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Graham boston fed president aircrews a read said years of low Interest Rates that encourage risk taking are making the current economic downturn worse he specifically cited low rates persisting for an extended period even after the economy had made progress in the recovery that can create problems well this is obvious you know as ive been saying you cant have capitalism without capital you cant have capital without giving people an Interest Rate to incentivize them to save. And the reason to do that is that if there is a downturn like a covert then theres plenty of state stuff theres plenty of capital in your capitalist system to smooth it out but if you debase the currency and you Interest Rates are 0 and theres no incentive to say therefore theres no capital then you dont have to apples them anymore you have a club talk or see run by Central Banks and the worse it gets the more they pay themselves and of course lower Interest Rates re the crisis worse because low Interest Rates drained the economy by all capital and without it you will at the 1st. Encounter with a pandemic like cove it you all have an existential threat and maybe or maybe not the us survives its up its an open question whether or not the Monetary System survives is what is being called into question and here they are doing the equivalent of oops my bad even though the report has been warning about this for years they could have listened to us and said they have a slew of overpaid economists in ivory towers that tell them whatever they want to hear and perhaps thats the problem perhaps the set up perhaps because there is no 25th amendment where the people can take out these you know economists and the heads of the various feds across america who keep on getting it wrong hes like my bad clearly a deadly pandemic was bound to badly impact the economy however im sorry to say that the slow build up of risk in the low Interest Rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult it is making it more difficult but then another fed economist is telling you how difficult its going to be its going to be difficult for everybody because whats their answer always money printer go prove top that Economist Says another 3. 00 trillion dollars and q. E. Is needed senior fed economists and Deputy Director of the banks Financial Stability division Michael Kiley and according to a paper published. By kiley the fed will need to monetize deficit part in purchased bonds equal to 30 percent of g. D. P. Or 6. 00 trillion dollars in order to offset the impact of the 0 lower bound and since the fed has already purchased a record 3 chile in a bond since march that implies another 345 trillion in q e is needed well you know how it is coming up so let me give you an analogy in an example using hollowly you know when youre a kid and youre out there trick or treating and got a bag and youre putting free candy into the bag and you like this is great im getting free candy well after about a half hour 45 minutes you get bored with getting free candy you want to move on to hang out with your friends and enjoying that free candy in the period of collecting the free candy gets somewhat boring youre on set of eyes to get a more free candy you want to actually eat the candy or do something with the candy so here in america theyve always taken the position that we just give away free money and that will never stop anyone from being incentivized for more handouts or more free money but history tells us that at some point the entrepreneur class says you know what if youre just going to give people money its not fun were not competitive were here to compete to give away all the free money were going to like under obama obama was very on inspiring and entrepreneurs were not doing much during the Obama Administration theyre kind of sitting on the sidelines waiting for Something Else to come along and thats the problem you need to have an incentive to compete to save to be capitalistic if you give away the free candy and the free money then the entrepreneur sit by and they move somewhere else so they just sit home and play tiddlywinks just not on competition usually drives entrepreneurship and innovation and we have seen that for sure we personally have seen it here in kaiser report when we do our interviews because of the existence of zoom because you start started to eat microsofts skypes market share weve seen that skype when they bought. It from then the Dutch Company you know a decade ago they did nothing with it like the technology was horrible its started to degrade once a bought it well then soon came along and what happened well they had to up their game and skype has been coming out with all sorts of innovation the same across the board tick tock all these Chinese Companies want are much they see that the United States is vulnerable because of all that loops from Central Banks because we did not have a 25th amendment to take out the insanity to take out the insane policies to take out the q. E. To take out the money printer to take out there are clearly the 25th amendment would apply exactly this room saying this is my idea you know i thought no ideas im an ideas person you know really good and clearly the current chairman like the previous chair people would qualify as needing to be sanctioned or institutionalized for criminal insanity believe that you incentivize people by debasing the currency so much that nobody cares about her anymore and thats clearly an insane concept well exactly and im going to tell you so you know we were you brought up. The fed has been trick or treating this whole time like you know giving treats to a Certain Group of people and i can tell you a fact and thats what we see with the wealth and income grat gap growing but theyve been tricking everybody else into believing the stock market means like the economy is good that the house prices going up is a good thing for anybody needing shelter so theyd have a trick or treating but im going to show you something that shows you that they they they are one of those like jason are pretty krueger sort of following that need to be sections that they need the 25th amendment and you can see that in this basket of chart data that shows how scary and terrifying it is but what is scariest and not that the fed will continue monetizing every single dollar of u. S. Debt issuance for the foreseeable future or perhaps indefinitely which considering this. B. O. s latest forecast means a long long time well this is federal debt held by the public 1800 to 2050 as a percentage of Gross Domestic Product my color printer the ink looks really colorful on the contrast there the off white lie and soft gray but the i mean it tells 1000. 