tv [untitled] November 23, 2013 6:30pm-7:01pm EST
simon black of sovereign man and he was at dinner with the national economy club and ben bernanke was the guest of honor he said at one point during the evening when pressed about whether his quantitative easing program was good for wall street at the expense of main street he being ben bernanke he flat out denied it saying that such a premise is simply not true he defended his printing eighty five billion dollars per month suggesting that fixing interest rates as zero is beneficial for society because among other things it allows people to buy cars right well and allows people to go into debt into ever deeper debt and it's funny because this idea of giving out dollars in amsterdam is beer to keep them docile and keep them cleaning up the park clean up their their open air prison it reminds me of wal-mart and mcdonald's it was reported this past week that they themselves are out there giving the equivalent of a couple of beers to their employees to have him come into the store and perform menial label labor and slave labor so this amsterdam model is being picked up by
the likes of wal-mart amsterdam the people that work at those companies they don't have enough salary to maintain a living wage there are probably homeless a lot of them live in the parking lots outside of wal-mart mcdonald's they don't actually can afford homes and so what you're talking about is that wal-mart they're asking customers to donate food for their employees and at mcdonald's they issued a notice for employees to how to keep yourself from feeling hungry by chopping up your food a little or bits and spreading it out over today exactly how is that different than big just giving drunks beer to shut them up and of course the americans are quiet about it they don't mind being treated like a drunk in the park they love it so there we have it is that ben bernanke he confessed that what he wants was there are races to encourage the addicts to buy a car with using debt remember the car loans in america they're stretching out up to ten years now it's like longer longer you. would be like two or three years the
mortgage on your car would be now it's like five six seven years so it's a rapidly depreciating assets not even something that was a wise investment but there's also on the high end we're seeing record amounts of margin debt on the new york stock exchange and this is a chart from bloomberg and it's the margin debt at for a new york stock exchange member firms and you see the three peaks there this is an image that tells a thousand words two thousand two thousand and seven and today as you see record margin debt right when you buy a car america you are it's just like money printing in america you increase america's debt load when you're buying stocks in america increase america's debt load when ben bernanke it keeps interest rates at zero percent he's helping to increase america's debt load it's all such time as the debt bubble pops everyone who issued the debt the bankers include bernanke get a fee on the size of debt issued they don't make money based on profits and losses they make money based on the size of the debt they issue so in a car is
a debt issue a quantitative easing is debt issue getting a job of donald's put yourself into debt that gives fees to the bankers it destroys the economy it just roy society it destroys everything but the fees for the bankers and so we're just seeing it getting more entrenched in the global psyche because now economies around the world the e.c.b. the bank of england bank of japan of course got this whole ball rolling they've adopted this model of turning everyone into an open air prison like gaza so this is the gaza model being written large and i've told the palestinian monetary authority they should adopt bitcoin to try to fight this but haven't gotten any word back yet and by the way you know relating this to addiction as you see with those debt peaks what happens is the debt addict passes out they collapse into crashes these market crashes so we're at the point where we're at a higher peak than the one in two thousand and seven and higher still than the one in two thousand. so again is it going are we going to fall over like we did just
like the drunks in the park probably eventually fall over after the sixty seventh beer right in other words when the whole system crashed in two thousand and eight the conclusion was we need better mathematical models to convince people that banks should get into deeper debt that collusion wasn't that we need to reform banks so that we don't have another crash there will be another crash it'll be much worse than the two thousand and eight crash just like two thousand and eight was worse than the three or four previous crashes there'll be an incredible economic duress and they'll be an incredible confiscation of wealth as usual and the cycle repeats itself i was going to say you know as well likening this to addiction this is like with the quantitative easing program and what they're trying to do with increasing new radical programs negative deposit rates things like this is the new beer that they want to the alcoholic beverages they want to concoct that won't give you a hangover so you don't ever there is no lesson ever learned there's nothing to
keep you from ever feeding the addiction well in the u.k. there's a big argument about whether to lower or higher the price of beer or alcohol as a way to try to manage the fact that quantitative easing m.r. carney is treating the people in the in the population of the u.k. like opening prisoners and they're on their policies not just monetary policy or to try to adjust the economy in ways that are not blatantly ripping people off they only trigger the only valve the only fulcrum upon which this economy rests in the u.k. is the price of alcohol because they know that britain's run on alcohol more so than any other society in the world in the us is gasoline prices that everyone's driving around going out west going to west driving around route sixty six gas but in and here in the u.k. it's alcohol that's it feels the economy and again here is the quantitative easing being fed to the markets and you know that just like the guy in amsterdam said he would not work if it were not for. the beer here people will not shop they will not
