As a report so much so many things that. Yes you know i notice that its basically crash season upon us and you could tell that because how dark it is outside all the time in the morning late into the morning that it stays dark and everything on the surface seems a ok but under the surface theres some sort of turmoil brewing in the Financial Markets in oh weve been looking at this repo situation and you know something apparently like at least one bank survived going under in the past week or 2 according to nick. But heres an interesting interpretation as well from Rick Ackerman at Rick Ackerman dot com hes a former market maker and financial journalist and he says repo rumpus foreshadows a short squeeze on the dollar the feds so far 128000000000 dollar intervention in the repo market slipped off the wall street journals front page thursday evening hardly a concern dont be surprised if years from now the squeeze on short term borrowers that cause this flurry of excitement is recall as an Early Warning sign of the Banking Systems coming collapse on tuesday there simply werent enough dollars to keep Short Term Loans rolling this implies that the dollar short squeeze that i 1st wrote about barrons and the San Francisco examiner more than 2 decades ago may have. Arrived the dollar short squeeze the fascinating topic. This would be deflation according to the deflationists out there and how the collapse of the bond market the credit markets. Continued despite all the money printing despite all the attempts to reliquefy Banking System doesnt matter. The internal machinations of the bond market as its traded internally by banks is continuing to collapse and on the surface this is not reported because its too hard to speak of the fact they credit markets reach such a state of disrepair disrepair. Its. Causing a run on the dollar and a short squeeze on the dollar in this way but you know rick is probably correct and you know the its just a corpse basically and they they they cant keep it animated weve had so much money printing we have negative rates we have all these things to keep the system alive and most people feel like really great about the economy jobs are booming wages are rising house prices are booming everything is ok we also felt like that in 20062007 when we were reporting in the Financial News at that time we did you know i remember you going on france 24 when in january of 2007 there was a flash crash in the chinese stock markets it went down Something Like 1520 percent in one day and everybody around the world including wall street they were all like what is going on so there were like crazy movements leading up to the financial crash of 2008 and. This is before they begin to paper over really violence will he and aggressively but so here were looking at. Similar movements this could be something or it could be nothing but here Rick Ackerman says regarding the run on repose it is curious that a dollar shortage developed in one specific market at a time when dollars remain only lost in exhaustedly available in so many others mortgage money is not tight nor are percent teaser loans for any credit card holder who is not in prison Big Companies have no trouble borrowing billions of dollars to buy back their shares borrowers in the repo market theyre potentially like short sellers of a stock that has suddenly become unavailable which is to say they will be dead ducks on that inevitable day when even a slight whiff of panic wash through the battery of people in the repo market the repurchase agreement business who are putting up collateral for short term ones you know they dont wanna lose a penny i mean its ok to lose a bunch of people in the Mortgage Market its ok to disenfranchise the entire black community for example and so we did in 2008 for for a laugh its ok to crash the stock market periodic low for stockholders who are unhedged and they get wiped out i mean or its ok to wipe out a country like breaks it is doing because of the interests of Hedge Fund Managers who are looking for the next greece thats off for fun and games but in the repo market its the guys with a lot of money that i want to lose any money so they dont trust each other so the Interest Rates go higher so theyre there theyre unwilling to lose even a penny thats why theyre there theyre charging each other exorbitant rates because theyre cheap i mean theyre only lending for overnight and yet theyre not trusting each other the people in the Mortgage Market credit card whoa. There is those are the dumb money that those people dont have any idea they believe you know all things are great whether they tune into fox news or m s n b c they think life is forever eternally perfect and the fed will always bail them out so theyre happy to spend and spend and spend but these banks asymmetric information they know a little bit more about the true state of the debt and the derivatives and the deflation that might be coming down the road they also many people are suing that this was perhaps one bank Like Deutsche Bank that was that is insolvent and so we wont know that until later it could be a hedge fund some people are suggesting as well so we wont know the fact that we want now until its too late is part of the problem this time the fed handled the problem without breaking a sweat the next time however the cost might run into the trillions of dollars which is to say more funny money than the central bank can gin up on short notice when this day of reckoning comes the banks wont open the next day nor will credit Card Transactions clear although there is no way that even a prudent person can completely protect him or herself from the fallout it seems likely that those who hold treasury paper and gold bullion as insurance will fare better than those who dont and rick just does go on to say like. That gold is looking good at these prices and in this situation that is better to get it now while these just little tiny signals the Smoke Signals are sent out occasionally that youre seeing the