tv Keiser Report RT April 17, 2021 11:30am-12:00pm EDT
our guest say it's inflation and it's heading for hyperinflation others say it's deflation is going to have to hyper deflation or deflation and heading to hyperinflation so we saw a similar one in our early days of price report during the last financial crisis and i think it's the same sort of thing today and one of these days one of these boom bust cycles will collapse the whole system that's my opinion whether or not it's this we don't know serena look at the information everybody knows that house prices are soaring out of control in america across america it's amusing to watch your house price theoretically go up to $345000.00 every day used car prices as well for your set on a recent episode here that consumers are willing to pay the increase they he as a former auto dealer in that sector like he's never seen anything like this nor have any of his contacts and that's the most important thing according to the central bank and inflation is whether or not consumers are willing to pay those
increases and prices right they don't step away there is they keep on demanding the product even though it's going up in price and stock markets of course continue to hit a new all time high so that's the inflation side then we have the deflation side of the derivatives that there are unknown quantities out there let me explain everything. go ahead. 2008 global financial crisis had a global credit freeze global economy suffered cardiac arrest affectively died. in response that's called deflation when when you have an event where bonds for example become worthless and. you would call that deflation and in response the central banks flooded the system with. money money. and they lowered interest rates at 0 and this is caused a lot of bubbles and because we live in
a finance lies world where everything is traded everything's commodified and commodity sized and traded on exchange those bubbles can appear everywhere including food and energy occasionally so a lot of that bubble as in food prices and that goes up and people say ah look inflation better be a bubble and food within the context of a secular deflationary collapse the reason i can say that with some confidence is that we have not seen any bubble in wages. everything is subject to a bubble except wages because there is no actual all inflation as defined by an accelerated economic activity or business cycle that would precipitate things like rising interest rates rising wages etc now we have
structure all collapse we have lots of money printing to faster than the system can collapse for every trillion dollars and bonds that are a threat of collapsing the central banks will inject 5 trillion worth of money and the interest rates are near 0 and those who can the speculators and those are now the a ruling elites of the world are the speculator kens they can create bubbles it could be used cars this week it could be. food next week it could be island somewhere in the pacific the week after that those are bubbles with an a secular collapse and ultimately when the everything bubble collapses then we have the realisation that the economy died in 2008 we just haven't buried it yet right and that we inflation story is entered into in the j.p. morgan report recently where they're predicting 3 percent inflation for the next 10
years they're outside their peer group say j.p. morgan goldman sachs thinks it's not going to hit 2 percent at all over the next 10 years but they're j.p. morgan's predicting it's going to run higher and it's obviously not because of wages wages are not going up but their income is going up the ordinary americans income has gone up dramatically in the past year because of all the stimulus all of and hands on employment benefits all of that has caused their wages to go up americans unleashing pent up savings could drive up inflation and rattle parts of the market j.p. morgan's chief strategist says. aaron ward said in an online presentation this week that j.p. morgan estimates americans have built up extra savings worth around 8 percent of u.s. g.d.p. during the coded $1000.00 pandemic when their spending options have been limited ward a former top economic adviser to the u.k. finance ministry said she thought most of this would be unleashed on a spending spree when combined with joe biden's $1.00 trillion dollar stimulus bill
worth around 9 percent of g.d.p. that is likely to push inflation higher she said as you point out that's not those aren't wages that's income so income through transfer payments yes or money fronting yeah because the economy died in 2008 and it's being kept animated like you and adam made a corpse with electric shocks with money printing and this is causing bubbles so used car prices are in a bubble not because wages are growing and that there's inflation of there's g.d.p. growth and there's any hope of paying down the national debt those hopes have been dashed to stop we're going to happen but we do have these bubbles within the collapsing global economy and the acceleration of backlash. crash is increasing which is now contributing to political tensions you know you've got this new cold war situation bubbling that's because the economy died in 2008 so it just dawned on me when you said the transfer payments it could just be a situation whereby you know and you talk about the geopolitical tensions and we've
