I'm Max Keiser this is the Kaiser report hey we're going to be talking about central banks so I'm from a vomit bag this is handy anytime you take a slice you know pick one of these up so when I talk about central bank's on TV you can really set you seal it up yeah I use it a few times and then send it to the Federal Reserve Bank in Washington DC and they can use it as collateral to help finance the American economy so max I won't say anything about the vomit bag there but I do want to talk about central bank's I want to talk about in particular the ECB in the Reichsbank in the past week they both came out and they warned about housing bubbles how is in bubbles popping up everywhere but we've seen a Toronto for example we know about the 35 percent increase in house prices in the past year before I had it what is like 20 percent and 16 percent like double-digit price gains every year in these housing markets so now these central banks are warning about it but I want to look at the environment they have created in which they've terrified the ordinary person not only into stampeding into overvalued assets but also into acting irrationally so here's the first headline it's really crazy what this ECB has rocked in the land of new refugees and reverse Yankees who will get crushed at the end of the week which was last week something special happened something totally absurd but part of the new normal the average yield of euro denominated junk bonds the riskiest non investment grade corporate bonds dropped to the lowest level ever two point seven seven percent max that is junk bonds in the eurozone two point seven seven percent they're yielding that is in comparison to the US Treasury the 10-year Treasury which is considered the safest of all assets of all bonds and that is trading at two point three three percent at the same time you saw junk bonds and the euro zone trading for two point seven seven percent you know the central bank's warning of asset bubble inflation I mean it's like the IRA right theses call and say hey the bomb is going to go up at some location somewhere they would call in the bomb right so the central banks are telling you about there they're in finance terrorism they're saying we're creating these incredible bubbles we're calling it in if you want to do something to protect your lives do it now buying junk bonds at a to whatever percent yield it is is the same thing as blowing your brains out let's look at the actual chart also because you are indeed guaranteed to almost lose money because junk bonds or junk bonds they're rated junk they're junk companies they're likely to default there's a high chance of you losing everything so you know a lot of these pension funds have to hold these bonds to maturity by the way so they're the European Central Bank is buying up all the sovereign bonds they're buying up the bonds that are unlikely to completely default because they can either print money or be bailed out here these don't companies are unlikely to be bailed out and these pension funds have to hold them to maturity so they guaranteed to lose quite a lot but even just an inflation terms so the two point seven seven percent Europe this is the inflation number in the eurozone is actually positive they have positive inflation at 1.9% which if you subtract that from the two point seven seven percent that investors are getting for giving money to junk companies they're only being paid point eight seven percent to take a massive risk you know why are they just not buying US trade is it in the parlance of wall street you are picking up nickels in front of steamrollers you know the return is miniscule the risk is huge and yes pension funds are forced to buy these things because that's where banks dump their risk it's a toxic risk dump for sovereign banks for big banks they take all their garbage from their balance sheet they stick it into the firemen or the nurses or somebody else's pension fund and then they wait five or six years it goes to zero it blows up and then they blame quote the market it's like arsonists blaming the house burning down on something other than the fact that they just set it on fire so you know this is the game that's been going on for a while instead of having a normal business cycle where you we eat out the losers you weed out the poor performers the companies that are making it or the banks that are committing fraud the central banks have decided to globally coordinate their policies to keep these zombie banks afloat and to keep rolling over their non sellable debts until such time as the interest on all this debt eclipses global GDP and we're rapidly approaching that number and then you have hyperinflation fiat currency collapse and Bitcoin of course would go to much higher here there the nerve refugees are negative interest rate policy refugees these are investors that need to invest their money they have money that they have to invest these pension funds have to invest the money they have to do something with it so they're forced into these negative interest rate of bonds whatever is available that the ECB hasn't bought or in this case then they go into junk bonds in America but this is where the reverse Yankees come is I guess the there is a bigger deeper richer debt market and the Federal Reserve Bank is not buying up as much of all the the investment grade debt that the European Central Bank is because I guess there's less investment grade debt in Europe and the ECB is buying up all that so we have reverse Yankees is the second half of the story issuing junk bonds and euros it's not just the prerogative of European companies it includes issuance of junk rated US companies that seek out this cheap money reverse Yankees is these bonds are calls have become a large factor in Euro bond issuance but not only that you have it in like Pemex in Mexico as has issued one of these euro bonds so I think it's like two billion dollars in the company that's just unveiled out by the Mexican government and it's on the verge of collapse and that they operate in pesos obviously they're going to earn a lot of dollars for their oil but you know you're starting to take these currency risks because people are crazy and desperate for investment these newark refugees will buy every anything even if it's like a bizarre situation like Pemex issuing euro bonds and likely to they've already defaulted they've already gone bust the Mexican government bailed them out well let's