tv Keiser Report RT March 18, 2021 6:30am-7:01am EDT
u.s. banks value in cash which is where to put cash of course in one place an asset. is europe a strong astrally asia and the far east deflation assets are government bonds us some investment grade s. and p. 500 u.s. consumer discretionary growth and u.s. high yield bonds. well this is the big one the big onto a lot of to big bull market over the past 40 years that has been the foundation upon which the economy around the world particularly in the united states has been built because with that big deflation trade as it's being referred to you end up having lower interest rates lower interest rates that's the key that's been keeping the american dominance rolling for 40 years because every time there's a mistake like in 2008 for example or the dot com crash or the stock market crash
of 1907 or the bull market crash of 1993 the answer has always been to extend and pretend and that means to extend the maturity out to longer maturity days. and watched bills maturities rise in value because the central bank has been instrumental in assisting in this bull market in bonds by purchasing a lot of these paper to keep interest rates artificially low and that's the story of the past 40 years if bank of america is correct and the bull market of bonds is over and interest rates are going to start going up that means that pretty much 90 percent of the american economy in the global economy will start to become insolvent so they're basically identifying trends that you and i have pointed out here for the last few years and increasingly making a focal like the globalization they're now seeing that and that's because of the
city's trap america doesn't like to see china overtaking it but it is overtaking us so we will withdraw from the world we'll try to make sure that nobody else can trade with china will introduce tariffs on china as we have done and biden has yet to remove the tariffs that trump introduced on many of the goods coming out of china we've introduced tariffs on on goods from canada and europe so i'm not sure if biden has yet considered even removing those he's also saying where there's a feeling deflation effect so a lot of that deflation effect has banned from the central banks have you as you've identified because central banks can't print money they can print credit and the credit is deflation because they just that credit can never be paid back so therefore it's always deflationary it's going to collapse all the time but also that technological advancements have created
a lot of deflation and those are going to be over necessarily because of of the fact of the globalisation and then demographics so the boomers are dying off but. lindsey are inheriting their wealth they're also well they have their own entire economy strong structural economy based on like bitcoin and digital assets and digital existence if the u.s. wanted to take another route here and 2021 and instead decide that they were going to try to compete with china by biting the bullet and taken the hit to the economy by introducing manufacturing back into the economy and a more prudent lifestyle to try to rein in the excesses and to go head to head with china on the competitive basis that would be the smart thing to do but instead they're as you point out there de globalizing there was drawing there shrinking because china is moving ahead and they're becoming belligerent and what usually
happens is as many have pointed out currency war leads to trade war leads to a hot war so the u.s. sadly instead of just out there competing with china like ok you know what we you guys are tired of you out competing us we're going to compete they're going to probably big you know violent which is sad but protectable you know they're also pointing out there that you're starting to see for the 1st time fiscal stimulus from the u.s. government and so he spent you know credit stimulus from the central banks or money given to bankers who then don't circulate the money and that's why we've had the money so velocity collapse and that same time of this this this huge surge in deflation assets deflation was remaining while banks just the wealthy the financial system hoarded all that credit they didn't spread it to the ordinary person now it's spreading to the ordinary person they're having air drops in their bank accounts almost the hope quarterly at this point but soon they're hoping many in
congress are hoping it'll be monthly or even weekly that people will be getting like $2000.00 a week which of course is like far more money than me. most of the world makes but here and far more money than the rest of the world makes actually going out and working really hard in a factory all day manufacturing all the goods that we're buying whereas you know basically they just want to pay several times the global average salary for people to just stay home forever a turn of the front from from here on out in terms of how the structure of this economy is going forward because once you get that free money once you live like a banker who's going to ever give that up well i mean make a good point there that you have a situation now where all the money printing that's been going on with a credit expansion as as you point out in terms of what central banks do has also seen record lows and money velocity the money just is parked on the banks of the
