Alright y'all, Anti-War Radio, Chaos 95.9 in Austin, Texas.
Of course, we're streaming live worldwide on the internet at chaosradioaustin.org, and this show every day at antiwar.com slash radio, and I'm happy to welcome to the show Max Keiser, the infamous Max Keiser, I should probably say.
His website is maxkeiser.com, that's K-E-I-S-E-R, and you can find him on Russia Today, he's got a show on Russia Today, and on BBC, and on Iranian Press TV as well, and you can sign up for all his podcasts, and he's a filmmaker, and a broadcaster, a former stockbroker, and options trader.
The show is called On The Edge on Press TV.
Welcome to the show, Max, how are you doing?
Very good, thanks for having me on.
Well, I really appreciate you joining us today.
I'm a big fan of the show, and I've learned a lot from you, and I've laughed my ass off watching too, so I really appreciate it.
Let me start off with this, you're constantly talking about the value of the dollar in the minds of various holders of dollars around the world, and it seems like most important among those would be the Chinese Politburo, and I wonder how long you think they'll continue financing an American war on their western border?
Well, you know, it's all about business, and right now there's a bit of a symbiotic relationship between China and the U.S. in terms of the currency, because the U.S. buys Chinese products, and China gets to build up a huge dollar reserve in the bank to protect themselves against, if in fact, the IMF should come along and start imposing austerity measures, and they've got some dollars to fight the IMF with.
This is something that the Asian countries learned after the crisis in the late 90s.
A lot of these Asian countries looked at what the IMF did in places like Thailand, and they started to build up these huge dollar reserves as a cushion to fight the financial wars that are being fought now.
So the World War III has started, basically, and it's being fought in the currency pits, and people need dollar reserves because that's the weapon of choice right now, but that should be changing because now the IMF is sensing that they're going to lose their power since so many people have so many dollars.
They're going to introduce the special drawing rights, so this would be the new, it's an arms race, if you will, so this is a new weapon for the colonialists.
It will be the special drawing rights.
Now, when you talk about these austerity measures, if I read you right, what you're saying is the U.S. prefers to have countries go bankrupt and then take their stuff, and what they've learned is to build up a big dollar reserve so that when times are bad, it's not necessary, at least as quickly for them to be forced to give up all their actual tangible property to the IMF gangster types.
Well, yeah, China has a way to fight back.
In other words, anytime the U.S. tries to muscle China into doing something that they don't want to do, they can just threaten to sell their huge dollar holdings, which would crush the U.S. bond market, so it gives them a weapon.
Right, well, does that mean they have to put up with a war on their western border indefinitely, then?
Well, as long as it's economically viable, as long as the money is flowing, they're profiteers.
They're war profiteers.
They're all war profiteers.
Nobody cares, ultimately, at the end of the day, about other than making a maximum amount of profit.
Utility value in the short term is what everyone is concerned with, so that's really all they care about, isn't it?
I mean, there's no ideology.
Well, there's the short term and the long term, I guess, and I've heard you talk a lot about the idea that the Russians and the Chinese, the Indians, everybody else have already decided that the day of the dollar is over, so we're just waiting for that to kick in.
Yeah, well, I mean, right now there's relative strength in the dollar because the euro is so weak because it's been disintegrated, so the IMF have successfully crushed the euro.
Now, it's interesting that the Chinese, just in the past day or so, are actually devaluing their own currency to buy euros because they need the euro to be fairly strong because the euro is actually their biggest export market.
So again, it's a matter of currency wars, that the war is fought with currency, and there's nobody with any wages, nobody has jobs, nobody has benefits, it's basically just everyone is going to be working for peanuts while these guys at the various exchanges are fighting these currency wars.
Well, you know, I saw an interview the other day with an economist that said that the whole Greek catastrophe going on there is actually part of an Anglo-American war against the eurozone, and that the president of Greece or the prime minister or whatever, the finance ministers over there, are in the pocket of Goldman Sachs, and that they've deliberately overextended the debt of Greece in this manner in order to weaken Germany?