talked about the city the strap and that the conflict emerges when a rising power overtakes a declining power you know that happens to europe in the past as well so you know we could just becoming becoming more french like more and more people you know this massive deflation across europe as well there's a deflationary problem there but. because wages aren't rising wages don't go out but there's huge transfer payments from the government it seems like markets except that in some way the j.p. morgan does point out that the opening the 1st quarter it's to 2021 it's been the worst bond market since the eighty's so they they're suggesting best bond market thinking there's going to be pricing and huge inflation so. right while the bond signals on the 30 year bond clearly shows a downward trend it's currently 2 percent yield on the 30 year and there's room for it to go 2.25 percent 25 basis points so we'll see about that the next 9 months if
us is becoming more like french than this which psychologically in america you work to take time off and in france you take time off and work is something that just allows you to take more time off right it's a completely different psychology and we've lived there for many years we know how that goes in the u.s. you get 2 weeks vacation and many americans don't take the full 2 weeks in france to get 8 or 9 weeks vacation and that can be stretched out to 12 or 13 or 14 weeks of vacation and that's the psychology is that work isn't necessary evil to take time off well again the psychology changes and that's the thing that central banks in particular worry about and investors so we have as we mentioned like you have chance for payments that were huge last year and whether or not you know a bitin administration will be able to roll that back. it's own life play right once you're getting all that free money who wants to take a 20 percent cut in their pay you know their income essentially and michael berry
the famous hedge fund manager who is the subject of the movie the big shorts who shorted the housing market when they're a subprime mortgage market collapse and causing global financial crisis well member he said that we're in the beginning or the end of that why march stage like the end is the last year of hyperinflation so he's saying you know went for 9 or 10 years and you saw a lot of inflation a lot of booming stock markets and booming property markets as as the investors the psychology was changing over those 10 years getting ready for more and more inflation until it collapses their whole faith in it and vester support more money into stocks in the last 5 months than the previous 12 years combined and raw numbers 569 sites selling it to these investors but a lot of people are flush with a lot of cash but it's also that psychology that michael berry talks about of the why mark you know if you can control this inflation if you could do something if it
gets too hot you know brant bernanke it argued they could just stop it in a few minutes by raising interest rates but whether or not they could do a paul volcker sort of situation as happened in 1980 when he ratcheted up interest rates to near 20 percent will say no they can't and stocks are clearly in a bubble and as a result of all this money printing transfer payments and ease of access through apps like robin hood and others you've got folks who are getting money from the government and going right into stock market speculation and buying options and going on margin and the margin pool has never been higher not even before the crash of 1929 did you see as much margin on a percent basis then you do right now is the highest percent based margin few old stock market ever in history and again that is a function of a bubble within a collapsing system when those bubble star bursting pop pop pop pop then you have. a recipe for
a global conflict sadly because there will be no way for one country just survive without taking the resources of another country well we see that in this final headline here from bloomberg and terms of you know great depression sort of times and blizzard dreams of of negative rates of negative oil prices and and crazy stock signals price signals and stuff like that well we've always had a beggar thy neighbor everybody every nation of course tries to survive the best they can and that includes the weapon of beggaring by neighbor and if you have the u.s. dollar as a reserve currency if you get to print it then you can export inflation or important place in whichever one you choose the global middle class shrank last year for the 1st time since the 1990 s. with about 150000000 people slipping down the economic ladder so this is a new study out and shows that 150000000 people tumbled out of the middle class
right so that the rise of the bubbles like the stock market are masking the fact that the global middle class are shrinking it's neo feudalism as we have called it before is this barbell economy where it's extreme concentration of liberal wealth at the very tippy top and everyone else is essentially hand to mouth and one paycheck away or one transfer payment away from being homeless and there's absolutely nothing in the middle and that's by design by the way because all the darks love the oligarchs and you know yeah it's interesting that the lockdown of the economy is really exposing that layer of the cantillon effect i mean we do have a real economy that manufacture stuff and creates wealth but the financial eyes economy has grown bigger and bigger and starting to swamp that real economy and you really see it that's the high end exaggeration of that cantillon effect when all there is this essentially money printing for most of the world outside of you know
china. yeah the financialization component of the economy of 30 years now has grown every single year and i think it's it's well over 70 percent now if you make all the correct adjustments anyway we're going to take a break and when we come back much more coming your way. the world is driven by dream shaped by one person. who. thinks. we can ask.