banks keep it essentially and they keep it and they buy stuff for themselves but to put it in the base most basic terms they don't want to distribute it they'd rather as a matter of fact a slight a stimulus check a corner go out of the banks now they're holding onto it they're not going to distribute it for other week or so simply because they like to get it and use it and spend it and give themselves bonuses and buy apartments and yachts and stuff that's the only reason so the government is saying you know what there's no way to rein in the bankers eric holder said they're above the law we can't prosecute they're made men effectively like in the mafia that is the american economy so they're just going to print money and air drop it with the stimulus checks and that's going to have the effect of causing a real inflationary nightmare and the bond market to tip over into a secular bear market and rising interest rates which will be the final nail right that those stimulus checks a lot of it being held by the major banks kind of like in a robin hood way you're front running your trade so i think they know before they released the money to you that you're going to mostly go and you know speculate in
the stock market so they're going to front run all your trades so again of course like like we haven't. sieved any stimulus ever in this whole pandemic and we won't but our stock portfolio our house price has gone up far far more than any of the stimulus so that's the way this unfair system works of course right you know how back in the day the eighty's and early ninety's there was a term herd often called check kiting check kiting could have people already was busted. they in turn went out of business or bought out that was a stock brokerage yeah yeah and so what they did after they got rid of the competition or peabody they may check kiting legal and that's check kiting so the government sends the money to the banks the banks check the sun surely they as you point out they use the money 1st to the front runner everybody else so a lot of this is by the history of the past 40 years during this bull market is
that banks figure out new ways to rip people off they get caught and what they do is they change the law introduce new laws and if there is any problems they extend and pretend they just make the maturities longer and the coupons lower but now it looks like that big american game of fraud which is the american business model is coming to an end well here's another remarkable story this one is so crazy because ok so we have all of the stimulus checks thousands of dollars member income is up 14 percent in the past year mostly because of transfer from the government to the people and it's something like over 20 percent of all income now is provided by the government then by then promises to wipe away student debt and those you know debates whether he wants 10000 truck she wants 50000 wiped out so huge amount of money debt deflation disappears now representative ilana omar this is pretty remarkable i introduced she said the rent and more gives cancellation act
which would permanently council all rent and mortgage payments until april 2022 anybody who hasn't paid their rent or mortgage. for the past year and many people haven't and some suckers did choose to pay their rent or mortgage and they could have just not paid it because apparently all of that's going to be wiped off whatever you owed they're just going to cancel it permanently and clued in for the next year ahead lots of people are in the comments on this and yes stick it to the landlords yes you know warren buffett and blackstone big lamers yes stick it to them well if you read further down basically the taxpayer is going to pay those landlords right since the taxpayer is going to pay all the student debts right. because all that money went to the universities and the and the administrators right they've already collected the cash from bought houses or or stocks or whatever so they've had it that cash is being paid off the debts are being paid off
by the taxpayer here the taxpayers going to pay off all the rents mortgages so pretty much everything in the economy is state owned all the bonds are state owned all the debts are stay own the houses mortgages are state owned student debts are state owned so that's the situation we find ourselves and what you're describing there the minimum monthly payments the forgiveness of rent state ownership of everything i actually read a book in college that explained the whole thing and they kind of like lay down exactly what you just said it's it's not read off and now it's kind of famous so it's called the communist manifesto and it explains this exact political theory well i mean our founding fathers well again you're not allowed to teach the founding fathers in america anymore but nevertheless they did predict that once the once a taxpayer once the citizens realized that they could control the printing press then we were doomed so i'm just saying like once you give people free rent. and
once you give people free you know monthly weekly payments until their bank account where they don't have to do anything like who doesn't want that right to not pay a mortgage or rent i love to pay be just people send me money for no reason like i was above that but you know i just think once a set sam is going to be hard on line just like q.e. is hard to on wind these sort of policies will be hard to unwind well comrades are going to have to take a little break when we come back much more coming your way speak don't go away. but rather stand and hear from us and.
i know that i know there are a lot of shows that are rather you know that are for them to care as a. family and that competitor and then you can keep an. eye you lose a child for all of that and. then. it's whole place choice for you and there's a payoff time in syria this is. a. model for other women africa will fuck around with mr hates it for
a gentleman and lawyer but i hope that our friends in the court. americans love. this was a fundamental part of how our political leadership and our country at large understood the bargain you get a hope and then you know rebel right as the things you don't revolt if you have a stake in the system. and think about the longer deeper history housings men in the united states not just that question of the american dream but the bigger question of who the dream is for.