take a bigger look at this because you met and that Americans are floating bonds in this euro environment it's a global conspiracy a genuine conspiracy where a bonds are being issued to satisfy pension buyers who by law need to put money to work in some income-producing asset and you mentioned a point eight percent return of course that is only possible to come up with that number if you understate inflation dramatically by two three four or five percentage points which in the case of America and around the world is the case because they don't include in their inflation calculations things like the cost of health care obviously if you live in America and you have Obamacare you've noticed that your health care went up 100 percent fifty percent one percent hundred twenty percent over the past year just have to go up again next year that's not included in the basket of goods and services that is used to calculate inflation so they take out everything that's going up in price they only keep stuff that's going down in price like maybe slave made goods in American prisons and based on that the deflator the inflation deflator they can say that well the inflation rate is a positive and it's low and this bond is you know yielding of 1% more and therefore we've got a positive carry and we're going to keep this Ponzi scheme going and the bankers get fees based on the size of the debts that they underwrite and until such time is the interest on this debt eclipses global GDP and then you have hyperinflation in the global financial collapse the likes of which we've never seen we did see a financial collapse in 2007 through 2009 and that was precipitated by record household debt we are back now in the past week again talking about how the central banks have caused insanity and we have crazy behavior in the US household sector the US Federal Reserve has of course been encouraging more more debt that they've achieved that household debt just surpassed the record level reached during the 2008 financial crisis during the financial crisis that was twelve point seven trillion right before and then it fell and now it's 13 trillion but on a per capita basis is less because obviously the population has grown but I want to say the irrational crazy thing that has asked is mortgage debt which was non-recourse remember the jingle mail that we had back in 2008 when everybody just walked away from this debt that they couldn't afford so it was really no big deal for the average household they could just walk away from the debt and it was up to the banks to sort it out they're the ones that took the risk of lending to these people who couldn't pay it and blah blah blah so now this time around a mortgage debt has fallen from 73 percent to 68 percent of all household that has risen is student that which you cannot walk away from because remember the federal government also under-eyes almost all of it and they can come after you for your Social Security your Medicare until you're 95 years old in the old folks home they'll still be taking money from you he ends auto loans and this is a remarkable chart because this is the auto loans outstanding and you're starting to see these debts roll over this is where the new subprime is because to get a mortgage you need almost perfect credit score to get an auto loan you didn't need any credit score these days and this is the securitized auto loans this is back during the 2008 financial crisis and it collapsed without all the outstanding auto loans right now as we said in that period 2008 the banks need to be punished for their criminal behavior in illicitly selling toxic loans to the economy causing a collapse if the bank's created that collapse and there was no reform they just they just put a block in front of subprime lending but you know if you have a say a house or building or something and you try and protect the rats or the cockroaches from getting in you just can't block one hole on the wall you know you've got to block all the walls or you've got to exterminate all the rats so all they did was they block the subprime hole and the banking rats came in through auto prime sub auto a lot of they came in through a student loan hole and then the rats are back in the house the Goldmans the JP Morgan's they're back in the house the raps are back mm-hmm and they're destroying the house once again the foundation of the house ie the economy is obviously the real economy and you need all of this money that the central banks the ECB the Reichsbank the Federal Reserve Bank the Bank of Japan the Bank of China they've created a lot of money and in order you need that circulating in order for the economy to grow and I want to turn to another headline relating to how all of their crazy shenanigans and the unrestricted banking system financial system that we have we had an opportunity Obama had an opportunity in 2008 to fix the system we have rich retirees are hoarding cash out of fear a new study by as many US retirees keep saving even after they've retired the average American over the age of 60 cut spending 2.5 percent per year or about 20 percent over a 10-year period according to analysis by the University of Michigan as a result millions of Americans are living to frugally Matt fellows United income CEO says on average and adjusting their for inflation retirees are entering their 80s richer than they were in their 60s and 70s and this is getting worse and worse and they're saying that Americans are dying with more money than they used to they analyzed the incomes of estates of people who died in 2000 and from 2000 to 2002 vs. 2010 to 2012 and they are dying with 130 percent more partly because even though they have Medicare which covers most of their health care they sell to cover like 20 30 percent and you're still getting a the the health care costs are out of control so they they're afraid to spend because they don't know how much health care bills they might be stuck with heroes héroes they're all heroes they can't have capitalism without capital anyway we got to go to the second half thanks for what I don't go away [Music] welcome back to the Kaiser report I'm Max Keiser time now to return to Craig hamkke of TF metals report.com Craig welcome back max – it's fun to speak with you I want to continue on our conversation from from before just to fill in some of the gaps for those who are just joining us we have a situation in the global economy essentially where the Japanese yen is a