about print money and it's a catch all term that refers to all 3 different banks and so my question is this right now the government is sending out checks to people who get a check from the government and that's a different kind of money printing that's actually helicopter money that's money that's am one money i think from not wrong and that's different than what's been going on before that with let's say a fed expanding credit which is a part of the plumbing of the money creation can you go into a little bit am i right to say that the sending out checks is a different kind of animal and it would have a different concept wants and probably a more inflationary consequence car i fully expected to have

a much stronger inflationary consequence at its core everything the fed does is it is not actually the fed. you know if you think about it. it is congress that borrows up the cash and prints it the fed supports congressional actions but it's congress that does it so really the question is do we trickle it down or do we just hand it to people and when you put when you put it into productive things like building bridges and eisenhower's roads you know they d. eisenhower expressway system things like this you get a different multiplication factor if you just hand people cash when you have people cash is normal cation a fact i go and i spend it on food i spend a booze i spend the remainder i make my car payment with it but there's no real multiplication when you build productive assets with it as eisenhower did with the eisenhower expressway system that does have a multiplicative a fact so i think there is

a quantitative difference of substance but one of the things is very very difficult for politicians to do is ever walk away from any of this when you look at you know ok we were hanging 14 or dollar checks that maybe the longer term in worst problem is what we're doing with these child credits in the tax code where we're taking what used to be the e.i. t.c. on a fairly narrow basis in more sensually codifying that in at a at about double the level. in that maybe permanent because can you imagine a politician trying to take that back ok what does that do to the price level over you know over years remember the johnson said great society we're going to get rid of poverty in the united states by just what it what he said we were going to accomplish with his program so we didn't get rid of poverty we made it worse no we got this we got the same talk coming out of palosi go see in all these other guys oh by the way we're going to cut child poverty by 80 percent by increasing the. try

to take those back 2 years from now see how well that works out i get my payment has been trending on twitter people are calm on the biden box after a year of getting paid more to not work. with all these and benefits passing throw . how they how they're going to go why should they go back to work number one and number 2 if they're demonstrating you can just print money out of thin air by the trillions of people going to start asking why are we paying taxes karl well you know of course they will if i have a nice taste that works at a big box store it nor one of the northern states machine to work during the entire coven say their next door neighbor was literally 66 o'clock in morning she got up to go to work and he still smoking bong hits with the smoke coming out of his windows because he's got 600 bucks a week to sit at home well so what do you do to the wage level if i can quit and collect you know and collect that money now theoretically you're not

supposed to be able to do that but we all know that these systems get gamed so i don't know how this what ends up stopping this other than the fact that it's going to show up in the price level and what i have said really since i started writing on this stuff is doesn't matter how many dollars you have what matters is what they buy now your purchasing power is collapsing a spic i have about 30 seconds what's the problem with gauld car what hasn't they got 30 seconds because it's always been a terrific. herbal inflation hurts sure it's a good geo political activity which you want to you want to hedge inflation by common stocks all right called senator well said oh great to see you again you look healthy whatever you're doing keep doing it thanks for being on kaiser report thank you. that's going to do it for this edition of kaiser report with me max kaiser and stacy herbert want to thank our guest karl denninger market hyphen ticker dot org and so next time by you all.

to this summit in alaska representatives from china and the united states will meet for the 1st time since the advent of the ministration what can the beijing expect washington can the 2 sides agreed to disagree what would be a meeting of low expectations. americans love buying homes. this was a fundamental part of how our political leadership and our country at large understood the bargain you get a hoe and then you know rebel right that's the things you don't revolt if you have a stake in the system. to be really interesting. and think about

the longer deeper history. housings man in the united states not just. a question of the american dream but the bigger question if you dream is for. las vegas was the last resort it was like tombstone territory where old outlaws go to die. the mob was real generous with their good thing they gave the rooms away the day of the drinks the way. they were concerned about just making money on the gamble tables. food rooms and all that was just seen as the service to keep the machines turning and you always felt welcome even if you were poor because you were all poor old walked out the door for the most part right you could lose all the

money that you had and you've become.