early you know the tremors ahead of perhaps a bigger earthquake now its also interesting to know if its in the scheme or idea of Interest Rate apartheid. More you know if youre not part of the in crowd you you have to pay exorbitant fees on your credit cards are living in a bantustan of bad credit by design and its a way to keep the society in check from uprising right because if you are keeping them all isnt debt and on the short term credit crowd those are high quality credits and they wouldnt dare take any risk at all and you know i see the same thing in the way food is regulated right because for a lot of a large part of the population they have a certain standard in the food Regulatory Regime about certain number of rat hairs they allow in your food for example and thats that theyre acceptable or but for people who are dining on the short term credit markets i was you know on champagne on the highest possible standard you know its food its apartheid in the food business all its of everywhere is apartheid now thats the model whether its food credit security in from Drugs Pharmaceutical opiates heroin is just we live in a new apartheid state of course that we have we live in a command and control Financial System this is possible under fiats currency however the problem is that there is always an underlying real economy and real banks and real debt that has to be paid so these are the fact that we have a command and control around a real economy this never works because eventually the real economy rises up and they. They overwhelm the control that you have over its so whether or not were at that moment it could go on another year another 3 years another 10 years but at the end of the day were at the end of a system of this fiasco control command and control and you know i mentioned so here you had the repo market big banks primary dealers let lending to each other overnight and using supposedly great collateral as the basis and yet they couldnt even borrow for 10 percent overnight here on the other side heres a story from this talk dot com house flipper lending his 13 year high what can possibly go wrong the dollar volume of financed flip purchases in the 2nd quarter of this year jumped 31 percent annually from 6400000000. 00 to 8400000000. 00 according to adam Data Solutions that is the highest level since the 3rd quarter of 2006 so home flipping is back and lending to home flippers is soaring its up 31 percent in the 2nd quarter of this year he talked about the real economy and how these things impact the real economy well in the real Economy Companies are earning that are going down yes s. And p. 500 earnings have been going down for 151617 years now its masked due to stop buybacks but the Actual Company is losing money retailers are shutting down by the thousands across america you go to the malls now and its half empty and the wages of course are going down adjusted for inflation theyre going down even more the real economy is dying. Its close to completely dead. The financial eyes economy the fake economy the home flipping economy the repo market should jive economy because ive got to make a payment on my yacht in greenwich because im an ex Long Term Capital Management fraudster living in a saloon and i need to quit. They that market is doing great but thats the real economy thats a Market Driven by. Potentates and charlatans and neo feudal meisters sitting on their throne of easy credit spigots thats not real but the repo market signaled something is going on at the very very top those guys own yachts the people not lending to each other werent even able to borrow for 10 percent overnight theyve been motwani however an investor with Iron Gate Development in washington d. C. Area expects to flip about 15 homes this year he says its always smarter to use a mortgage because you get leverage you can do many more deals wright said might want also the banks have become a little bit more easy and lending on this flip business they used to be a lot tougher so the dumb money is pouring in the money is there for the dumb money its easy for them to borrow 1 its easy for them to flip this also happened in 2006 right before they had World Economy the real World Economy went over the cliff. In 2006 which for 10 the 20072008 crash but real quickly the crisis really quiddity crisis so q peter sure if were back all right were going to take a little break when i come back much more coming your way. So you. Can buy things that impedes the elections that will be most door to the police and the American History because the stakes are incredibly party for both sides for donald trump this stake in small just implementation of his domestic politics but actually avoiding prison for the democrats of the stake is that if we doing even deeper a crisis of the party and the base think a leader in this survival of the traditional elites if its the problem of self i vote for both sides. Join me every day on the alex salmond show and ill be speaking to us from the world of politics sport im show business ill see that. Welcome back to the hazari part imax keyser time now to turn to mark used to go hes the c. E. O. Of morgan creek Capital Management right here in North Carolina were going to get to his thoughts on bitcoin in the 2nd segment but 1st were going to discuss all things the current legacy fear system as it continues to disintegrate but 1st mark i got to ask is it a kind of dressed down monday korea down there it is it is i i for guys money. Tied a suit to come on my show this just for my casual clothes was was that all but i you know watching all your tweets over the past couple weeks travel around the world youre youre pretty cash but now youve now your suit. All right us all your socks thats good i got i got the flamingo socks going to the flamingo socks flamingo. Flamenco that would be a dance and i would be a dance and if these are the flamingos ok well more about that later but 1st lets discuss oh i shouldnt do that my sound guy hates it but its too