tv Keiser Report RT July 16, 2013 3:29pm-4:01pm EDT
all creatures with a basic instinct or a sixth sense able to read the environment in which they lived and long fled elephants screamed and ran for high ground monkeys holleran climbed the trees dogs refused to join their owners for the morning swim humans on the other hand ran out into the receding sea to take photographs of the unusual event having no fricken common sense whatsoever about what was about to happen to them today we have the same sorry tale to tell the interest rate time is receding and the tsunami of bad debt is about to fall upon us and yet most market creatures appear to have no instinct for survival only a few will survive the debt tsunami we need stacy herbert to break this down
explain it more to us stacy herbert yes max the equivalent of a nine point one magnitude earthquake has struck in the debt markets somewhere and we see the signs of the receding tide. is the tsunami about to hit yes i think so the debt reckoning has arrived total debt owed now approaches sixty trillion dollars while fed wrestles with interest rate confidence game so you know the fed claimed it's going to taper market interest rates went soaring and now the fed is backing backtracking of course or saying we're not going to taper we're actually going to print to do whatever you want markets but first i want to look at this chart here the total debt owed in the blue is the rising debt load and the red sea is constantly just rising a little bit in line with inflation every year year after year is g.d.p. now the interesting thing max about looking at that chart is of course the debt started to depart from g.d.p.
once we went off the gold standard and one of the arguments that the likes of paul krugman and joe wiesenthal make against the gold standard is that well we can't expand the economy but that chart clearly showed that we have been expanding the economy it's all been fraud and now that the reckoning is coming yeah well a lot of great points there the economy has been growing a little bit since the one nine hundred seventy s. but when you look at how much debt has been accumulated it looks quite small the rate of growth as compared with the rate of debt growth the rate of debt growth is unsustainable that's the tsunami metaphor that you've got now a crash coming in the bond market interest rates by going forward and all the cost of that interest on the debt explodes in a way that causes enormous economic hardship now then another way to look at this so i can just put this in terms would be to point out that for every unit of
g.d.p. growth we've had over the past few years five years in the units of debt required to create that unit of g.d.p. growth has gone up sharply so back thirty years ago took one or two units or die. alors of debt to create a dollar of g.d.p. growth then it got up to six or seven dollars of debt required for just one dollar of g.d.p. growth so it's like a heroin addict. constantly needs more heroin or more smack more coke more drugs more oxy cotton like you know to get the same effect the same thing with this economy it's addicted to debt and now the results are predictable results are with us it's into the gutter it goes now this other chart shows fed total assets eliminations from consolidation and you see that's accelerating this is the sign of quantitative easing and there's no sign of tapering however because there's been such a violent reaction in the markets to them possibly stopping it or there are allegations of the propaganda that they were stopping it and i believe that was all about gold
but we'll get to that in a moment the quick reversal in interest rate signifies a strong reaction by the market it is fascinating to see how much outside money is now flowing back into the u.s. to purchase stocks real estate and other real tangible goods in other words global investors are now demanding payment for all that cheap credit lined out the era of cheap debt is now we versing and the piper is demanding to be paid right reading into that a little bit in other words the america's hugest creditors like china are now demanding assets in exchange for that debt a member of five or six years ago to try to buy conoco phillips the oil company but there's another that's a strategic asset we don't want china to own that now recently they've been able to buy huge number of assets and those assets purchases are growing because they realize that the debt that they hold in their books because of the secular generational rise in interest rates is now going to become worth less and less and
less and the way to keep the peace america is selling to china their income producing assets the same way the greece and ireland have sold to the troika or the private equity groups their income producing assets to. same mentality it's a financial muckraking marauding that goes on well also this whole fiasco empire run by the us has always been the argument always this is that we can run this forever because china has nowhere else to spend all the treasury bonds they buy and that inflation we can print as much as we want because that inflation will never come back here well this is exactly the scenario where people were projecting where when the inflation will happen as once they start bringing that all those trillions of dollars printed back into the u.s. economy to buy those assets and it could be one reason why you are seeing booms across america in various mortgage markets housing markets and things like that so in california for example seventy percent of chinese buyers of property there are paying all cash so here's that cash from from china coming back into the u.s.
