tv World Apart with Oxana Boyko RT November 7, 2013 8:29am-9:01am EST
welcome to the kaiser report i am max kaiser you know apparently it takes one point three million liters of water to make a liter of water that's right the lunar water that you purchased down there at the shop it requires one point three nine liters of water in the whole process getting the water manufactured in water distributing the water consuming the water to get that one liter of water it's called the economics of suicide yes humans are fricken stupid but even that's not as idiotic as when we tried to create one unit of g.d.p. growth get this sense the collapse of lehman brothers some estimate that it has taken eighteen dollars of debt to create one dollar of g.d.p. growth it's called stall speed. so. max the first article here that we're going to discuss shows you chart this stall
speed of which you speak paul brodsky the fed is holding a burning match the burning match can be seen in these two charts first up the orange line there is total us credit since one thousand nine hundred three you can see that it's divorced from the blue line which is nominal g.d.p. and the gray line at the bottom is base money supply so either one of those two has to increase either the nominal g.d.p. or the base money supply in order to collateralize that orange line of debt going up the second is total us credit to us nominal g.d.p. that puts all those charts for the first one into one chart and you can see the stall speed so we've hit a point where no debt is not creating anything yet this is really the amazing charts here the clearly demonstrate this economic problem is that no matter how much larger jest is given to these banks in the form of free money from the central bank. they are on able to lend it out into the economy in sufficient quantities to
generate any g.d.p. growth and that number has always been a bit skewed sense the world what off a gold standard on to a currency standard says nine hundred seventy one but going back to nine hundred seventy one so you need a that's on about one to two dollars of debt to create one dollar of g.d.p. growth then right before the crisis of two thousand and eight it required seven dollars of debt to create one dollar of g.d.p. growth then the reaction to the crisis in two thousand and eight was to flood the world with debt and they flooded the world with eighteen dollars worth of debt for one dollar of g.d.p. growth which is to say that they don't get any g.d.p. growth at all really but they're just keep flooding this just in with debt and that debt is suppressing g.d.p. growth the money creation as i've said on the show many times before the money printing is creating a net effect of deflation that's what g.d.p. collapse is all about your prices some prices are going up but not as fast as the implosion of the banks the shadow banks the zombie banks are causing those stall
speed as you point out stall speed and when they hit stall speed you're up there at thirty thousand feet or what have you and then boom you gravity takes effect what do you do when you hit stall speed if you're the head of an empire or the head of the central bank of the united states the federal reserve bank what do you do well if you can't grow the economy on principle they're against it anyway right they're against people having any sort of wealth of their own so they've got to steal it don't they because the fundamental disconnect today is unnatural clearing levels prices of goods services and assets that do not reflect society's sustainable needs wants and preferences so over time the natural cycle of an economy is that prices will decline but in a finance based economy central banks and heads of state don't like that they want always inflation so you see global monetary authorities have sought price.
