Dollar is days are nearing an end and how they determine that in their reports is that. The gold price so do you see those 2. 00 as being related and are they a little bit too doing gloom and that the u. S. Dollar is ending soon the answer to that is yes they are related but i would put it slightly differently from the way Goldman Sachs describes it there was a day earlier in this year when everything changed it was rather like you know the tide stopped going out and started coming in all from how the port if you stop coming in as a going out and that was the 23rd of march between more or less the beginning of the year and the 23rd of march markets sank the s. And p. Lost a 3rd of its value you had gold was just absolutely knocked down i mean certainly the open interest was not down there the price was a lot more resilient than you would have thought and so there were various things that really were hit i mean even cohen sort of was pretty weak in those in the at that early time but then on the 23rd of march something happened and that was that the fed made a statement which basically set we will throw however much money it takes at resolving economic problems and at that moment the markets switched from being worried about deflation to suddenly thinking the outlook is inflation the s. And p. Took off and we are where we are now gold and silver took off the gold silver ratio collapsed from 120. 00 down to current 70 ought they call and took off oil took off so there was that moment and i think we discussed this in an earlier. Cost with it will fit with the when go dipped in april because of delivery problems on cemex but apart from that oil also basically took off so did copper dock to copper which tells us that. You know the outlook was considerably improved after the fed. Ground said we will print whatever it takes and it was also the day when the dollars trade weighted talked and it hasnt really stopped falling since that so 23rd of march i think is the date we should all put in our diaries that was when the world changed and it is so remarkable that any idea that for example go tos had a wonderful run today it is done nearly a 100 bucks. Thats the end of the run forget it its not things have changed so i do Goldman Sachs but i would be a bit more specific about actually what has happened right well that that was caught up caught on by the Financial Press the mainstream Financial Press the economist magazine out of front page cover story called free money basically the. Headline when Government Spending knows no limits right so now the cats out of the bag that governments are going to keep printing money ad infinitum to support these markets and as you point out the the switch happened as being well run a deflationary world possibly being in an inflationary wall but that that seems to be hasnt really been completely caught on by the bond market yet right because the bond market still reflecting this deflation trade and what is it really going to the wills are generally going to come on faust or well the bond market is reflecting waste of money which is just being shoveled into Financial Assets and particularly u. S. Treasuries by the fed through concept of easing so thats why bongos havent recovered it is so important for the fed to keep these bond yields less because if they fail to do that the Funding Crisis that the u. S. Government will find itself in will be completely intractable so it is. Absolutely key for the set to keep Interest Rates funding rates down to keep find actual Financial Assets bubbling if they fail to do that because theyve committed the dollar to doing that like they will print whatever it takes to keep Financial Markets running then if they fail so the dollar will fail as well and again weve discussed this because this is a dead ringer for what john wrote it exactly 300 years ago so let me pick up on that date of march 23rd because ive also kind of mentioned this on report rice said something happened i didnt specify that date of march 23rd but that the mindset the psychology of the Global Investor class all participants in the economy in fact changed just like that day in august of 1981 when basically the u. S. Went bankrupt right they failed to pay back in lent the gold they were due and instead pay them in dollars and we went we close we shut the gold window so you know at that moment nixon nobody really knew if this thing was going to survive the whole system because this was a shocking moment in World History it was the 1st time in thousands of years that we were on a global feel centered so i kind of feel like that the psychology snapped and changed where all across the world we all kind of adopted this m. M. T. And next stage of this off system is like i saw so many people saying why do we need to pay taxes anymore if we could just print the u. S. Government borrowed 3 chilean dollars in the 2nd quarter alone i think in june they borrowed as much as they had borrowed the entire existence of the United States so you know it is this is a psychological change of shift in the whole mindset of the entire part all the participants in the economy yes it is what youre describing i think is the reaction of government in particular that 19 government has actually no idea whats going on. Arm it only understands when something is actually sort of hits it in the face and thats what covert 19 did before then and lots of people in government will of forgotten internally we had the seizure in the repo market in september last year when it just ran up to 10 percent the other thing of course is that we had trade wars between america and china now that really did do for cross border trade if you remember things like indicators like. Shipping rates and some so forth just completely collapsed so we already had the makings of a downturn in the economy which actually matched very closely in terms of its character what happened in 1929 check this 929. 