Well, the US didn't like the idea of a euro to be a competing currency to the US dollar, and so they never liked the idea of having a competing world reserve currency because there's a huge benefit to having a world reserve currency.
So the first opportunity that arose, they took it to crush the weakest link in the euro, which is Greece and Ireland, of course, and they can do this with impunity because, as you say, they've got people inside the eurozone who are working with them.
Back in 2002, when Greece was, when they were entering the euro, of course, Goldman Sachs advised them, and Goldman Sachs engineered some accounting fraud that allowed Greece to put enormous debts off their books, which made them eligible to be part of the euro.
So 10 years later, of course, those debts came back to haunt them, and now they're dismantling the euro because the US doesn't want a competing reserve currency.
Again, it goes back to currency wars.
Yeah.
So, I mean, that really is right then, that basically the Greek debt bomb is some kind of inside job manufactured by the Americans.
Well, yeah, there's a group of folks, you know, in different countries around the world who want to have the ability to just maintain this world reserve currency and all the benefits that come with it, and this is what they enjoy doing.
This is how they collect their rent.
They are rent-seeking monopolists, and if everyone asks, you know, if Japan wants to buy oil, they have to buy dollars first.
You know, if any country in the world wants to buy oil, they have to buy dollars first because oil is priced in dollars.
So every country in the world must maintain dollar reserves, and the US, anytime they run a deficit, they just write a check that nobody, that they don't, never intend to cash, to pay out, and the rest of the world has to keep taking these dollars because all the essential commodities are priced in dollars.
So it's a great racket.
It's been working since World War II, at the end of World War II, the Brenton Woods Agreement, and it's the way the US makes a tremendous amount of income.
Well, you know, my friend Charles Goyette says that really especially, well, he would say since the end of World War II as well, I think, but especially he would emphasize since 71 and the end of the breaking down of the first Brenton Woods or second or whichever it was, and the abandonment of the gold standard altogether, that it's basically been one big bubble since then, and if you look at the different bubbles that have popped through the years, that they're still kind of smaller bubbles on the back of this one giant fake prosperity, and I kind of wonder whether you really agree with that, and if there was real deflation to prices at their natural levels, and they stopped just creating all this new money to make whole, all the banks who've made all their bad bets, how many bazillions of dollars disappearing are we talking about?
I mean, how big of a shift would, are real prices from where we are now, I guess?
Well, the global market and derivatives right now is 700 trillion dollars.
The global GDP, all the GDP of every nation put together is about 60 trillion.
Okay, but what exactly does that mean, the derivatives markets?
I mean, I think we all know that none of us really know what 70 trillion or 700, how many trillion?
700 trillion dollars.
700 trillion, so that's, if we were talking...
Almost a quadrillion, almost a quadrillion in derivatives.
Yeah, so if we were talking light minutes, that would be to back to the Big Bang or something.
Yeah, exactly.
So if you were to unwind all of the phony derivative products and get back to, let's say, a gold standard, then you're talking about a 98% haircut.
So what does that mean, half the people on earth starve to death, if you had that kind of deflation, or what?
Well, no, I mean, you'd go back to a barter system.
You know, people would be bartering for real goods and services.
You know, it would be a sustainable system and ecologically preferable.
The whole idea of a fiat currency itself is unsustainable.
It always has been.
It doesn't make any sense.
It just, it rewards misallocation of wealth, and it rewards moral hazard.
Well, I guess what I'm getting at there is that that's the fear, right?
Is that even people who agree with your premise that, you know, what we have, the system we have is very problematic.
It's transitioning from here to there, and trusting in...
It's going to transition from here to there because of two scenarios, which are both inescapably the situation.
Number one is every dollar of debt now increases GDP by only 10 cents.
Going back 20 or 30 years, for every dollar in debt increased, GDP would be increased by roughly $1.
