b c bloomberg and all those other financial news programs and frets about the price of bitcoin and what bitcoins doing when it is the only safe harbor as max and i have pointed out now for almost 10 years from government printing and quantitative easing and other exotic sort of programs introduced over the past 2 decades and you see why we might be concerned out here in the big korean community a grim look at the exploding u.s. budget deficit. look at these charts max so this is the long term outlook right now for government debt and apparently according to the budget office it could hit 202 percent if things go well for us. and by 2051 if they don't go well it will hit 259 percent the public debt will be 259 percent of g.d.p. and the bad outlook like where they think it might go wrong is like it's going to go ok if we stick to like we don't do anything else actual budget deficits could be higher under c b o projections under an alternative scenario that assumes lawmakers and act an additional 2 trillion dollars of fiscal support in response to cope at 19 similar to the american rescue package that just passed last week or the week before extend most expiring tax cuts and grow annual appropriations with the economy instead of inflation that would total 259 percent of g.d.p. by 2051. they are catching up to japan i think they're almost at 300 percent debt to g.d.p. and the whole world is over $200.00 probably closer to 250 percent debt to g.d.p. could explain the problem of this what what the real issue is here because a lot of people the new york times like paul krugman say don't worry about it's just money we owe ourselves can explain what the problem is and yeah go ahead and write so in order to sustain this huge debt load you have to keep interest rates near 0 percent and the access to those 0 percent interest rate it's a political. cronyism it has to pen's i clipped political connections and that's the transformation of america from a market led economy a free market let economy to crony capitalism because the entire economy sense it's mostly debt as you're pointing at 234500000 percent debt to g.d.p. it's all about who has access to the cheap interest rates the 0 percent interest rates and that increasingly are this oligarchies of kleptocrats and they and the what they do with that with that credit availability at 0 percent is that they would buy other competing. companies and with a huge concentration of wealth you know great examples the e.c.b. right they loan the head of louisville toll l v m h money from the central bank 0 percent interest rate to buy tiffany's right so they want to have bought tiffany's for free so now they have that luxury brand that companies usually concentration of wealth so for those who don't think this is a problem they're wrong yeah and you know when they compare it to japan however like tapan had to have a really high savings rate ok the domestic households had a high savings rate and that was like money they owed to themselves and that their savings was in yen they were buying up the treasuries from their government the japanese government bonds so you know it was within their own economy whereas we have a huge no save or create here in america so therefore foreigners used to buy it but now it's just the fed so it's it's just yeah it's money we owe another branch of government not based on any savings that actually happened right in japan they have the pension the public pension fund is enormous yet similar in size to the debt load and there were they don't expose that pension pot to their equivalent of wall street to go lose it probably what's going to happen in the united states is that they're going to let wall street manage america's social security fund which is about 3 trillion dollars they'll give it to blackrock or something like that to increase returns and then they'll gamble it away lose it. right so i'll show you another chart because it's just scary so remember the public debt is the accumulation of all the deficit over the decades and centuries of the founding of this nation especially if it doesn't get paid off so sometimes rarely in the past few decades have we had a budget surplus i think the last time was under clint. then we had a small surplus under him during the dotcom boom well we don't have surpluses anymore i remember in europe everybody that fiscal number of the number of the budget deficit you're allowed to have is 3 percent right so just put that into context when 1st i'll show you the chart because it looks scary this is where we are now our budget deficit is very high in 2020 they they they the cvo projects is going to decline i don't see how that happens for a bit but then sore so what the actual numbers are budget deficits had already risen before the pandemic from 2.4 percent of g.d.p. which was 442000000000 in 2015 to 4.6 percent of g.d.p. which was 984000000000 and 21000 and set a new record of 14.9 percent of g.d.p. last year which was $3.00 trillion due to the crisis the c b o expects the deficit to fall to $2.00 trillion this year and hit a low of 905000000000 and 2024 before resuming its upward trajectory the deficit is projected to total 5.7 percent of g.d.p. and 20311.4 percent of g.d.p. and 2041 and 13.3 percent of g.d.p. of 8.8 trillion and 2051 and just so you know the actual number of what the debt is they project in in in the good times if things go well by 2051 so right now our total public debt is $28.00 trillion and by 2051 they project it will be $133.00 trillion i have 2 or 3. shut up. 2 or less in this movie before. boris yeltsin. go back and look at your history. oligarchies flourished under a guy who was barely able to walk down the street here we have in the us somebody who is cognitively impaired that's pretty common wisdom over will seeing the rise of an american oligarch the assisted by 0 percent interest rates that allow for the kleptocrats to own all means of production we've seen it before we know it ends sad to say but busways