Referenced you can make any difference between the difference between different time values of money and so now this is the end game of monitor there is asian and neo liberalism we get to watch it now life time the social fallout will be spectacular we already see uprisings all over the world get ready for the global insurrection against banker occupation so break up fireworks maybe its time to go big yes so in particular these are the European Banks we see the European Banks suffering the most we see their stock prices has have collapsed we see their bonds collapsing we see like for example j. P. Morgan and Deutsche Bank at the beginning of this financial crisis in 2008 they were roughly the same size now j. P. Morgan is about 10 times the size of of Deutsche Bank since the financial crisis and this is partly because of e c bs intentional policy as you mentioned you know the its a simple easy game right of banking do you borrow short term. From the fed or the treasury or the e. C. B. And you lend long to mortgage holders and stuff like that the 10 year bonds yield to around 1. 5 Percentage Points more than 2 year issues in historical terms currently the difference is just under a 0. 2 percent so theyre losing money hand over fist theyre not able to pass it on to their clients right now theyre trying to pass these costs on to their High Net Worth clients because those are the ones with a lot more money but heres a quote from the article that is exactly quoting from like what weve talked about and how radical the situation is at the moment people dont understand like how radical Central Bank Policy has been since the financial crisis and they say historically banks need money out of time if time no longer has a price because there is no more interest nothing can be earned so the time no longer has value max right you know when i was working on wall street the banks was 363 you pay a deposit of 3 percent you lend money out of 6 percent and youre on the golf course by 3 pm and that was the banking business so now without any kind of Interest Rate spread all there is no banking business so banks but but but theyre going to go out of business completely and time has no value anymore so were entering a new post time its not even post capitalism its post time where were living in the Twilight Zone this is Twilight Zone of banking time doesnt exist its like the Bermuda Triangle of banking you know youre flying over all the banks are lending at negative rates and all the collateral is sinking into the ocean and you know up there in the sky and next thing you know youre youre on a wing of a plane with William Shatner dancing the want to be wondering what the heck just happened its the Banking System 21st century thats what happened. Well but remember so what weve done with the Financial System the fee system the all global fee system since were eradicated hard money in 1701. 00 is weve only managed to we weve gone further and further we have been time travelling ok thats been happening weve gone further and further out into the future weve gone 4050 years out into the future and pull all of that earnings today to today and thats why we have this mega debt load and you know i was talking to nick and youre going to talk to him in the 2nd half but one thing we were talking about in terms of this and why these negative raids is that in fact basically theres. There arent enough assets for all the liabilities so all of these debts are trying to find assets a safe haven essentially and there arent enough there arent enough treasuries there arent enough gold and there arent enough big queen even. Dropped heavily while they are here now everything has been securitized and turned into a commodity turned into financialization of everything has already taken place so the sport has become a securitized the same its become securitized Agricultural Industry securitize Energy Industry security with the exception of hollywood thats another story but every single industry in america and in the world been securitized and sold forward 102030 years all the consumption that would happen has been now been so so now were in a dead planet as like richard that burroughs Worst Nightmare is like great hi im richard out bar welcome to dead planet everything on planet earth is dead because when securitized and weve consumed it all well theres a teenager in the us. Heartbroken crying her eyes out because shes going to grow up on a dead planet we could have all been securitized and sold and resold and repackaged a real profit cater to 1000 times 10000 times were left with nothing except the dream of one who was one who wasnt it is no more you know in 1071 when i was. I was alive but i was very small didnt know but you know back then there were only like 33500000000 people on earth so that was a hard money age now since 9071 its been all easy money its been basically in all its kind that you can print and leslie but the fact is time always did have value the problem is we cast it all in for the next 4050 years so there is a sort of you know with the when voice of god was saying that that the markets the bond rates negative you rates were predicting essentially a population decline thats because weve already like if there are 8000000000 people on earth today its really like were living like its as if there are a 25000000000 in terms of how many lives weve lived already right remember during this subprime crisis everyones home had been securitized turn into tradable security and resold a dozen times amongst 1000 banks and Pension Funds and then you have the Interest Rate crisis you had a collapse in all those homes one belly up and just as interesting