the the high a match guys are this is be kaiser re port. well, you know, we also coming off different places. they think. right, well you and i have been covering here on the kaiser report for the last decade at least, but especially with the last 6 months of as we lead up to the 50th year of fi out when the u. s. went off the gold standard and august, 15th 1971. we've been looking at all the problems of the trip and dilemma with you know, all the consequences of the exorbitant privilege. and one of the things you see is, as we've covered in nigeria, where they've turned to bitcoin, we've seen hyper quantization there because they had no access to dollars during

this crisis. during coven, as world trade shut down, we're seeing a similar situation emerge and st. mancha and i believe bit queen facts as this. she long declares food emergency, as for ex, crisis, worse than sherlock has declared a state of emergency over food shortages that according to the government are caused by hoarding. as private banks say they are running out of foreign exchange to finance imports. the move followed a sharp rise in the price of sugar, rice, onions, and other basic ingredients. right, right for x markets are cause thing, food shortages and was bitcoin. you don't need it for x market. that's the plain, an obvious and simple truth and country after country is beginning to realize they can escape the matrix of for acts of dominated by corrupt players who control us dollar. and they can have sovereignty true sovereignty. if you have rely on the

us dollar, you do not have sovereignty full stop. this is part of what we've been covering with this trip and dilemma is that there's always going to be that dilemma or a fiano currency. a national currency is the world's reserve currency, is during a time of crisis, whether it's the 20082009 financial crisis, or the coven pandemic locked downs. what happens is, you know, obviously the elective leaders going to allocate all their time and resources to the domestic population. an international population therefore has no currencies with which to trade. we saw that with nigeria, that's why they went to hyper big quantization because there was still there economy by the way, didn't shut down that much because it's much younger and they can afford to shut down. so they had demand still for it used cars and nigeria, but there was no, you know, there were no us dollars with which to trade with japan or trade with china for used cars to be imported in tonight's area. so either they could just say it, ok, well, because we can't get dollars, we're just going to starve to death. instead they turned to bitcoin. and here is

a solution i think, to shrink as the problem is like the government's actually having to shut down imports in order to avoid further depletion of their reserves. because they said the economy shrank by a record 3.6 percent in 2020, because of the pandemic in march. last year, the government band in ports of vehicles and other items including edible oils and to merrick, an essential spice and local cooking. and the bid to save foreign exchange however, import is still say they have been unable to source dollars to pay for the food medicines that they are allowed to buy. so their foreign exchange reserves have absolutely plummeted. and we'll get into that. but basically it weighs down to $2800000000.00 and july from $7300000000.00 and november, right, just as part of the theme of the collapse of globalization. the collapse of dollarization and one might argue the collapse of neoliberalism. the now the,

the american model, the washington consensus and countries are starting to reject that full play of foreign influence. and in places like el salvador, they're simply going to a big point standard and there are g d p, a set to double in the next couple years. right? but again, like the point about the story about sri lanka is there is demand. there is desire . there is they want these products, they're not allowed to have these products because in order to do so, would require foreign exchange being sent overseas because they need it. they have a shortage of dollars. so if you had or a neutral currency, a neutral payments rail, whereby any demand could be met through the payments rail. despite the situation of global trade, you wouldn't have these sorta situations whereby trail august foreign reserves, as i said, fell to 2800000000 at the end of july from 7500000000. sorry,

i said $7300000000.00, but $7500000000.00 in november of 2019, when the government took office and the root pay has last more than 20 percent of its value against the us dollar. in that time, according to the bank energy minister, dia government has appealed to motorists to use fuel sparingly, so that the country can use as foreign exchange to buy essential medicines and vaccines. right, well, who benefits from the for x mark? as it's the people who are in the money changing business, and they get an override on all that money sloshing and washing out. and they get a commission, they get a ron t, a globalized finance, lies economy. and when it breaks down, whether through the pandemic crisis or the global financial crisis, the people who are not finance years are all going to get penalized. the finance years are not getting penalized, they're right. they're using this as an opportunity to even gouge more from the people. that's why the people and we've said all, salvador have said,