late now sorry about that. Market what is it and how unusual are the events of the past few weeks and what in your mind is it telling us well its telling us that there is a shortage of dollars around the world how could that be because i thought they just print them up all the time willy nilly i think that is the common misperception is that they are just printed out of thin air and i think the challenge is that you know when massive debt is issued or incurred and then issued by the government someone has to to buy it and what happens is the money then transfers to the treasury and the treasury then hoards those dollars and so other people around the world have to scramble for dollars and i think thats what were in the midst of here is a global scramble for dollars twice a little more strength in the u. S. Dollar than we probably would have. Anticipated given that theyre devaluing it every single day by printing more of them but the one other piece that i think is interesting here is the information content of the fed having to intervene in the repo market is that oh its not a big deal. 300000000000. 00 is a big deal i dont care you know who you are who you want but its a big deal and i think what it tells us is one of the banks perhaps more than one of the banks but at least one of the banks has a capital shortfall and thats whats having to be shoring up here is this the beginning of quantitative easing some have speculated that this is just the 1st steps that yes they axe the government the coming in and theyre there on the short end but eventually this become the medium and longer and this is kind of the beginning of human 40 you agree with that i think were in q. E. For ever forget q. E. For me its q. E. Forever my x. It was less good than your North Carolina access fine were going to go another question because you make of that some badly let me ask you about this Dollar Strength for a 2nd so i know i said i get the because later but i got to ask this now you know because it has become a risk safe haven asset you know generally speaking thats thats the mean thats been circulating i simply so its a Dollar Strength is causing a little headwind because there seem to quite as bent 10000. 00 back to 8000. 00 spend stalling gold also stalling and you know making the equation between gold and because being somewhat lower. So a Dollar Strength it poses some headwinds to both these assets yes are not correct absolutely and one of things that should occur in a. Environment where where the dollar weakens right that all should weaken if theyre creating more of them that should actually be good for real assets but to your point were seeing the exact opposite were seeing scramble for dollars Dollar Strength and a weakening across the board of real tangible assets gold Oil Commodities and because so that signals on a big macro picture here if we can extend this a little bit deflation. Yes regular days i talk about the killer ds all the time so we have bad demographics every single day in this country 10000 people turned 65 same thing in europe so we get too many people who are older nonproductive non spenders not enough working age population growth we have debt massive debt in fact the deficit and debt more ds are rising at an alarming pace because of the fiscal irresponsibility in washington and brussels and elsewhere actually in tokyo as well so you have massive debt in the developed world and that all leads to ultimately deflation and whats interesting if you go back to the original quote i think was Thomas Jefferson who said if the American People ever allow banks to issue money. They will be theyll have their future stolen from their children 1st by inflation then by deflation so had the inflationary spike in the 70s now i think were in the deflationary death spiral ok deflationary dust by also this has been with us for a while now and the answer going back 10 years going back to 2008 was you know were going to put a lot of money to bail out the banks and some economists out there were saying well that will cause inflation well see a gold spike didnt happen happen and in fact weve seen increased amount of deflation and the deflationary death spiral as are calling it as seems to be exacerbating and can we therefore conclude that this idea of printing money is not fighting deflation but iraq at the point where you can say its causing causing deflation absolutely theres no question that if you print more of something you create more of something again out of thin air it will devalue it and that has been the playbook really since the turn of the century i have this great chart that i talk about all the time from 776. 00 to 1913 the dollar was. Roughly worth a dollar now had ups and downs around though the wars civil war cetera but from 1913 to today you know weve turned a dollar into a nickel so theres a joke from jay leno he says it was a rumor that the treasury wants to convert from paper money to a coin where to have its called a nickel and so you know theyve been doing a good job and to your point if you think about the issuance of currency particularly in the q. E. Form to bail out banks thats what the Central Banks do thats their job ok banks are outnumbered 2nd enrich themselves when youre bailing out the banks and banks that should not get bailed out because im a horrible lonesome a travel Business Decisions if we live in a free market cap of society they should go bankrupt in a way replaced with Competitive Bidding but by feeding the banks as theyre called youre crowding out those businesses that could create productive wealth generating businesses and jobs always right so that money printing if it went into a multiple glossary of money there was a real business creation s. M. A. Small to Medium Enterprises then you might get an uptick in the economy but it keeps going to the zombie banks of course that is the only people that get access to fed funds i was the people to do borrow fed funds well no do you get your mortgage and fed funds rate no everybody else has the problem that the banks borrow from the fed and buy treasuries that is a risk list trait they levered up you know 1112. 