funding currency because the interest rates are so low it's the cheapest to borrow in the world to use those borrowed funds to buy into bonds of central banks that are holding them to keep prices keep interest rates low and as a way to make it cheaper to roll over their toxic portfolios of junk debt another debt and sovereign debt and all the garbage they've been accumulating over the past 10 years during the financial crisis post financial crisis because if those bombs were allowed to trade freely in the market then it would be obvious that these banks like citi bank hsbc goldman sachs warren buffett's corporation are all technically bankrupt and that would cause of course a seizure and credit freeze and a nuclear winter in global markets and that won't happen so this Ponzi scheme is perpetuated on the back of the Japanese yen and this is reflected in the gold prices as you pointed out and med Maeda leyland a pointed out if you take those two charts you invert the gold chart you see that these two are correlating brilliantly because and gold is the canary in the inflation goldmine if that price is allowed to uptick at all it would tear down this house of cards and so this is all quite obvious high-frequency trading is the method of choice to manipulate these markets and Craig you left us kind of on a cliffhanger there because you were talking about the VIX which is the volatility index the volatility index is another one of these inventions by banks to help manipulate markets tell us tell us more about it well and it is at the end of the day max it's about not managing the market and getting it to continue just to go straight up right as Ben Bernanke and the rest of his Fed governors and Chairman that talk about the wealth effect and how rising stock prices make everybody feel better and go out buy refrigerators and new cars and all that kind of stuff so they have this vested interest in keeping the stock market go up and in fact I would say that's like the feds primary indicator now for raising interest rates everything else going to act the US economy isn't growing there's no jobs but yet the stock market goes up so it's okay to hike raids apparently but it is all about high-frequency trading these days this idea it's kind of quaint now to think that there are actually people that are doing their homework and deciding to buy 200 shares of coca-cola because the fundamentals look good that kind of stuff and that's why the stock market's going up now nothing to do with any more 90 percent 85 percent whatever the number is a total volume on the New York Stock Exchange is just simply high-frequency trading computers just swapping positions back and forth trying to Nick each other for fractions of a penny and doing it at the speed of light and so the Fed and what these central bankers have figured out is that if you want to create this wealth effect if you want to get the stock markets to go up then you've got to get these high-frequency trading computers to do the heavy lifting for you and with all of the think of it it's like any other computer program it's all written with the same type of code and they're all taking basically the same inputs where a computer sees for you know lack of a better metaphor certain inputs doing going up going down and then those computers make decisions to buy or sell in this case stock futures or gold futures or whatever and what the Fed has figured out what the other central bankers have figured out with the biz the Bank of International Settlements has figured out is if you can affect those inputs if you can get the inputs to move you can move all of the markets a lot of folks that there say well the stock market can't be manipulated it would take trillions and trillions of dollars to actually move the stock market no it's that's that's a gross over what's implicit simplification of how it works you want to move the market just simply move those high frequency trading inputs the computers will take Gover they'll do all the heavy lifting for you the two primary inputs and moving the stock market at least here in the US or the dollar yen that we talked about before but also this Bicks the volatility index if you can get the dollar yen to go up or at the same time maybe get the VIX to go down and recently this VIX index was at the lowest level in 25 years you can get either of those two things to happen the computer will take over they'll buy stock market futures and up it'll go anybody can watch this on a daily base so I gotta do is take the time sit and watch it every day and you'll see that this is what's happening we mentioned I think was a couple of days ago this legendary investor by the name of aster Edelman who apparently the character Gordon Gekko was based on 30 years ago on the movie Wall Street Asher Edelman was on Fast Money on CNBC and he said basically what I just said is that the Pledge Protection Team is he called it the president's working group on financial markets is the ones are they're the ones and they're driving the stock market higher and ever at all roll their eyes and threw their hands in the air how can you say that you can't manipulate the stock market again because the dollar volume it would take but that's a lack of understanding of how these things work in the 21st century markets are manipulated almost every market is manipulated it's done so by the banks for the reasons that you laid out just a couple minutes ago before I went on this rant the banks right well the the dollar volume doesn't make any difference because the cost of borrowing and all of this hierarchical trading is done with borrowed money is virtually zero again getting back to the yen but you mentioned how the program trading the algorithmic trading is affected by inputs and one of those inputs are by BOTS that essentially read the financial press and this is becoming more of a factor in creating these algorithms when Janet Yellen goes on television and says we fear inflation the bots pick up on that and they know then to start selling the gold manipulation schemes to bring that price down because they have heard or read the version of Janet Yellen sang we have a fear of inflation so we're not sure we're going to raise rates so her job Johnny Allen's job is no longer to conduct monetary policy it's not really the Federal Open Market Committee it's not buying and selling it's not working with the primary dealers on Wall Street it's not about managing the money