stability which in practice implies the need for constant price inflation to offset would what would otherwise be naturally occurring price deflation indeed price stability has become a bipartisan socially acceptable euphemism for consistent policy administered credit and price inflation functionally the dominion of currencies purchasing power and they provide a chart for this this is c.p.i. from one nine hundred ten to the present and as you can see it's been declining and down fifty nine percent max since one thousand nine hundred three all right bring up a couple of different things there this one debt deflation in this context is debt deflation the idea that the government can print money to create inflation is an attempt to try to inflate debt a way that's their intention but that's not happening in fact that's exacerbating the debt accumulation the more money they print they're not getting the inflation that they hoped they would get that would diminish the debt actually they're increasing the debt load the debt load is going i are both phenomenal in real terms
because g.d.p. as reporting out is also shrinking so debt as a percentage of g.d.p. is going higher debt in nominal terms is going higher debt is just keep going higher and higher and if it does stall speed there's no policies or saying there's no policy there's no monetary policy there's no fiscal policy that can be implemented that can rectify this fact that the engines on the plane at thirty thousand feet have stalled and then we're getting ready for heading down into a crash landing nothing can stop the crash land i mean more current so it's going to take the bank of england belgium from four julian pounds to none trillion pounds in an attempt to keep the plane there's no way engines running at this point in the air for a little while longer that may work for another few moves but ultimately within the next twelve months it's going to crash well i mean this c.p.i. chart shows that this is a. form of theft as well by the way inflation is
a former theft from the people remember i said this is if they they've hit stall speed what do they have to do they have to steal it so as they point out here the rate of currency dilution has exceeded the rate of production growth so by every single trick every single idea they could come up with they're losing they're falling further behind now regarding this stealing from work and labor and savings the economist points out labor pains all around the world labor is losing out to capital and you see a chart here this is labor costs as a percentage of nominal g.d.p. the line at the bottom there is mexico and there they have lost the most appalling labor share implies that productivity gains no longer translate into broad rises and pay instead an ever larger share of the benefits of growth accrues to owners of capital the amount of money being created does have an effect on c.p.i. or you know what people associate inflation being that the consumer price index is
and over the past forty years you have situations where the c.p.i. is running at a rate that's higher than the rate of debt accumulation but over the past five or six years we only have had one statistic and that is that debt is growing faster than either c.p.i. or g.d.p. or wage inflation there's only one thing growing and that is debt and this is rare throughout the history of america and the united kingdom very rarely i would say probably never in the history of these two countries i mean that is straight seven years now of debt and money printing accumulation that hasn't generated any uptick in g.d.p. at all and remember when the u.k. and the u.s. say that their g.d.p. is positive it's because they're understanding that inflation number if they use the actual inflation number of stuff that people actually buy day to day food and energy it would be negative right now well the. increase in debt they're just
counting as g.d.p. at this point and from that first chart i showed you you saw that the debt credit is rising but it's doing nothing at all to nominal g.d.p. it's doing nothing just recap this for a second what we're saying here is that this is a rare situation in the u.s. economy and it's being replicated around the world that the debt is guy rocketing and it's not having any effect whatsoever on g.d.p. or inflation or wages there have been times in the past under the theory let's say keynesian theory let's say paul krugman for example paul krugman in the new york times believe five years ago that if you simply double or triple or quadruple the debt in america you get some g.d.p. growth he's been discredited he's been proven wrong he's been proven a charlatan whereas guys who don't follow that particular school of thought have been proven correct that's the article in the economist about labor not increasing their wages this pointing out that productivity gains have been huge and the time
that their their actual share of it has declined as a new a futile sort of system. or a great credit to the game are paying prisoners a dollar a day to do an eight or ten to twelve hours of work per day they're the most productive workers of america or the prison population and the policy makers in washington want to turn the whole population into a prison population and then they'd have say look there's so productive really printable a dollar a day look at all these license plates that they get to stamp who. don't tell marketing don't people who point you know a lot of tickets and go to the casinos and blow their wad of cash there so productive well let's go back to how the fed and the banking system the finance system has to steal and where to stay in the ponzi scheme left and part of the n.s.a. scandal i think is by the way about that mostly about that is about them stealing corporate secrets from everybody else in the world but let's look at a story here cartel traders advised banks three currency dealers linked to a global investigation. alleged rigging
a foreign exchange markets advised the bank of england on the fallout from the euro zone crisis max so these are the bankers names ramchandra citi group trader richard j.p. morgan executive neil o'riordan of u.b.s. are all members of an influential committee appointed by the bank to provide intelligence on the currency markets and they've been implicated now at reagan global for x. markets a five point three trillion dollars per day market that's also deflationary in other words money is being stolen so there's less money around those deflationary why are they committing these frauds because there's no growth in their industry banking to sustain their bonuses so at the end of the year they've got to go steal the bonuses these people are engaged in embezzlement is different than the embezzlement that jamie diamond was involved with the m.f. global member who stole a billion of the creditors in the completely legal fashion then they retroactively was back and they changed the law and said well we were able to reverse the
rotation of the planet earth and going backwards in time we've decided he didn't break the law because those were laws that we were thinking about making at the time we didn't get around to it therefore he's innocent by virtue of time travel that's his defense and of course this is what all the bankers do i know myself i haven't worked on last year whenever you break the law it's always a fact that you know what it's going to break the law is the law as of been touching up to all my innovation as a financial engineer now finally max you talked at the top of the show how it takes one point three nine leaders of water to make a leader of water or eighteen dollars of debt to create one dollar g.d.p. growth now we see the opposite the same sort of situation happening in the rest of the world the internet has provided a great g.d.p. global g.d.p. and efficiency and all sorts of productivity gains but now we're seeing the break up of it and countries like brazil are going to spend enormous amounts of create an alternate internet essentially they're going to create basically spend seventy five cents to keep the u.s. from stealing a dollar's worth of corporate seat. brit's n.s.a.
