Alasdair Macleod & Max Keiser discuss GOLD, Interest Rates – U.S. Economy Is Headed Toward Collapse



hi I max keiser this is the Kaiser report you know Inconvenient Truth time we've never been off a gold standard people say we left the gold standard but in fact central banks clear all their dealings with gold and now after this period of experimentation with a purely fiat run currency and currencies as a globe various countries are recognizing that it's all nonsense they need to go back to pure gold standardization Stacey well gold has always been there and we have not found a way to destroy and throw it into the Sun and destroy the truth-telling that it does for for the past 40 years 40 plus years we've tried to remove ourselves from a gold standard and we pretend it doesn't exist and we pretend that we're able through our central banks and our masters of our universe and the the most elite and brilliant nobel prize-winning economists like paul krugman that we know better than the markets we know better than the ordinary consumer we know better than the ordinary investor and that's failed because gold is always telling the truth and and the reason why gold works is because it's trustless you don't have to trust that somebody's printing up a whole bunch of money and this was a articulated this week by the Prime Minister of Malaysia dr. M moots currency backed by gold Prime Minister Dr Mahathir Mohamad says Malaysia is proposing a new currency based on gold as this would be more stable than the current currency trading which is manipulative he said the precious metal could be used to evaluate import and export activities among East Asian countries quote we can make settlements using that new currency using gold that currency must relate to the local currency as exchange rate and that is something that can be related to the performance of that country that way we know how much we owe and how much we have to pay the special currency of East Asia he's saying like this is a for the trade region of East Asia he wants a gold backed unit of account for trade so that we know for real what we're getting and who's cheating and who's not cheating the only way can tell if you're making any money exporting and importing is if you have a yardstick or a benchmark to apply your economics and that yardstick has always been gold we went into a period of monetization globalization dollarization after World War 2 where the u.s. convinced the world that you don't need a yardstick just take our word for it and the pie grows infinitely you get part of the infinite pie and now that's failed and countries like Malaysia China Russia and others are saying you know what I think we've got these gold you know tell us what we're making or losing in gold and Donald Trump is really pushing us hard because he's saying that the US wants to withdraw from being a globalized nation they want to be a mercantilist nation and so the striving this is putting it into fast overdrive now well it also matches with what David Graeber has said in his book the history of debt and what we do during times of distrust between individuals within a society and between within nations within the global or in the world so right now we have a system whereby people do not trust each other that's why we have the globalization that's why the US is withdrawing from a system where they feel they've been cheated even though it's a structure they created so you do see people not trusting each other nations not trusting each other and that's why you're seeing these suggestions for gold he said that the global market currently is tied to the US dollar which gives room for the currency to be manipulated quote just because that one country is affected there's infection to the other countries Malaysia was very stable way back in 1997 but because of the problems that occurred in Thailand during the Asian financial crisis they said I like the IMF and World Bank sort of people that we must peg the Malaysian currency also what happened the currency traders sold the Malaysian currency down and the value of the Malaysian currency depreciated it is not even the money that they have they never had any Malaysian currency but nevertheless they were able to sell huge quantities of Malaysian currency and when it is depressed of course they can buy and sell it at a higher price when it comes up the definition of naked short-selling he's pointing out very specifically that forex traders with unlimited lines of credit at 0% borrowing costs can sell counterfeit sale orders of any currency they want to manipulate it down versus the dollar and that's been the basis of the American Empire now for decades and these countries it's been very difficult to extricate themselves from US dollar Germany because they had been bought the bill of goods that the world is going to grow and keep growing and you want a piece of that growth now it's clear that the world is reached its growth limitations both climatologically you can't grow the economy on a globe that's literally on fire or being flooded like corn the prices are skyrocketing because corn in America is being washed out due to climate change there's a way to profit from climate change I'll give you that if you want to make money trading on human extinction by corn right okay we understand that but getting back to the dollar it's a currency that is now in a hyper inflated bubble and once it pops you'll see a gap in gold from thirteen fourteen hundred to twenty-seven twenty-eight twenty-nine hundred we're going back to this notion of D globalization we see that in every nation around the world we see this notion of D globalization except for of course China which has been the big winner from globalization and they obviously do not want to stop it every rise in power always benefits from globalization and they don't want to stop it but the Empire wants to stop it we have a global economy whereby nobody trusts each other anymore and now we see that you know this notion of fake news and