tv Keiser Report RT October 19, 2013 7:29pm-8:01pm EDT
invade iraq with everybody behind us the french refused and he was hated freight freedom fries were introduced to low. well he's now in hong kong and he's the chairman of the universal credit rating group and this is formed by de gong credit rating agency in china it's also backed by egon jones you know the very first american credit rating agency did downgrade american debt and rusts rating of russia so these guys are together and they're upset that the u.s. has wasted three extraordinary privileges as dominic to bill pound said he said these three privileges are the control of the currency we all know that they have the global reserve currency the control of the rules so they have the global department of justice essentially and they could change the rules midway through the game so they always win the third privilege control of the risk the u.s. decides what is risky and what is not that is where the money should go and where not he said it's
a way to redirect money by under valuing risk in the west and overvaluing it in countries like china india brazil or pakistan and they could do this he said because of s. and p. fitch and moody's where they overvalue u.s. debt and undervalue the rest of the world well and begin to understand the nature of this collective scam this racket because it includes the accounting firms the fund managers the hedge funds government and of course the rating agencies which we've said before are part of the corrupt part of this whole nightmare and in the case of moody's you give them money and they give you a rating and typically they downgrade foreign debt in france of u.s. debt and this is how during these periods of extreme financial terrorism the u.s. has had this extraordinary privilege of having money flowing to its aaa debt only later did we do we find out that it was not aaa was triple c. or worthless entirely and this is what we've been saying we've been advocating for this for you. years i begged china to do this i begged russia to do this so not
only is russia taken my advice and bought lots of gold but now russia is taking my advice and they're participating in this new global credit rating agency head by none other than dominic do you view pan well the important thing here is that you mentioned it would read directing wealth which is misallocating capital of course what happened over the course of the past decade or so is that with this collusion between the rating agencies the banks and the accounting firms the audit firms that they they were mis allocated all of our global capital so we have all these unsustainable bubbles backed by a dilapidating economy we don't have the economy because the capital is not flowing to places where it should be and instead is flowing to places like the u.s. where they're perhaps like one of the c.d.o. sold by goldman sachs they're going to be suddenly down create it will this sound overnight this is where the left wing gets it all wrong because they talk about redistributing wealth and in
a post capitalist world that we live in where wealth is no longer generated through jobs through capital creation wealth is generated through rejecting finances and re financialization securitization therefore when you want to talk about redistribution you must talk about redistribution of risk because the only thing that's in the global economy are quotients of risk some things are less riskier than others and by reestablishing or establishing a new credit rating agency then you'll see the redistribution of capital flowing along the channels of the security world in ways that correspond to a more cogent analysis of where the risk actually is in the global economy yet many people call it the socialization of risk and the privatization of reward they get to keep all the reward and we get to have all the risk and doubly develop than actually addresses this issue he says credit has become the key for the central nervous system of the economy those who control credit control the economy those who control. risk control the credit and those who control information control the
risk that's why credit rating agencies and american monopoly have such enormous power most put this in perspective the global g.d.p. is roughly fifty trillion dollars a global derivatives market our debt market our risk market is seven hundred trillion dollars so to get back to my discussion of how the left wing politicians completely missed the boat on this is that they focus on the fifty trillion number and try to redirect that wealth and they completely ignore the seven hundred trillion dollar number where the actual price discovery takes place where the actual changes in distribution that would happen that would cause an effect would occur and this is unfortunately i've tried to get this message through to activists to politicians to all of myriad constituents trying to explain to them how this works but they are completely resistant to this notion that somehow by really really defining risk you would change the fortunes of the ninety nine percent the bottom ninety percent i just don't understand why they're so resistant well one
hand we have this misallocation of capital which we've discussed and now on the other hand he points out that there's also been essentially outright theft using the credit rating agencies by mispricing the risk so he says cheap credit led to a bubble in private corporate and public debt the global debt disease as he called it that artificially created economic growth the buyout fever hollowed out entire industries and left even the most efficient firms more fragile and when the bubble blew up the fed flooded the market with even more liquidity so the u.s. having access to this cheap credit because of these global credit rating agencies controlled by them they were able to use cheap money to steal essentially the wealth of the rest of the world in productive capacity right i mean it's a question of collateral and to put this into a way that hopefully the left side of the political aisle will understand it is they. sume that work and capital itself is worth collateral that you can put up
and borrow against but that's not true as steve keim who's been on the show many times has pointed out that credit is created spontaneously from nothing and that the spontaneous credit creation from nothing not even a fractional reserve but zero reserve then becomes the collateral for even more credit creation and you create this global daisy chain of credit that has no collateral whatsoever but is nevertheless used by the top one percent to acquire assets who happen to be going up in value as long as they keep creating phony credit and again this is all tied to rating agencies being able to say look here's a steaming pile of dog poop and we're going to give this a aaa rating and then say using that as collateral to go to the bank and borrow twenty million dollars to buy a chateau or to borrow half a billion dollars to buy a company if they're willing to say that this steaming pile of dog poo is
