Transcripts For RT Keiser Report 20240711

And others might have and so thats the next point is that companies who buy back their own stock and the executives around these Companies Say remember if you have options on your stock and the stock and you know guaranteed theres no risk the stocks go higher the options can go from a dollar to one 100. 00 or 300. 00 so an executive can make 5100200000000. 00 us what we have so many billionaires in america is by playing this game of guaranteed upside by money printing and owning the options on your own stock and so if you strip out those numbers you would have markets that are a lot lower youd have a lot more parity between classes in america you would have the wealth and income gap you wouldnt have the social unrest and you wouldnt have a lot of these other problems so its very stark very plain to see for those who want to say hey were going to show you some charts to show you visibly how big it is. In terms of kind of a lean duck president coming and biden whos you know very very old and doesnt have the senate and his leader says majority and the Congress Member Jerome Powell had said last week that we need more fiscal stimulus because all i can do at the fed is create these can tell you an heiress and so here were having a situation where there will be you know free money for the people because theres no you know you dont have a populous vibrant young leader who might be around for many years and youre going to like you want to be in his favor if youre in the senate might want to do some deals but there is no will to do some deals because you dont want to give the lame duck president any you know points that you yourself when youre in power want to achieve so you know this soc gen data again they said so the stock market the s. And p. 500. 00 is that 3500. 00 it should be at 800. 00 then they say that the nasdaq should be closer to 5000. 00 then 11000 which is totally remarkable and just to show you the charts on the s. This is the s. And p. 500. 00 where it is and thats where it should be the red line if it werent for q. E. And nasdaq 100. 00 you see the huge gap there and of course gaps usually close should this quantitative easing ever end if it ever can and right that thats like a whole nother story to cover but lets compare biden he comes into office potentially and this means that i believe were going to see a repeat of 2008 remember Obama Took Office and because obama was a pretty young guy at the time and didnt come through finance and he was. A law student and very good with constitutional law but he didnt know anything about wall street he kind of threw the keys of wall street over Larry Summers and all these other folks and they went ahead and they created the Global Financial crisis. After a fax that seem to benefit the can tell you theres a remarkable way remember the billionaires i. Of the 2008 crisis all quadruple or more of their wealth while vast swathes of American Population went bankrupt or lost their house so im pretty sure going to see a repeat of that by thats why they say from 11 years ago 2008 when obama was elected thats the point where it starts and thats those of the trillions of dollars you know that gap represents trillions of dollars trillions and thats why theyre so wealthy and youre not and of course like as weve already covered on Election Night when you know its like a few days afterward to determine to declare a winner but at that night when trump was ahead the chinese currency crashed and then when it was biden it soared so you know that is something that ordinary you know the deplorable people across this country have to consider that this is the system theyre stuck with for the next 4 years china continues to eat your lunch and you arent even going to get free money there is going to be no m. M. T. For all theres just going to be more can tell you created and. Soc gen also looks at the bond market and theyre saying by the way that you know is the fed buying all these bonds that drives the Risk Appetite which is directly then causing the stock market to soar so in the bond market this is what the 10 year treasury should be instead for their part the soc gen analysts using a mix of wheat glee Macro Economic indicators running back to 2005 took a stab at estimating the effect of the feds bond buying effort on the benchmark 10 year treasury yield no they concluded that q. E. Likely knocked around 180. 00 basis points or 1. 00 Percentage Points off the 10 year yield so again putting it into the storable context the 10 year yield in an American Economy that is capitalist is foundationally constructed on a central bank and banking so. Feeding into the not normal class the long term rates are traditionally and you can make a strong case for them to be without equivocation around 4 to 5 percent that give savers enough money to save for retirement if they work hard in the economy when the fed started buying back these bonds and dropping rates to near 0 they transferred trillions of cash from savers you know your mom and your dad out there they probably have grandpa they called you up and said hey you know my retirement account dropped 8090 percent of income that was this wholesale thievery going on by moving that capital to wall street to then use it to speculate and as i point out about their comment about risk the d. Risking of the economy never was if you know beforehand. Before the roulette wheel stops that its going to land on red then you know were going to put a lot of a lot of money on red when wall street knows that as as was said during the 2000 a crisis the news that Goldman Sachs got ahead of everyone else of the bailout was coming allow them to put go all in and they quadrupled their wealth overnight again so that thats money thats been extracted from the real economy using this machination pass through a mechanism that looks like a market economy but its actually a rigged kind a way to feed billions to your friends of course when you just talked about grandpa you know in their pension being eaten by the feds quantitative easing policy. I thought of cenk uygur of the young turks he tweeted that he was so glad to have like a grandpa in office and i say this guy still has to work because