but i can't. if you do. you wish but when you open your eyes to go forward from the hundreds. that you'll see just who do you. think if it was national guard. w. . bush or from the schools from. their school board of these products one of the ways of getting new pollution caused to be. shown into life would be smeared. all over the city you knew those who. oppose someone. because of the old style if you were 80.
welcome back to the kaiser report i'm max foster let's go to oust rick lot of call money dot com i'm an investor in the company out there welcome back nice to be back max let's talk about inflation deflation hyper inflation hyper deflation what's the current thinking well i think the best thing we need to do is divine inflation and deep nation inflation is simple it is an increase the request of money in circulation deflation is not so simple because it's something that very rarely happens and overall it hasn't happened in our lifetimes. what you would look at for the fashion would be a contract action in the constant money the effect on prices as it is it is an effect but the real deflation would be a contraction in the total constant money we haven't seen that i know a lot of people talk about deflation but what they're really talking about is they
see prices maybe fully. but that hasn't happened either i mean the prices were forwarding in the 1st month or so of 2020 before the fed stepped in in march march 19th cut they fed funds rate from one half down to 0 and then the following monday announced 120000000000 monthly q.e. and a few other bits and pieces so that was that was if you like for the deflationists the last deflationary time now having said that the us the majority of the money that is created is actually create by the commercial banks not the fed it's important to understand that why are the banks creating money well in the last year they haven't created that much they have created roughly 4 percent look at the figures and i can see that total bank credit up until the end of march. was standing at 15.247 trillion a year ago it was
a 14.6940 credit so what are they being doing with it that's 3 things they can do they can either pass it prices they can lend it to consumers or they can lend it to business now the only bust figure for business lending and to an extent also consumer lending will take the loans in leasing total that actually decreased from 10 trillion 681000000000. it decreased from that to 10 trillion 329000000000 us vulnerable 3 percent. so what were they doing the balance the answer basically is that they were investing in securities in other words they were puffing up the markets so we have an inflation of prices and not on fixed interest secured these markets we now also have inflation if you like or the effect
of it inflation purchasing power for the dollar in commodities and also of course krypto asses and to a lesser extent goten so so we are in inflationary times it's as simple as that it is possible that the commercial banks will reduce the bank credit but actually if you look at the much money there is in the system i mean this is just it just crazy total bank credit is standing at ever 15 trillion and one the narrow money supply is $18.00 trillion this you know as a small money in the system then there is bank credit. it's just an extraordinary situation so. it is inflationary and how it affects prices depends really on how that is translated if you like into the 2nd is it aimed at the consumer is a good good example because the. expansion of consumer spending all this week
drives up prices other things being equal what you have is a government which has drawn down on its general account to helicopter money into every bank account of everybody who has less than $100000.00 they've also increased the amount of welfare payments for the unemployed and so on and what this does is it just pushes money 1st into savings and then as the lockdown. ceases that is likely to dribble back into spending but again it's not going to be satisfied by an increase in production so you can see that again and prices will drive what will be a trip driven up so i think it's the it's the vital. helicoptering money which is probably the greatest effects on rising prices translating monetary inflation into price inflation out there if there's inflation what happens to the
price of bonds not the elf but what happens to the price of bonds tarring inflation. quite simply they fall which my follow up question would be i'm looking at the 30 year treasury bond has done nothing but go up so there's not there's something wrong with this picture well let me ask you this. it seems that in 2008 we had this huge credit phrase the global economy came to a screeching halt it was a massive effort by central planners the central bankers to refloat the economy with a massive injection of money efi out money and that's the how money a sloshing around the system in the form of bubbles we seem in commodities we see bubbles in the stock market we see bubbles across the spectrum and this
leads some to conclude that we have some inflation but the overall the arc of history from 2008 to today and going back even further is this fall in yield a rise in bond prices which is the classic view of deflation number one and number 2 if you've got this inflation how come there's no wage inflation right so there's 2 can be caters that tell me that the big picture is deflation and within that we've got bubbles from all the money that you rightly point out there's a huge there's trillions and trillions of dollars and because interest rates are at 0 percent and because there's no accountability and there's no enforcement of financial regulations that bubble of cash is moving about and it creates distortions and it creates bubbles but that's not necessarily the predominant theme