00 was the end of a long period of credit expansion back credit expansion 929. 00 toba was when Congress Passed the smoot hawley tariff act that was the month went from the previous attempt to high the market fell 35 percent literally by i think it was the 11th of november a possum ducked thats actually very similar to what happened to the s. And p. Between roughly and january and march you know last assert and now weve got the rally the rally is taking us higher than the subsequent rally in 1929930 took the dow but you can see the characteristics the underlying background whats happened to the market is just so similar and then we think ok what happened after the rally after the rally and that was more or less when president hoover signed smoot hawley tariff act into law the market then went down and down and down and by round about june july 1982 the dow jones index had lost 89. The scent of the valley from his high so weve got in terms of whats going on in markets actually quite a similar situation what is it done as done is it get that bit and its brought forward a lot of the disaster that we would otherwise face perhaps in the into course it sort of made it hare and now this is very serious and of course thats the bit the governments cannot see they dont understand actually theres a far more deep and worse condition behind it because of that parallel ive just made between now and 929 so we are in really extraordinary times now the next thing that happened after the 1929 crash and then we started sinking in 1900 from 1932 with banks started going out of business now at the moment im writing an article on the g. Said its the globally systemically important banks and they are some of them are in deep deep trouble and we can see this from the point of view of the relationship between their Balance Sheet assets and their market capitalization in the case of one bank which i wont name on this channel but its a major european back the current rate ratio is 118. 00 times i just think about that this is really extraordinary one euro is write off on the Balance Sheet creates 118 euros worth of pain to each shareholder this is gearing we have never seen before and that bank isnt the only one ther are a number of other banks in the euro said and the other thing thats happened of course is that the attack on hong kong the financial and verbal attack. Really from america to which china has not act. Sensibly that we must admit but what its done is its on the share prices backslid Hong Kong Shanghai bank a static shot back which operative backs but then if you go and look at the chinese banks what we find the full chinese j 6 yeah share prices of all ringback plummeted after no National Rally from that march 23rd date which peaked i think it was the 7th of july and since then it has just collapsed so we have banking and systemic problems in the making and nobody so far as i can see is paying any attention to it this is an exciting story but we pick up after the break alister you know you got me on the edge of my c dont go away well be right back with. What the guys report out the way. The world is driven by. The day. Thinks. We dare to ask. An entire village in alaska. If another country threaten to wipe out an american. We do everything in our power to protect the. Want of a. Climate change poses the same threat right now alaska has seen some of the fuss just coastal erosion in the world we lost about 30 feet. 35 feet of growth in just about 3 months right. We were measuring. He is but he is the river is interesting. Though susan how. Who are who are who who thirst for. Who. Welcome back to kaiser report summer solution. Max and Stacey Allison lets get back into this story you know me ask you this so you make the comparison to the crash of 29 and then the early 1930 s. And then the rally and then the smoot hawley was passed and then we went back into a huge fall 85 percent top to bottom contraction in the dow jones and you make a comparison to whats happening now now of course during that depression of the 1930 s. That was a de play should marry de pression which is different than an inflationary depression what they saw during why mark republic back in the twentys so what we had to get to here is going to be a deflationary depression because if you say banks are failing best sounds like deflationary depression but you know what what about the other side of the coin here where the money printing is attempted on this gargantuan scale and we go more like a y. Our republic type d. L. Alister ok what weve got to do is susceptible this problem into 2 components the 1st one is the problem the banks have obviously if i know that these banks have much during the directors of these banks also fully aware it is scary and this is why if you look at the growth of back lending its actually stuff you to tail off and if anything is beginning to contract. The problem they have is that they cant really Contract Bank lending without creating whites go bankruptcies but equally they cant go on just increasing bank lending so thats one problem thats the deflationary aspect that you were talking about the inflationary aspect is really when you come to the fed the fed is desperately trying to get money into the underlying economy to rescue production chains. Companies which employ lots of people to stop them going bankrupt and so on and so forth the problem they have is that the banks wont transmit the money so the only way they can do it is to do it via helicopter in money through their u. S. Treasury for example and following that route so we have got 2 elements in this weve got the deflationary arguments i we have got the inflationary adamant now the way it will be