tv Keiser Report RT November 13, 2019 10:00pm-10:30pm EST
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with us now because reports both discussing one buffet's 128000000000 dollars cash pile but if you're watching us in the u.k. more financial news with the boom box. i am max kaiser this is the kaiser report did you know that there is a growing global helium shortage that's right the world is running out of helium you noticed on running out of paper money right stacy indeed you're not but you know what you need the helium because of all the paper money all the printing of money because helium is not only are the stock prices and everything going up up up like it's an a helium balloon but you need the helium balloon for the celebrations everybody celebrating president trump while we've been here in new york or right now where in
brooklyn and he's tweeted stock market is record how i spend your money well you would think that he's inhaling helium and so are the various stocks that make up the s. and p. $500.00 and dow jones average but when you scratch the surface you find that there's nasty accounting fraud going on and all kinds of wall street derivatives tricks this is a real or just a fake ileum high exactly so stock markets hit all time high. and we know as we were covering a here the fed continues to intervene up to $250000000000.00 a day and the repo market so is there disaster or is there not why or why is this wall street class right across the river here why are they so coddled why are they such big babies there was actually a banker by the way on the news recently on kuperman he literally started crying on television because of elizabeth warren coming after his money.
losing. money because the billions of the stuff that goes up in the when she did this is who this guy is i would say discrete to the male gender he's a disgrace to wall street is a disgrace as an american so here we have a situation whereby the federal reserve bank of new york right here is intervening daily in the repo markets the fed in washington d.c. is also continuing some 2 we sort of measures we don't know. the stock markets are at an all time highs and yet you look at the most successful investor ever warren buffett berkshire hathaway's cash pile climbed to a record $128000000000.00 in cash after reported a 14 percent jump and profit obviously cash is dead money if it's just sitting
there in a 0 percent interest rate war old he's not putting it to use he's not able to find i guess things to invest in but also on the other hand the fed is printing so much money so fast as processor jumping so fast like it's hard to even spend so this is like that the end game of this wealth inequality there's but there's that at the bottom of it we have a black hole like the people running faster and faster just the same place and the debt keeps on catching up with them and their interest rates are too. 20 percent and they're falling sinker faster and faster and today on the other side of the balance sheet of course is the top and they're there earning so much money that they can't possibly spend it as we recently covered this $4.00 trillion dollars this is $128000000000.00 of a half ways balance sheet they can't spend it because it's just it's just sitting there doing nothing for him buffett is bored you know leon cooperman is bored you know when you play monopoly if you own a certain the number of properties there's nothing to do except wait for everyone
else to go bankrupt so they're just warren buffett or linux overmen they're just sitting in their office they're just collecting all the rent they're around ca's there and they don't build anything they don't invent anything they don't add anything to the economy they're just raunchy asr oligarchs they're kleptocrats and they're bored they're just waiting for everyone else to go bankrupt that's the only thing that's that's the only play left in the global monopoly game of which america is the boardwalk and park place certainly berkshire hathaway has missed out the stock markets on its here tear i saw somebody i think it was josh brown somebody in the investment community here in new york was saying like this is one of the most hated ever all time highs i've ever seen usually there's giant euphoria we've seen it many times people are ecstatic and it can never go down here you have a lot of very very successful big bankers very well known list of the stock market are all worried so i guess you always say stocks are climbing
a wall of worry people are generally worried but sometimes when you have a trillion dollar valuations and you have the fed having gone through the printing of at this point over the length of this bull market which started in 1982 i mean suppose they probably have printed close to $100.00 trillion dollars of cash and given it to their friends on wall street they're friends of the fed and you just enter a period of lethargy there's really literally nothing left to do there's nothing left to prove there's no corporation that. hasn't been bought out or merged or acquired in some way and it's just a matter of waiting for either a the rebels to come with the torches and the nooses or be to be carried out on a stretcher and put in a box somewhere and forgotten so here's a tweet from melton to mirrors and this is referring to the berkshire hathaway $128000000000.00 cash trial just cast 0 percent even losing because of them play ssion 3 of the 10 most valuable public companies in the world are holding more than