and will it cause inflation will see above the us worker gets hit two ways first their jobs are outsourced to china over the past twenty years and now they've built up all this cash and the bond markets reversing and they're going to bring that cash back to the u.s. and they're pricing people out of being able to afford the homes so you end up with people homeless and jobless as they intended so that's the debt market and we showed you all the signs there that a tsunami in the debt markets is about to hit us that asian giant stampeding into gold while mining production is around one thousand one hundred thirty four tons so far this year gold delivery on the shanghai gold exchange is nine hundred eighteen tons this is strikingly in contrast to the gold delivery on the comix which then said only one hundred three tons year to date as the at the end of may so china is consuming every single ounce every single ton basically produced so far this year
and yet also the. dominated markets and commentators in the west focus only on what's happening in the comix and what western investors are doing with their piddling little one. one hundred three. it's a curious thing as the during the recent sell off in gold the demand for gold in asia and around the world has skyrocketed to all time highs and so when the gold bull market resumes and you see two thousand three thousand five thousand dollars an ounce for gold most of the gold will be held by middle east and other entities and you know following on this just use cafe american rights that c.m.e. reports that brinks has a seventy percent decline in register gold bullion supply and brinks is now being depleted they have gone from four hundred forty seven thousand one hundred ninety nine ounces on july third to one hundred thirty four thousand five hundred twenty five on july ninth which is a drop of three hundred twelve six hundred seventy four ounces so jesse of course
asked where is the gold going and he thinks well as it's not being reported in other comix warehouses and must be asia all that shanghai gold exchange right now not only the question is where is the gold going but where is the gold coming from so many see the price of gold dropped by ten or fifteen percent on a volume that would indicate tons more tons then is mind during the course of five or ten years then the only conclusion you can come up with is that the central banks are lending the gold out to a billion banks who are then dumping it on the open market which means that the central banks are short gold which means that as the price the spikes higher they have to go into the open market to buy gold back that's the first option or b. they've got to get together and completely recalibrate the global currency market which would only mean doing it against gold which would make the price of gold go higher also well in the tsunami where did all the bodies come from where did the tens of thousands of people who died in the tsunami come from it came from the
people who we're now looking at this curious event the same thing here is you've got where is the gold coming from it's coming from the we can't in the west who have all sorts of propagandized to to store. price signals they don't know how to read the tide going out they don't know how to read the sudden wild violent swing in interest rates and they think you know it's all going to get better somehow the quantitative easing is going to continue and they're all going to be fine while the real gold is shifting east you know what was happening that well during the seventy's when the price of gold went up seven and a percent it was against a background of rising interest rates so a lot of people say well interest rates are going up as a negative for gold of course history doesn't bear that out and i was speaking of price signals however we have talked over the years and this is i think at the end if this debt tsunami is coming this is also the end of these sort of people and this is share trading volume drops after reuters changes release schedule trading
volumes in exchange traded funds that track the s. and p. five hundred collapsed in the two second interval before the release of the thomson reuters university of michigan survey of consumers after thomson reuters this week suspended its practice of releasing the data early to clients that paid out several thousand dollars a month extra so if they can't cheat these high frequency trading firms are not participating only two thousand less than two thousand contracts traded in that to which they used to get previous information early during that time used to be tens of thousands of contracts traded this time the first time in years that they haven't received the data early they didn't participate they didn't want to there was nobody in front run they didn't have the privileged information the insider information so that there was no liquidity no value goldman shrugged. no inside information i'm not going to participate them or the movie the sting was all based on getting the race results the head of the actual race results and