So you got a one-for-one bang for your debt buck, but now it's less than 10 cents and falling rapidly.
So it's like giving a blood transfusion to a corpse.
You can continue to pump blood into a corpse, but it's not going to help it.
It's not going to get up and start walking around.
So the ability to manufacture GDP growth through debt creation is now coming to a rapid close, which means massive global debt deflation, simultaneous, and that's one inescapable track.
The other inescapable track is that the ecology, which is ultimately the backstop to the global economy, is collapsing also.
So these two things are collapsing in real time.
They're happening right now, and they both mean that you have a secession of the global economic system as we've known it.
Well, now, what effect is that going to have on all the hyperinflation we seem to have coming up from all the new money that they've created?
I guess what you're saying is that the corpse is too dead.
We don't have hyperinflation.
We have deflation, and we have the black market.
The oil is a black market.
Food is a black market.
And then we have the deflation of debt deflation.
What do you mean that oil and food are black markets?
Those prices are rigged.
Oil prices are rigged.
It's a manufactured price against the backdrop of deflation.
Well, but I mean, if there's a bunch of bad debts that are being liquidated and you have deflation like that, but you still have the Federal Reserve printing more and more money all the time.
They can print money all day.
It's not circulating.
The money isn't circulating.
It's dead.
The money velocity number is zero.
There's no money circulating.
They can print money all day long.
It's not circulating.
It's not going anywhere.
The banks aren't lending because there's a deflationary debt collapse.
Nobody's borrowing money because it's a global depression.
It's deflation.
Now, on the other side of the coin, you have prices of commodities going up, but that's purely rigged.
That's a rigged market.
That's not a natural market.
Bullshit market.
Well, yeah, and it's the result of the depreciation of the currency, too.
But what about the 1970s, where you had stagflation, where you had deflation and all the bad debts being liquidated for despite all the stimulus and all the deficit spending?
And so you had high inflation and high unemployment at the same time, right?
Yeah, well, you had Paul Volcker who took interest rates near 20 percent.
Here you've got no central banker in the world doing anything to defend their currency.
They're all letting their currencies get crushed.
Pardon me.
My problem is, as an economist, I'm a great anti-war guy.
So forgive me for not constructing my questions very well here.
I'm trying.
But I won't talk about the Volcker thing, but that's the next step.
I'm kind of talking about the parallel to the raising interest rates to defend the currency.
That's how you ended up with this stagflation number, because you had, on one hand, currencies rising, which drew capital into fixed income products.
But that is not the situation now.
Now you've got interest rates at zero.
Zero interest rate policy, ZERP, is being followed by every bank in the world.
And you've got no, which has led to a different situation than the stagflation of the 70s.
You've got a massive deflationary debt spiral.
I guess I'm confused about the 70s.
I was just a little kid.
But the way I learned it was that Volcker raising the interest rates was his attempt to defeat, not the unemployment, but the inflation that was part of the stagflation.
But you're saying the stagflation was from the Volcker policy.
And I got my terminology and my cause and effect all screwed up.
You have somebody who's fighting inflation by raising interest rates, which contributed to this mixed stagflation economy.
Currently, you've got nobody.
The price appreciation that we see is not due to the inflationary factors that we saw in the 70s.
You're seeing them because, on the commodity levels and the futures exchanges, it's pure price rigging.
There's no underlying economic factor that's contributing to those prices moving.
It's not economics.
It's pure price rigging.
It's a black market.
It's not driven by underlying economic forces.
Well, you know, I was watching the Dylan Radigan show the other day, and he was interviewing this guy who wrote a book about the failure of all the regulators to do their job in the lead up to the giant crash and everything.
And he went down this laundry list of the reserve ratios being cut to a million to one or whatever, and basically all the caps on all the fraud being completely lifted.
And I got to wonder at this point, how much of this is stupidity and how much of this is the plan?