this fear of fake news and the sphere of the world that we ourselves have created all around us it ultimately goes to this fake prices this fake because there's no measure of the economy and the fact the economy is the fabric of our society the fabric of our existence and we have no way of measuring it because there is no honest unit other than gold grams or Bitcoin I would say here he says in terms of remember what happened in the Malaysian in the Asian currency crisis it was these guys these forex traders could crash their economy even though they can't print Malaysian currency that they had none themselves to sell and yet they sold it off he said currency trading is not something that is healthy because it is not about the economic performance of countries but about manipulation anything that you have an oversupply will lose value anything that a shorter supply will increase in value so they sell huge quantities of money that they don't have and because the amount is so big there's depression of the value all right let's go through the looking-glass once again on forex trading and what's happened in the last 20 or 30 years there was a time when price discovery look at the price how did it get to the price it was a function of buyers and sellers more buyers price went up more sellers price went down and you looked at that price and then you would recalculate your business needs based on the price that was now being discovered by the marketplace we live in a world today now where quants pick a price first and then fill in the trades to get to that price that's a complete repudiation of free market capitalism and it's the beginning or it's the part of autocracy by megalomaniacs running these trading desks and you know listen to interesting podcast by Travis clang who was interviewed by pump recently on his podcast talking about what he call quantum quantum that when you get to a certain level and go before X it's just extremely well capitalized quants at hedge funds abusing the system to see who can abuse the system more profitably than the other guy and that's an the result of the prices that are then reported as economic reality even though the prices in this case and almost every single instance and every market around the world now are completely fake but here you have genuine societies like Malaysia it's a country filled with people and needs and wants and and real like humans living there if their currency is not backed by anything but what a computer says an algorithm if it's trading against a euro or the N or the dollar then it has real-world consequences where the people themselves are helpless however when they do do naked shorting of gold or silver for example there is an ultimate thing of delivery of physical if you start buying if you start taking gold off the market if you start taking silver off the market as when JP Morgan had a massive naked short position on silver buy one ounce of silver at ten bucks and that gives them makes it harder and harder for them to manipulate the price so here he's saying that it's like if we have a unit of account which is gold then it leaves your schemes vulnerable you can't just print up gold because we know how much there is and you have to mine it and you have to hold it and you have to verify it so here he's saying that this is a way to end those schemes and asset the Japanese yen or Chinese yuan could be used as and currency in Asia he replied if we tried to promote our own currency there will be conflict but if we have a common currency for East Asia common trading currency that is not used in each country but for the purpose of settlement trade only then there will be stability but trying to promote the yen or the yuan that is not way to go against a gold standard and that's what ran the economy most for most of recorded history it's been run on a gold standard and selling because of the hokum and PT Barnum s quality of the Federal Reserve Bank in New York to convince the world that forget gold the dollar is going to give you a magical pudding pie they were growth never ends and you too can be a Hollywood star and okay worked for a while but now it's breaking down it's breaking down as we've covered you know in Los Angeles San Francisco New York and Washington DC where prices a property can keep on going up that's how they keep you engaged in their manipulative system is that you have the asset which is the property and they can make it keep on going up in price and you feel like you're winning but the rest of the world is looking at this this is a moment just like 1971 when Charles de Gaulle and France asked for their gold back they called the bluff that the ledger they were keeping on the amount of gold and their reserves was a lie and he exposed that now there there's this guy from the Prime Minister of Malaysia saying is he saying we don't even believe that they have the fake paper I don't think dollars to back this is not even the paper there but again it's like mafia capitalism you know currency war leads a trade war at least a hot war so the US has been operating like a mafia a currency mafia and now that people are demanding actually to get their cash back like the Mafia the US will resort to violence so quickly you know Warren Buffett has been the the one of the chief beneficiaries of a u.s. dollar system he has Wells Fargo he has coca-cola and he's very against gold and Bitcoin so here's the tweet today I learned that the price of coke remained the same one nickel five cents for seventy years after it was first sold in a world where we've become accustomed to our money losing his value and being debase how is this possible and so they said on NPR this is how the interview end you might think inflation would have been a problem for coca-cola the whole time but Andrew Young says there wasn't really inflation before the 1940s yes prices would meander up sometimes sugar and the ingredients cost more but then they'd Mandor back down after the 1940s inflation is here to stay prices just