a aaa rated security that i'm going to borrow against then so be it that's the new papacy in the post capitals world the vatican pope of goldman sachs j.p. morgan says this crap to be triploid does cologne will give you security here we have time to develop on saying the same thing he said the system as it exists cannot go on we cannot wait for america to reform and so as we said at the top of the show we've got to reform it ourselves and the good thing is that the new generation the generation x. and y. are ready for it y. money will soon be extinct research from the curb report finds that sixty five percent of generation xers in wires say they are ready for something new as opposed to sticking with the tried and true financial institutions and principles this shift in perception means that individuals are reinventing the financial services typically provided by banks spencer capitalists hedge funds and angel investors thereby creating new options to which consumers can safely spend borrow and manage their money they talk about peer to peer. lending they talk about fact fractional
ownership that you're seeing across the housing market for example but the most radical they point out is bit coin right we covered bitcoin first of any international news organization going back several years with john mcdonogh suggest on the show that calling is really the new reserve currency of the world that will replace everything and be the building blocks upon which you can create a well risk distributed global economy that is a meritocracy and has attributes like capitalism but not the top or c. coming in there in the kleptocracy in the congress dr c. undermining it with their central bank model of clip domania well in fact you don't need a credit rating agency a corrupt corruptible one to monitor and rate any bitcoin transactions because the community the global community does it with triple book entry accounting and they point out that one of the most radical examples of this shift in the young is the growing viability of the digital currency bitcoin the currency uses peer to peer
technology to operate with no central authority or banks transaction management and the issuing of bitcoin is carried out collectively by the network because it is also entirely open source as design is public nobody owns or controls bitcoin and everyone can take part in it so a decentralized world don't like silk road which was like an online version of wal-mart that used bitcoin the f.b.i. is always looking to steal money and that's their primary function now and they the n.s.a. as well and they use invasive and spying technologies that's the primary purpose is to steal stuff thing to do security no one has any more secure in fact that we're less secure as a result of this but they saw the so-called one hundred million dollars of the bitcoin so they went in there and they tried to steal in the great thing is that the f.b.i. and the n.s.a. are incapable of cracking the protocol to steal that money it shows finally that bitcoin is bigger than any government any central government any n.s.a. and this is why people now the big clump are. skyrocketed after the f.b.i.
did a mia culpa and said we're too stupid to figure this thing out yes but in this post america world where you know dominant development is over there in hong kong getting ready for it by do which is the biggest internet company in china which is the google of china they're now accepting bitcoin so you see that this post u.s. dollar command and control top down central bank controlling. the system could put all them x. times right again soon as you have become a aaa rating about these days you haven't read it so. i give it a oh my god. well i love dominic would say just dribbling over his kind of air all right ever thank so much for being the guys report pink humax save for the second half a whole lot more. technology
innovation. developments from around russia. the future are covered. so we leave the. oceans to. play your part of the musical. issues that no one is there with to get that you deserve answers from. politics. philippa torch is on its epic journey to such a. one hundred twenty three days. through two hundred cities of russia. relayed by fourteen thousand people or sixty thousand killing. in a record setting trip by land air sea and others face. a
welcome back to the kaiser report imax guys are time now to turn to leo johnson a green investment consultant and author of this book a business and the city of the future makes an excellent christmas gift and stocking stuffer slip thank you yet welcome with us report so this thing is not ok it's just flying off the shelf. mainly bought by my mom this is my secret fear but nobody for some reason i mean there is a kind of. yes which is the least competitive kind of room i was in we were doing very well oh actually it is business ethics and business at we're we're rocking on business ethics that's not a popular section here in the u.k. military intelligence is one of the great it's one of those great oxymorons but we're looking at we're rocking oh my god i'm not going to be let's get into the main thesis here of this fabulous book there's three possible futures johnson the proper list. and the distributed city i mean it the whole book is about this but if
you can kind of encapsulate that it matters. so you ask me to sum up my yeah in a minute two hundred fifty pages there's a period just to flush the ball a little start with the problem of what is the propolis for patroclus the city that henry ford built on iraq it was great it was the city of mass production that raised this out of poverty lifted welfare across the globe. but over time there's this quote from will rogers henry ford which says it'll take one hundred years to tell whether you helped or hurt us but you certainly didn't leave us in the same place what we've seen is this same general purpose technology of the combustion engine which changed people's lives changed the cities we lived in has started to come up with some problems ok before we go on let me just explain that one of the themes here is that what we're finding in the twenty first century