making bets that were guaranteed to win or lose here thomson reuters is telegraphing the results of their market moving news ahead of the when the news is reported so that firms like allman sachs can't keep can they make money lying cheating stealing the same thing that j.p. morgan and others and so when they close that window then they simply walked away from the table and said well for not going to be able to make money cheating and we don't know how to compete anymore because we've become fat twinky over fed idiots on wall street like lloyd blankfein or jamie diamond there is going to walk away from the table never atlas shrugged that's the basis of the book if i can cheat to make money i don't want to participate i don't want to compete because essentially part of a social system in america called the federal reserve bank all right well so you see over thank you for explaining that all the guys report thank you max states you have a second half of a whole lot more. technology
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welcome back to the kaiser report on america guys are going to turn to jeff scholes of the real company jan welcome back to the kaiser blank you found me right jen let's take a look at the white hot chinese gold market tell us about your latest report we have been doing a series of reports on various exchanges around the world and we couldn't ignore what was happening in china you know i think i've been on i think three or four times now and every time we go back to chime his demand by saying in that country so we decided we'd look at the shanghai gold exchange and we took the three most liquid contracts two of which are available for next day delivery and in terms of the size of the country it's actually a lot more accessible to the average joe as it were and wiser well there's a much smaller size that is one k.g. or three k.g.
contracts and what we found was which you know has been reported in the last few weeks but what we found was that just a huge amount of delivery is being taken off of these exchange this exchange far more than we found our previous research such as on k.-max and so i think the delivery ready shay's folk a mix a was five percent of contracts we take into livery of compared to an average of between twenty five and forty percent has been taken on the shanghai goat exchange and shanghai people are buying gold and they are taking delivery of gold and they're doing so in big numbers huge numbers and you know when it's compared to mine production or even the imports that we're saying going from hong kong to china it's overtaking or at least reaching these levels on a weekly basis is what we're saying say all that physical is being pumped out of the us is just making its way to china how much. is flowing into the crowd to say it's flowing from west to east gold market well i would certainly
say you know if you're looking at the federal global production that it's nothing's meeting. anywhere any other demand anywhere else in the world so it's going to china but we've been saying they rise in imports a long time from hong kong to china say all of that gold is going into hong kong it's being shipped instantly china people take delivery of it i think in the last quarter imports from china from hong kong is up sixty eight percent you know and last time i was on the day after we chatted the gold price fell quite significantly and has fallen again since then and yet the chinese just can't get enough of it of course and it dates you know we're hearing stories of these four hundred ounce bars are going from the west being melted down into one k.g. bars in china and that is something we're going to look into and we haven't looked at it yet but i don't see how you can deny that there isn't a significant movement from west to east of gold during the second look at the numbers or took four months for western investors to sell children seventy one tons of paper gold vehicles like. that are but only two weeks for the chinese and i was
five to buy three hundred tons of physical so this is why she's being called to see the new mrs watson rb of the post world in other words during the last twenty years you heard mrs watson r b she's the prototypical japanese housewife who is swinging the global forex markets and the end carry trade all these things happening is there a new asian housewife driving global forex and gold mrs was it would seem to me what's happening well yeah i think you treated a really interesting article a couple weeks ago it's a radio show that had been going on and they had been talking about this kind of the powerful chinese house are for. here where basically playing wall street game you know they were they were for three reckon groups when it came to the gold price now whilst we are seeing premiums being reported these are heavily localized and in our research the shanghai gold exchange which is what i'm most. proud moment is
once it has got he's run a delivery the volumes that go three are nowhere. where near as high as we see on the paper gold on k.-max or the a.t.c. market in london so in terms of the gold price and he's influencing at the moment we're not able to say that china or the shanghai gold exchange are influencing events but we've definitely seeing a huge disparity between paper gold and physical gold and i think that if anyone's going to be that wedge is going to be driven between those two market it's going to be the chinese housewives or mrs warns you want to color that's going to be that the driving force between the city so disparities in these markets are characterized in two ways what is the demand in asia versus selling in the western world and the other disparity is that you've got these huge premiums in gold in other words people are paying more than what's called the spot price for gold and we're seeing those premiums escalate twenty twenty five dollars an ounce and not