consume if it weren't for the free money five years of q.e. and the distributional effects here's a chart of luxury retailers versus middle class retailers the luxury ones being tiffany coachella the mh and that is the burgundy kind of brown line and the blue line is macy's kohl's and j.c. penney as you see they moved in lockstep from two thousand and three up until two thousand and nine that vertical line is exactly when q.e. started and what do you notice oh the luxury retailers soar away from the middle class retailers so who is that benefit and who is this debt benefiting quantitative easing is a program of debt irrigation or money printing irrigation where it's a new way for bankers to direct the printing of their cash into the pockets of people who shop at tiffany's and you see that the tiffany's shoppers are getting the money basically deposited directly into their accounts without having to go through the economy where it might trigger wage inflation so wages are depressing
while tiffany shoppers are getting more free money to go shop at tiffany's or by francis bacon triptych four hundred forty million dollars or andy warhol still train for one hundred million dollars that's the new financial irrigation financial engineering that is quantitative easing that's to financial innovation is that they figured out a way to keep people's wages from inflating while they inflate the value of their ill gotten artworks and now that chart west from j.p. morgan and what they said that this is showing what the chart shows is that there are debates about whether is zero percent cost of money helps anything except financial asset prices all we know is that the fed has a story to tell i money is good and they are sticking to it more like sticking it to us. people are getting stuck that the quantitative easing is keeping wages low it's a program of financial repression wage growth is below inflation by design is financial repression. or from national oil pressure that's an actual economic term
and it's it's what i call financial terrorism and the reason i call it that is because it's creating jihad in economies around the world from people rising up against their terrorist overlords well i don't see any sort of rising up people are willing to spend as we see with this headline here that is housing loans soar by thirty seven percent in one year mortgage lending is back with a view that evening standard is saying and the addicts are being fed and they're taking it the last month totals the first time seventeen billion pounds has been breached since october two thousand and eight when the british financial systems near death experience condemned the home loan sector to a deep freeze so now they're celebrating it the fact that like the addict hitting bottom near death experience that we saw in two thousand and eight from too much debt consumption they're like celebrating like we're back to that same point again we were hello step away from your debt addiction the zombies got
a big debt transfusion and they're celebrating before they have to be shoveled back into their coffins again you know after the n.h.s. gets privatized this country taken by hedge funds after co-op bank was was was unceremoniously murdered by hedge funds they will go after these people in the prison business and privatized the u.k. prison industry and people who are too in debt to pay their mortgage when it collapses and twelve months or so they'll just turn their house in doing a prison it will be run by an american hedge fund or like manchester united run by americans well there are some people who chose not to be addicted to debt and those are people who will not take the debt drug that the government and the central banks are feeding us to keep us quiet in the park they feeding us the beer to stay so quiet doe silent obedient in easy to control some people are not obedient well what happens to them they buy gold they buy silver and now they buy big. point is
well furious gold slammed down leads to yet another twenty second gold market halt what do the following dates have in common september twelfth october eleventh and now november twentieth these are all days in which there was a forced gold slam down so furious a trigger to stop logic event on the c.m.e. resulting in a trading halt of the precious commodity and today's case gold trading was halted for a whopping twenty seconds as the market tried to reliquefy itself following what was a clear attempt to reprice the gold and silver complex lower needless to say it was absolutely no news driving the event right as i said two years ago a year ago six months ago if you have a gold of silver portfolio and the manipulation risk with bitcoin and so people who took my advice they're having a record profits in their portfolios this year gold silver but going like that last year like a half of past twelve years but this thing is what they're saying is the stop logic event as a banging open and happened here in the u.k. this is from the london open and it was two thousand contracts slamming the market
at the open the day after the f.s.a. the financial services authority said they were going to investigate such manipulation they're saying where in control of the market you guys are not dead addicks you're trying to protect yourself we're going to slam you the only one that's outside that manipulation as you say is bitcoin yeah it's gold is clearly being manipulated and bitcoin is the only way to get around it so we've got to go get a good. ok we'll have a good interview with barry silbert very sober in a second market talking about bitcoins today to. people like which. programs he documentaries in arabic it's. the will of your people into the true story. so you did.