side note of American History was the largest confiscation from the black community you know 100 years because they had been sucked into this predatory lending by all of the major banks on wall street but you can apply that not only to housing but just about every single facet aspect of the economy has been packaged securitize and resold a 100 times and so the reason is that you have no way to extricate yourself down at that rate youre going negative because the only way you could possibly get out of that mess is if it somehow encourage growth that would encourage tax revenue that would allow you to pay down debt thats been the theory all the time trickle down economists and monetarist for the past 30 years have said all we need to do is just jam the economy and some money were going to get the Growth Engine started and that will generate the tax revenue we need to pay down all this debt while as ive been saying now for years and now its totally irrefutably true that lowering rates doesnt fight deflation of causes deflation and negative Interest Rates in the. Collapse of the financial ecosystem so paul krugman and his guys they have responsible for the largest transfer of wealth. I mean the point is. Weve had weve pulled forward all this consumption from 40 years 50 years into the future so negative rates and that sort of situation might actually make sense in terms of. This article in mission talk dot com and there are some wild birds and butterflies and animals and crack crickets and grasshoppers here so if you hear noise dont be alarmed we always have to tell our audience that they they get alarmed when they hear noises and we are out in the wilds of palm springs and they report they look at the j. P. Morgan report about these negative Interest Rates and of course morgan is looking into their their own future like were saying like were bringing forward the future weve consumed the next 4050 years j. P. Morgan is looking at europe and seeing 0 rates negative rates coming to america and they see their own future so they say they quote in their report franco their c. E. O. Sparta bank berlin and he says that the negative Interest Rate policy of the e. C. B. Is ruining the Financial System and is a socio political poison frank kohler c. E. O. Part of. The Financial System is absurd if we have to explain to the children that money has a negative value and thus debt is good because you may not have to repay anything again this is one of the things weve been covering and its an important thing to look at since 2016 because everybody is looking for like some sort of mythical reason for all this stuff happening around us the populism the the socio political poison that is negative rates is the fact that we have. Dede genuinely consumed the next 3040 years of of 5 productivity and asset. Of the debt black caller still living. So when you go into negative rates they will go into your bank account and theyll say we need to take some money from your bank account and that will become 2 percent a year then 10 percent a year then 100 percent then theyll say well your car is also security we have it on our books its on our computers and we know exactly what that law is all about we need to take that as well theyll take your car then theyll take your kids because of this Financial Education system has been completely financial and also unless you give us your kids you know the schools are going bankrupt and theyre owned by j. P. Morgan we cant let them go bankrupt so we need to kids and theres just continue basically unabated in this way and its a plague thankfully its like the black plague that wiped out half the global population as Royster Bogen said negative Interest Rates porch and a decline in population around the world like the only thing i can compare it to be the black plague which wiped out half the population so you know i again youre speaking to make policy on the 2nd half and i think its important if you go online look up him and look at some of the data he has because if you want to go into in this short segment here of the kaiser report but he talks about the triumph of liquidity and the fact that bitcoin here is and people who are looking at the situation looking at negative rates looking at the debt while what they dont understand is like the u. S. Dollar the currency is the euro the actual dollar you know if you have a dollar in your pocket its actually debt its a liability its not an asset u. S. Treasuries are an asset a Treasury Bill is an asset that is backed by the actual productive capacity of the United States that is an asset theres a shortage of those of assets actual real assets and you know i think ultimately we will see as. These sort of ruptures in the in the we phone market the stuff were starting to see those are the same sort of warning signs we saw in 2007 that we saw in 2008 about the financial crisis that was about to hit and i think were seeing the same thing and i have a tweet here all. So from germany. Has ruined a Business Model of german banks which borrow money short term and lend long term the banks can no longer earn money with. Maturity transformation business is dead Commerce Banks shares. With a 2 year 10 year treasury yield spread and those are the charts like Commerce Bank which used to be a big bank in germany thats declined their share prices decline Deutsche Bank is down like 95 percent since the financial crisis even the landis bank and which are the foundation of the middle east middle Corporation Says the heart of german exports to me that those banks are starting to suffer as well right now by the way all the big banks. And we answer that because. When you make a purchase on amazon you either get a big shock or a little shock depending on your Credit Rating or you get shocked and population declines anyway were going to take a break and when we come back much more coming away dont go away. Not at me. But if she warned you i do. Wish that the. Those jeans nudist beach and you see me. In the news i mean that is where that information ball. A lot of you will see sawing your info as if parts about to kids out the bulls are the most cool. Doesnt need a list of. These. People. 