00 times j. P. Morgan last year had 0 negative trading days. Trading implies taking risk you cant have 0 negative trading day as well because theyre not trading theyre just levering of treasuries so its all a big ball of bank in kabul and the problem is its run by the bankers themselves right the people who control the central bank are the heads of j. P. Morgan Goldman SachsMorgan Stanley city you know the new york fed and the treasury so those 6 people as i like to talk to about them the plunge Protection Team you know they get together on sunday nights and they decide who theyre going to bail out they bail out their friends and their cohorts the banks and therefore banks then dont make loans anymore so people have to get loans from fin Tech Companies from peer to peer organizations so if you look at the velocity of money as you describe it has been plummeting for decades and its not going to get better because Bank Reserves that dont get lent dont create inflation the way that some of those economists were worried about to your point it creates deflation and then the economy is a car and the banks are like got a big hose and a siphoning off the cash that yes well in fact its worse you watch Stranger Things sure show strange things so you know everyone knows the story about the wizard of oz was really about Gold Standard and and the president taking off the Gold Standard so whats interesting i was going through washing Stranger Things and the mind flayer you know the big thing that sucks the life out of billy at the end and i started thinking wait a 2nd ive seen that before somewhere in 1010 a guy wrote a book about the creation of the fed and he had a picture of this octopus that has tentacles around the companies and then all of Middle America and the banks and then out of his mouth he was up chucking money into the banks in new york and women they look exactly like the mind flayer and this you know octopi look exactly the same and then i look. At the Federal ReserveBank Building and it looks like the National Labs building d from Stranger Things right there is a little freaky they crossover between pop culture and finance you know Robert Proctor used to write about this a lot you know he was big in the eightys with the elliott waves there and you do see some interesting connections and a lot of times pop culture reflects whats happening in the economy and vice versa so dispraise us to course the big question is ok what is the cure because when. We forget that before we get to hard money what would be if you were running the fed would be the cure. To shut down the bad banks being would be my cure and ok what about raising rates thats a good cure to his and i think that right absolute this raise rates because now the people who are only survive on cheap money because they dont have a viable business would go out of business yes well look. That is absolutely the cure percent agree with you and its so funny. Back when yellen ms yellin was still fed chair i was on. One of the mass Media Outlets and they asked me what do you think shes going to do tomorrow and i said i think shes going to do nothing but what she should do is raise rates from 0 up to 3 percent and you know literally melissa like crazy what do you mean. Thats what she should do but she wont do it because that would put a lot of people out of business and cause a recession and people are afraid a recession is for some reason recessions this thing hash tag m. R. Ga on twitter you know make recessions great again recessions are not bad theyre not evil right they cleanse the bad businesses its like every once in a while they burn you know around he had little ism has ups and downs ok socialism is flat you know ups and downs but everyones equally poor right ok. And happy and right yeah yeah these up it but you need the downs are you and up with just as flat kind of economy where you have a kleptocracy at the top who are fed with these low rate was your point about about pop culture you talk about Zombie CompaniesZombie Apocalypse we had zombies on t. V. All the time. Everywhere at this hour and so thats why we have we have. 38 percent of the s. And p. 1500. 00 so the 1500. 00 Biggest Companies could not in the last 3 Years Service their debt with their evil to forget paying off the debt they could never do that they cant even service their debt being a like a just a cash flow exact right so they arent they cant even serve cant even ask their own debt the by their cash for that but there are things going up because theyre buying back their own stock oh look apple bought Bad Company Good products made the same amount of money last quarter as 2015 exact same amount of money but their earnings per share went up 20 percent because they issued debt and bought back so much stock with that stuff. Q we if you look at buybacks it is just you the fed is not allowed to buy stocks like its Swiss National bank or bank of japan so i believe the treasury in the got there washington went to the Big Companies that will cut your taxes on one condition you have to take the money and buy back stock to keep this ponzi go. Right ok were going to take going to carry this over to another segment were going to say goodbye for now thank you for being on the show thanks for having me always great to be with you and thats going to do it for this edition of the kaiser report with me max kaiser and stacey i require to thank our guest mark morgan creek capital johnny cash just on twitter at kaiser report until next time. A little. And very well might continue your. 70 years ago this week china started down the path of communist rule over the past 2 decades china has emerged or rather really emerged as a leading world power rivaling the us the communist party can write bleak play a string of stunning successes but challenges remain whats next for chinas extraordinary revolution