It almost seems like some of these guys are rich enough and powerful enough that they know that the whole game, not just the last 10 years or something, the whole game is rigged, and they're just completely sucking all the last blood out of the whole society before they leave it dead.
Well, I mean, yeah, that's true because the aristocrats never liked the idea of having a middle class, you know, the feudal model that existed before the Enlightenment and the aristocrats that ruled between lords and serfs.
They want to get back to that because the whole idea of an Enlightenment, of having a middle class, of having a, you know, any kind of economy, a meritocracy in any way, is really distasteful to the aristocrats.
And they want to go back to a kleptocracy, which they had in the Middle Ages, and this is where we're going.
We're going back to lords and serfs.
And it'll be very, very difficult for anyone who's not born to the manner born to rise above the peasant class.
America is becoming a peasant country, you know.
We're seeing it happen right now, and it's happening all over the world, you know.
Wage conflation means that people in America are going to be making about the same as the people in China.
That's a huge peasant country.
It's becoming a peasant country.
This is one of the reasons I don't live there, because it's so hard to live in a country that's being turned into a peasant country, and then everyone is basically working hard to defend the lords and the nobles who are transforming their lives into a peasant country.
You know, they've got a collective case of Stockholm Syndrome over there.
They're defending their captors, in a way, that you can't even... you just can't.
I couldn't possibly live there, because it's so... it's like living in a psycho ward.
So, in a sense, like, say, even just since the crisis, but even going back, these giant stock market bubbles, in a way, have really just been a way to get all of the middle class regular American people to put all of their money, all their savings, because they don't have a pension, all they got is a 401k or something.
They put everything they got into some mutual fund, they put it all in the market, and basically these guys, the rich, powerful ones, they get to run off with all the money when the whole thing crashes, and they just keep using the people to prop up their bubble higher.
Oh, look, the stock market's going up today, and all the regular day trader guys get back in the thing, right?
Prop the prices back up for them.
The Ponzi schemes in the stock markets have been around a long time.
I think in the last 10 years what we've seen is the way that the middle class was sucked into borrowing against their home, and then home prices crashed.
So they used the home through collateralized debt obligations and collateralized mortgage obligations.
They got people to believe that their homes were worth more than they really were.
And then, of course, when you pull the rug out from underneath them and people lose their home, then they're out in the street begging, and they've entered the peasant class.
That's clearly by design.
And of course, they blame the peasants for borrowing the money against their home, even though the people doing the lending never had even one second of risk in terms of making that loan, because they immediately sell it into the wholesale market, and they take it off their balance sheet, and it gives them the wherewithal to make more fraudulent loans.
So they never took even a second of risk.
All the risk was put into the hands of the peasants who now are losing their homes.
Foreclosure rates are now spiking up again.
The number of people losing their homes is spiking up again.
So that was by design, clearly.
Absolutely.
It's funny, too, though, is if you look at Congress, for example, they really don't seem to know anything about it or have any interest in it.
I asked Ron Paul one time, hey, you've had, what, seven years in a row here trying to teach Austrian business cycle theory to Barney Frank.
Is it just not taking, or what?
And that's what he said.
These guys are idiots.
They're blind to fraud.
Yeah, they're stupid when it's in their interest to be stupid.
They're all making a lot of money.
They're the aristocrats.
I mean, you can't say they're stupid.
I mean, they're all banking huge bucks.
They're all aristocrats, and it's a corrupt system.
You know, America today is like Argentina, you know, 2000, 2001.
The corruption spread from the banking system to the Supreme Court, to the judiciary, to the political class, to the corporate class.
The entire system became massively corrupt.
And in the U.S., this is what's happening.
The judiciary system, the justice system, all the institutions are becoming massively corrupt.
And the central bank, of course, is becoming, is massively corrupt.
So this is, of course, you can't say they're stupid.
I mean, it's like saying a famous bank robber who made a lot of money.
They're not stupid.
I mean, they're just bank robbers.
Well, but there is the whole thing, though, about empire as murder-suicide.