keep going up what happened the u.s. went off the gold standard dollars no longer had to be backed by gold so we went off the gold centered and prices continued to climb and climb and climb and climb and climb yeah you know the minimum wage if it kept up in the same way would have had we not gone off the gold centered 71 would be almost 50 dollars an hour that would be the minimum wage ten times higher almost than it is now anyway we're gonna take a break and when we come back much more coming your way welcome back to the geyser report it is my great pleasure to bring back once again one of the biggest minds in macroeconomics the guy over there at gold money.com his name it's Alistair McLeod Alistair welcome back nice feedback max now stir the US Federal Reserve Chairman this past week said that we should get rid of the word unconventional when related to monetary policy measures like quantitative easing that is it is now conventional policy your thoughts you know anything to print money basically last refuge of the scoundrel is printing money I think I mean anything that supports the opportunity to just try and print their way out of trouble that's what he's doing I mean next we'll hear him saying mmm tea is a good idea it's not correct that when quantitative easing was introduced people said hey you're monetizing debt and debt monetization is always the recipe for hyperinflation of currency collapse every single country that's tried it has failed under a hyperinflationary and currency collapse and the response from central bankers was no that's not the case because this will only be temporary and weak as Ben Bernanke said we can reverse quantitative easing in 15 minutes if we wanted to now here we are looking at quantitative easing for there is no reversal this is massive Ponzi scheme economics and is it not simply a case of debt monetization Alistair is simply that yes I mean the idea that you can rescue the economy by debasing or deporting the currency is absolute lunacy because what you're doing is you're transferring wealth from people without the consent to the state and you know this this doesn't actually improve the economic outlook if anything it makes the outlook deteriorate there can be a temporary benefit and that's of course what they're playing on but there's nothing temporary about the policy now it is becoming permanent it's quite simple they are printing money temporary benefits are almost by definition a Ponzi scheme everyone loves it until it suddenly collapses and let me ask you this when you have eleven trillion dollars in debt around the world now with negative interest rates and that number of growing it would appear that not only our rates never ever going up again in any meaningful way and not only are rates going to be universally at zero percent but we will also have not eleven trillion and negative interest rates but probably 80 or 90 or 100 trillion at negative interest rates Allister it's getting that way isn't it because they're just print print print and part of it is to suppress the cost of borrowing and this is actually not so much to improve prospects for the private sector it's more to make government borrowing affordable that I think is the primary reason for doing QE is printing money basically said that governments can finance their deficits and in the coming years the costs of welfare states will be escalating the amount of taxes that government are collecting in real terms will be declining so how do you bridge the gap you print money that's where we are maybe you can settle an argument I've been having a Danny Blanchflower former I guess he was one of the top guys at the Bank of England he's an economist I made the point a number of years ago that this type of quantitative easing doesn't fight deflation in fact it causes deflation and by that we mean the increase in zombie debt am i not now the winner of this debate Alistair quite clearly you are brilliant answer and let's move on okay so on that note it looks like the Fed cuts yes still the markets at all-time highs of course but this doesn't let me ask you this Donald Trump loves the fact that the markets are doing great and stock markets are going higher if that were true Alistair does isn't that when you would see rates go higher higher rates indicate a booming economy not rates going down true or false Alistair well basically the devaluation of the stock market is if you like based on ultra-low interest rates and the prospect perhaps as you've just mentioned of even negative interest rates and you know on that basis your valuation for anything can be sky-high that's all it is at some stage there will be a realization in the market that the contraction of business in the real economy is actually beginning to be so serious that all these valuations are complete pie in the sky and then there will be a massive return to earth the only exception I can think of is if governments actually step in like the Japanese have and buy the market by stops and end up owning a big chunk of stocks buying anything that comes into the market they could well do that because there is a fear among central bankers and this was expressed by Carney yesterday that there is an awful lot of collateral on the banks balance sheets which is unmarketable there's a lot of collateral which is or sorry assets unlisted assets which are in public funds you know mutual funds unit trusts you know hedge funds and all the rest of it and the problem is that if those asset values decline they're going to be uncovered if the public starts selling these things they haven't got the liquidity in in the fund to pay out and we've got a particular case in this country I call Neil Woodford who's a hotshot fund manager set up his own fund management business a few years back and it's very much the darling of the industry and he's had to suspend redemptions on one of his major funds and this is creating a huge problem in my view that is not the first of these instances that we will see the global economy