RT PRESENTATION OF THIS EDITION : In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss economic insurgents and fiscal charters leaving the economy to monetary policy. In the second half, Max interviews Fran Boait of Positive Money UK about Osborne’s ‘fiscal charter,’ the rise of inequality and its causes.
This is the first time I am trying to create an english text transcript of the show. This is of course an awful and painful task but of english it can help non native english speaker to understand the full meaning of the show. I have already been talking a lot about RT show Kaiser report. This is mainly an heterodoxe view of economics. So, there you do, please enjoy this – unfortunately incomplete – transcript.
Kaiser reports are mostly informal talks and speeches about economy and finance. Do not expect to see a perfect track being followed all the time. Stacy Herbert and Max Kaiser are just chatting. Do not expect it to be very formal. But, anyway it is always interesting. A publication of the FB wall of Finance Watch AISBL triggered this publication since I was happy to see for the first a Kaiser report edition to be release as a part of daily FB publications from finance watch on their FB account.
What to say about this edition ? I don’t know yet. Please wait a little. It’s midnight and I am tired. This transcription took several hours. But it’s a nice and effective to foster your listening comprehension of a foreign language.
MAX KAISER : Hey, “the economic insurgents are coming” says the world bank. The global ponzi scheme to watch these unemployed, young people cannot buy : the law of numbers and timing. Be the winners will be overturned. Game over! to make, well of course for the new permanent schemes perhaps, or just perhaps a more honest way of running an economy who knows ? Honesty might prevail although honesty is not trading very well on the stock exchange. Stacy ?
STACY HERBERT : Well, yes, the world bank in a report regarding youth unemployment around the world does warn that economic insurgency could happen, social unrest and economic insurgency, and this comes again as a backdrop of a new credit Swiss report which says the global 1% own more than 50% of the world’s wealth. Here is that global pyramid of wealth. And all of this section at the bottom, 98% of the population, they own less than 15% of the world’s wealth, and that’s the backdrop of our global pyramid scheme which has caused the wealth to trickle up and debt to fall down.
MAX KAISER : Now, let me give you a brief history of how this all takes place and why all happen. To make the comparison to the atomic age when it was possible to split the atom: you created atomic weapon and the balance of power and the world changed and we lived in a new post nuclear age, or a nuclear age. Ok? Now in the nineteen seventies or nineteen eighties it was possible to split risk and reward with something called the option volatility formula.
“the option volatility formula” I need to stress this out of the show because I don’t know for sure but I guess that – may be – the option volatility formula is the same thing than the black scholes formula, which is described here in another post”
And last began the age of derivative contract. And the derivative contract allowed for the top 1% to siphon off cash without taking any risk. That’s how the top 1% becomes the top 1%. Not by making more but by taking less risk. They put all their financial risk into the public domain where it shows up as infrastructure collapse, or taxes, or corrupted politicians or corrupted police and the concentration of wealth that is the result of being able to borrow at 0%, grab asset without taking any risk is this. The solution is to reintroduce risk in a good way into the global markets. But that conversation is not even taking place at any level because there are no policy makers in the world who understand the history of derivatives, the option volatility formula, and the progress of the concentration of wealth at the top 1%. So, there is nobody talking about it. So I don’t see any solution happening, other that what we’re saying which is the youth of the world staging a global interaction against banking occupation. We have talk of jihabo ?? ? On the show for years. Global interaction against banking occupation and the banker use an occupied force using as I just described the modern weapons of financial terrorism as Warren Buffet calls them: derivatives.