resolved in my opinion is that we will have a systemic crisis and the systemic crisis means that the fed and the u. S. Treasury and your case well end up basically taking control of the whole Banking System will be doing same in our country the euro zone will be staying the same that japan will be doing the same china will be doing the same even though theyre already there ready so what that then means is that the politicians and the planners can instruct the banks basically to transmit money into the economy and to distress borrowers into. You know sort of raise raising Consumer Loan limits things like that whatever it takes remember that was what was said on the 23rd of march so they will prevail but in order for that to happen the banks will fail 1st the bit where buybacks are cautious because they are over leveraged and they are frightened of going bankrupt that is going to. Happen that is going to get out of the way and then the fed can do its best to try and get money into the underlying economy but thats not the only problem they have because if we have a banking crisis a systemic crisis such as i just described and believe you me its very hard to see how it will not happen then we have to ask ourself selves what happens to Financial Assets those lovely bones theres 0 or less than 0 in the euro zone us treasuries which yields and i see the euro has just been rising point 6 something percent for the 10 yes whats going to happen to a less well foreigners are going to be looking at that Dollar Holdings and theyre going to be saying we got a bit too much of this weve got problems back at home we need to reduce our dollars keep a bit of Dollar Dollar liquidity but we can liquidate fairly as we dont want to have anyone elses bombs it makes no sense at all so were going to repatriate our money. Then you will see that the dollar falls further and it begins to impact on this problem the fed has and that is how to keep Financial Assets maintained as high levels so they can finance u. S. Treasury debt. And the answer is that at some stage that game is going to fail and when that gain fails then the purchasing power of the dollar will go down with it so this situation which started on the 23rd of march well i think evolve into a banking crisis and then the through vogue and to a currency and market crisis and weve got that ahead of us and it will not necessarily take very long for the whole process to compete but whatever it takes of course is also war and weve had many wars from america in the past few decades whether its iraq afghanistan libya somalia yemen but those are tiny countries the whole country will galvanize if we take on a nation like china a 1400000000 people with a massive military so weve everybodys noting this trade where were seeing smash and grab the United States is just massing and grabbing things like tick tock a bite dances the company that owns that because theyre better theyve produced a better product than what the American Companies have been able to wawa same thing so are we going to see possibly a hot war and wouldnt that of course enable the fed and treasury and everybody to do whatever they want because obviously in a time of war all everything is on the table thus a difficult one to answer i think there is no doubt that when you get financial instability and when that Financial Stability but to committee leads to. You know people starving literally which could be the result of this coded crisis of that basis yes you get political disruption and very bad political disruption. One of the way in which you avoid it being a simple destruction its you attack firmus and whether thats going to happen or not i dont think at this stage we can really say but there is no doubts that the american. If you like langley the deep state. Its still pursuing those sorts of tactics and i just wonder whether you know how long would it be before they start to say right were going to take the cannot because he is no longer allowed. If it again refuses i. M. F. Money then i think his days will be numbered as far as the u. S. In a deep state is concerned so weve still got that sort of behavior what my hope would be is that this crisis ghastly though it will be actually puts a lid on that sort of behavior that will be other priorities and effectively what were talking about is the states going bankrupt when its money no longer buys anything the state is bankrupt now we can help that id its it is more than a help i would mitt that some wise heads were. Arise from somewhere and take control of the situation and with the publics blessing because at that stage the public will be very very much aware of the mistakes of previous administrations actually plot a course out of it i mean this is what germany did with the daycare hot after the 2nd world war i mean as economy minister he just took control of the whole thing and he told his military superiors the british and the americans. I dont weigh rationing what you dont weigh the rationing that was in 1948 in this country we still had rationing in 1954 so youd need someone with imagination to deal with this and at the moment its difficult to see where those people are weve just got to hope they would arise but i think your point stacy about the political instability that is likely to follow is a very very serious consideration so i also want to go back to something he said earlier about the treasury going directly to the people bypassing the banks so another way and ive heard this from a different quarters. And another way to describe that would be theyre going to nationalize the banks and so that does play in also to your think your idea where governments start to become more autocratic in terms of their how to deal with these problems you describe germany in the world war effort world war 2 except around that