of the feds q. E. Policy like thats why we have this you know this gerontocracy as they call it here in america remember theyre replacing capitalism based on supply and demand free Market Economics with what they call progressivism like so theyre trying to base an economy on progressivism just bad economics they wanted to do mt theyre not going to be able to do that but remember on the campaign trail in the very last week what were buying and then harris having to say they love fracking they love fracking and this is the bad economics that again kinds reports been right for years on this because not only did the fed encourage this the growth not even encouraged but created the growth of this can tell you our class and encourage risk taking and forced Pension Funds into risky assets and they forced Pension Funds into private equity funds that were invested in what shale ok well you know biden love shell but ill tell you what exxon mobil which used to be the Biggest Company in the world the biggest American Company in the world and now its being displaced by high tech of course but exxon warns of 30000000000. 00 shale right down a decade after buying x t 0 again this goes back to that 2011 p. R. In 11 years ago here it that all this cheap money the quantitative easing drove people into the shale sector which never made money ever even when Interest Rates are 0 even when oil prices were over 100 even all of that stuff and they never ever made money so you know people tell us were wrong and theyll tell theyre wrong for 30000000000. 00 you know how much exxon how much how many shares are in Pension Funds in grandpas pension fund you know theyre having. Right down there shale investment because of the patriotic fervor that was happening that and and this delusion that there was somehow that this was that a great investment because the yields are so high and blah blah blah 70 percent of our fracking rigs begin life negative cash flow and never make money the remaining 30 percent end up losing money within 3 years the industry as a whole is cash flow negative and is only exist for one reason to allow wall street to create junk bonds to sell into Pension Funds and they miss out they do not state that those bonds if you look at those junk bonds are pension for shayla history and those that theyre all catastrophic they down and they all will go to 0 and then what will the politicians say particularly those who are saying we love fracking oh thats right they forgot to take the pencil and a piece of paper and add 2 plus 2 and come up with for the politicians whoevers novice will say 2 plus 2 is actually. Were not sure so sorry. But sorry if youre sorry that youre poor i guess thats the best the mean with awake right now are your poor no its called have fun staying or have fun staying for may not more value than the s. And p. 500 has the biggest drop of any sector going back to 1928 which was like just the decade before biden was born so i think its like its quite interesting that this is like a full circle that this this industry this era is over where at the end a fee out at 0 percent where 0 pounds were hit weve hit 0 dollars over by even came into office 97 to just after we went off the Gold Standard so this is just coming full circle and were going to sleep and who beats us in high tech of course is china and thats what the market said is where thats what the market said it has been decided in this thread i think the current whoever is in the white house Going Forward theres a bit of a poisoned chalice because theyre going to be in power during the worst collapse ever in history i think theres a 99 percent chance that well theres a 100 percent chance were going to take a break and when we come back much more coming your way. Is youll be a reflection of reality. In a world transformed. What will make you feel safe. Isolation community. Are you going the right way or you. Want to strive for his way. In the world corrupted you need to descend. To join us in the death. Or remake of the shallows. I am. Quite sure. There was no soup will sure wish to leave sure but. I sure do w. Clubbable was she who are sure to keep the i. Q. Board approved and culturally a male vegetable would have been murdered by. You going to go with us because all of those going to use the word because those told in the name we will see in the movie confused with it would seem to most news but is the most severe some of what is in your speech come off the news the of. The 20th century was doing in a revolution the Great Depression and world wars the 21st century of mental illness. Those arent my words thats what surfaced some psychiatrys to tell us the only question is should we accept it as a fact. Or no. One else childs seemed wrong off quite old paul just all. The world is yet to shape out just a comfy advocate and in gains from it equals betrayal. When so many find themselves worlds apart we choose to look for common ground. Welcome back to the kaiser report imax times or time had to go to lynn all the lin all the Investment Strategy linda welcome to the kaiser report thanks for having me i love your show oh excellent so Jerome Powell is as were having this interview hes testifying before congress and his one of his comments i want to get your comma. He says that fiscal policy is absolutely essential here hes kind of throwing it back to congress and saying you know we need to do address festool policy so what does he mean when he says that some of that has to do with the transmission the transmission mechanism for you know the asset purchases that he wants to do so for example when the fed buys you know treasuries Mortgage Backed securities or apple bonds or whatever the case may be that doesnt make it out to the average person right so that thats thats mostly you know a liquidity boost up asset prices but you know you know large fiscal deficits whether its in the form of stimulus checks or other things can get out to the you know the average person so basically that you know the Federal Reserve here theyve already done you know wait wait a Punch Program for Monetary Policy but they cant really target you know to individuals the way that the treasury caps which is basically saying is you know if they want