10 percent of their market cap as cash something something about opportunity cost of capital something she's referring to 0 hedges tweet about this and they show berkshire hathaway's pile of cash they're passing apple and google now so those are the other big giant holders of cash markets capitalism and capitalism refers to capital and capital of it's not circulating is worthless capital sitting in a bank account of berkshire hathaway is like a rotting festering pile of horse manure in lust you spread it out over the field you don't do anything productive with them a new or so warren buffet is literally sitting in a barn full of stinky manure cash holding his nose playing pivotal winks with charlie munger whatever they do over there and dying from suffocating of the stench of his own cash in the fed has intervened mostly for wall street and all of
berkshire hathaway's companies by the way all the insurance companies and all the other banks wells fargo what cobi all the stuff that collapsed during the financial collapse and as we said you know we have negative interest rates so many things can't be valued anymore so how do you as an investor even know how to allocate cash if you're a value investor like warren buffett how do as you point out warren buffett is underperforming the s. and p. underperform because in a way if you simply bought or index fund like over there bank art and with no fees he would be out. they perform himself but that because he thinks he's smart he's underperforming the s. and p. or i suggest as a call the reverse hunger games that reverse hunger games are randomly picked $10.00 to $15.00 billionaires every year and strip them of everything get him down to 0 and force him out there naked into the world of commerce and see if they can build it up from scratch again introduce risk back into the american capital system once you have a certain amount of money there's no more risk you're just clipping coupons for finity and you have no stake in the game whatsoever think warren buffett has any
risk at this point no he's just aggregating wealth risk list only that's not capitalism that's a monarchy we've got a new monarchy aristocracy in america so you introduced the reverse hunger games randomly picked leone kuperman stripped him of everything stripped him naked and force him into the inner city and say here's mark i see what you can do now well also like what i was saying as well as warren buffett calls himself a value investor that's a certain sort of investor and that just looks for value long term value they're going to hold for 5 years 10 years 15 years most investors you see on c.m. b.c. are not value investors they're tracing chasing the trends they're momentum traders and they're trading in and out they're high frequency traders most trades are from high frequency traders warren buffett is a value investor but value the way to understand value is you need time to have
some value so if time no longer has value because of all the interest rate the negative interest rates around the world it becomes very difficult to even be a value investor because all there is is the fake stuff the momentum whatever the fed is creating right go backwards in time to a time when these billionaires were just doing clipper outs and the selling a soda on the street for nickels and see how they can regain their wealth from today in a world of negative interest rates because as you point out if you were to put warren buffett. and say explain the value investing in a world of negative interest rates i will bet you any amount of cash or he could say absolutely nothing they would be mute if there's nothing to say the value to a long gone the horses jumped the fence j.p. morgan the biggest bank in america can we be in a situation where like all of these unicorns in silicon valley they were held privately they were unicorns on paper only and then they tried to bring it to
market and resell investors this time around said right we're not paying those numbers. with bitcoin it was the retail investor that got in way before bankers here we have a situation where stock markets everything seems to be booming consumer spending is up everything looks great but j.p. morgan the biggest bank in america who. if they if jamie dimon cries the fed really answers the phone and they start bailing out stuff but j.p. morgan pours $130000000000.00 of excess cash into bonds in major shift quote the bank is acting like the next recession is here everything the bank is doing points that way they're looking like they think there's a recession coming they could be wrong who knows right now they're acting like that pouring this money on the business cycle which is you 5 in a recession would be up and that's over we're now in a period where j.p. morgan and others like buffett and kuperman are calling up the drawbridge the castle is being closed everyone who is not
a billionaire right now is going to be left into the no man's land and are going to be fighting for every scrap of food you can possibly get the oligarchs and it started with 911 this culminating in the air 2020 or pulling up the drawbridge and leaving everyone else out there who's not a billionaire to fight among themselves for the remaining crumbs and kansas of course a lot of people are blaming this exact movement j.p. morgan for causing the turmoil in the repo market so that is one thing that can happen is j.p. morgan is the way all they were the london whale there the american whale there the whale in hong kong they're the whale everywhere around the world so if they pull liquidity from the market as they have a huge cash piles well they could cause everything to crash if they are the market essentially i know you have in the past have been the market and it's a bad place to be right well look in j.p. morgan again proving the point and this is so stiff it's not a. liquidity crisis of insolvency crisis j.p.