00 words the audience will get to see the full graph well then. They have its trick or treat its trick for me and think for them i say it was going on that the trick is can you comment on that chart that of course im a professional you know what it shows it shows like world war 2 is back here that was the last time that there was so much federal debt and now its off the charts by 2050 s with the Congressional Budget Office is predicting the only way monetizing all this that doesnt cause inflation is if you have a debt sink to hide it so in america right for example they like the same soldiers out around the world who die and thats a way to get rid of a lot of debt and lets be honest theyve got a lot of collapses going on in the bond market but thats bought by the central bank that hides to the inflationary impact but at some point you get to a saturation point and you can no longer put that debt into a debt sink and so the money printing results in a runaway currency collapse like a y. More republic and so were getting were on the edge of that right now and that is sadly what that that short clearly showed exactly what i just said when you said money printing i thought you said bunny printing yes that films are on during easter ok here were focused on hollowing christmas after the thanksgiving metaphors ok well he fear is the final headline and kind of goes with this whole trigger tree and the need for the 25th amendment for the money printers Bleak Outlook without stimulus more layoffs anemic growth president Donald Trumps move to cut off talks on other government aid package will further weaken the economy. They said obviously as soon as the markets crashed and thats thats what thats what a trump response to either he gets like trick or treat thats his is blue like a ghost dont think out of the forest you know i mean if you say in kabuki theater a Movie Theater japanese ancient japanese theater its all style in no plot right the plot is not theres no plot its the same story over and over again but its just about the style of it its about the costumes and it and its about the gestures and its highly stylized its extraordinarily stylized but there is no story there in the kabuki theater that is that it everyone doesnt already know before they go into the theater right exactly and so this is the equivalent in the pot do i think is to say that dance between those who are claiming that we need tighter restrictions on monetary and fiscal prophecy and those who are going to just print money the net result like in the book is it or its anticlimactic because you cannot taper a ponzi scheme the answer will always be more money printing thats thats always the end the only thing different is what color hat nancy pelosi is wearing or what color tie donald trump is werent during this kabuki esque but highly stylized dance of of the of the mediocre and so but was not the end oh another 5 showing the money printing thats thats always the conclusion well ill tie that also with back to our metaphor of hollow mean the day of the dead you know the do those marches where they wear the skeleton thing and carry the yeah so if your mom is ready for day the debt well thats the day the debt is our markets right thats our Monetary System and our markets and right now it all looks fun it looks like were having churchy and were all getting free candy and were having you know a kooky theater of fun but at the end of the day when we all realize we should have sectioned suspension bankers years ago. Basically in 20082000 i went when well when decline came around because chances are on brink of 2nd bailout for banks thats that was a bit quaint section and the central bankers thats a big degree of factory ammo series and you are. Well thanks for watching and the 2nd half are going to talking to Pierre Rashard in an excellent side but they wont want to miss. The pandemic no certainly no borders im just glad to nationalities. This summer. We dont actually. Be. Judged as commentary this is. Something we can do better we should. Everyone is contributing each of our own way but we also know that this crisis will not go on forever the challenges created with the response has been so many good people are helping us. It makes us feel very proud that we are in it together. A dark industry comes to life in los angeles every night. Dozens of women sell their bodies on the street many of them underage. Los Angeles Police reveal a taste of their daily challenge no if youre going to exploit a child here in los angeles are there were going to come out to see officers going undercover as sex workers and customers to fight the early sex trade. Welcome back to the kaiser report imax guys are time now to turn to pierre irshad who is not only famous a bit coin space but our all around great content provider a nice guy pierre welcome to the kaiser report thanks for having me max happy to be here big news and big calling weve got the Jack Dorsey Company square in out this week that they bought 4709 bitcoin worth about 50000000 dollars for their treasury what does the Company Statement tell you in regards to the reasons for buying because this is obviously in the wake of micro strategy and Michael Saylor doing this is this the beginning now of the 4 chilean dollars worth of cash sitting on a Corporate Americas Balance Sheet being looked at and possibly other