you want the treasury to do more of the targeting and then the federal would be to you know to finance that to buy the bonds as needed to maintain a little liquid treasure market its an interesting phenomenon because he has been doing money printing over there at the fed by the trillions and trillions of dollars hes saying now that we cant get individuals youve got to work on that over there and congress concurrently with that we see that the velocity of money has been collapsing for years up until recently maybe theres a slight. And so you can comment on that what does that tell us when the fed saying were trying to create inflation by printing trillions for years but if the velocity keeps going down they hakan they keep doing that whats whats going on here well so if you look at money velocity that you know that most refers to the broad money supply in the federally has partial control over that so when they print money that mostly gets in the Bank Reserves and the 2 ways that that broad money supply can increase are either banks lend it to individuals and corporations and use the broad money supply that way or the federal government runs these massive deficits that are monetized by the fed and of course this year we saw the 2nd of that so we saw you know the treasury ran very large deficits and a large portion of that chese issuance was purchased by the fed so instead of extracted from the economy somewhere from taxes or lending and then put back in economy somewhere else it was extracted from nowhere as extracted from new dollars and then inserted elsewhere in the economy so we saw this big increase in the money supply but we havent seen it you know weve seen a g. D. P. Decrease this year because of the pandemic and because of you know theres a variety of factors there so theres wealth concentration generally results at lower velocity and also aging demographics in technology increases so were seeing basically that broad money supply is going up a lot faster than g. D. P. Over the long run and thats a recent philosophy got out and you missed a couple of things there about bank lending and wealth concentration so the banks are not lending back frank philosophy when bank a lands to bank b. And then Bank Bailouts the banks say you know i creates velocity of money and with Interest Rates at 0 percent and with no blending from bank to bank velocity goes down that would suggest that theres no demand for money theres no demand for credit and here in the United States there. Are millions of entrepreneurs who are always looking for capital to start businesses. And then you mention a wealth warning and so my question is are banks courting wealth in a way that theyre not making it available to small to medium sized enterprises. Which is walk us through how theyre able to do that because if Interest Rates are so low as they are today and we know that there are millions of entrepreneurs who want to to do business what are the banks doing how do they get away with that it seems to me like theyre doing something that is economically unsound or on the dodgy side of things or what do you say to this well yeah the challenge is that when the banks perspective they just want to maximize their profits and so whenever they look at a loan theyre looking at the risks and the potential rewards from it and so when you have very low Interest Rates you know the overall upsides pretty much kept were as the risk is still meaningful that they could lose the entire loan if its a bad loan and so you know there are some places where were actually seeing you know for example look at credit card Interest Rates theyre extraordinarily high and thats because you know thats an area that hasnt really been held down artificially so that market jelly represents more the true risk of that sort of lending where there are lending out but then theyre getting really high Interest Rates in return resume look at the mortgage sector or you look at corporate loans or you know smaller personal loans Business Loans basically that the race is pretty low and so the credit worthy demand for that is somewhat lacking and is the way that things are set up now you know part of why weve seen you know what would many people call it a k. Sheep recovery is that Large Businesses they could Access Capital markets whether its bond issuance you know even with the fed you know helping to push down yields they can get access to capital whereas as you point out Small Businesses you know there is a lot more kind of a higher risk and theyre more reliant on banks and just banks have seen it in their favor you know the cost. Benefit analysis to do a lot of lending in that area theyre worried about you know the cost of that business if theyre going to be there or not and you know basically if you look at lowering Interest Rates in some cases it can be stimulative but only to a point because if you get to a low enough Interest Rate its not like you know going from 2 percent to one percent is going to make you take out a loan they werent otherwise going to take out so for example back when there was higher inflation and higher rates going down from 8 percent to 5 percent could be stimulative but when redound here near the 0 bound lower lower rates this increase reliance on Monetary Policy does this really do a lot is that its not really getting out more into the economy right i get that but what troubles me a bit is that banks are in the business of making loans thats what they do you know and theyre not making the loans and some fine lets say im a shop owner and i sell tomatoes and i get wholesale the liberates metals from the farm and i decide im not going to sell my tomatoes today im going to hoard them because the price its made us is going up and people end up starving so then theres a case to be made that youre thats a bad actor in the economy theyre not fulfilling their role as a merchant so banks are not fulfilling their role as a bank where it makes sense for the government perhaps to introduce a public option and say look were going to have a bank that makes loans that doesnt hoard the cast that doesnt increase wealth concentration and doesnt try to game the system all the time as weve discovered from some of these big banks that have