going to be well certainly the currency is going to be trashed and it does seem like an end game like. as you pointed out earlier we've had an extent to pretend for 40 years and now it's reaching the end game so in terms of the spending projections what the c.b.o.t. projects are spending will be and why it will be impossible to pay down any of this that is the projected long term growth and spending is largely driven by rising health care costs obviously interest and retirement costs the c b o expects spending in these $3.00 areas to rise from the current 12.3 percent of g.d.p. this year to 24.4 percent of g.d.p. by 2051 interest spending will be the largest federal program by 2045 and that is why we can't have interest rates rise because. i mean this is just some low interest rate say here where they're saying that it's going to be the largest even at these low interest rates it's going to be the number one line item in the budget and 2045 right which is really a bad assumption to make because all this money printing is leading to a loss of confidence in the u.s. dollar as world reserve currency and we have an incredible signal right now telling us this is true with bitcoin the u.s. dollar right now is in a hyperinflationary collapse against decline it's a big signal because it is not the bubble bitcoin is the pin the us dollar is the bubble now once the bubble pops and if in fact we are at the end of a 40 year bull market in bonds that means u.s. dollar of the world reserve currency ends of the bubble pops of the bond market interest rates are going to go from let's caught a $1.00 on the 10 year bond to 567 percent so a 567 x. . higher rate so that projection is not going to be in the 2040s it's going to be next year next year i predict not not 2040 it'll happen next year yeah and you see that like the day the moment the very 1st stimulus checks in the latest round of stimulus checks hit the bank accounts literally started to soar so it is that acting as that bond vigilantes that used to exist before the central banks crush them or the gold bugs gold piece to rise whenever this sort of thing happens but now it's just between is the only one and you know in terms of a crumbling empire you know if you look back through history you often see well the bread and circuses so we've had circuses for the last 40 years and now they're getting the bread right all the free stimulus has been thrown into their bank accounts that's the 1st time we've seen that sort of stimulus happening in america since in our lifetimes like you've never had like thousands and thousands of dollars just poured into you know i have a lot of family with thousands of dollars that they never had just being poured into their bank accounts but at the edge of empire is where you start to see the you know the movements away there you know they're safe distance away and they start they start exiting the dollar or preparing for you know the collapse of that central currency or the power structure and i saw this headline from south korea's crypto exchange market volume surpassed the nation's stock exchange market this is quite insane so this is that stampede anything to get out of currencies if you know it's just that instinct that a collective of people like thousands and thousands and millions and billions of people sense something's amiss something's going to happen right this is the 1st time possibly ever that the u.s. has resorted to the bread and circuses with the emphasis on the bread you know we've had. the circuses and now they're just pumping cast directly into people's bank accounts and the rest the world sees that they're like why my working like a dog 100 hours a week in a factory somewhere in asia so that americans can buy these goods with that funny money that they're just printing by the hundreds of trillions of dollars maybe we should just cut them free and let's keep our economy more domesticated that's part of the d. globalization trend that we called as more of the big transfer 2021 and that would further collapse the u.s. dollar jack interest rates higher and the interest on the debt wouldn't be a problem in the 2040s but in 2022 that would be next year if for the past 40 years we've had all circus no bread and now we have all bread no circus because the circus has of course and the platforms because all the cartoon characters all that stuff like everything is against the walk ideology so it's all bread no circuses i didn't really have no choice because people are sick of circuses and they want the bread for an hour for pepe le pew we're going to take a break and when we come back much more coming your way. as you read this. and hear some of. whom one has. done a lot of rather you know a lot more. political patronage question and you can keep an eye on what. i don't see it as a channel for truffle not it living. in the modern world then i'm on my machine with a lot of. other than the owned mind. that i hate when i do it. because it's whole full plate choice there you have them and they are trying in theory this is. a. model for them after the forefront mr hates it for jim and then for hope that are from him and of course. leaves the money. it was spoken to be dated been published samy africa c we've seen you know good data from the use of some data from the chinese but i've seen like any other vaccine if the data holds all you can call them a line you know what's the basis for that statement you give me the scientific i would say to those people you need a scientific basis or choice and there's no vaccine zur are given the thumbs up from a scientific or medical point of view we should be interfering with the process and if it's all. welcome back to the kaiser report i'm max keiser time now to go to michael pants off the top part dot com michael welcome back thank you for having me back on the program actual yeah my pleasure sal you're a money manager that ad gyal you're making money not markets and down markets you've got a very strict discipline