is that all these models economic models are hitting against something called what's called capacity constraints of planet earth platter as a vironment as a certain ability to sustain growth as that's the fine and it has different definitions and so some economies are aware of this some are not you're trying to offer some way through the thicket of this. move all for sitting in a little ball object or unstoppable force or this will be let's actually worse than that but it's better than that there's a triple set of problems not just the carrying capacity of a ok because as mass production has reached full deployment what's happened is the returns on capital to investors have gone down from a six point three percent in the sixty's to one point two percent now the cline in the real sector is giving us the first real problem but then the three side effects the come off about the first of course is of course the carrying capacity of the planet because there's a high carbon burden that spits out its fossil fuel group the second pathology is
social because its profits go down what is business trying to do it tries to push profits back into this is the by squeezing wages so in work poverty out of work poverty is there as contra offshoring to china the third pathologies of course what governments do is pull the lever they've got to try to bring back consumption bring back the month stimulate the economy with cheap money flooding into the system and credit fueled debt high levels of personal the high levels of national debt and then into this imbalanced unstable mix. you then have capital that says well i'm getting one point two one point three percent chance this isn't work capital and looks for whatever new routes they can find to reboost its returns so you have the sub prime so you have the misselling of p.p.i. insurance you have a series of bubbles which then of course collapse these are the ones you're characterizing the lower it's arms of capital leading to mal investment as the inevitable consequence of a certain endgame for capital and return on capital given these restraints and you're not applying any kind of contribution of some outright malfeasance now there
are some would argue that one of the reasons you have this problem and in this current capitalist world is that the main antagonist. in their heart and they're acting as bad characters there's the acting not acting well here you know people have taken great joy in beating up the bankers yes i do. have capital is to find a time that's it's magic it's to find returns the real issue is not the financial sector it's the real sector it's about whether we've go what she refers to as the general purpose technology in play that's going to usher in the next wave of growth or not so bitter also correlate you know creative destruction was one of his great themes and yet in the banking sector in the u.k. i don't see any of these banks being destroyed that have to fall into hard times because they made bad investments they the big four banks that partially nationalized or are bought out are involved all columns of skullduggery why didn't
the same jury in concept of trade destruction play out and you have new banks come along and let the bad actors the who do those names we know well why weren't they allowed under the capital system to die we're used to a room where you have a system that's both deals with the money and you know we can the still very much in place but at the same time what you're seeing is bubbling up bubbling up and by the way that you always depends on the synergy with the old you start getting wood . the old banking systems are going to be chaos it's always about the synergy between these old systems and the new that's bubbling up with the capacity to usher in a great wave of growth and let me say this we started this book in quite this bad but seriously done thing with a company who could deliver on the economic social environmental times if we go where we ended up seeing that there is such a wealth to refer stuff that's bubbling up the kill me going for a second because all right so would it be fair to characterize your work it to some
degree as a financial architect in that yearly you have you're looking at the finances in terms of their design in a kind of macro sense and seeing the inputs in the outputs and does it does it does it is it fit for purpose and so that getting back to this book which is an excellent book i say i did actually read this book so we talked about the troubles i want to talk about the main themes or the way you're kind of from a financial architect characterizing these different clusters of activity economic activity there's cyber yes which i would take it from the description is the plugged in world but please explain this a bit ok you can see this if you want to really concrete example of these three different cities in action look at nairobi today if you want three different types of city that are all springing up you've got the old and ropey which essentially off the west gate the risk is that the strategy for business is exodus let's leave this and what's happening instead to this old city that's getting inbound is a new city is being built up as replacement you've got these new smart cities in
theory with digital digital if they don't right with giant plaza a screen nothing like that you'll know dollars as it goes down as a some part of curve toward a price point called zero in other words storage processing and and c.p.u. is always going cheaper cheaper cheaper so here you have african country where they start at a place of baseline nowhere but they're meeting the a some part of curve of zero cost account way over my head with kosovo let me. put this in concrete terms ok well you know what i did learn a lot as you know in this case a bad one oh i'm tired you are as if i advocated british people you got these i pad cities ok you've got these cities which are built for obsolescence yet which i've got quite small technology which is really this mission of interconnected highly vulnerable systems which are not going to be resilient and a lot of capital is going into these new cities and the gated compounds which on can be delivering jobs for the two hundred thousand people a day who are going in a part of distress migration from the countryside to the city what we need is