you know what, we're just going to go to a big point standard and get rid of the whole. the whole lot of you. well, the salvador experiment is ongoing, it's, i think it's an experiment which will prove to displace especially for developing economies. and even the financial times is now reporting this, that bit quite make sense for a developing economy because of these issues like for ex reserves and trying to manage inflation, trying to manage the problem here in atlanta is very high inflation. and these staples, of course, we at kaiser port saw this back in 2010, 2011 after a similar situation whereby a huge amount of money printing met financial crisis. and now we have even more money printing meeting this pandemic crisis. and that the domestic economy could keep on like just printing and printing to feed the people. whereas that,

that the how it filters out to the rest of the world is what ends up costing huge inflation. and then we saw in 2010 and 11 crises across the world and huge riots and governments overthrown. so we'll keep an eye on what's happening, history of anchor, but this could just be the 1st of many stories to come if it's any, if, if history rhymes with what happened in 201-2011 which we covered here. but, you know, of course there's somebody as well that's winning and another nation that's winning during this whole crisis because yes indeed, americans are by and large getting huge quantities of stimulus checks, enhance unemployment benefits. so for those who don't understand like what the enhanced unemployment benefits have been, is that you get your normal unemployment benefits that everybody has. if they were made unemployed, they got their standard unemployment benefits. that was for the past few decades,

the expectation of what you would get on top of that. they got an extra $600.00 a week on top of their ordinary benefits. so people were, a lot of people were making a whole bunch more me on top of that, they also didn't have to pay rent and they didn't have to pay their mortgages. many millions of people didn't do that for the past 18 months, so they were flush with cash. some people get upset, the comments saying that they deserve this and blah, blah, blah. what i'm, where we're talking about is the macro consequences of that. because obviously they're staying at home, they're receiving these enhance on employment benefits. they're not paying rent, but they're flush with cash and they want to buy and they spend and spend and spend on durable goods, who is still working. we're not working here obviously, but they are working in china. china's exports strengthen despite cobra, 19 disruptions, august data shows shipments of imply and says furniture and clothing grew helping offset waning demand for pandemic related goods. chinese export unexpectedly

expanded at a faster clip in august, shrugging off the impact of a global resurgence of the corona virus. pandemic port congestion and supply bottlenecks. china's outbound shipments rose 25.6 percent in august from a year earlier. higher than the 19.3 percent increase in july, the general administration of custom set on tuesday. the result also comfortably topped the 17 percent increase expected by economist pulled by the wall street journal. right, so, so the, my print thing in the us, the stimulus tax are going for the most part, the china. and they gave me an amik power which supports their geo political possession. and the snow accident that they're also getting a little bit more what's called self confidence in their disposition toward some of their neighboring countries in territory. if this is not inflation adjusted. so if there was money printing on the order of 23 percent last year, you know,

assuming that that's also adjusted there. so that's not yet adjusted. so the increase of 26 percent might just be a reflection while the money printing. but nevertheless, the fact that the economy remains open as we have covered with a stan trucking miller, the famous hedge fund manager, has taken a bet against the us dollar in the past year. and is betting as long as asia, in particular, china because of the fact that they haven't had money print and they're still open and they're creating, well, this is, this is called wealth creation. and it is a situation similar to post world war 2, where america saw those order numbers for themselves, like they were producing all their manufactured goods in the world. and we have the era of detroit and things like that. so the china could be in a similar situation, who knows, we could end up in a nuclear war instead and, and you know, way, it would all go horribly wrong. but in the meantime, shipments to each of china's major trading partners increased at