tear approach just working fantastically well i understand your daily list with clients and rightfully so because you do a great job and we need to pick their brains on something here bank of america reports this week suggests that the 40 year bull market in bonds is over your thoughts well i think generally for sure we are in the middle of a bomb global meltdown and when i say meltdown i mean you know you've gone from 0.3 percent in 8 year up to probably low 2 percent by may june timeframe and that's probably. going to cause some ants in the credit markets and it's going to cause some anxious in the emerging markets tremendous amount of dollar based debt and i think you might see a temporary flight into the dollar and a mini crisis but. in the stock market equity market and of course the fixed income market but i think on the other end of that it's going to be a continuation of the bond bull market because what we have engendered here is a tremendously unstable economy predicated on artificially low 'd interest rates national you know this and we're going to have times of severe booms and severe busts in the economy and in the markets so what you're seeing now is a boom predicated on the fact max that the u.s. government borrowing 6 trillion dollars year career from march of 2020 to march of $22016.00 trillion $1.05 trillion of which will be printed by the federal reserve so yes you're having a surge of growth you will have insurance insulation a surge in nominal interest rates. and then you're going to have a massive fiscal and monetary cliff later this year into 22 and i think it's going to cause enough 2nd pull all market in the bottom south the answer is in your view the bank of america is basically wrong because they're calling for the end of a 40 year ball market in the beginning of a secular bear market in the bond markets a year and as a pending more of the same they'll be a crisis in the markets which will be responded to by another massive purchase of bonds by the central bank so imagine 6 trillion here on here printed in the last 12 months and we know that sense 2008 there spend 17 or 18 trillion or more printed to try to keep pace insolvent banks up and running so how much can they go where as any limit can they go 3040 trillion worth of sculling well you're running into a bit of a problem with the dollar here max you know the dollar is a heavily shorted instrument right now it's all one sided treat and like i said if you see change year note rise and he's the benchmark treasury charge you know as my proxy for long term interest rates if it rises quickly it intensely into interation between now and in june you might see a collapse in equities worldwide which always leads always to a search of money coming into the dollar as they repatriate those carry treats. and it will lead to a boom in prices for bonds so you'll see a huge reflex where 5 year old skyrocket bond yields bond yields charts i reckon prices collapsed and then you see the reverse of that trade probably later this year that's where we're headed so i know one often quoted indicator would be the so-called buffett indicator where stock market valuation as a ratio to g.d.p. and i believe we blew past that number a while ago you're shaking your head i guess you fall back a little bit we're are we on those types of valuations how much how bloated is this market well i'm shaking my head because stacy told me not to interrupt you so i'm trying to listen to her and being in italian it's very hard to do that you know i like to talk with my hands and interrupt people on time but i'm sure i was agreeing with you in the a have a main course over here is that the buffet indicator if you don't wear was in 2007 it was basically one times 100 percent of the underlying 108 today it's 195 percent of the underlying economy so we had a massive underestimate her bubble in equities and it's hell together by what low interest rates and what's happening next well right now it is the end in a cyclical basis that we have a sense where you say oh we have very low growth and very low inflation so the federal reserve jen prints money willy nilly and the government can borrow and spend money. into an item without it and it then it will because no problems in the stock market but look what happened to the high flying tech stocks recently some of them down 40 percent if you look at these rooms and it's not because everybody was sequestered and that is one trait the growth heavily. stayed home trade call whole the nasdaq trip to. and everybody got out of that at once and course it's a gretsch we're going to see many more presses like that between now and say may because the pressure up we're i'm healed is going to be absolutely overwhelming year over year growth rates are going to blow the doors off. any estimates i'm looking at probably set for the whole year 7 percent g.d.p. growth year over year you know is going to be something we haven't seen him since outside of right after world war 2 and you're those also going to see inflation because you tend not to tell me you can hand out what your $100.00 checks do you know the vast majority of the marriage of americans and then more enhanced unemployment. you know all the governments can do that was they sent 6 trillion to state local governments what operations individuals that money's all that printed and handed out to people and the economy the private sector and that means you're going to have a massive spike growth and inflation followed by what i call this unprecedented system flip so basically if you're not an active manager you're going to sit there and say i always think this i always think the dollar is going to go down i always think tech stocks are going to be in well i'm always going to buy china whatever whatever your mantra is it's not going to work it's going to work sometimes really really well and other times it's going to crush your math and stocks bonds cast at the mamak any amount of the counts what's your having