welcome back to the kaiser report i'm max keiser time now to go to the legendary carl denton share of market hyphen ticker dot org karl great to see you again you know good to see you too you know it's a long time no see well we need to pick your brain here the u.s. government has printed trillions upon trillions in the past 12 months is it really this easy karl are there any costs we might want to be with a live there karl oh i don't know retail prices of gasoline have. kind of gone through the moon the futures price on gas is roughly doubled in the last 4 months and i can't imagine why that would cause anybody consternation i mean i was paying well under $2.00 a few months ago and i just drove by the gas station a couple hours ago just to $69.00. i guess if you own
a diesel vehicle it's not so bad because. for a volumes being all down and you know not so many people traveling with all the cool stuff that's you know the trucks are not running as much and so as a result the demand for diesel less there used to be a much wider gap between those 2 prices than there is now but most of us drive gas for cars don't we all wait wait wait wait you too could have a electric powered vehicle. which works just great until the windmills aren't working and then. go a problem near to you're talking about some inflation or inflation is starting to make a south noun sound my question is that for many areas during massive money printing there was deflation and that's what we heard all the time and there is a big debate about is it inflation is it deflation are they printing credit or are they printing money but it seems that we've had an inflection point at same site whatever they were done before it's not exactly resulting in the same thing and renting
a new era i think bank of america just set the 40 year bull market in bonds is over so they're also looking for a change possibly a secular bull move in commodities which would be inflationary. a bear move finally and bond prices what's different now than last year or the year before how come the money printing now suddenly has some traction col it's always a function of supply and demand just like with anything else and i don't know were these analysts get the idea that commodity inflation is starting looked at the price of lumber for example random board feet it's roughly doubled i'm not quite so sure how you consider that just a little inflation. i mean it's not a big deal if you want to do something like build a house or put it to respond and you've got some rugged boards up on top and need to replace you know that kind of thing. so the problem with money printing
is that the credit goes into the system. and it ultimately always ends up in the price level but the masters of the universe folks love it when it shows up in places like stock prices because boy that doesn't hurt you you know you go to the grocery store it doesn't do anything bad your your grocery bill and it does wonderful things to all the rich people that have a lot of their money in the stock markets. there is this chestnut that it's it's beneficial to you if it shows up in your house price but that's actually false because you can't monetize it you need a place to live so if you sell a bubble house you have to buy another bubble house you gain nothing the only real way to monetize it is to die that makes your heirs happy with the appreciation and take it but it probably doesn't make you very happy so the the issue though is that ultimately this all winds up showing up in things you care about. and when rates start to go up then you run into the other problem that inevitably arises which is
that stock prices are essentially a discount on cash flow and when you get down to it that's what they are and when the cost of cash flow goes up because the cost of borrowing goes up i.e. interest rates rise then that multiple shrinks and so if we were to see for example the 10 year treasury you know trade at 5 or 6. year take 30 to 40 percent off the current price of equities immediately because most of these companies are fairly highly levered and the ones that have no assets behind it have nothing other than their operating cash flow to iran so you know and just real company that actually makes steel still has steel to produce but a 0 asset firm such as amazon you know people think of amazon's having you know they have all these warehouse of it well how much is a used computer worth in today's world what $0.05 on a dollar what you paid 40 year ago or 2 years ago so from tense of purposes. it's
an asset free business. have is that operating cash churn nets that's where their price comes from somebody these companies are for example air b.n. b. hotels amazon has just warehouses full of stuff it's essentially a software company right down the list. they don't own the cars etc so we are beholden to the very thin margins tied to technological all improvements and the ability to borrow money at near 0 percent for so many of these companies and as you're saying any uptick in rates at all it has a really huge impact on the operating leverage of just about every company out there because every company's become a software company in that regard as if as you describe but 2 things so if the past 20 years the central banks have been able to keep a lid on rates by doing things like quantitative easing and other a machinations of the central bank and 2nd of all the dollar has remained pretty
firm throughout all this which way it doesn't show a lot of inflation in terms of where the dollar is out really necessarily so my question to carl is. you know we've been talking about this for years is the central bank finally out of tricks are they reaching into the magic bag of tricks and coming up empty finally and will the dollar finally start to also show that they've run out of tricks karl i don't know that they've necessarily or are tricks i just think they've run out of respect for its renewed they're going to continue to reach into the bag but what color balls going to come out of the bag you know this is not the 1st time the federal reserve tried this if you remember there was an entire era of great repression that happened after world war 2 they got away with this for 20 plus years they built up enormous iniquities and distortions in the system. richard nixon actually recorded 2 reports put burns up against
a wall literally assaulted him. insisting that he he keep rates low for him and of course we all know what happened during jimmy carter's presidency when that didn't work out so good right ses there is a reckoning coming but do recall that during all that time it's the dollar never collapsed and the reason is that all the central banks around the world have the same sort of general concept of what they want to do so if you have the same kind of a situation arise for example with the e.c.b. . then the c.b. is forced into the same box that the federal reserves forced into and yet the dollar being a floating exchange rate currency yes it will probably decline from where it is now but you know people even back in 0708 timeframe was was looking at the possibility of a trade deal excretory at 40. obviously i didn't happen ok well when what you see is the mechanism doesn't occur you go look for why why why were you wrong and