a faster year over year pace in august. then in the prior month, according to calculations based on the official data exports to the european union, which is china's number 2 trading partner, jumped by 29.4 percent in august from a year earlier. accelerating from july 17 point 2 percent rise, while shipments to the association of south east asian nations and the us, china number one and 3 trading partners respectively. for 16.6 percent and 15.5 percent. yeah, i don't know the us really messed the trick here. remember i under f d r during the depression, the have korea, the jobs, the public works programs and they built them. they built the hoover dam, i believe they built rockefeller center. they built roads, they built bridges, and america needs infrastructure rebuilder. they just want the congress to get multi trillion dollar infrastructure build package. but here, under this administration, incentive making up jobs with that money. they're just the fact of sending it to china that money. so they, they could,

they could have actually rebuilt the infrastructure with the same amount of money that they're sent to china. but they're going to pass another bill in washington to do the infrastructure. and we know that that will never make it that to the, to the work either it gets stuck in the banks and into that chasm is, is the 200000000 americans and they're just being disenfranchised. yep. the, all that money gets goes to the bank, which goes to the big contractors, the, the multinational ones, which and they, they don't do any of the work. they subcontracted contracts that and then filters down till a few pennies to a local road. i mean basically the afghanistan model of what we did an afghan as well that's that's great. we're going to take a break. and when we come back, much more come here when it the me ah,

in the 19 twenties and thirties, several 100 african americans moved to the soviet union. and many of their descendants still lived in russia. law. never yet to be truthful. nice things was that richard lum duck back home, black american suffered from racism under complete lack of prospects. the not but not the real be losing one by one. provide you the truth danger. so they decided to leave everything behind and start a new life in a country about which they knew almost nothing at all. some of the african americans who went to soldiers union in the 1930 found great success was blown to me. and now almost a 100 years later,

history is repeating itself. my great grandfather, george time, went to russia. i'm probably the worst time to go anywhere. why not mean? what if i come here? i see the truth. that may be red, orange, yellow. maybe we assume that they going to be on the sweet side of things and procedure around and soft and looking maybe assume again that they're going to be sweeter in some way. i work in the room or should she popped in? she said, well, i'm getting ready to go shopping for christmas. and we, we said there was a good good bye to another, shooting another safe part of american life. shattered by violence. the gunman was

armed with an a r 15, semi automatic rifle. when the issue comes home, time to act, when we're filing on this issue, the other side window by default, lady that lived over there. i was walking one of the dogs. she said, why do you wear again? were you scared? that's such a good offer. i think people need to take responsibility in their own hands and be prepared if those kind of weapons were less available. we wouldn't have a lot of shootings and we certainly wouldn't have the number down. ah ah, welcome back to the kaiser report. i'm nice guys are time now to return to our conversation on michael pena. pencil port dot com. michael, welcome back. always good to be with you max. well, ear latest method that goes out to your followers is

entitled the great deflation of 2022. ok. so you're looking ahead the next year, and so you're, you're thinking that there's going to and our previous like when we talked about the nick, a average back in 1989 and had a huge collapse of peak that is $40000.00 on the new k, there is this 20 year deflationary period. so you're making a comparison. you think that the u. s. is on the cost of something similar to it and do i have that? right? i actually think that the evaluation of equity is now at 207 percent of g. d. p is something similar to what they saw. busy in japan, you know, paul bookers day when he raised rates, the 20 percent evaluation of equities as compared to g d. b was 35 percent. so i just don't see the fair being able to fight inflation the way they did before

. so i think this might be a truncated period of the inflation. and then i think they come back with this massive fiscal and monetary package. and to be at that juncture where i will join the inflation nieces. and believe that the headed to say that the site is going to engender the treasury is going to engender intractable stagflation. with rising interest rates and plunging g d p growth because we lose all competence, our federal reserve to support the dollar and the u. s. bond market, i think that's sad to say, but i think the game is over max, you know, they think keeps bluffing, that we can normalize interest rate. but as i said, the last statement, you know, you take the fed funds rate, the 5 and a quarter and you're going to be a $125.00 basis points higher than junk bonds show. so you know, block cielo market leverage long. what market the junk bond market, the shadow banking system. you are going to have a deflationary depression like we've never seen before in this country. it makes it