surveillance may cause a break up of internet warns experts internet specialists highlight lose by brazil germany and india towards creating separate networks in order to block spying and they speak to some experts ian brown from oxford institute and he says that states may have few other options than to follow brazil's past this would be expensive and likely reduce the rapid rate of innovation that has driven the development of the internet to date but if states cannot trust that their citizens personal data as well as sensitive commercial and government information will not otherwise be swept up by giant surveillance operations that may be a price they are willing to pay of course brazil's finance minister calling the phrase currency war as jim record says first you have currency war then you have trade war then you have a hot war same thing happened three world war one free world war two hello world war three days everything was going on the guy's report thank you max for the second half a lot more. of
the i want to. pick up something that is quite simply a mess. with no way oh. clearly they were just at the wrong place at the wrong time. and sold to the us and turned over to the us for about the soul that could be buried alive. was saved with great ever. going to they wanted to turn me into a terrorist or this with them they wanted me to admit that i was a member of al qaeda or taliban or that i fought with them. was not about time i didn't even know what al-qaeda is nevertheless there are people all. brave enough to start a fight. or something is going to be done that's going to be done by me and to have
a short amount of time to do it but it's going to impact me i'll be prosecuted but it's not going to impact. the wife or my daughter. the one time or trap the monarchy. welcome back to the kaiser report imax geysers i'm not in los angeles to speak with wolf rector of testosterone pit dot com wolf welcome back to the kaiser report. you know max thanks for having me all of being on your show tonight wolf rector how is the federal reserve like dancing chickens. well that story goes back to a movie called country war two characters the main character dusty and his buddy we're talking it's a buddy of us telling this story about a. guy who's saying was to get chickens to dance at
a carnival and come to find out he had one hand on the stage and the hand on the burner and heating up the chicken heating up the stage and when the chickens when their feet got so hot that they couldn't stand it anymore they started dancing yeah i remember back in time square back in the one nine hundred seventy s. they used to have dancing seconds and they outside on the street and these little kiosks you worked on an electric hot plate you put in a quarter and the electricity would go through into the feed of the chicken then they would start dancing but you're saying that the dancing chicken syndrome applies to the federal reserve bank i see what you're saying is that they've just got to keep feeding it more quarter they got to keep printing more money they've got to keep this to condensing that's right and they it's actually the feds turning on the heat underneath the chicken and so. the issue with the chickens is they don't jump off the stage you're not smart enough to jump off the stage so ben
bernanke is counting on it that we're not jumping off that statement of course. if your feet get to jump off the stage do something different and so ben bernanke you with his sir policies and and full effort to reduce interest rates long and short term to near zero has made life very miserable for a lot of. people that depend on it depend on yield income for many life insurance companies and other organizations pension funds social security. and continues to do so and nobody's jumping off the stage ok so this is actually to keep on the zoological theme here a variation on the frog in the boiled water there aim where they keep turning up the heat but the frog doesn't jump any bulls themselves to death that's another variation so the fed policies are essentially killing us now zero heads estimates that central banks around the world have created eighteen trillion in debt since the lehman collapse but managed to generate only one trillion in g.d.p.
