tv [untitled] January 15, 2013 2:30am-3:00am EST
the company sumitomo was fined one hundred twenty five million dollars for squeezing copper supplies in artificially inflated prices at that point the largest penalty ever levied by a us government agency the commodities futures trading commission called the scheme one of the most serious worldwide manipulations we've covered of course the speculation in various agricultural markets and stuff like that but actually that's in direct speculation because their investors are buying say agricultural futures but a few two weeks ago three weeks ago the s.e.c. not the commodities futures trading commission but the securities and exchange commission approved they essentially legalized hoarding. in the form of a controversial fund designed by j.p. morgan chase that for the first time will lead investors buy shares backed by physical warehouse copper to use as a form of investment well you know it's interesting to use the word hoarding who are nervous because according to economists in america and the obama administration
saving is a bad thing because of somebody one person savings is another person's loss of spending and that we need people to just spend spend spend and warning is bad and yet the f.c.c. has given the green light to wall street to hoard vital commodities why why is wall street interested now hoarding vital commodities is the day of the pawn paper apocalypse upon us yes it is the day of the three hundred year high bull run in bonds upon us with a magnificent spectacular burst and bond prices yes that's baked into the cake for twenty thirteen that's why they're hoarding things like copper because they know that as inflation hyperinflation currency collapse rears its ugly head j.p. morgan wants to be there after having made money and totally destroying the system with the revenue of they want to repeat to trick by totally destroying the economy
by hoarding commodities and i remember we discussed this over and over is that j.p. morgan essentially is the us treasury now the us treasury has deemed that china is not a currency manipulator that's part of their that's what they're saying publicly but this could be a war finance a war against china in a way because china is the biggest user of copper now the article points out that this scheme of the investors purchasing shares in j.p. morgan's fund won't be buying copper to use but to store the intricacies of the fund are complex but its underlying rationale is straightforward the more shares investors buy the more comp. he's taken off the market and the more copper that is taken off the market theoretically the more valuable the copper and the shares become the seamy tomo trader who cornered the market in the ninety's relied on the same essential strategy to artificially inflate worldwide copper prices so remember when you spoke to mitch firesign he said that they basically j.p.
morgan now had twenty seven percent of the copper market yeah well you know most of j.p. morgan's horning going on happens right here in london under the auspices of life masters you only think of blith masters the first thing i come to my mind is who are doing and her attempt to corner the market in all these vital commodities while her bank simultaneously runs up those three hundred year. bubble high in bonds. yeah ok we're going to actually turn to blythe masters in a moment but i want to point out that opec itself does not use the spot market to price their oil products because they said that's open to manipulation they use future is that instead so here you are allowing j.p. morgan to enter this spot market essentially the physical market and rig copper prices they now control twenty seven percent of the copper market with this new fund and black rock is seeking approval of their fund will be twice as big as j.p.