essentially the essence of it is that yeah they'll be depreciation but i don't think there's going to be a collapse in the price of the dollar simply because every other central bank is going to get shoved in the same box you know we speak about print money and it's a catch all term that refers to all 3 different banks and so my question is this right now the government is sending out checks to people who get a check from the government and that's a different kind of money printing that's actually helicopter money that's money that's am one money i think i'm not wrong and that's different than what's been going on before that with let's say a fed expanding credit which as a part of the plumbing of the money creation can you go into a little bit am i right to say that the sending out checks is a different kind of animal and it would have a different consequences and probably a more inflationary consequence car i fully expected to have a much stronger inflationary consequence at its core everything the fed does is it is not actually the fed. you know if you think about it. it is congress that
borrows up the cash and prints it the fed supports congressional actions but it's congress that does it so really the question is do we trickle it down or do we just hand it to people and when you put when you put it into productive things like building bridges and eisenhower's roads you know they d. eisenhower expressway system things like this you get a different multiplication factor if you just hand people cash when you have people cash is normal cation a fact i go and i spend it on food i spend on a booze i spend the remainder i make my car payment with it but there's no real multiplication when you build productive assets with it as eisenhower did with the eisenhower expressway system that does have a multiplicative a fact so i think there is a quantitative difference of substance but one of the things that's very very difficult for politicians to do is ever walk away from any of this when you look at you know ok we were hanging 14 or dollar checks that maybe the longer term and
worst problem is what we're doing with these child credits in the tax code where we're taking what used to be the e.i. t.c. on a fairly narrow basis and more sensually codifying that in at a at about double the level. in that maybe permanent because can you imagine a politician trying to take that back ok what does that do to the price level over you know over years remember the johnson said great society we're going to get rid of poverty in the united states by just what it what he said we were going to accomplish with his programs we didn't get rid of poverty we made it worse no we got this we got the same talk coming out of palosi go see in all these other guys oh by the way we're going to cut child poverty by 80 percent by increasing the show taxes go in try to take those back 2 years from now see how well that works out i get my payment has been trending on twitter people are calm on the biden box after
a year of getting paid more to not work. with all these and benefits passing throw . how they how they're going to go why should they go back to work number one and number 2 if they're demonstrating you can just print money out of thin air by the try and why aren't people going to start asking why are we paying taxes karl well you know of course they will if i have a nice to their works at a big box store in the normal in the northern states machine to work during the entire cove and say their next door neighbor was literally 66 o'clock in morning she got up to go to work and he still smoking bong hits with the smoke coming out of his windows because he's got 600 bucks a week to sit at home well so what do you do to the wage level if i can quit and collect you know and collect that money now theoretically you're not supposed to be able to do that but we all know that these systems get gamed so i don't know how this what ends up stopping this other than the fact that it's going
to show up on the price level and what i have said really since i started writing on this stuff is doesn't matter how many dollars you have what matters is what they buy now your purchasing power is collapsing a spic i have about 30 seconds what's the problem with gauld car when as a mother they got 30 seconds because it's always been a terrific. herbal inflation hurts sure it's a good geo political activity which you want to you want to hedge inflation by common stocks are i called senator well said i great to see you again you look healthy whatever you're doing keep doing it thanks for being on kaiser report thank you in time and that's going to do it for this edition of kaiser report with me max kaiser and stacy herbert i think our guest karl denninger of market hyphen ticker dot org and so next time.
one of the worst mass shootings in america wasn't less vigorous in 2017 the tragedy exposed a little of the real last. election officials are controlled by could see you know not. reveal where. really and now it's partly because. the american public barely remembers that it happened but just shows you the power of money and. the powerful showed that true colors when the. most contagious contagion we've seen in decades and then you have a mayor who doesn't care so here's care i goodman offering the lives of the vegas residents to the control group. of deep indifference to the people by. taking action absolutely. machine. money machine huge cash is ran by people who don't care about people's lives being watched.
the women's category. why do we have gender or do you have gender characters in sport because we do treat men and women differently. every single week athletes all we all have biological advantages over each other. are losing use lots of friends are those that you hear has a lot to do it. and develop confidence and belief in myself and i've learned the value of hard work and dedication to cut down. that these men say that they feel like a woman and they will not ever know what it's like to feel the loss of a baby her maybe biological realities that they will never really really think this
is fair. i just don't believe at. least. we are in the crisis of the century and i'm not ruling out anything any single for now. the european union threatens its allies with a vaccine export ban in the 10 to fix its flying green job while other e.u. states suggest that sputnik could be. also warns of a new low in time after the american president brands his russian counterpart to killa and we look at whether joe biden's promise that the problem you see is back is in fact a stab in the back on the u.k. you should strike trade deals with countries even if they have a poor human rights record that's according to a link to a recording of the u.k. foreign secretary rod.