just in china you know we're also hearing about vietnam and india and of course they're interesting because there are two countries that are featured heavily in the last year or so in terms of governments trying to clamp down on gold now let me interrupt you for a second ok argentina has been reported i just saw something across the tape that people are paying nineteen hundred dollars an ounce for gold almost two thousand dollars an ounce for gold all time high price for gold that you see in a well i've said it again i hear these things anecdotally i haven't looked at it but what we've got between the common themes are team argentina vietnam and india just to pull three pull three examples is it that currencies are not exactly in the strongest position at the moment and whilst vietnam and india are coming down on the gold trade and imports they're saying it's because you know this isn't an empty investment it's not doing anything they don't see this is actually this is a currency that they're wanting to hold this is gold you know this is what they want to spend their money and say in argentina way you've got inflation if she's
india where the repeat significantly weak vietnam where there's also been huge inflation issues people want to. own gold and it's not because it's just jewelry and it looks pretty it's because it's an alternative form of money but i think it's important to keep in mind that over the past couple hundred years there's been over seven hundred currencies that have been created the average lifespan is about twenty seven years is when the average life span of paper money gold however is still been money for five thousand years let's talk about silver jazz coils any sign that asian indian investors are moving into the so over bullion market there's been quite an interesting report that we can pick in the mainstream media about silver demand in india which hasn't been as clamp down on gold imports have been and it seems that the government is sort of trying to appease a jewelry supply as with silver and they are saying sitting significant time and higher premiums on silver than they were previously and so again you know we talk
about currencies lasting you know twenty seven years i say when it has an effect currencies it's also been so very it's not just about gold so again we're seeing this push three for so with demand and so it was also a particular interesting something you know a lot about and talk about in terms of cooling to month was you know the american men might have seen that declining point on the last couple of months it was phenomenal back in april when we lost and also when we lost we had a conversation about paying the eighty one silver and since then we've seen a significant rise in demand for so. this is from the real asset company so again it's something that people want to hold it's not just about gold it's not always just an alternative to gold with a new name some positive angel has issues with gold it is but people want to hold the seats together and i think this isn't something that should be ignored just because it's volatile people are still wanting to hold on to and grabbing it lost its way and one of the talks about something i read in eric sprott research you know a canadian investor in research from eric sprott it's brought money he talks about
the supply of gold and silver but in particular gold there seems to be some anomalies in that and you see the. futures exchange and these various other exchanges sells of gold's on many hundreds of tons of gold but it's hard to reconcile where the supplies coming from and he reckons that the central banks themselves are lending the gold to the bullion banks like j.p. morgan h.s.b.c. who in turn are dumping it into the physical market and then it's being snatched up by eastern investors but it leaves these central banks short gold in the bullion banks like j.p. morgan short gold and silver. so that means at some point during a price rise are going to cover correct well this is this is where everyone's saying is when when does this breaking point occur you know because this this discussion of central banks having a with that goal to be as large a bank for them it's you know has been going on for a while and in a lot of ways and i got particular time he's come a sense of is there
a breaking point other words can they simply continue to dump paper contracts on to the market ad nauseum without any reconciliation coming or is it a foregone conclusion that at some point the gold vigilantes will come in and they'll force some short covering and then you're going to see some explosive price appreciation my question is can they just sell paper gold forever and core correlation to this question would be in a rising interest rate environment doesn't that become next to impossible well exactly i think i think that has to be a breaking point that can't be because this this demand that is saying thickly in the east is increasing we're going to start seeing will people and particularly in europe will be the year is that moment demanding more growth so there's demand to be taking physical is going to be there now in terms of k.-max breaking points and gold being dumped on paper when we were looking k.-max we couldn't find at the moment that there is this breaking point going on you know because there isn't this there isn't
