it shut down or thing, a similar situation emerge and st mancha. and i believe bit queen facts as if 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 import, 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 shortage is and with 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 for stop. this is part of what we've been covering with

the trip and dilemma is that there's always going to be that dilemma where a currency a national currency is the world's reserve currency. is during a time of crisis, whether it's the $22009.00 financial crisis, or the coven pandemic locked down. what happens is, you know, obviously the elected leader is 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 quantization because there was still there economy by the way, didn't shut down that much because as much younger and they can't afford to shut down. so they had demand still for it used cars and nigeria, but there was no you, there were no us dollars with which to trade with japan or trade with china for used cars to be imported into nigeria. 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 full, i think, just driven 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. 3 an essential spice and local cooking and a 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 in july from $7300000000.00 and november. right? this is part of the theme of the collapse of globalization. the collapse of dollarization and one might argue the collapse of neoliberalism. you know, the, the american model,

the washington consensus and countries are starting to reject that full plate 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 shall 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 roof pay has last more than 20 percent of its value against the us dollar. in that time, according to the bank energy administer, 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 ex markets? it's the people who are in the money changing business, and they get an override on all that money sloshing and flashing out. and they get a commission, they get a ron t, a globalized finance, lies economy, and want to break down. whether through the pandemic crisis or the global financial crisis. the people who are not finance, ears 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 said in our salvador have said, you know what,

we're just going to go to a big one standard and get rid of the whole. the whole lot of you. well, the salvador experiment is ongoing. it's, i think, 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 a long time 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 shoe darius and governments overthrown. so we'll keep an eye on what's happening and sri lanka, 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 in the comments saying that they deserve this and blah, blah, blah. what we're, 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 the my print thing in the us, the stimulus tax are going for the most part, the china. and they gave the make an amik power which supports their geopolitical 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 sort of 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 out of 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 a 16.6 percent and 15.5 percent. yeah, i don't know the us really mr. trick you remember i under f d r during the depression, the have korea, the jobs, the public works programs and they've 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 and started 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 their sense of china. but they're going to pass another bill in washington to do the infrastructure. and we know that that will never make it to be 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, that 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, what we did an afghan as well that's, that's great. we're going to take a break. and when we come back, once more, here when it, the me. i have often said transparency for the powerful receipt for the bell. this bit cares about privacy. what people care about is power tuning and sons is become

a symbol of the battles of brevity. information is power. that's what's going on. a huge struggle with the government's corporations who want to keep information secret and others who democratic rights should be pushed forward. and people have a right to know what to do. watch sons helped to shift the conversation around transparency and see what that battle has done to him. i feel like julian's 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 features that are maybe red or orange, always yellow. maybe we assume that they going to be on the suite to find a thing to receive a rounder soft. and they can assume again that they're going to be sweeter in some

way. the the me 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 new k average back in 1989 and had a huge collapse of peaked out of 40000 on the new k. there was 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 in japan. you know, paul bookers day when he raised rates to 20 percent evaluation of equities as compared to g, d, b was 35 percent. so i just don't see the fed 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 a massive fiscal and monetary package. and a b at that juncture where i will join the inflation nieces. and believe that the headed decided that 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 confidence 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 in 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 law. 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 in the late seventies and early eighties to 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 you'd or to strip 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 higher 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 jump start 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 the way you're saying here is where we've reached the end

game of this 40 year trickle down experiment. well, you can also look at price to 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. 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, the fence 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 comment. 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 can ever do that. so again, would be over because we have jumped the shark with inflation. what about structurally speaking in the back of a 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 gagner and hank paulson they got together and they kind of rewrote all regulations that apply to finance markets to make it possible to just channel and 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 their risk of, of they know 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, mag, 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 tightest reads 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 worship. and the problem here now is that the spanish, 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 fell off into the sunset from the end of this year, but he wants the job as can be his decision then to increase his balance sheet,

which i will remind you and you know. and so, as you're in this balance, she, the fell reserve, was $800000000000.00 in december of 2007, it is now well over a trillion dobbs. this 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 competence in our treasury market crushed the bond, 6 income market and, and in the stock. more. so let me ask you this back in 2000 or a 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 as going to have to sell that debt and buyback 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 like you has never declined before. but to specifically answer your question, i do not see a world where the united states goes down and the rest of the world sales often some kind of a concern. like it's just not going to happen. it's not based in history. and it's not based in real economics as a money manager, when, when you see the chaos in capital afghanistan, does that ripple through as a risk event, that competence in the u. s. and the u. s. military is ebbing. 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 just bought the bottle and dentist and 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 fed still has just stayed mild of phillips curb 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 ex post the next crisis. when we bring embrace up permanent, a permanent condition of child income tax credits and hands, unemployment, ellicott their money, m m t that will all serve to expedite the demise of the dollar as the world's reserve term. yeah. on the global risk front, you know, 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 a seemingly pretty remarkable the 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 make sure you have smart, really aren't. how enjoy your program that. so i, you know, i look at koby, nike has variance and i think there's going to be a backseat resisting barrier. emerging soon. if there's not one already. israel is very important. there. teachers aren't diminishing their skyrocketing. i follow israel because there's a country that has the best vaccination program going, but they're just arising and their cases are soaring. so that has to be part of any good active monday 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 mankinds report. always my pleasure, max, and i'm going to do it for this edition of kaiser report with may max kaiser and stacy herbert want to thank i guess michael panto, a pencil port dot com until next time by the me 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 to be truthful. nice on things. was that richard lum duck

back home. black americans suffered from racism under complete lack of prospects. set up a real be illusion. show one by one provide you with the procedure. 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 1830 found great success to monet boys. he came to me and now almost a 100 years later, history is repeating itself. my great grandfather, george time, went to russia on probably the worst time to go anywhere. why not mean? what if i come here? ah,

the ah, i need you to list what was the, the person who did the previous with the all the sudden there was here for it was for what fin the but only the film we use for the what you want to do certain of

the computer thing, some of them went to west point when look for them. so we'll do the peach coming from the meals for kind of the same i was given your logo for me as a senior on one of us go to school in some fruit. what are one? why do you think that us them i mean on i wish to live. oh, when i was the wrong, why don't i just don't the yes to see out the thing because the after an engagement equal betrayal. when too many find themselves worlds apart and we choose to look for common ground

the the a sub in design balances distribution as we are with airlines. the us, the u. k. i was traded, leave us out of, of pacific security as seen as countering china. and joe biden makes and embarrassing slip out while announcing the field, apparently forgetting the name of the trailing one minutes back. thank you bores and i want to thank that down under the thank you very much brown.