to pay fines all the time for cheating this doesnt make sense to have a public bank like that i mean in europe for example you go to the post office and borrow money at the post office is also a bank and they dont its just a bank right we dont have any real banks in this country live and i think theres a case made for that and thats thats the one policy option so far we saw this year is that they did something similar with the you know the p. P. P. Loan program but of course they structured it show went through the banks so banks got a cut of that it was. Actually you know the fed i mean the treasury and the fed raise the backstopping you know the risks of the banks and so one way to look at it if you look at you know Bank Holdings of treasury securities theyre at multi decade highs right now so basically instead of lending to the broad public banks are buying treasuries and lending to the federal government and then the federal government is basically you know running these big deficits and getting it out you know in some ways to the public so basically banks are lending but through all their only choosing the absolute safest assets rather then going out and lending to Small Businesses and other things like that of course it comes and individual banks to some banks you know these large Money Center Banks for example are very different than a small Regional Bank specialize in certain types of loans many of them for example have been caught out in Bad Energy Loans right there some banks that specialize in that and theyve been you know by basically making all those loans that so there they were punishment for actually doing the loans whereas other banks it is holding back and not lending at all so it really comes down to individual banks some of them are kind of you know more aggressive than they should be at areas that are just not economic and other ones they could be doing more and theyre just choosing to go with the really kind of low risk groups of buying treasuries and holding reserves you know you mentioned wealth concentration and we talked about the dynamics of banks and the fed and how money circulates another term often heard this year and last few years is the cantillon effect ok this is speaks to wealth concentration and how this money does or does not circulate. Is is is that part of the banking plumbing the that i can tell in effect is that an underlying cause of a lot of. The wealth concentration but now were seeing a lot of social unrest thats coming with that wealth concentration on that and the divide and the disparity in society can can can we point to the console in effect and say look this is a primary cause of this when i think thats a big. Part of it yeah and if you look at you know over the long term weve had basically rising wealth inequality since you know about 40 years 45 years or so ever since around the mid seventys it start to go up and you know theres a variety of factors for that theres fiscal policy theres Monetary Policy theres all sorts of reasons you know theres technology that basically takes something weve had a you know geopolitics this this big kind of offshoring movement weve had it really excel or it in the ninetys so all these factors are basically coming to a head over the past several years you know when you run into the 0 bound and when you know we are already off short a big part of our Manufacturing Base basically yeah if youre if youre if youre close to the money sources youre doing ok this year but if you work you know if youre further from those resources you know many of these bins is out of luck right so if youre for example a large restaurant chain and you can Access Capital markets you can get the financing you need to stay liquid in this environment if youre a small kind of family run restaurant is much harder if you get financing and so youre further from the money source and so weve seen a very large number of closures for example of Small Business isnt and Family Restaurants they met in the early 1970 s. Of course 171 nixon closed the gold window we wanted to at all fear out world and this was an echo in response to back in the fortys with the creation of the Bretton Woods agreement after world war 2 and trying to architect the Global Economy in ways and that that time it was tied to gold now the i. M. F. A week before said now theyre looking to do a new Bretton Woods the global standard the Dollar Standard turns 50 what do you anticipate with this new Bretton Woods the i. M. F. s calling about how it changed things line what were already seeing over the past couple years more and more kind of a decentralization so for example if you look at trade between russia and china over the past 2 years its really the dollar ised so it used to be you know most like 80 percent of the 85 percent of the trade was in dollars and. Past 2 years that shifted to Something Like 45 percent of their trade dollars in aid of course now weve seen iran for example potentially using because to go around some sanctions and so were seeing more of these kind of off dollar channels already developing so my base case Going Forward is that thats going to continue in some way that were going to see kind of a diversification in Payment Networks including for oil which is part of this you know petro dollar system now i think that there are these going to be these potential pushes for reform or in like a 2nd friend woods to see if policymakers can try to unify that but that you know the trouble there of course is that you know now we have kind of increasing multiple the world so why you know it can be hard to get countries to agree on things especially countries that feel that theyre benefiting from the Current System and so you know whether or not any of that goes through were already seeing some fracturing and it decentralization of of you know what how global trade is done right hey were going to do a 2nd part with you but thats it for this edition thanks for being on glenn thanks for having me farai nothing to do it for this edition of crossfire in part with me max keiser and Stacy Everett want to thank our guests len all the end of lent all that Investment Strategy and the next time by all. 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