look like a walk in the park, so they can't really fight this inflation. and we have a shame inflation that we have today is the same inflation that whole boker type is like in the late seventies and early eighties. look at that number again. children 7 percent of g d k is the valuation of the stock market. i believe the buffet rule is that he thinks stocks, good price, see if they exceed 100 percent of g d p. and here we are 200 percent of g d p. so clearly by any measure by any metric, stocks are extraordinarily high. if your district out the stock buyback programs and you were had a real accurate look at earnings, that price earnings ratio would, would be closer on average, would be closer to probably $50.00 or 50 p, which again would be highest sort of the highest ever in history so this idea of course, the, the home exercise of money,

print thing and quantitative easing was always that while we jumpstart the economy and then we get taxes flowing and then we're going to pay down that debt with those taxes. you know, the trickle down, it goes all the way back to reagan and trickle down economics. david stockton, this has been with us now for 40 years. michael. what would you, would it be fair to say that what you're saying here is that we've reached the end game of this 40 year trickle down experiment? well, you can also look at price and sales and strips out all that engineered air earnings . they like to report on the s and p 500 record high priced sales. so, so the game changer here, the watershed it just in a moment that we reached here on the states is that we've now engendered inflation . we go all the other times before we had a crisis, the crisis engender deflation. and we had to try to attack it by lowering interest rates in printing money when we could do that because the, the salient issue was deflation. and

a pro long period protracted period of deflation. but if you have a situation where we have a truncated theory of deflation, which deploys modern monetary theory once again and helicopter money once again, fetch credibility is blown. so like you are alluding to the question, this is no longer an experiment. this is no longer an emergency measure. this is something that is current. we can never dream the balance sheet of the fell reserved. we can never raise interest rates. we can never and q we, we can never support the purchasing power of the dollar, not versus the you're not talking about now. the dollar on the dx one or the bloomberg dollar index. i'm talking about supporting the dollar against real estate

and stocks and hard assets. and precious metals. you never do that. so again, would be over because we have jumped the shark with inflation. what about structurally speaking, you know, back up to 2008 craft? remember the money market funds, there was a threat of breaking the buck and extraordinary measures were introduced to stop that from happening. and jim gardner and the tank paulson. they got together and they kind of rewrote all regulations as they apply to finance markets to make it possible to just channel in just torrance, of, of cash, and to strip out a lot of those regulations. so you're, as you point out your money manager, you do this day in and day out what, what did you steam structural a? it is it, is there a risk of a been the wheels actually falling off at this point? is there are, are there any safeguards in place or is it just

a house of cards writing to blog? i'll choose the ladder match. this is, we have a record amount of margin dead, a record amount of margin debt as a percentage of gdp. we have the biggest junk bond market in history, with a title spreads to treasuries and the lowest rate in history. we have the highest real estate values in history. the home price, the income ratio, is the highest, it ever been outside of maybe one month in 2005. we have the biggest bubble in the bond market, real estate and stock market. we have a, triumvirate of bubbles and records of fortunes. and the problem here now is at the status as they always do. they always threaten to normalize monetary policy. and when they do, the chaos will begin, the deflation will begin. the markets will unravel very quickly. i think you're

going to have circuit breakers hit. the credit markets will freeze once again. and then you're going to get, have, you're going to have power. i think you will be re appointed, yellen loves him and gave her blessing. i don't know why this billionaire private equity guy wants this job. he's just sail off into the sunset from the end of this year, but he wants the job as me his decision then to increase his balance sheet, which i will remind you and you know? so join this balance, she, the bell reserve was a $100000000000.00 in december of 2007. it is now well over a trillion dobbs balance sheet is going to increase by trillions of dollars per annum after the next crisis. and i just cannot fathom how that engenders any kind of confidence in our treasury market. crushed the bond, 6 income market and, and in the stock market. so let me ask you this back in the 3000 crisis,