c. E. O. s following suit with a fair or missing out or a full mo in the corporate space here yes it is but i would also highlight that this actually began a very long time ago which is that in 2013 slash 2014 Fortress Investment group became the 1st publicly traded company to hold big client on their Balance Sheet and i remember because im an accountant and i read Financial Statements and that was interesting to me because i was also a big corner. And then its fun out in it became no regrets you know that. Galaxy so its it started a very long time ago but it did it at the time it did not gain acceptance and thats why fortress had to spin it out because the investors were not happy about the losses going on there because anyway fast forward to this year we have this current of virus hysteria or pandemic whatever we want to call it and. You know it became apparent that Central Banks were. Not going to let the markets do what the market is supposed to do right which is reflected the real economy and the really kaname has been crippled by governments responses to the current a virus or the crown virus itself depending on who you ask. And they papered over those problems by q. E. Infinite money printing right globally and it became apparent to Michael Saylor that you know if hes got cash on his bouncy and hes got us dollar denominated you know investments. Cash equivalents as the accounts call them which i find to be heretical but any any case so hes looking at this saying hes wondering what does cash even mean what does the u. S. Dollar even mean if they can just create as many as they want and that actually came off as subtly different than jack dorsey is reasoning with this latest announcement of 50000000 where jack is really looking at it from a of kind of a values perspective rather than a value perspective and so hes interested in and empowering individuals and you know increasing the Economic Justice in the system and its interesting because you know jack b. Can buy 1st of all offering the sale and purchase of decline through the cafe. And then he moved into open source was square krypto which was also continues to be very successful and now hes moving into holding it and i kind of see this as the the trifecta of being involved in becoming as i said 1st of all increasing because of quiddity is crucial you know liquidity is the only utility of any money ultimately and then improving kind of the engineering fundamentals of it so that we can really push it forward as a technology and serve actually holding it and by. Lots of it and that to me is the the triple play that jack is doing that is fantastic now i think that his. His reasoning and if i contrast to compare it to for example Paul Tudor Jones or Michael Saylor i kind of think it reflects that theres 2 camps in decline and i dont think they are intact mystics rewards each other or anything because i actually think that theyre moving in the same direction which is that you have people who have an ideological tilt towards it and others who are just doing it because its in their rational economic selfinterest and so its kind of a idealism versus pragmatism so that its an interesting dichotomy now obviously we all have some idealism and some pragmatism to varying degrees but i think in decline its theres 2 camps developing where on one side you know it is that politically engaged idealism which you know came out in the spat between Brian Armstrong and jack dorsey as well its a thread the that goes through a number of different interrelated narratives but ive rambled on long enough max lets go back to the fortress comment you made there so fortune as being essential a Money Management farm and big coing is seen as an asset a new asset a financial asset its not. Its not you know much of a stretch i would say for them to consider putting some big coin on the books that was understandable but what what what sell what Michael Saylor has saying is that he had a choice to make he and his board want was to buy back stock boost the price boost executive stock option value at the set the whats being done across the board in Corporate America. Principal apple the biggest of all or buy bitcoin so it pivots on what they believe the fed is up to and it seems to may and based on michael sales comments they believe that the fed is that an Inflection Point where the inflation genie is about to come out of the bottle and all the stock buybacks in the world are not going to save you and you need something thats going to protect you against inflation and a debasement of the currency the dollar and theres only 2 choices gold and bitcoin and the fastest horse in the race as Paul Tudor Jones a set is bitcoin now having said that let me pick your brain you mentioned you were to some degree still are an accountant you have got advanced degrees in accounting youve worked at the highest level of the profession of accounting youve been in a lot of boardrooms youve talked to a lot of c. F. O. Than c. E. O. s let me ask you this right now in Corporate America what the 4 trillion dollars of cash sitting around the conversation i want to get your thoughts on this isnt that conversation almost by legal obligation being discussed in this is to wait across Corporate America about should we be buying big point because not to have that discussion could be construed as malfeasance and that would be of course a shareholder issue that boardrooms are keen to avoid yes i agree because frankly any competent Financial Planner would tell you that you should not hold a material amount of cash because of inflation and that you need to put that cash to work now you mentioned you know give it back to the shareholders or or or keep it on the Balance Sheet right lets just start with that we want to and say what asset on the Balance Sheet. And then we have to turn to. Why do people hold d cash in the 1st place well its and why do large corporations hold cash its to hedge or to minimize uncertain future cash flows or to manage that risk right of uncertain future cash flows now for an apple or for