one could call inflation ouster well it goes back to what i was saying about where is the bank credit it is not going into the economy it is not going into industry it is going into norms it's interest securities on fixed interest security it's as far as the banks say the loss of course is u.s. treasury now i haven't been following the bond yields closely as you will but i. i can tell you the 10 year treasury has actually risen quite steep in recent months is a little bit off the top but we're talking about something which in february the yield was just under want the sentence now what 1.66 percent that's a reasonable rise in europe which basically means a reason for if you like in price 10 year treasury now not only that but you have to bear in mind for ownership dollars that is standing approximately $28.00
trillion dollars which has the g.d.p. all roughly 2021 trillion dollars so the foreigners are they owed an awful lot of dollars and guess where they are they are in u.s. treasuries they are in cash i think about 6 and a half trillion of that is sitting in back because it's. short term instruments such as u.s. t. bills on top of that you have got investments portfolio investments in the stock market now they are important because the 1st people who will feel sensitive to a fall in the purchasing power of the currency are foreign owners off it and they will demand a higher return in order to stay with that currency so we are likely to see increasing market pressure on the fed which means that they will be fighting to keep the short overnight rates close to 0 bond now this is important
because either the fed responds by raising rates or the dollar tax i mean it's really a binary choice is the simplest that that's true you know you've got the u.s. dollar wild reserve currency but if there was. again when you started and you said any of that now have a definition for inflation and a definition for deflation and this you know in different minds can can really mean different things clearly when you. got an economy where the employment participation rate in the us is that some of the lowest numbers we've seen in decades where the g.d.p. is suffering as a result of small to medium enterprises are going out of business the the central banks are are printing all this money to try to stimulate the economy because and they say you know they're fighting deflation now the result is with then
a crashing economy let me add let me put it say this way because we've had this conversation a few times is there another something maybe we need to consider here it's not really inflation or deflation it what it what what if this is just a massive power grab by the central banks who know that their policies are not working as as indicated and but as it is making the oligarchs at the top of all the countries they may trillions of dollars is this not alister a pretty that's why a little creative thinking here is that almost you could call it neo feudalism i think that's actually quite a good description because i mean you know all of us all serfs in this environment i mean the policy makers and the policy planners in the central banks. you know they are going on a course which basically funds the government handed riches the banks why does it enrich the banks because there is a transfer a wealth transfer for money printing from you me everybody else into the banks and
into the government and we lose sucks no this is never ever admitted by the policy planners in state wealthy do is they say we're creating a wealth effect because what they do is q.e. and the q he is targeted pension funds and insurance firms. pension funds insurance funds sell government debt treasuries to the fed and. the fed gives them cash through the banking system which puffs up say banks reserves i mean that's just a balance sheet effect and the pension funds and the insurance funds are encouraged to invest in riskier assets and so you get money getting into call protests and you get money going into. entered into the stock market into into restocks and that is the bubble. and they have the central banks are saying we are creating a wealth effect but on the other hand they're taking it away from us through
inflation and the people who are suffering of the low paid the people who contra spawned to this situation of the purchasing power of their wages and their pensions and their savings being taken away from them they can't respond but as you rightly say the people who really benefits all the people who are in the system the rich the people who have set up these enormous companies you know the bill gates this well and so on so forth so that is why you've got this divide actually happening and it's extraordinary the senate deny server to a 2nd is ag medallists there are getting somewhere finally after years doug thanks for being on this kaiser report thanks thanks very much for having me ok that's going to finish this stuff has a report with me max kaiser say sarah thank our guest house macleod until next time by all.
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course after the war but once the cold war begins. little people think that hollywood is a free place only with is strictly defined by only one side of the business and the other side is ideology. how would i define hollywood is they call it a dream manufacturer which i think's true but i think equally it's a problem and the fact. the world is driven by shaped by. the day or thinks. we dare to ask.
there is no freedom of speech even though in the european parliament anymore and i mean he claims he was silenced during a heated exchange in the european parliament for daring to question the transparency of the global chemical weapons watched over its investigation of an attack in syria we hear from the man himself. in all of those issues. and it is sure to come to.