morgan's and this but blythe masters however let's turn to zero almost two years ago february two thousand and eleven when you spoke to pierre giovanna bank of javadoc dot com who wrote the book masters and this is what he said them she gets her title of head of commodities and sun this is extremely interesting because at least what you consume this book is that what is interesting is not the fact that she invented the credit default swap what is an interesting it's a sense two thousand and seven she's buying commodities she's buying food she's buying sugar in two thousand and seven she was already in brazil but i'm glad we were you know. billy's life got souls and this is why you know the prices are going up and to doing you're seeing the results well p.r. giovanni is totally plugged in to what's happening in the french banking system and
it is a society general and b.n.p. of course are totally integrated into the global finance or terrorism network and we know that blith masters his book blast masters what's quotes me extensively in that book by the way as used to be years ago he said this was coming to the budget be more going to these banks hoarding these commodities that's why we've been telling people that when the bond bubble bursts and commodities enter a phase of hyperinflation that's just being telegraphed right now those. gold and silver which is a way for people to get in on the action today just like black masters wants to control thirty percent of the global copper market the people of the world should be controlling the majority of the sober market or the people of the world will find themselves even worse off in a couple of years than they are today. well i can see where is this going where we're introducing it for copper why is blythe masters as pierre giovanna vic pointed out in that little clip we just showed why are they accumulating
agricultural products he's been doing as he said since two thousand and seven two thousand and eight they of course own the regulatory authorities so they of course would have known that they are going to get approval in this by the way the article points out that it's usually the commodities futures trading commission that would approve this sort of thing or not because they know the commodities market or allegedly they do this went through the f.c.c. because he's selling shares in these physical assets so the securities and exchange commission which is far more bought up right there in the center of new york rather than over in chicago they're the ones that gave approval for this was up because it's an exchange traded fund but it is a derivative it's the claims of owner blackrock would have a senior claim to anyone who owns the shares in a copper or exchange traded fund same thing with the precious metals exchange traded fund that's why if you're buying precious metals you would buy an e.t.f. because it's going to get paper and exchange for your shares are not going to get
metal and this is really interesting because we've gone full circle on the entire history of the financial ization that's taken place in the global economy starting in the late seventy's early eighty's with the introduction of listed options in chicago which quickly became the market for listed financial futures and options in chicago so for the first time under reagan do you make you less than you had the ability to train treasury bill futures currency futures and that began the twenty five or thirty year period of the financialization of the global economy which made banks and like j.p. morgan and goldman sachs and these other global banks trillions of dollars in profit but now we're out the point of this bubble bursting so these banks very cajun really are going back and realizing that the whole thing's been a false from the beginning. and they're going to come back i'm going to they're going to corner all the commodities now that the bubbles bursting for the next way however max this could pull in
a lot of members to the silver liberation army because this article actually ties it to silver and gold and precious metals and how those markets are open to abuse by j.p. more and more troubling is that the f.c.c. has decision collapses the distinction between precious metals traditionally used for investment like gold and silver and metals and other goods that we consume in large quantities like copper and corn is signal so bankers that all goods are fair game for financial play no matter how vital to our economy or a well being so the past few years it's always been oh those silver bugs the silver freaks the conspiracy theories they think oh big deal with j.p. morgan's rigging market who it doesn't affect us however as they're saying oh my god now all of us are going to be subjected to this j.p. morgan abuse. right that those who argue that the silver and gold manipulation stories overplayed you know they had some ability to argue the point in seoul the
library scandal which was a multi hundred trillion dollar global scandal involving manipulation by barclays and other banks that they admit they're not there's no moral in any debate about it they said yet also the bank of england admitted to manipulating the library so they manipulate large where you're manipulating it's our global commodity and futures trading infrastructure which includes gold and some are to manipulate them down to make paper assets look better but i kind of disagree with this idea that ok we're going to turn all the commodities in the world into these highly manipulative exchange traded funds and other products and this is going to somehow cast a slightly different line on gold and so are the gold and silver story of a story as the return of gold and silver as the backing of the global economy as the bond market collapses is been in play now for ten years and will become bigger more visibly in play this year and the next year as well as people like the hunt brothers back in the seventy's try to corner of the sower market they were shut
down because they were in the futures business today the summer liberation army has the ability to corner the silver market and killed life masters thinking of lay of course now again and finally on this story banks the s.e.c. in their statement when they looked at the london metals exchange where the alameda where j.p. morgan will be storing this thirty percent of the global commerce supplies they said that they don't see thirty percent of the supplies being taken off market will affect prices so here's the s.e.c. openly saying there is no such thing as supply and demand in the price covering mechanism it's not really about the control of the physical stocks of commodities including copper so much as the impending collapse in global bonds and the and the return of hyperinflation that's really the big. the story here j.p. morgan wants to be hedged against all the damage that they've created these past ten years because as the u.s. treasury and u.k.