supply so much as manipulating the algorithmic trading using the bully pulpit of her position at the Federal Reserve chair to influence algorithmic trading to influence high-frequency trading and that's a primary job now is to if it looks like markets might be going in a direction that is dis favorable to Wall Street she'll get on TV that's why they're starting to do weekly press conferences that were monthly press conferences now because they are now catering to the algos they're not they're no longer observing any market fundamentals whatsoever there is no School of Economics that she follows there is no data point other than a stock market data point and so she becomes a toady a servant of these computer algorithms essentially that's our primary job it sounds like right precisely I agree 100% max no doubt about it this is why now these guys are treated as rockstars I mean I call them just goons I mean mother goes out there and she runs the show and she's got all these goons for her governors to give multiple speech I mean there was a day last week where there were seven or eight different Fed governors out giving speeches or television appearances all doing exactly what you described they're essentially trying to jawbone to get these computers to react the way that they wanted to react which is you know either they want to get the dollar to go higher they want to get the entry to bond market move in a certain way or the stock market to move a certain way and the media founds all over them and seeds this power to them I mean look at CNBC whenever there's some Fed announcement the minutes release something like that they'll have a countdown clock you know is this is the most earth-shattering development we've ever seen you know some mutterings of the Fed where they change a couple of words from the last times they put something out yeah and I'll give you one more max I don't know if people have ever you know if they pay attention to these things as it flows but at the end of every FOMC meeting the Fed puts out a statement which you know is breathlessly announced to the world by Steve Liesman and these other clowns on in financial media and then three weeks later we get the FOMC minutes the actual you know things that they talked about during that meeting what wait you can't tell me that that it takes three weeks for some you know secretary or assistant or what sonographer at the Fed to transcribe the notes from the meeting and then put out you know what the minutes are of course not what the Fed does is they put out a statement at the conclusion of the meeting then they sit back and see well let's see how is that received we get the market response that we're looking for when I was really hoping instead this would happen so then three weeks later you get the minutes and a lot of times people that observe this stuff you'll notice the minutes don't match the statement well then again that gets back to what you're saying max the Fed sits back and doesn't get the market response they want so then they adjust the minutes to match maybe what they were trying to get again I this may sound like crazy talk to people out there that think oh no that's not how the markets work let me assure you as someone that's been doing this for thirty years but now just simply observing for the last ten it's precisely how these markets and I should probably do this with my fingers how these markets work here in the 21st century right well I know for a fact I mean I I invented a technology in 1996 called the virtual specialist technology and it referenced hundreds of times by subsequent patents by banks all over the world and one of the features of that technology that patented technology is to change the ratio it required to effect the price change up or down so if there's an imbalance and buyers and sellers if it's one-to-one buyers the sellers the price is unchanged if there's a balance in favor of buyers you see an uptick if there's a balance in change sellers imbalance you see a downtick and by simply changing the ratio required to affect the price tick you have in effect created up or downward bias now that's patented technology I I know I invented it it's used by hundreds of banks it's used every day part of this whole derivatives nightmare Cantor Fitzgerald is the owner of the patent there are big players in this market manipulation their primary dealer that after 9/11 and so this clear evidence black and white you can look it up five nine five oh one seven six is the US Patent Number is a virtual specialist technology of Max Keiser it's the smoking gun it tells you how to manipulate market using high-frequency trading right well anyway so so Craig you know in Japan which is the biggest you know source of funds because of their participation in all this we see explosion you can bring it back to Bitcoin in the use of Bitcoin it's not a premium use of Bitcoin the price goes higher in Japan I don't think that's an accident right because the people there want freedom from this manipulation your thoughts yeah it's not an accurate accident anywhere max and that's what's probably most exciting about Bitcoin those of us that have and I've only owned Bitcoin since last summer I started buying it six seven hundred dollars and there's people like you that have owned it really almost since the beginning to your credit but I mean those of us that are in it think oh my gosh this has got to be about as far as it's gone right it can't be I mean the awareness the global awareness of Bitcoin anybody watching you and I today can you know shout across their back vents at their neighbor and ask him what bitcoin is and you'll get this kind of quiz you know what what a bit clatter I don't have any idea what you're talking about and the next time there's a financial crisis right when people are desperately searching for alternatives the next time there's a bunch of bank bill ends and the awareness will be raised so this idea that the Bitcoin is somehow a bubble I've seen people try to equate it to you know the tulip mania that kind of stuff all that Dale come I split I cry you got to cut it out there on the tulips thanks for bein on the show thanks max alright that's going to do it for this dish on the cons of report with V Max Keiser estate seer bird got to thank Craig hefty if TF metals report calm you can reach us on Twitter kinds of reports the next time bye y'all [Music]
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