And, you know, like you talk about on your show all the time, and as we've been talking about here, these guys have pushed it all too far.
I mean, I can see how.
Well, I have an idea.
I have an idea.
I'm trying to push for, to rectify part of the situation, okay?
Take a country like Iceland, which has just been completely devastated by the international banking crooks.
They need, you know, $10, $15 billion right now in cash.
And I'm talking to the parliament in Iceland that they can offer an economic passport, like countries like Dominica do.
In Dominica, they offer anybody can buy a passport for $75,000.
And there are thousands of Americans now who are renouncing their U.S. citizenship, looking for countries to live in.
And I'm trying to get Iceland to offer an economic passport for $20,000.
If only 500,000 Americans took that option, renounced their U.S. citizenship and moved to Iceland for $20,000, that would bring in $10 billion into the Icelandic coffers.
And this, I think, is what we need to do as citizens, is to say, look, fuck you, America.
Let's all just go to a country that respects human rights and respects their...
They're also opening up a new thing in Iceland where they're going to strengthen freedom of press rights, so that people in the press are protected, they have protected speech, unlike any other country in the world.
This is why we have to leave America now, completely.
Leave it behind, because it's become a vast wasteland of a kleptocracy.
Let's all 500,000 of us go...
I'm trying to get Alex Jones to also participate in this.
I'm trying to get people in Greece also, who I'm very in touch with, in Ireland, all these countries that are getting screwed by the banking shysters.
Let's all just go to Iceland and start a new country.
Fuck these guys.
Well, the problem is there's 300 million of us, so what about people who want to stay home?
They're not going to make it.
They're too stupid.
Unfortunately, they're just not going to make it.
They bought into the whole fast food, fast money nightmare.
Now they're going to die.
So what?
You've got to move on, buddy.
So there's no hope there.
I'm not going to carry 200 million stupid Americans on my back.
What's the point?
Forget them.
Forget them, man.
Leave them behind.
We don't have time to teach hundreds of millions of Americans how to add two plus two.
If they haven't figured it out by now, we've got to hit the exit button and move on.
Fuck them.
Yeah, but here's the thing.
I really appreciate the sentiment in a lot of ways.
Don't get me wrong.
But there are people who... most people, I think, who live their lives and they can figure out how to negotiate the circumstances they're in just fine, but that doesn't mean that they have an understanding of grand schemes like international banking pyramids and inflationary this, that, and the other thing.
Hey, let me put it this way.
Give me $10,000 right now.
Give me $10,000 right now.
Right now.
Me give you $10,000?
Oh, I'm going to break your legs.
How does that feel?
Give me $10,000 right now.
I'm going to break your legs.
How does that feel?
That's what the American people are being told by their government.
Okay, now what's your response?
You're going to try to reason with that?
You're going to try to negotiate your way out of that?
Well, I'm just asking what people can do to fight back rather than just take it.
Because we can't all just run to Iceland.
Come on.
I just gave you an idea.
Petition the Icelandic government to open up for economic passport and immigrate out of the U.S. and restart over again.
Hit the reset button.
The constitution has been shredded.
There's nothing left.
We've got to start all over again.
The aristocrats who America fought to escape from in the 18th century have taken back everything that the American Revolution successfully established back in the 18th century.
We've lost it all.
There's nothing left.
There's nothing left.
So we have to start from scratch.
We're starting at scratch.
We're right back to where we were 220 whatever years ago.
We completely blew it.
All right, wait a minute.
Let me try to find one silver lining here.
Does that mean that we won't have a standing army anymore?
Does it mean that the empire's pushes so far that they're so bankrupt that we can no longer afford to occupy the world?
Because that's what's most important to me is the end of the wars, Max.
Are we too broke to keep them going?
Or can we just indefinitely?
The nature of wars has gone digital and has gone financial.
And the people who understand that who are fighting these wars right now are understanding that this is the new front line in the global war is purely financial.
And we saw last Thursday, last Thursday was an act of a domestic financial terrorist attack.