5 days doing a sit. In english medium people who simply. Include in. Welcome back to the kaiser report imax keyser time now to turn to nic but to yeah oh open note and tantra labs welcome thank you max this is fantastic because weve been talking for a long time number of years and were going to get into some really interesting topics right now you are really a guy who understands the internal plumbing of these markets these bond markets these money markets and thats thats where its really your specialty is in the background of banking and the bond market so youre well placed to explain the turmoil and whats called the repos market a lot of people been talking about over the past week or so what you know what happened sure so. The treasury market is one that needs to be funded at the primary dealers balance all right so theres i think 18 primary dealers and theyre the people that interface with the Federal Reserve bank right and the way that the economy is managed in terms of the cash is there get they have a certain relationship with they have to buy stuff from the fed and they get a guaranteed revenue stream and then they market essentially to wall street so its kind of like the inbetween layer of the stack if you will the financial stack the primary dealer stack right so so the primary dealers in this case they were what was going on there so the primary dealers are obligated legally to take down excess treasury supply at the auctions and what happens is every time they take down treasuries they fund those treasuries through the repo market that is coming from money market funds cash balances from across the country so that money ends up in the repo market and funds the treasury. For some reason the treasuries that settled last week didnt really go well in the funding market and the fed had to step in and do an emergency. 75000000000 repo facility on an overnight basis for these treasury securities repos a repurchase agreement. Its the most the shortest term piece of paper in the Financial System its a loan that secured by the treasury collateral itself and its short term and this is kind of the stuff and this is whats used back and forth to finance the transactions back and forth you need a lot of actually a loan to just cover the transaction and in this layer of the economy its all pretty small you dont have these types of disruptions right so its shocking when the rate on the repo market so it shows that there is some trust as of operating in that market has shot up and that would imply as we saw in 2008 when short rates and the rates shot up that was telegraphing as a big signal like somethings amiss here somethings bad is that what did it was it telling us something and if so whats it telling us right so its telling you that the its not the quality of the collateral thats the problem the treasury market is still very well bid and you know rates are still quite low because the treasury prices are high what happened is that this treasury collateral was at a counterparty or multiple counter parties that other banks just stop trusting the parties just stop trusting last week again like in 2008 right shut up because these banks dont trust the dealings with that theyve got the goods that they dont want to go out there and do business because they think that banks actually insolvent and came in and all these banks going to 1000 if they were looking for everybody now it seems like were out that state again you know its funny its a game of Musical Chairs sometimes the music stops and somebody loses last time Lehman Brothers was taken out bear stearns taken out sounds like the musics about the stop again and which is which bank is the unlucky bank this time that will be caught without a chair i really dont know its hard to speculate my guess is that its a European Bank weve seen a lot of trouble. Over there over the last several years in the Banking System. But its really hard to guess i would guess somewhere in germany france or switzerland somewhere in germany france or switzerland now sit down you can do a little work yourself there at home and come up with 2 or 3 names thats right you want to germany weve mentioned many many times thats my favorite the new Lehman Brothers said would be your bank and so now were getting some Market Action then became one of these big banks about to go under now i 1st heard of you when you began writing about the time value of money and how the Lightning Network in particular makes this relevant to big claim so explain time value and why bitcoin matters in this regard sure so the Lighting Network does something novel for it allows you to earn income without taking explicit counterparty risk because when you stake bitcoin to a lightning node and open payment channels those are all still real big transactions and youre not actually giving over any control that big quite so this idea that we can earn income we can earn an Interest Rate without counterparty risk is pretty special my idea was that we can use these rates from across the network to establish a time value of big client and perhaps a reference rate for big Capital Markets where we can have lending activi