morgan is insolvent as is deutsche bank it's not a liquidity issue there are insolvent they have that are a 1000 times greater than any possibility of ever paying well exactly because the you know j.p. morgan is the largest creditor in the world they all they own us they own americans and americans are in debt and they can't pay anything so essentially that's why they're also bankrupt j.p. morgan is insolvent so if your bank is insolvent all major money center banks in the world are insolvent and all the money printing in the world is not going to solve the problem because at the end of the day we're running out of helium we'll go shop that's what donald trump says oh fabulous well don't go away stay right there coming back in a minute. you
know world's big partners. and conspirators it's time to wait to dig deeper to hit the stories that made history media refuses to tell more than ever we need to be smarter we need to stop slamming the door. and shouting past each other it's time for critical thinking it's time to fight for the middle for the truth the time is now we're watching closely watching the hawks. join me every thursday on the alex simon chill and i'll be speaking to guests of the world of politics or business i'm show business i'll see you then.
welcome back to the kaiser report i'm not at cern professor steve cain is the author of the instant classic deep funky economics he's also got a patriotic page where you basically are like you know taking lessons right from professor steve kean steve welcome back to be him why the patriots ounds call it's going very well it's a good it's may be a new public intellectual without having to worry about a single university bureaucrat or university meeting and i can research what i want to research and i can do it in europe where most of the activity in both economics and environment is happening and that's those much 2 areas a lot of really i'm very grateful my patron you know it's fantastic and lot of people sign up to your patronage for steve k. and it's a heck of a deal now tell us mr mr professor steve king the u.s. national debt is now $23.00 trillion dollars of past $22.00 trillion in february reading about
a trillion dollars every 8 or 9 months i like to move my shoulders around i say that as the chilean dollar debt dance is a sustainable what's going on here yes it is. we obsess about the level of government did we ignore private debt and as myself and michael hudson in a small band of rain to go to college and saying for a long long time government debt is not a problem private debt is the reason being that the government owns its own bank and it is creating when it's creating dead it's still tiny creating money but it spends into the into the physical economy we use government not just government created to put government mandated money as a form of commerce so we need it to be produced boss someone the government produces of the mirror image of that is the debt that it came the lights on the other hand when we borrow money if you borrow money from a bank the money they give you comes with a debt you owe back to them when the government spends money the government accumulates the debt but you get the cash so part of a functional capitalist economy is money created by the guy. and i know there's all
sorts of austrian critics of money etc etc but capitalist comus con happen without money and the government creating money creates money which the receiver gets without debt the government carries the day it doesn't matter that the government created money loses its purchasing power continuous this is one of the hassles people have if they want to think about the functions of money which will get money as a unit of account as a store of value and a means of time and we obsess about the store of value but in fact the most important function of money is that it is the means of payment now if you obsess about the store of value you worry about money losing its value of atomics the trick cetera but if money is losing its value $1.00 thing you'll do as a result of that is spend it and part of that spending is actually what's stimulates economic activity hoarding money means you get less exactly productivity out of money so a certain degree of depreciation of money over time actually encourages spending you get obsessed with about it as a store of value you don't spend you get
a lodge amount of cash and 0 economy but a lot of people critical of the fact that money is loaned into existence along these lines that the basis of capitalism should be capital and capital is something that accrues an interest that people are putting in the bank and therefore using too fractional reserve out in the case of the fractional reserve banking system so without capital you can't really have capitalism so what you're describing it doesn't sound like capitalism per se what how would you describe that system scrub of the real world i mean a lot of people say we should have gold should be money bitcoin should be money all these other alternatives money because they don't like 1st of all government being involved in creative mining and they also don't like debt being upon the government is not a factor the corporate debt the bank debt is a factor here and debt of this of the of the private sector going up is a problem. and we see that trend exacerbating all over the world to this day in the