When the Dow Jones dropped 1000 points in 15 minutes, that was internal.
Those were bankers on Wall Street who committed an act of financial terrorism.
But TV said somebody just hit the wrong domestic financial terrorist attack.
How did that happen?
Explain yourself there.
Well, having designed the technologies that are referenced more than 100 times by high frequency traders and algorithmic traders and computer trading and patented proprietary trading techniques, I can tell you exactly the technique used.
If you take a stock like General Electric, for example, it trades on average close to 200 million shares a day.
And through program trading, you know, that 70% of all the trading on the exchange is program trading.
That means around roughly 140 million shares traded on General Electric per day is traded by computers back and forth.
And they do this pretty much looking for slight discrepancies in prices from the cash market or the sucker market.
And they can jump in there ahead of them and do front running to make a nickel here and a nickel there.
But if you're talking about 150 million shares, that adds up.
That's why every single bank last quarter reported 63 straight profitable days, not a single day of loss by Goldman Sachs in the first quarter of this year.
The statistical probability of that is just slightly less than one in a trillion.
You've got a 40 times greater chance of getting hit by lightning than repeating the financial performance of Goldman Sachs and several other banks in the first quarter of this year.
This is how they do it.
They just nickel and dime front running trades on the exchange all day long.
But in the case of last Thursday, in Washington, there was a bill to break up the big banks.
They simply instruct their computers to pull all of their buy orders for that 15 minute period of time.
Just pull the buy orders.
All that are left are sell orders.
The sell orders swamp the exchange and you have a manufacturer 1,000 point loss.
Then it came out that the Congress was saying, oh, you know what, we're not going to pass this bill to break up the big banks.
OK, now you just instruct your computers to pull all the sell orders.
Now, all that are left are buy orders.
The buy orders kick in and you've got that rally.
And in this way, they can direct the market to do whatever they want to do for political purposes.
Next time there's a bill to try to break up these banks, you'll see another 1,000 point crash or 2,000 point crash.
It's purely manufactured.
It's domestic financial terrorism.
Clearly, there's no doubt about it.
If you look at even to this day, a week later, the only the only explanation here is that it was, quote, a mystery.
You know, that's a week later.
You think it's a mystery?
You think it's a mystery to the Senate?
I mean, well, we just said that they don't care.
They don't care, do they?
I mean, they are invested in these bank stocks.
During the end of 2008, it was just revealed that many of the folks in Congress were short bank stocks.
We're using there's an exchange traded fund, which you can buy with short bank stocks.
So it's just a one stop shop.
You buy this exchange traded fund in your short bank stock.
And that many of the Congress people during the time when Paulson was extorting 700 billion from Congress were short bank stocks.
They were making money as the collapse was unfolding.
They're just day traders.
Now, let me ask you this.
Is any of this even illegal anymore?
No.
They really lifted all of those restrictions and just said, go ahead.
If you took fraud out of the American business model, you'd have nothing left except guns and donuts.
Yeah, but I mean, even these most exotic kind of frauds that you're talking about, these brand new kind of ones.
I don't mean that I expect them to repeal the Federal Reserve Act and make everybody adopt 100 percent reserve ratio or anything like that.
But could no federal prosecutor just do like a RICO case and indict all these criminals?
They could.
Yeah, sure.
If they wanted to.
But who's going to do that?
Who's going to do that when I think maybe somebody will?
I mean, Andrew Cuomo in New York, I think he's taking on the rating agencies, you know, which is a good, good idea.
I mean, there's if the political gains outweigh the financial gains, then somebody like Elliott Spitzer or remember Rudy Giuliani, Giuliani, he took on Mike Milken as a way to give his political career a huge boost.
And he made a huge political career out of it.
And he made a lot of money on the tail end of taking on Drexel Bernal.
So if Andrew Cuomo figures that he can make more money by going after the rating agencies than he can by just sitting there, sitting at his desk, taking bribes all day, then he'll do it.