these measures autocratic measures were taken so are we politically doesnt look like countries including the u. S. If the u. S. Nationalize as their Banking System and its run out of the white house that becomes very autocratic is that true alister. Is photographic but i if you have got as i believe we have had the baking solve a complete systemic disaster amongst big big and small banks and you know you got to look at the numbers to see if this is a very serious risk and not only is it a risk it seems very unlikely well get out of it unscathed then you can see the nationalize of nationalization of banks its going to be happening everywhere. To have been stories that what the Central Banks really want is to take control of lending away from. From the commercial banks and certainly the way the e. C. V. Has behaved about the commercial banks in this network and remember its actually one step removed because the relationship is always between a National Commercial bank and the National Central bank the e. C. B. Is like some sort of god like figure in the background. You know as a running everything but the e. C. B. Would like i think to have more direct control over economic events because these people believe that if you just inject money into an economy you will rescue it even though classical economics tells you that that is a lot of hooey but that is what they think and i think in a sense when it happens the central bankers will shock their shoulders and say well say the v. A. But at least weve got better control. For events now and i think thats going to be the way they look at it these are Summer Solutions so for the ordinary person out there watching this how do they protect themselves what should they expect in the future is there going to be another post Bretton Woods sort of post agreement global currency grand whats going to happen and what should they do i dont see sort of another Bretton Woods what i do see is a crisis that surviving so rapidly that the web really be a consensus as to how to deal with it although other than for Goodness Sake we must not let any banks fail i think that would be the one point of consensus in the whole thing as for protecting yourself of a some of the anything i can suggest is get out of finance and step 2 ways in which you can do that one which is not controversial in my view and that is to have some golden sofa and the 2nd is probably a bit more controversial but i think you understand and that is have a look at that point all similar restricted main self owning money i mean restricted in the sense that they cant just be printed willy nilly so youve already got to get out if it and depending who you are if you are lets say you know a millennial who understands technology your choice may well be scared because if youre a bit old and does the fuddy duddy like me all say well thats going to come back as money. I would say thats your thats thats what all your view is should really look at right lets talk about the alvira not believing a over there at the central bank of russia buying 520 tons of gold just over the last 3 years awfully good timing on that will pierce through cirrus the Charles De Gaulle figure remember Charles De Gaulle guy frances gold up before nixon close the gold window britain of course was left holding the feet out back your thoughts alister. I think its a very interesting comment at. The head of the russian. Central. It is a very interesting test when she was fast appointed i dont think anyone really saw this is a serious appointee is just. Too since economic advice being promoted but actually shes dealt with the banking crisis there was a huge great banking Crisis Office she came in she reformed the Banking System. That was ready quite an achievement i think the policy on. The far as she has anything to do with it almost makes her a sort of precious austrian in the sense that she understands the for just say off someone elses Paper Currency thats an important point for the russians now fair enough all right alice mcleod thanks for being on the kaiser report thats my question our righty and thats going to do it for this edition of kaiser report Summer Solutions with back to stacey once again i want to thank our guest from gold money dot com if you want to reach us on twitter its kaiser report until next time. So what weve got to do is identify the threats that we have its Crazy Foundation of let it be an arms race. Spearing dramatic to follow only really im going to resist i dont see how that strategy will be successful very critical time to sit down and tom. What the pandemic know is that you know born is just blind to nationalities. The summary of the rupee we do look like seem. To be. Commentary. We can do better we should know. Everyone is contributing way but we also know that this crisis will not go on forever the challenges created the response has been so many good people are helping us. It makes us feel very proud that we are in it together. Just look. At this commercial moment allowed him should ask for the past 70 and seen and done to this day for the dutch girl who should. She. Branch in just shoot on disk in the. Ocean i mean the long. Beach mom. You know your new car so sit on the opening much the same new mama its just that our. Fellow thunders a 10th day of antigovernment rallies as more factory workers go on strike demanding fresh elections after the bell russian leader offers protesters saying a rerun of the disputed president ial vote can take place only if the constitution is amended. Oh. Ok. With covert 1000 infections spiking throughout europe governments across the continent are reimposing safety restrictions sparking widespread discontent. And President Donald Trump threatens federal intervention in new york as a
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