a microsoft what are uncertain future cash flows well the major one is m. In a activity right so are they going to have opportunities to acquire competitors or companies that are not competitors today but you know synergistically become this massive conglomerate and really you know cash on the Balance Sheet is about having the ability to execute on their Corporate Strategy long term and its not necessarily the case for apple or microsoft that theyre going to have an acquisition opportunity that is interesting within the next 5 years right it might it might take 15 years or 20 years for them to identify a company that they would like to to acquire and so to they have to hold something they have to hold some kind of cash now people say well they dont need to hold the cash they can just give it back to the shareholders right heres the problem when apple or microsoft has an acquisition opportunity and theyre not holding any cash that means that they have to go to the Public Markets to raise fund right so they have to get financing from the Public Markets now. Sometimes the Public Markets are not providing favorable financing even to large corporations right so what if Apple Microsoft wants to make an acquisition you know at the bottom of the crisis in 2009 and they need to go to raise 50000000000. 00 in the marketplace and they cant do it right without begging to Warren Buffett and getting praise selling preferred shares so thats where having the optionality of holding on to cash is crucial now then which cash to hold right because theres lots of. Different currencies one to hold usually you want to match or your currency with the liability right what is the cash outflow going to be so its not clear that in 20 years that will be using u. S. G. S. The cheshire outflow for making a large acquisition right if we project out 20 years maybe the us all are going to exist anymore and because it will be the standard you know youre talking about cash in the Balance Sheet and its nature in terms of corporate environment and what is good for and but what im saying is that what Michael Saylor and micro strategy seems to be saying is that were early leaving the era of the socalled greenspan put or bernanke he put or janet yellen put or j. Power point where the fed will bail everybody out always and there will be no real price discovery and are entering into i guess you could call it not they Central Bank Put but more of a Central Bank Call so youre buying bitcoin as a way to play the fact that Central Banks have failed its a bigger bigger story than just oh strategically we want cash on the books because they might make an acquisition i mean im asking in your opinion is this a repudiation of current fed policy and have the recent Inflection Point and as we get ahead now toward an inflationary environment and see some serious Serious Problems with the World Reserve currency the u. S. Dollar certainly Warren Buffett is getting out the dollar hes a 1st flying in to japan hes buying gold mining stocks and hes saying the dollars is doomed how do you see this emerging yourself i would say its a continuation of the process of monetizing every asset in the world right because ultimately thats the only thing the fellers are of can do so theyve theyve monetize Bank Deposits right that was the 1st thing they monetize then they recently in this past financial crisis they monetize money market funds and so they said hey you can break the buck anymore ok. Theyre monetizing the bond market so when bond yields are 0 percent theyre just saying that treasuries are cash right theyre just saying that that is now money because ultimately its going to get paid back in dollars anyway now theyre also monetizing the stock market and so now we have like tesla being monetize real estate in prime markets like london and new york has been monetized as well right people use real estate as a store of value and so people are hoarding these assets as as savings but not really as investments and we even see this kind of at the retail level where people are buying low cost would be index funds right this passive investing trend all passive investing means is that you are using stocks as your store of value youre not really investing because you think this business is going to grow youre investing because frankly you dont have any other choice right if you hold us dollars are going to get diluted out right when it doesnt raise but it goes back to why ma republic of the twentys and the rush mark went to a trillion to one from one to one against gold right so this smells like hyperinflation to me but pierre restart thanks so much for being on the gaza report thanks for having me on max this is fine and thats going to do it for this edition of the kaiser report was made max kaiser stay sara but want to thank our guest pierre rashad going to find him on twitter you can find us everywhere so next time ill. Bet it was a very nice offer from president putin that i could have said no thank you or. Could have said thank you and i said ill take it and now its time to introduce my its not special close to mr donald trump thank you susan very much for the. Name whatever you want to name i mean i dont know how when i come that the news thats dishonest tell what i call that a recorder or e. Network thats totally dishonest c. N. N. Is saying you know 100 percent negative i carry this change fast changes so fast sometimes ill say wow thats going to be a great story be a pretty good report another as good as you. Can. Get well see what happens. I always say who knows what well see on the field it will be success. The world is driven by dream shaped by one person if there is. No day or thinks. We dare to ask. About the catalyst of all of this. Im going to want to look at what why you. Keep. Your cool cool but there are also friends so that the arts are still so but the soul beautiful thing to do something. Yes. Thats. True. Both. Armenia launches a criminal probe into. Syria. And. We dont need any money to

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