STACY HERBERT : And of course, that can only happen post a gold standard age where at least everybody even with the most simple education can understand what the unit of wealth underlying all of it was. So, once you understood that your gold was been stolen and people can understand you needed gold that you handed over. Now it’s so fictional. Nobody understands anything but the house prices. That’s the only thing that we’ll all been staring just like our smartphones. We stare at that. We stare at the house prices. There are the two things that keep us under control and when the UK, they introduce a new thing called the fiscal charter. And the fiscal charter is very similar to what Gordon Brown introduce in 2010, which was the fiscal responsibility act. Right now what Orsbon has introduced for the UK government is that by 2020 they have to be in fiscal surplus. The government can’t run a deficit. And he called this basically an Algerian scam when Gordon Brown introduced. But now he introduced his own form of Algerian scam. The parliament has voted in favor of this. Now I wanted to talk about one of this critic of this that is very interesting in line pyramid scheme and of our debt based money, which underlies it. Against the fiscal charter (stumblingandmumbling.typepad.com), and one of the reason why they’re against the fiscal charter where we have to be in surplus and where the government therefore is cutting back on expenses is that given the inflation target, a tight fiscal policy implies a loose monetary policy (stumblingandmumbling.typepad.com). So right now, we’re in deflation here according to the bank of England. It is negative 0,1%. They need to be 2% by their own charter. So, here the government of UK, is saying fiscally, they’re going to start cutting back they’re going to spend even less but they still need a 2% inflation rate. So they gonna rely on monetary policy to create this inflation. But this policy mix has a least two possible costs. One is that it can generate financial instability as a search for yield encourages banks and investors to take extra risk. As Larry Summers has said: “Low interest rates raise asset values and drive investors to take greater risks, making bubbles more likely”. (stumblingandmumbling.typepad.com). And they said the second cost to loose monetary policy is “loose monetary policy tends to raise asset prices thus enriching asset holders who tend to be already rich. Fiscal austerity, at least in its current form, however, bears hardest upon the worse off. To this extent, the fiscal charter would increase inequality.
MAX KAISER : Yes, Osborne is a financial schizophrenic. Because he’s trying to pursue two policies that are major exclusive at the same time. He’s trying to do this charter which is deflationary as a way to create inflation. So the bank of England said “we need a 2% inflation rate to help us to pay down this debt. And so Osborne says ok we’ll create inflation through the fiscal charter which by definition is deflationary. So obviously these things are completely incapable of working together. They’re incoherent. They don’t go together.
STACY : And also this is further continuation of the privatization of government function. The more and more we see, the abdication of government. They never respond fiscally. Everything is left to the private central bank that operates on behalf of only private bankers. Private banks own the central bank. The people, we the people do not own the banks. We own the government theorically. But they always relies on the central banks and their monetary policy to try to help the peasants and their only, the way they always respond, every single time, is they give more money to the bankers hoping it trickles down. But less and less do we see it’s ever trickling down. Other than unstable pyramid schemes that over and over collapsed. There’s misallocation of capital, we’ve talked of it over and over, the 0% percent interest rate have, you know, cheap money led to the subprime crash, cheap money led to the misallocation of capital into fracking which now we see is blowing up all over in the US, companies going out of businesses, banks loose introduces huge write downs into their fracking investments, bla bla bla. It doesn’t go into anything that will build the economy sustainably over the long period.
MAX KAISER : oh franking is a great example of money printing causing deflation. Because the money printing causes a misallocation into an industry that is now collapsing. And so, That pyramid scheme in the fracking industry around the world is collapsing. How did it get started in the beginning? Because of the 0% money that was available to the frackers.
STACY : And bankers chasing yield… And investors chasing yield…
MAX KAISER : Complete misallocation. You know, he’s the Austrian school, a way of looking at things.
STACY : That’s in fact what the bank of England is saying causing the deflation right now : it’s the collapse of energy prices which is caused by this misallocation of capital.
MAX KAISER : Again, Osborne doesn’t seem to understand the basics. What does he thinks he’s trying to do? What does he thinks he’s trying to do?
STACY : What they’re trying to do is abuse the population even more. Because another point about this is what Steve Keen has always warned is that the broader, macro-economic criticism of Osborne’s new charter is that public and private debt are only two halves of the same coin. Push down on one, and, if you expect any growth in the economy at all, it will merely raise up in the other, in this case, the private debt. According to long-term Office but Budget Responsibility forecasts, falling public sector debt is likely to be mirrored by rising household debt. (From telegraph.co.uk). And rising household debt … hem, it’s already too high in the UK; it’s to high in the US, it’s too high in many parts of the world.
I can’t help thinking about this woman activist who jumped quite rapidly on Mario Draghi during a meeting of the ECB or to quantitative easing for the people, an expression used by Max Kaiser in a prior representation of the Kaiser report show.
There you find below an RT Kaiser Report show about QE for the people :
There you find an intervention of a member of the European parliament in Brussels during an ECON (Economic and Monetary affairs committee in the European parliament) asking Mario Draghi himself (head of the ECB) about QE for the people. This is a serious statement from a member of the European parliament, another way to talk this fantasy QE:
All episode of this RT show are available there on my page about bibliography and sources : https://www.rt.com/shows/keiser-report/
[…] this post, an RT Kaiser Report show, I stressed out the meaning of what Max Keiser, former broker, called the “option volatility […]