growth this is the most lopsided debt to g.d.p. growth number ever seen in any economy ever in history your thoughts well that is certainly true and it's a big issue there are two elements two big really three elements in it on the consumer side consumers have actually marginally reduce that debt just a tiny bit but governments and corporations have dramatically increased debt and terms of corporations obviously they they haven't done anything productive with them they're buying back shares they're paying dividends the share buybacks pay mostly for their shares that they have issues to recently to acquire companies and corporate. executives benefit clients and so it doesn't go back to corporate that didn't go into building factories or appliance or infrastructure it
went into wall street engineering and it didn't produce any results as we can see. and on the government side they have obviously borrowed a huge amount of money but as we have seen in japan for example the biggest bar of them all they have had a very lackadaisical economy for many many years and they have to spend. part forty to fifty percent of their entire budget expenditures every year and it's the most gigantic stimulus package ever and the economy just hasn't really grown yeah that's right yeah there was a great editorial incident in this week's stuff and has a time to said that in seoul you downsize the financial sector they won't get any g.d.p. growth because the too big to fail banks of the united kingdom of the united states they're just zombie banks are gobbling up all this money and they're returning growth they're keeping a lid on growth and until you get rid of them you won't have any growth now the n.s.a. spying scandal when it emerged it was revealed that national spy agency across the world are actually spying on behalf of the n.s.a.
is this the same case for central banks are the bank of england and the e.c.b. working in effect for the fed wolf well that's an excellent question and. i wish i or i said he won the fed someplace to do you know they are to transfer they one thing we know for sure. who the fed is working for the fed is working for the companies that own it and the fed the federal reserve system the united states is owned by private companies and they run it and so the fed will do what what's best for these companies and includes goldman sachs and all the big banks around the country and some institutions like general electric and this for money also and iran and so whether the other central banks work for the fed i'm not sure but they're all working together that's for certain well not all of this if you listen let me point out something here because in the united states they just went through
all big wrangle on raising the debt ceiling and now they go through the same thing in a few weeks time they want to raise up seventeen trillion and beyond simultaneously mark carney the new chair at the bank of england said that he's going to expand the bank of england. and see it from something around four trillion pounds to nine trillion pounds so is the obvious that that this whole debt ceiling debate united states is the off draft is going to be dumped into the bank of aim of the bank of england as da going to be a toxic waste risk dump and one of the primary beneficiary of that will be the federal reserve bank of america which if they have trouble getting through that debt ceiling there is going to dump the debt on the bank of england's balance sheet and of course the bank of england and the u.k. is the worst regulatory environment in the world where most of the financial fraud and financial terrorism takes place so they always see though an exact correlation between debt ceiling bank of england total collusion these bankers are completely
working for themselves have nothing to do in generating g.d.p. it's a complete fraud your thoughts. i totally agree and that is there are colluding. if one central bank ever stops printing money and buying crappy bonds another wall will pick up the pace and right now of course the fed stopped buying and printing the bank of japan has jumped and big time. the e.c.b. has backed off just a little bit in the bank of anyone is no contemplating further expansion is there so yeah i mean it's. if one bank just one central bank just slows down a little bit the other won't pick up the pace so there are colluding they're all sitting together in conference to this. bank of international settlement on its board all the major central banks central bankers so there are definitely clothing on these issues i would imagine if i'm looking at this in terms of connecting the
dots between the fraud between the central banks my guess is that the next economy to have a massive social unrest problem will be the united kingdom and mark carney will be forced to climb down from this nine trillion dollar debt assumption that he's put forward into the public domain when there's blood in the streets and then that debt which would have been on the bank of england's balance see will be a part somewhere else and as you point out the top of the show is the dancing to consent room or the boiled frog syndrome the public's being lall into a state of perpetual surveillance of martial law by the central banks to hide debt bought my question to you is what do you think about my guess that the next outbreak of blood in the street for bankers will be in the united kingdom your thoughts. well i hope not. i don't want to see blood in the streets anymore right now are seeing blood in the streets in france no one in their window
well if i must i must interject here because the economist magazine last year ran something called the social cohesion index which. in attempt to figure out where the social unrest where the blood in the street will happen next so these bankers are banking on blood in the streets they've got contracts based on blood in the streets their entire raise on debt is based on creating blood of the streets so why should we not be in the game of trying to second guess where they next will attack what's the big deal they want the blood the streets they profit from the blow in the streets so why are we so hasn't about calling them out on it they want the blood of the streets right here in the u.k. because they profit from it so let's be honest about it let's be honest well why are we has it then it was welfare thoughts. i hate to predict the future like that and i can definitely see blood in the streets we are seeing blood in the streets right now and and it could very well be in the u.k.