becomes a roach motel easy to go in but you can't get out now let's talk about asset values for a second and collateral and the remarks of Mark Carney because what we've seen over the past 30 or 40 years particularly going back to the Reagan Thatcher era of deregulation is this constant reclassification of collateral and what constitutes good collateral and the central banks whether it's basil agreement 2 or basil agreement 3 or the utterances of the Bank of International Settlements that are constantly lowering the bar what constitutes collateral it appears as though almost anything can be considered collateral at this moment and there is no good collateral anywhere by the definition of even 10 years ago and if that's true then how do we price anything if interest rates are zero and anything including you know bat Guam I forget what the word is for that off the top of my head guar a I think it's considered good collateral what kind of freaking economy is this Allister I think you've got very good point there because I mean the whole thing is just so crazy it defies analysis really and the central bank's when I've got themselves into this awful mess they've only got one weapon and that's to print money it's like constantly tell everybody and it just doesn't work and the fact is that if you print money you transfer wealth from people to the government or do the central bank or to the banks if they're creating bank credit and you're basically impoverish everybody and then you've got no economy that is the end point if you like to which we are moving well it's basically trench warfare you know you have all these central banks or dug in and instead of firing bullets all day long for no reason they just print money and the result will be the same a global catastrophe reparations will follow one one country you know China will demand reparations from the US the US will become enraged and they'll probably you know as a lot of people have said currency wars lead to trade Wars lead to hot worse so once this blows up and trying to demands reparations and the u.s. gives a short end of the stick of the new banking Versailles Agreement we're gonna have you know this is how you this is how you get fascism this is how you get political extremism Alistair your thoughts so that's absolutely right America does have a huge problem and that is that she has been financing herself by if you like running a trade deficit and reporting the dollars which have been sold to foreigners in order to finance the government foreigners buy US Treasuries that story is now coming to an end now the problem for the American government is they cannot afford that story to come to an end and I think this is why they're gunning for China so hard what they want to do is make China uninvested ball for international portfolio money so guess what the money will go into the US dollar that is the hope it's almost as if they're saying we don't care about the rest of the world it can go to hell as far as we're concerned but America will be all right as long as we get the portfolio flows now I think that's too simplistic and analysis if you like from the American end if that is what they're saying but that's certainly the impression I get from their actions okay the story with China in the US is that they have a reciprocal arrangement China has a lot of US dollars on the balance sheet to keep their currency low to export their way into a massive GDP boost and that they would not rationally dump dollars but if we're going to a hot war a trade war slash hot war and you enter into the fog of war China could irrationally dump a trillion or two trillion dollars worth of US securities and crash the dollar and they could also according to Chris Cook who's a respected energy analyst they are now the swing vote in the oil market and they have the ability to crash oil which of course would put every single American Frakker out of business in America would once again be compiled a dependent on foreign energy sources I mean that's where things can go when you have this type of environment where as you point out every single problem is met with only one response money printing-house turn on the Chinese I think I would caution and say that they are very unlikely to trigger a nasty economic situation I think what they're more likely to do is just sort of respond in kind to what the Americans do so you're not going to get an aggressive trying I believe unless they actually really do get cornered by the neocons in America and that's in that situation they may have no alternative but to walk away from the dollar completely as you rather suggest I don't think they would necessarily just go and dump dollars but I think what they would probably do is they would probably drive up the gold price that would be a far more subtle and logical thing to do and if go price went up to over two thousand two and a half thousand dollars I think that it would impact on the dollar very negatively because the dollar is the other side of that trade and not only that but I think that people wouldn't blame the Chinese for driving the price of gold up I mean they would just say well you know you've got the Chinese you've got the Russians you got the Turks you've got the Indians you've got all these people who go in and buy gold and guess what America's monetary policy has driven them to do it in even greater quantities than the available supply so I don't really think that China needs to do anything direct like dumping Treasuries I think that will be too overt it would be too aggressive and it would lose China the global support upon which she relies outside America all right fair enough Alistair thanks again for being on Kaiser report that's my pleasure and that's gonna do it for this edition of the Kaiser report with me max Dyer and Stacey are but I want to thank our guest house MacLeod of gold money.com if you want to catch us on twitter it's Kaiser report until next time bye Oh

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