but the layman moment caused global contagion. since that time, particularly in asia, countries have been buying hundreds of tons of gall and preparing themselves for the next crisis, insulating themselves against the contagion. and the dollar rising. russia, for example, is gotten rid of all their dollars. a china seems to have insulated themselves against china doing, doing the dollar with bilateral deals. ah, well, this be a similar contagion when this thing blows up, or will this be away most heavily in the u. s. so i just back just history. i know you might disagree with this, but when they, when the largest economy on the planet goes down and you're going to bring down europe and japan with us. so you take europe, japan and the united states offline. and the dollars probably the most shorted currency on the planet. maybe you check into japan yen. you're going to have

a lot of people who are going to be invested with dollar denominated debt and other countries. that's going to have to sell that debt and buy back dollars. so i am not predicting a dollar demise. these are the other currencies, not when the chaos is but exposed the chaos. i am telling you that a dollar would probably decline against foreign assets. why do has never declined before, but just the civically answer your question. i do not see a world where the united states goes down and the rest of the world sales often from kind of a concern. it's just not going to happen. it's not patient history. and it's not based in real economics as a money manager, when, when you see the chaos in capital and afghan, a stan does that ripple through as a risk event, that competence in the u. s. and the u. s. military is epping, is that a risk event? for you, it is indicative, i don't know if it's

a risk event where you trade on it because you know, it's a dollar hasn't lost much value ever since we did a lot to the bottle. and dennis, than i said, it's still more marginally up on the year. but it does tell you that confidence in our president confidence in our federal reserve confidence our in our treasury is completely misplaced confidence. these people have no idea what they're doing. i mean the stage the has this stayed mild of phillips cur saying that inflation comes from too many people working when it's the exact opposite. inflation comes from too many people not working and giving them money to stay home and consume job owners theories are wrong. and the fact that the u. s. military supports our currency and our bond market and took a torpedo to the bow. does it is part of that picture that it's post the

next crisis. when we bring in break up permanent, a permanent condition of child income tax credits and hands unemployment, l looked up there money m m t that will all serve to expedite the demise of the dollar as the world's reserve terms. yeah, on the global risk front. you know. busy we're speaking about cov, it here we got the new variance are making their presence known explosion of breakthrough cases. what's happening and israel as seemingly pretty remarkable. they, they're on their 4th booster jab, cases are not diminishing at all. again, from a risk perspective. ah, that would cut into can the consumer dollar at some point with the seemingly we've got about 20 seconds left. me sir. let me, let me stop you because i'm going to do you max shows you have smart, really aren't. how enjoy your program that. so i, you know, i look at cobra, one is variance and i think there's going to be

a backseat. resist the barrier emerging soon. it was not one already. israel is very important, their teachers aren't diminishing their skyrocketing. i follow israel because there is a country that has the best vaccination program going, but they're just arising and their patients are soaring. so that has to be part of any good active money man. what's happening with toby? and so why the news is daunting to say the weeks? well, i wouldn't want to be sitting in your chair down there florida because you've got to deal with an awful lot of things going on, but somehow you manage to give your clients excellent performance. michael, thanks so much. bring on cars report. always my pleasure, max, and i'm going to do it for this edition of guys report with may max kaiser and stacy herbert want to think, i guess michael pen to pencil port dot com until next time via the me ah

ah, the, the transparency for the powerful receipts and the bell this bit about privacy. what people care about is power. tony and sons is become a symbol of the battles of brevity. information is power. that's what's going on. a huge struggle with governments and corporations who want to keep information secret and other issues that democratic rights should be pushed forward. and people have a right to know what they're watch. sons helped to shift the conversation around transparency and see what that battle has done to him. i feel like life might be

coming to an end. we are in a conflict situation with the largest and most powerful employer in such a situation. it's remarkable to survive all the stuff in the back and from events. it's 1st ration us 3 of it's a us the u. k. street. yeah, leave it all or it's a pacific security alliance of re china that does joe biden makes them borrow things lit up what the deal partly for guessing the name of the trillion prime minister naked boers. and i want to thank that trouble down under the thank you very much.