it's more dependent on finance and any other major country so if there is a big problem there. and it's likely that there will be i can i can say all right wolf let's talk about the economic fallout from the n.s.a. spying has put a halt to the latest trade pact with the u.s. china has halted purchases of u.s. tech products what sort of losses are we looking at for the u.s. economy as a whole as a result of these n.s.a. spying revelations from snowden on in the tech sector i think there will be there will be major repercussions and i am for example already announced that sales of hardware in china have collapsed by fifty percent last quarter so there will be so we already know in the united states that chinese manufacturer huawei of telecom equipment has been banned. that can't sell telecom equipment in the u.s. simply because of their spying equipment built into their systems so the question
is what are companies and governments going to buy to to run their infrastructure and they have to buy. some more so if they don't buy from i.b.m. who else are they going to buy from there's chinese manufacturers the european manufacturers. the question is who can produce what these american companies are producing and some of them have competition overseas and some don't so oracle has competition over seas. you know apple has competition over seas some other companies may not be microsoft you know with its windows software system has a back door and it communicates with the n.s.a. but what what options g.s. corp emmett's owns it isn't the obvious option to go to open source this is why you have companies like redhat which is based on the open source technology from linux which was took the internet by storm a few years ago it's now running most of the backbone of the internet wasn't china
just say we don't want proprietary code from i.b.m. anymore it's full of bugs and full of warm buffet coersion style banking terrorism we're just going to create open source technology one on one of these countries go open source and they're doing that the problem there is that linux too has a back door and there's a sign the security kernel for for that program many years ago and it was incorporated that manages linux is that it's not hidden that you can see the code so if you're an expert programmer you can see it and you can deal with it now i.b.m. is selling linux servers and they're there in partnership with wreckage and they're selling linux servers but those have crashed sales are very important point wolf is that even linux has a back door with the n.s.a. but it does have some transparency attached to it that's a very interesting point listen well for it to run a time we'll have to have it on again soon thanks for being on the kaiser report thank you max. that's going to do it for this edition of the guys report with me
max keiser and stacy herbert i like to think our guest will have to come if you'd like to get in touch tweet us at kaiser report until next time ask others i know you know. i think the issue of privacy the issue of surveillance hasn't gotten enough coverage in the mainstream media i think the majority of americans don't know what's going on don't understand the significance of what's come out
this summer i don't think it necessarily they need to hear about me and my story because love of it is one small piece of a much larger puzzle but what i do think that mainstream america needs to hear about and then her stand is just to what lengths our government is going to conduct surveillance just how much information they're actually collecting and storing in some cases for years you know these are very significant problems these are the types of issues that can do a democracy like ours. choose your language. clearly we can't with oh if you're going to. choose the consensus. choose to use that to. choose the stories could you please choose specific sense too.
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