treasury market collapses fifty sixty seventy percent and you have five six seven million people in britain suddenly homeless they want to have the price of all the commodities like copper go fifty sixty seventy percent doesn't mean the demand for those commodities and has increased it just means that against fear that money apocalypse that they engineer or those prices are going to be at those levels that's what this is all about a bond collapse and not really so much about cornering commodities all right thanks very much thanks so much for being on the kaiser report thank you all right states in the second half a whole lot more for you here on the kaiser report. decades
welcome back to the kaiser report on max keiser time now to turn to david halsey's a senior research fellow at the open university in the u.k. david l's welcome to the kaiser report it's good to be good to see now on your bio it simpler org you write i think that current p.t.p. file sharing system systems like bit torrent are essentially global economic experiments from which we may observe new economic phenomenon so here we. are file swapping which is relatively narrow what's known from bit torrent what's happening post napster era and you also mentioned bitcoin ok so burning all those together ok well what's interesting about the way the research has been going it was between the research is that because the massive deployed systems i mean bittorrent is the largest possibly the largest deployed system that's said to be. measurements can be
made because it's an open system so anybody can go in and measure what's going on the locks the data can be collected and the data can be used to understand the kinds of economic transactions are going on within bit torrent now you might think the bit torrents not an economic system but in some sense it is because bittorrent depends on the exchange of data block for block now the way that bittorrent works as a user is a tit for tat mechanism which is essentially scratch your back if you scratch mine kind of approach but it is still a very if you like primitive form of economic exchange so by measuring what's going on in bittorrent communities in different communities have different kinds of exchange relationships you know actually understand the fundamental micro interactions these fundamental economic my cook interactions that are leading to say the positive outcomes of bit torrent communities which. everybody helping each other to achieve their common goal which is the sharing of files well the current
state of the bit torrent ecosystem same's to be reminiscent of what we had before copyright before copyright law came into existence you had this open free exchange of information and ideas and you could get argue i suppose going back before that you know it almost mimics the whole evolution of d.n.a. d.n.a. is a strand of information that meets up with new strands of information and you create this evolutionary process but then there's something called copyright and the copyright lobbyist on the copyright some may even call it a cartel that are extremely. vigorous and their protection of their copyright which seems to be thanks to copyright extension laws becoming perpetual copyright that's the goal of hollywood to have things under copyright forever essentially so how does that work with this open system and how
is a conflict to be resolved well this i think you're right in what you say interesting really as you say when printing was originally invented a lot of the original printers were accused of piracy as well as promoting like subversive ideas so it's very similar thing going on i think the interesting thing about the way the tone is changing this. is that it's an incredibly because it's a fully decentralized distributed system it's a peer to peer system it's incredibly robust so it's very difficult to shut down so it's not the case that you can simply go to one website or go to one organization and usually go sanctions on them because it's fully distributed as long as users are running the. client then in fact the actual control of copyright kowtows as you call them is. is not quite. so this is where you see this kind of
ongoing battle between these kinds of centralized organizations that own copyright and distribute users who are trying to share information ok now that ideology if you are talking about that torrent information wants to be free and ideology was expressed in its purest form i would say with wiki leaks and wiki leaks is the p.t.p. networks to take journalism to a new evolutionary plateau but they met the financial blockade of master card and pay pal which shut them down so that brings me to big corn which you have about mistaken is a bit torn approach to currency decentralize as and it's virtually impossible to do what they did to visa and master card by imposing a financial blockade your thoughts you. think that you you you get a peer to peer solution to the attempt to shut down peer to peer publishing so as
you say wiki leaks some of the infrastructure that depends on a certain period to peer infrastructure but also so there's a certain ideology here of information wants to be free and this links back to when we talk about printers and printing if you do you know do your research and look at the earliest printers as well as being accused of being pirates and pirating novels and whatnot they're also publishing subversive pamphlets information that would embarrass the government etc so essentially if you can if centralized institutions and i believe it's the case it's my opinion that because of this technology and other developments centralized institutions are losing potential control over the information that people share as that control starts to loosen i think you'll increasingly see the rise of these distribute.