It's just economics.
If morality has given more money on this in this month than deceit, then he'll take that path.
Sure.
Yeah, that's how the system is supposed to work, actually.
Right.
Federalist number 10, you make ambition, check ambition since they're all a bunch of sons of bitches.
Well, yeah, you can accept when you have that usually happens in a situation where the currency is tied to something.
And here's something very interesting.
There's now been an arrest of one of the one of the Icelandic bankers who was involved in the scandal back in when the Icelandic krona collapsed.
And the prosecutor in Iceland is now adding to the charges counterfeiting, which is very interesting because we are at the end of the day talking about counterfeiting.
For example, a naked short sale is nothing more than counterfeiting and naked short sales are how a lot of these scams are perpetrated.
That's a very interesting one.
And again, I'm pretty ignorant about this stuff.
But if you could please explain how that that naked short works.
I like this story.
Well, selling something short is fine and dandy.
You know, you're selling something that you have borrowed and you sell it and you hope the price goes down so that you buy it back at the lower price and return what you borrowed and you pocket the profit from having been short.
Okay, that's fine.
That's part of the market.
But a naked short sale is you're selling something that doesn't exist.
You're simply saying you're simply showing up on the exchange and you're selling, let's say, five, five million bonds.
But those bonds don't exist.
You just say you're selling something you say exists but doesn't exist.
The way that they are able to do this is that the reporting the accounting reporting that tracks all of the legitimacies of all the deals.
It's never it's not there is nothing really a formal way to to to account for that.
And by design, there is no formal tracking method to establish whether or not these the sales of these items actually exist.
And or if they do do it, they make may take weeks or months, in some cases, months to try to track down whether or not the there's a legitimate sale of legitimate security.
So you end up with what's called naked short selling, you're selling stuff that doesn't exist, which is the exact same thing as counterfeiting, which is why the Icelandic prosecutor is right to say that he's prosecuting counterfeiting, because that's what naked short selling is it's counterfeiting.
And so he's using kind of a broader statute, since he doesn't have one particularly about naked short selling.
He's just saying it's counterfeiting to me.
Yep, I think that's what he's doing.
That's what it and I think that's absolutely correct.
And if he pursues that path, a lot of people will end up, you know, going to jail.
Yeah, see, that's kind of what I was getting at with the biggest counterfeiter in history.
Bernie Madoff, you know, Bernie Madoff is big.
For years, what he told folks was that the way he made money was making is making a market.
I'm a market maker.
I'm a market maker.
That's what I do.
That's how I make money.
What is Lloyd Blankfein keep telling Charlie Rose in his defense two weeks ago?
Oh, I'm a market maker.
That's how we make our money.
We're market makers.
They're both market makers in the sense that they're both committing massive securities fraud.
You know, Blankfein should be sitting next to Madoff in jail right now.
Yeah, that's what I was getting at with the whole legality thing.
It seems puzzling to me, because I can see how you have some genius banker kid who figures out a new way to commit fraud that there's not already a specific law against that.
But it seems like, you know, when you talk about naked short selling, it sounds like the kind of thing that is already just basically simple fraud, counterfeiting, whatever you want to call it.
Over the over the years, they have legalized fraud, you know, the repeal of Glass-Steagall.
And then back in 2004, when they allowed the reserve ratio to rise from 12 to 1 to 30 to 1.
Or just, you know, historically, here's another interesting factoid.
It goes back to Hillary Clinton, shortly before leaving Arkansas, involved in the famous case of she was opening a commodities account for $1,000, which quickly turned into $100,000.
And this is using a scam called a lookback trade.
And lookback trades are still used.
And the way it works is, the broker comes in in the morning, and they put on a trade, let's say they'll buy 500 options on a stock, but they won't give an account number.
And then at the end of the day, if the trade is a winning trade, then they give the account number of a customer that they're trying to curry favor with, let's say, Hillary Clinton.