sense we know check in place for that is the dangerous one because it's a level of private which is partly private gets stimulates the economy because when you borrow money you don't borrow for the shia pleasure of being in debt you borrow to spend and that spending should be the top of capital spending no talking about where you borrow the money to establish a business to make goods and services to sulfa money and that's what gives you a functioning circulating capitalist economy instead what we've got now is bankers lending money for us to borrow and go and buy an assett and drive its process up and speculate on the process sold and that gives us a form of financial capital rather than a healthy industrial capitalism that i want to get back to and that process of of borrowing money to gamble on asset processes has driven us into the hospital of private debt in history so you whining about 22 trillion with those with the government it but i think the level of of profit didn't america is not to the
dead of the nonfinancial american economy households and industrial companies to the financial sector is 150 percent of g.d.p. which means it's about 40 trillion dollars so the real worry is level of private debt that's ignored by conventional economists and that's what actually causes the crossties of capitalism. and to manage this pile of debt there's an urgency to keep rates low to go to the 0 bound and in some places in the world to go negative now you're a guy who's in a book called the banking economics and you're familiar with the work of dr michael hudson another's and the point is that not since the bronze age to today have we ever seen an economy where they've entered is negative interest rates never happened at it it's like negative interest it's being generally applied on the deposits that the drop its banks have with the central bank and this is the 1st level of a malfunctioning system you get that you. point there now we actually have
a negative mortgage rights in denmark which often absolutely absurd so were triggered this need for these negative rates is that this service the ever piling in of escalating dial up pile of debt was the way to commit what would be accounting fraud and negative interest rates rain that time has no value of effect time as a less than 0 value now i mean unless we're going backwards in time this is just counted in a surprise it is a sign of a crazy dysfunctional system and it's happened because fundamentally the economists who are running central banks and making economic policy don't regard profit as mattering at all i think level of private debt has no real impact on the macro economy so they click the dot of what they nor it was people like myself in model house and say private it actually is part of demand part of aggregate demand when you borrow money you borrow it to spend so that credit actually increases aggregate demand the mainstream economists think that you borrow money off another person who's also a non-bank and therefore that person spending power goes down yours goes up when
europe the opposite happens overall they don't think the level of private debt matters they're wrong because when you borrow money from a bank it's not borrowing from somebody else's bank account it's creating debt on one side which pushes up the bank's assets creating money on the other which produces a billet is which is your deposit account you then spend that money so if credit is positive it boost demand it creative negative it reduces demand and that's been driving the actual malfunctioning of the american economy for the last 30 is completely ignored by mainstream economists so we want to get epic to the level it was back in the fifty's and sixty's when profit was about 40 percent to 70 percent of g.d.p. that's sustainable because we ignored it it's now it reached 170 percent during the financial cross now 150 percent we're living in a credit stagnation will have too much profit right anyone what this us a call minsky moment where the debt is used to finance these assets that are used to collapse collateral to increase the debt by. and it goes on until it collapses
just giant ponzi scheme what do you make of the fact that there is close to 5 trillion dollars held by you know one percent of their call that are yelling basically 0 it's money that is dead money it's not circulating at all there's a sign that there needs to be a continuation bailing out of the economy with these low rates these artificially low rates these negative rates and yet that money is just sitting collecting dust it's not circulating $5.00 trillion dollars worth in the u.s. economy. why is that is how come it's not why is the velocity of money which is you know the bank lending so to bank based on the reserves of the other bank except for i that's a it's a chart you can look it up velocity of money itself of business activity it's at record lows why why is that. because people are carrying so much individual dead your reaction to that level of debt is still going to spend less and save money so that i can pay my debt off but if you individual level you can save by ending the