suppose hidden the copyright cartels really are now calling them they will argue that there is no economics whatsoever with peer to peer file sharing that this is an attempt to overwrite all the laws of of capitalism of supply and demand with free p.d.p. however if you look at sites like well google for example here's a site that's a hundred billion dollar plus company based on the free aggregation of information which they organize to an algorithm and then sell the advertisers a piece of that organism organizing algorithm so there's the economics of free turn
into a multi hundred billion dollar enterprise talk a little more about the economics of p.d.p. and why the hollywood cartel is getting that completely wrong and in fact putting out a message that is the opposite of the truth well i think this all depends on the view you have of capitalism or the way the economic systems are organized i mean historically economic systems change over time they're always changing changes the norm and of course people probably had before this idea of a disruptive change or disruptive technology now at any given point in time of course there will be successful entities who doing very well in the economic system and one of the incentives that those organizations have he's to reduce or restrict disruptive change because by definition disruptive could. their dominant position so the way i see movement to a more distribute. kind of economics approach is it's
a disruptive disruptive innovation which challenges more centralized more government regulation based government regulation based approach is that only you know in some sense if you go back to the disruption from a feudal system to a capitalist system in a way capitalism is in a textbook sense supposed to be a fully distribute system it's the idea that individuals and groups can actually exchange freely in order to satisfy their needs and therefore in some sense there's a kind of perpetual. if you look at kind of history or see where you start off with mainframes and then you had p.c.'s and now you have the cloud and then you have pete pete also in economics is there's a constant tension between attention for centralized control which has its benefits let's let's be clear about that and also a more distributed approach and there's always a battle go it's
a constant arms race are you talk about the transition from feudalism to capitalism let's talk about the sixteen ninety four clearly a pivotal year in the transition this is the year the bank of england was established. anthony hard dame who's a senior executive at the bank of england recently said that peer to peer lending boom that's going on with sites out there that are making it possible for people to lend to each other by passing the the banks on the high street could make banks obsolete is what anthony how they set this shows to me is that sometimes we have a tendency if we're on the peta piece of things to see centralized entities as monolithic in the sense that everybody's involved in them follows a certain kind of ideology a way of thinking about things but actually we don't or we essential. institutions quite forward thinking people. who very small know what's going on in the looking
towards perhaps the future. without maybe some sort of just stalemate moment there is a tendency to centralize amongst one group in a population and then there is a tendency to decentralize by another group in the population any talk about this in terms of a natural tension that goes on and it seems hard coded to go back to the original algorithm that drives us d.n.a. between having people in the group that are both for control and people who are for chaos and the mix of these two elements somehow produces you know you might call it civilization not to get too high falutin but there is that our reality our present reality to follow up on this kind of wheel of chaos and control ever spinning there is of course now a move to regulate p.t.p.
lending to some degree and to take it completely away from being out there and unregulated is that a good or a bad thing it sounds like it's a typical progression of things well i think the answer to all those kinds of. questions when people say regulation good or bad the question is what is the regulation i think some level of recognition and regulation the creates more confidence in the systems could be good if it's written in the right way of course there's another side to this which i think you're hinting at there which is that you know this could end up being a way of co-opting or absorbing they seem to an existing centralized i'm thinking about for example micro financing which started out in a very much a decentralized off the grid entrepreneurial venture in bangladesh which was doing a lot of good and then it got absorbed by the banks here in london and wall street and it turned very bad very quickly yes i mean. things can go wrong as i said
depends i mean there's another danger not an expert in p.h.p. lending in the current government relationship there but i know that recently the goldman thing was about one hundred million pounds you know to promote. lending now there's a danger there which is if you become dependent or even partially influenced by preferential treatment by government and then that can influence how things operate i mean as you say the basic ideology here is to have as much individual freedom and entrepreneurial behavior if you like but the lowest possible level ok david house thanks so much for being on the kaiser report thank you max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i want to thank my guest david halle's of the open university here in the u.k. if you like to get in touch with us you can do so via tweet or twitter at kaiser report or facebook dot com for slash cars