asked allocation heaviest allocation in the magic hour right now we have a bet on a widening hilter so we have a quadratic fund that bets primarily on interest rates from one to 10 spread increasing we are sure bonds we are actually in a war on banks only railroads and long banks because banks do well as the yield curve. spread increases we also are long dollar maxed as i said before and these are not his positions here is is what i'm trying to ball on this is not something to read and forget it. this is not the way we manage money here but the portfolio strategies this is not a set forget it we're fully oh we will probably be very much wolf duration bums in the summer and probably also will be short stocks in the summer if my theories direct because sooner or later this is that scenario is going to occur either we're going to continue to borrow it for trillions and trillions of dollars every year. and that's going to cause the bond bubble to burst no make no mistake about it we're in a bond market bubble absolutely or they stop printing money and the only buyer indiscriminate and unlimited practically buyer treasuries yielding 1.6 percent goes away and that's going to cause asset prices to absolutely collapse so we are in for a lot of trouble and it's unfortunate but what happens when you have central banks and governments you serve markets obliterate them. not only them for years and years and years what happens is you can never extricate yourself from that and you cause a lot of unintended consequences one of which we're seeing right now is going to be a huge spike. in banja at the moment and this can change at any moment as you suggest i set it and forget it it's very dynamic you've got live indicators and you respond in real time but at the moment you're saying here you think you can squeeze one more rally out of the bond market before at least before the big come up and comes to that to that market let's talk about one of your competitors i guess you could call it or one of your brethren stan druckenmiller he says he's very calm a very short the dollar and he's long asia and commodities and it sounds like you're a thinking along similar lines like oh well not a not right now i mean i'm actually along the dollar right now so i really have tremendous amount of respect for stand druckenmiller but let's just look back and just reap what happens when you have a global threats when one of the things that happen when you have well who trusts what we know for sure what happens 1st thing happens people rushed in to on wind cherry tree it's so great they borrow a dollar they sure they buy stuff overseas has higher growth rates and higher returns. bonds or athens and then when the problem gets the fan when the u.s. catches a cold the u.s. catches a fever the entire world gets deathly ill and then people on why their carry trades and they rush back into the dollar and they rush back into short term treasury so i will hold those 2 things when the problem gets i also will shortz. so you think about longer dollar long short term bonds long cherished and short acting that's that will probably be in my portfolio if the situation situation plays out where i see it. there's fiscal cliff siskel and monetary slips when the economy starts to toboggan down that's like to be clear i misspoke un fact or taking a position very much different than than standard i can mail or well you know one little question he's got a huge fund this that impair his ability to deliver numbers if the size become a mitigating factor when you're managing money like that and i take it that one of the attributes you've got over there pent up portfolio is that you're just sticking to that maximum bang for the park where you know you can squeeze out alpha or return without having to worry about moving markets which of course stand corrected miller has that problem because he's he's so huge you know he's also long gold. any thoughts there 2 thoughts is that you know the more money you manage managed you know hundreds of billions of dollars you obviously don't work it's when you make changes so i mean i'm of the word now it's over 100 i don't merit 100000000000 so that's one thing number 2 i sold my gold. all of it a few weeks ago and i sold the miners about 6 months ago and the reason why did it was very clear i said we're heading into a period of oh we're raising real interest rates in the worst nominal rates will be rising faster bend inflation rates which is always the death for gold and you can see it we've gold trades it's reached as real money and when when dollars pay more and more interest rates gold gets michael penthouse still in the game hungry for alpha given people returns that they love thanks for being on the kaiser report thanks for having me back on that's all right that's going to do it for this edition of kaiser report with me max kaiser and stacy herbert want to thank our guest michael pant port dot com until next time. so what we've got to do is identify the threats that we have it's crazy. let it be an arms race. spearing dramatic development only mostly exists i don't see how that strategy will be successful very critical time to sit down and talk. this headline stories it's really consider breaking ranks with the european union using russia's sputnik the vaccine even if the european regulator doesn't give it the green light. also. in stuff the rise in hate crime against asians in america was stirred up by his predecessor with the mainstream media also piling the blame on the. t.v. networks in the us the cost of trump's departure from the white house with c.n.n. seeing its fewer numbers plummet dramatically.

Related Keywords

New York , United States , Athens , Attikír , Greece , Japan , Blackrock , Italy , China , Tapan , Nei Mongol , Togo , South Korea , Italian , Americans , America , Chinese , American , Boris Yeltsin , Pepe Le Pew , Alex Simon , Stan Druckenmiller , Stacy Herbert , Max Kaiser , Stacey , Paul Krugman , Samy Africa , Max Keiser ,