a significant amount of delivery being taken from comics at the moment no one's particularly worried about where that boy is backing that gold or you know if they're going to. that money back from this paper gold but in time. people are going to have to be asking questions you know and this issue about interest rates which i'm not particular person to be talking about this because there are people who are better qualified to talk about it but there is this level of anxiety that you can feel rising about what is what is the price of gold is the price of gold is the gold price because now people differentiate between the two and i think the common man who is suffering is soon going to be poking together and they can be looking for moral tenants if they're going to be going i don't want to be doing any more i'm not my same zone going to be making any more money you know there is this the most populous country in the world seem to know what they're doing with their money i should be doing that and i think there is going to become a point where they can see us in question the central banks that we see in germany getting they go back why can't make that go back and i just think it's all these tiny little pockets of information regarding are going to put a lot of pressure on this market you mentioned germany i was going to bring that up
they demanded their gold back from whence it's being stored in the us and in other places and they were told well i guess so the next seven years or something like that they will try to get their gold back to germany and meanwhile there are economy is for the first time in a while reporting some contraction yeah as well as the entire euro zone there's a lot of anxiety now in germany there's a growing movement in germany that they want their gold back because they see what's coming well the german government be forced to demand their gold in a more obstreperous manner from the americans in light of what is also developing on the macro political scene a growing scandal with america spying directly on germany now germany claims that this is not a new stasi because angela merkel says well back in the stasis we had these huge file cabinets with everyone's files but we i don't think america has those of you know i don't think she understands the internet but once she somebody explains or the internet and she realizes that germans are being spied on twenty four seven
every single german citizen is that going to put pressure on this idea you know what we need are gold and you see. well i do because like you say this is this graying level of mistrust you know not just from our own governments but now from other governments you know the most powerful government in the world the moment the us and i think the german people have been incredibly influential in getting this go back and this is all come from a campaign and from other political parties have been pushing to retrieve this gold and already if you see tippets of quotes from various members of the german government and from the biggest bank they've all said there is no reason to be holding that gold abroad unless they don't have it then the kids are because they don't have it they sold it and that's part of the reason why goldman because they don't bring it down to get it back they got to go into the open market and cause huge problems out germany may not be able to get their gold back i think venezuela got their gold they demand the gold right yeah they did a pretty good job i think you may pay and was interested in going to next time they should but all they can stick to snowdon in the gold but maybe ask it again easily
given that had already got all the gold already they could be could put them in a gold crate and send him to venezuela and nobody would notice because nobody cares about gold apparently not but the venezuelan people were cheering when chavez put it back you know they were pretty chuffed and they think it was very interesting for each of the guys they were getting chaffed they were like i don't hear either of each other but we're out of time so i just going to also have the realize the company thanks so much again for being on the kaiser report thank you for having me . all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i like to thank our guests jan scales of the real asset company if you like to get in touch tweet us at kaiser report until next time ask. some of these traditional chili lines they've been bred and developed and passed
down from generation. to the told destruction of the culture of new mexico i tell you what i mean this is not going to impact asylum in mexico whatever happens here throughout the whole world now we're eating at about six in the in the open you know all the organiser or. the engineer cops why do you think this country is full of obese and sick people because we have a crappy food system. zachary what happened there i don't know but a woman got killed. years later is when i got arrested for. for a crime i did not do. we have numerous cases where police officers lie about polygraph results. innocent people to try to the police officers don't beat people anymore i mean it just doesn't happen really. in the course of interrogation why
because there's been this is like meant no because the psychological techniques are more effective in obtaining confessions than physical abuse and they were off taking they could do what they wanted they can say what they wanted and there was no evidence of what they did or what they said. oh but i will only react to situations i have read the reports and look for those who know i will leave the stage for me to comment on your claim the muslims say it's six am a car is all you have to say ok. ok no more weasel words. when you question me prepared for a change when you and you should be ready for. freedom of speech.