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so kids games are just in their memories. welcome back to the kaiser report imax keyser time now to go to new york city and speak with barry silbert founder of second market online marketplace for buying and selling illiquid assets such as restricted securities in public companies and on which he recently launched the bit coin investment trust barry welcome to the kaiser report thanks for having max all right barry silver tell us about the bitcoin investment trust the early adopter of bitcoin i got involved few years ago and what most people realize very quickly is that it is very very difficult to invest large dollar amounts of bitcoin if you got
a wired body foreign exchanges you've got to deal with very volatile market and so what we did was we incubated a investment vehicle and really what it is is it's like a private spite or gold g.l.d. where it essentially is raising money on second market and will trade on second market and we handle all of the hard work of sourcing large amounts of bitcoin we had a look at the security the safe keeping it's audited by in wa and so the whole idea is to open up to court investing too much group broader group of investors all right so basically it's like an exchange traded fund which is based on bitcoin but it's not exactly an exchange traded fund because i believe it's only open to accredited investors so you avoid that regulatory hurdle correct right we were able to launch this in about six months new p.c.'s could take years to get approved by the f.c.c. and at some point down the road it might make sense for this to be in the public market but for now it's only open to sophisticated individuals and institutions all right so as an asset class and i remember when we were in new york recently we were
talking about this in your office and we were discussing how hedge funds have got to look at bitcoin as an asset class because if they don't they might find themselves lagging their peers in six months or a year so what the hedge funds coming into this i want to ask you so. since you've lost since you've launched the bitcoin investment trust has it now become an instrument for this hedge fund community berry not quite yet we're seeing three big groups of the best years right now we're seeing tech entrepreneurs who are excited about because as a technology they can actually invest in the big investment trust via their iras now and so that's been exciting for for that group of investors the next group or family offices so what's interesting is we're starting to see family offices who have a very diversified investment strategy long term time horizon taking a piece of their gold allocation putting it into big coen and then the third group it's wall street professionals portfolio managers traders who are not yet investing
for their clients or their lp money they're investing personally and i i personally think that this is the precursor to the hedge fund money coming to the space all right o'berry if that's so and you've got these early adopters very smart money coming into bitcoin in a space which is now roughly let's say six billion dollars in size and the winklevoss twins who you also have a relationship with in terms of the local bitcoin and silicon alley community they're calling for this to possibly achieve market capitalization of four hundred billion which would make it on par with the largest of the stocks listed on the new york stock exchange like an exxon for example is that kind of the are you in the same camp do you think this is where we're going i think the outcome for because it is binary it's a highly risky investment right now it's either going to be a total loss of your principal or a fantastic return and actually on the website for the because investment trust
it's because you trust c.e.o. we actually outlined four different scenarios of upside for bitcoin if it was the size of western union if it was the size of pay pal it was the size of the monetary base of turkey and then the biggest one is five percent of gold and if you take five percent of gold. gold's about a seven trillion dollar asset class we're talking about you know returns of you know certainly you know well in excess of anything else out there yeah you mentioned comparison to gold and silver and this comes up often people consider this to be really the digital version of gold or for gold to be the analogue version of the big point it's funny barry i want to get your thought about this because a lot of folks in the gold and silver community that you know the libertarians for example they are slow to pick up on this thread where do you fall on this gold has thousands of years of experience of being a known trusted store a value that's never going to change i do think because it is potentially for
a younger generation our generation's gold because it does have you know the store of value characteristics and attributes but it really is from an intrinsic perspective very valuable because this network this transaction network is going to change the way that people move money around the world is going to change the way that people think about money and from that perspective i think it actually has kind of the best of both worlds both you know money and story value right now barry silbert i saw a tweet this week and i really sparked a thought in me somebody was talking about bitcoin it terms of a the bitcoin race and kind of making it an analogy to going back to the nine hundred sixty s. if you we had the space race where sputnik from russia was out there and then suddenly america entered the space race and there is a scramble to get men in space the reason i bring this up with the reason this is interesting is because only from what i've seen recently something like two percent of the total volume around the world is u.s.
based a lot of it's china base russia base it's all outside of america there is a bit of a bit coin race going on on the regulatory front it seems like the u.s. there is still kind of looking at this thing and trying to figure out what it is but the rest of the world is already going full bore ahead your thoughts i think that's one hundred percent accurate. you know as much before as one of the early adopters of bitcoin and i pretty active angel investor i've invested in about fifteen bitcoin companies and it's been interesting to see how the narrative has changed here in the u.s. from twelve months ago to six months ago to today twelve months ago because one was described as the silk road currency it was described as a tuna tulip bubble ponzi scheme and you had some early adopters using it embracing it but not many other other individuals then about six months ago the thin send department of treasury came out and said you know what bitcoin it's legal to use is legal to own but if you're going to operate as a money transmitter then you just need to register as such and at that point in
time is when i saw the narrative start changing from this is a really bad thing to this is something that that could be good but could be bad today i think it's changing i think what's happening right now is the u.s. policymakers and regulators are realizing that companies are going to get created jobs are going to created and evasion is going to happen and i think here in the u.s. we would love to see that happen here and that we'd love to see it here and here in new york. all right but clearly bitcoin is a competitive threat to an entrenched oleg aapl a big money center banks who love their huge fees and if i can move money around the world millions of dollars using big coin for pennies per transaction that's going to huge body blow to these money center banks so we understand they have a really a bias as to why they would want bitcoin because it's a threat to their business but nevertheless i'm looking at statistics such as bitcoin volume is now approaching daily volume of pay pal and that bitcoin volume
is approaching something like fifty percent of the daily volume of money sent through western union these are norma's numbers can you speak about this barry oh yeah i mean clearly because it is very disruptive to a business like a western union or a pay pal trust me the banks will figure out a way to make money off of bitcoin and in our conversations with all the banks i think that there is some about what this could do there is certainly some concern about having to comply with rules and regulations around a c. but i think this is a global phenomenon and regardless of what the u.s. or u.s. banks think of bitcoin it's going to take off around the world and think ultimately the u.s. will fall behind if policymakers and regulators don't take a fairly kind of balance accommodative approach. now barry the big boys come around at an interesting time in history it's come out at a roughly the same time as the edward snowden n.s.a.