spending list and you want but at the aggregate level your spending is somebody else's income so if you put in for a 2nd the 4.7 trillion it would create more economic activity in the hands of the bottom 50 percent of the 2 trillion in wealth that would be spent the multiplier effect would see the stock price of the top one percent probably increase by more than that what 4.7 percent other words if i may actually get a money were greedy and you wanted to get your stock prices go higher you a lot you give that 4.7 trillion as a helicopter money to the bottom part of the economy and then go out and spend it as they did you because i'm not going to go buy a picasso for 200000000 yeah they're going to buy maybe a house with their money that they get and they have to put furniture in that house and they have to the other you know buy food for that house etc household formation which is at a record low and at a low it would increase if mean that makes the law in the sense to have dead money like that it is dead money because money should be turning over the course economic activity as your site. but a year or so roughly 2 times
a year so one trillion dollars would cause 2 trillion dollars worth of economic activity it rose rapidly during the high inflation period 3 and a half times so one trillion quizzers do interior apathy it's u.p.d. because we're actually ignored the fact that it's now turning about one point want to $1.00 so one trillion dollars worth of cash is only causing about $1.00 trillion dollars worth of g.d.p. it's because people are worried about the debt level they have if your juice the debt level and all that money also back into the hands of the poor it would be turning of a trois she year out than once and would have tossed over all of the economic i so there's a write off the debt like student debt $1.00 trillion i believe or want to play $1.00 trillion dollars you can either strike that off 0 or you could dump $4.00 trillion or $4.00 trillion in cash into the economy either one stimulates the economy and has no impact whatsoever on any corporation's bottom line because the corporation would actually get more cash coming in through the door right to fire you to think at the aggregate level we if we extrapolate from
now individual situation to say that should be gov it is only ask you this in america there isn't we don't have health care universal health because the racism it's always been the case that the white population doesn't want the black population to have good health care that's why we don't have health care in america that's the unstated truth but as the truth is this true process possibly in economics we could release a $4.00 trillion or just under 5 trillion dollars of cash into the market but it will lot of a guy in the black population and the racism the hardened cultural institutionalized racism would be would want a lot of that to happen here from outside of the u.s. you observe these things as an outsider your thoughts on that no because it within in your opinion you wouldn't have the same problems and it does have the same problems the civil same obsession about saving money at the aggregate level but you'll saving at the aggregate level actually reduces income at the at the individual level reduces income at the aggregate level and that's that's the fallacy of composition with the. spoke about back in the not in thirty's and people
slipping about the heads around it i didn't look at the mission or in the plumbing of the markets in other words in the repo market the overnight lending rate is busted and if you got 10 percent on the embassy ever seen it distorted before it is this a problem you have is happened a few times before but what's actually happened is that what used to be what's called a chordal system book or color system for the right of interest that the central federal reserve said so they have a small amount of reserves existing and then they simply supplies musher was necessary to keep the right we know point 25 percent of the the sought of the interest right they've got when you had the financial process been enki increased the amount of money reserve money in the economy from trivial levels to 2 trillion $30.00 with our i got a car up there steve came professor steve came of the instant classic the punk economics also patriotic is available for you check it out thanks for being on the kaiser report good to be the next and thank you for being on the kaiser report audience until next time max kaiser stacy herbert saying bael.
the head off ice is decapitated but don't get our ideology. regrouping they have sleeping. not on the in iraq but in syria to so we have to did with this problem back to the fall to our long term as was bin ladin wasn't a copy but. it was all proved so i think the logic applied to this terrorist organization which have a global og to the. cloud .