a different ok so you're right where you can you feel constructive about this suburbia model when i know i feel that it's the next super prime it's not surprising it's the super product so you need a normal resilient city ok it's the technology equivalent of mom right ok if you told me i might waste of toast marks yeah and put your money or vegemite for the australian viewer if you put it in a giant bowl up in the middle does it taste good know what she's distribute this tech i'm going to get to this this mom might even lead across the slice finally the distributed setting so this is kind of getting toward the conclusion of the book i believe this is what you foresee as a model to work toward we were talking about distribution of the first half of show in terms of risk and capital and that the problem capitalism today is not wealth redistribution but risk regis tribulation that all the risk is being borne by the masses and the rewards are being accumulated by the very few it has more to do about risk management how do you see the distributed city though actually for me
the distributed cities the city that puts power back in the hands and uses technology horizontally to put power back in the mountains of people and it does in that sense both manage risk for them and create rewards so the nairobi example is very clear on this because you've got nairobi crumbling you've got the new cities the fiber because of comes a teacup etc but you've also got these innovations spaces bubbling up in nairobi sixteen of them. organizing groups who are doing things in this the i hope. what they're doing is using technology to solve the real problems so an example of this might be. where the taking of the deal on so long to mobile phone to light which is great because there's one point four billion people in the world without power but a lot of people can't afford the two hundred bucks a piece of kit costs but if you put a sim card in it and people can lease it for fifty cents a day and they can make mobile money transfers and they get access to insurance and then buy fertilizers and then make mobile payments for the footy for dollar
kickstarter agricultural pump which means they can get access to the underground water table point three times more crops incomes go up from one hundred sixty to sixty hundred dollars a head suddenly what you're doing is you're reducing the root causes of the problems that are making people flee the countryside to the city and this is a market that's a billion dollars in kenya alone the poor spend of kerosene thirty eight billion global ok i mean right here in london you have the silicon around about us is the home of the startup culture in london is this the kind of thing that's going to take london in to the twenty first century the next fifty years what do you think about the silicon roundabout culture i believe it's great i believe it's a vital part of the future ok let me jump in and ask you this why would that george osborne try to stimulate the economy not by boosting silicon roundabout or by giving broadband all over the country but by creating a housing bubble by offering this help to buy scheme which is clearly an effort to
create growth through a pumping up of an asset class housing to in a way that we just saw in american the subprime crisis in the fannie mae crisis utterly fail what what is it about this government that they don't get about your vision because i believe you're right why is are so blind about the and why is he pursuing such a dead end policy such as help bot. on the british government or the policies one of the great joys in my life is i'm not in the british who decide is it but what i do what i think is the reason why they go down as dead in why don't they see the obvious why don't they just look at this book and say lou johnson is a smart guy we want growth we don't want dead end bubbles popping in people's faces what's wrong with them and if you look at what tommy places like buffalo ny and austin texas the extraordinary stuff going on around the next wave of growth if you look at the last hundred fifty you bring a possibly yeah i mean are they going to you know they're going a are not going to go in attack they're saying i'm not big there is a wave of growth which always the caus when you have
a new image you have all this good that's going to new energy sources that get those who want to get growth growth of the debt that's all they want they said that yes they have by helped by scheme by giving mark already the guidance to create quantitative easing in interest rates down to zero zero interest rates creates mounds and mounds of debt and that's that's why not some of this train line up north create for good trains trains from two hundred years ago when i took broadband shortage could work and there is government support going for that but it's bubbling up so it's going to be driven by the people we've got to go. thanks so much for being on the kaiser report thank you mark all right that's all the time we have for this edition of the kaiser report with me max kaiser and stacy herbert i'd like to thank our guests leo johnson author of this book which is truly a good book i read this frickin book it is a good book you should buy this book it's called turnaround challenge if you like to get in touch tweet us a kaiser report if you want to order miss to leo jay mr leo jay it sounds very uptown downtown. i stand corrected and the next time this is my guys are saying by
. a member the first time i saw fox and i think a muzzle pops came into being. after i left leave the united states to live abroad when i first saw it i just thought what is this this is opinion t.v. there are no facts at all it's just opinion i personally i was really shocked at what would happen to my country because there's no news in this is news station you know if you if you click around or you go through all of the major news websites i agree i mean it tends to be the same story to a certain to a certain level or degree and not much new information and clearly you know fox is business model and they're you know that it's not a secret is to. carry a conservative or republican agenda and their major goal if you watch their show is
to really make sure obama doesn't succeed as a democrat so it's a business model they made a decision. pool. a little. bit. more. pain for the young girls cammo for the future harder. between two and three hundred million guns the united states so you can act like they're not here and keep kids away from them. the causes that if they won you know i mean this teaches them a lot of for us both ability to think through the eyes of children if we can't do it for our children for our future. home.
as you don't know if you don't care carlos responds to really. most everyone in my life that i cared about their government and then. came the skin. i was set national champion in track and field and also i was able to go and qualify for the olympic games. you know nine hundred eighty eight i started to experiment with other drugs i had lost all the financial means that i. was really on the street. black market can't. get great. street.
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