reveals at the same time that kim dotcom had a spectacular run in with the copyright cartel the m.p.a. his mansion in new zealand is quite a spectacular story and then big coin and all of these things have one common theme that theme being encryption now as you've stated you're a long time investor in the technology space you follow it quite clearly can you talk a little bit about how encryption itself is defining this currency why that's important and maybe why we see echoes of it in other parts of the culture that might validate big points existence bearing i think the history of decline i would break into kind of five chapters and i think we're in chapter number three right now chapter number one was early hackers people playing around the technology didn't view because as a currency or a transaction network that was the first couple years chapter number two were early adopters or early entrepreneurs angel investors like me who got involved and got
excited about everything we've talked about it's the going to the store of value the encryption the privacy all of those things the next group which really started just this year is the venture capital community who understands that the future of technology is going to be peer to peer it's going to certainly rely upon an encryption technologies so we're in the middle of that d.c. chapter right now the next chapter which i think is two thousand and fourteen is the wall street chapter so this is when wall street starts investing money into big corner that because in infrastructure are you also looking at a couple of these other alternative crypto currency the one name that pops up a lot now is like calling what do you think barry i'm an investor in ripple labs which is the company behind ripple but that's really more investments in the founding team and the technology less so the alternative currency. i am personally not that excited about the alternative currencies because you have to remember because at its core is software it's a protocol so any new advancement any new tweak that other alternative currencies
adopt which gets traction i think it's fair to say that because it can evolve over time to to adopt that characteristic as well so i'm i'm personally not very bullish on alternative currencies alternative alternative currencies right now but it's still very very early yeah i mean you could imagine a scenario like the various viet currencies today money flows in and out of these different currencies based on different macro events and if there are three or four cryptocurrency if you could see something similar happening finally barry silbert second market i want to get your take on something this is a bit more technical in nature but you are a high tech investor and somebody in silicon alley in new york very well respected high profile names only get your take on this cody wilson who is of course the guy who brought us the three d. gun is launched along with his partner the dark wallet which they see as
a conflict emerging between let's say one side are they validated coins this is an attempt by folks like matthew mellon another friend of the show to come up with a technology to validate so-called validate coins versus you know going down a more an arctic path we've only got about thirty seconds left buried you have a thought on this because it will follow the way that u.s. dollars are use there will be a well lit well regulated use and there's going to be illicit private use and i think ultimately both are appropriate and both you know it's really it's not appropriate to try to shut down one because i think you know because at its core is is an open protocol that anybody can use however they want to use it all right fantastic right barry silberman second market thanks so much for being on the cause report. and that's going to do it for this edition of the kaiser report with me. max keiser and stacy herbert i'd like to thank our guests barry silbert of second market if you'd like to get in touch with us tweet us at kaiser report at the next time i was on by you know.
if you. got no opportunity. to start to construct your own little currency. no let me. give the want to meet gangsters you don't want to be drug dealers they don't want to blow a window of time a kid came be we can see. you just me because i was and i was in the hood. like i said. i don't want to die i just really do not want to die young young.
if you're thinking about an alcoholic drink associated with russia it's probably not going to be one that springs into your head but they've been making it here on the black sea coast for more than two thousand kids and there's an industry which really can compete with the best the rest of the world has to offer i've come to meet some of the people growing the greats and to see if i can find out the secret to the perfect. you know there's one thing that i still can't understand i said that i don't want
to ruin your good mood but i have this one question what do you do it is all for you that you had everything they respect and so it is that you give them all up in the senate to go your way but what for. it was a way to inform he tried to restrain himself but look at all the first out anyway. if it really puts me off that i have such a father. it was one small but very great secret that i have to live with for his role.
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