If it's a losing trade, then they stick it into a corporate account that needs the loss to offset tax gain.
This is why, for example, last year, less than 20% of the S&P 500 paid taxes.
This is because of this very technique.
Any gain you have, you can offset with one of these lookback trades.
There's a whole, you know, when I was working on Wall Street, there's a whole division at our company called executive services.
All they do all day is manufacture losses for clients, so they never have to pay taxes.
And they just do these trades all day long.
And of course, the brokers get paid the commission.
So, I mean, I was working there.
You come in in the morning, you buy a few hundred options, you go to lunch, come back, you just allocate the trade.
Losses go here, winners go there.
You make maybe $15,000, $20,000 a day, and go home.
That's a nice day's work.
Yeah, well, it sounds like my big mistake is not being rich already.
Then I could stay rich really easy.
Well, it gets boring after a while.
That's the problem.
The biggest problem rich people have is boredom.
Because after you make a certain amount of money, it gets so incredibly boring, which is why rich people tend to be very boring.
It's very, very boring.
Because making money at the end of the day, it's not hard.
If you're willing to do the Wall Street routine, I mean, it's just like, it's boring.
It's definitely boring.
Yeah, you know, I saw my friend showed me a clip of you from 1988 when I was in junior high and the stock market crashed.
And you celebrating all the yuppies have been defeated and will now all leave Wall Street and leave you in peace.
Yeah, that's right.
So, but by the way, how did that work out for you?
How far away did the yuppies go before they came back?
How long were they gone?
Oh, I think about three months.
So you're a little more optimistic in your youth, I guess.
Well, you know, the stock market crash of 87 was a 20% crash, which was the biggest percent crash in the US history by far.
So it was really quite a devastation.
You know, we haven't had anything remotely as impactful as that crash of 87.
Which is, by the way, the impetus behind starting the Working Group on Finance.
You know, the October 20th of 1987, the day after the crash was the day that Robert Rubin, Alan Greenspan, and Ronald Reagan started the President's Working Group on Finance, which is now euphemistically called the Plunge Protection Team.
But on the Tuesday after the crash, they started buying S&P futures contracts, which was a direct violation of everything America stood for, which is a free open market, free market capitalism.
It was that day that the government started to buy S&P futures contracts to manipulate the direction of the stock market.
And that, you could argue, was the day that free market capitalism died.
Because the Working Group on Finance, or the Plunge Protection Team, has only grown in size and influence every year since then.
So now we end up with a situation like we had last week, where people who don't like what's happening simply push a button, crash the market, the politicians back down, and they hit the buy button.
That all goes back to October 20th, 1987.
That's interesting stuff.
You know, everybody always likes to demarcate the different lines.
I heard a guy talking one time about a law that Reagan signed in 1981 that changed which kind of debts can be monetized from a very narrow range of government securities to pretty much anything.
Right.
Well, part of that goes to, you know, in Basel, Switzerland, the Basel group restrictions in terms of what you can collateralize and what the value of that collateral is worth.
For example, the collateralized debt obligation, which is simply a repackaging of a bunch of securities mortgages into another mortgage.
One of the reasons this was all put together to begin with is because since they could put in some AAA-rated government bonds into the debt obligation, into the package, according to the Basel II restrictions in Switzerland, that allowed, therefore, the collateral value of that package to increase and to be commensurate with a AAA-rated bond.
It's what I call reverse drug dealing.
Because, you know, in drug dealing, if you get, let's say, a kilo of smack and you cut with some baby laxative and you create two kilos of smack, here it's the opposite.
You take something that is already garbage, which are these collateralized mortgage obligations, and you cut it with the good stuff.
You cut it with AAA-rated government bonds.
And the product becomes, therefore, according to the Basel requirements, worth more in terms of collateral value, which you could then use to buttress your Ponzi scheme.
That's the reason why the collateralized debt obligations were engineered to bypass collateral obligation laws.
So every time there's a new law put on the book, the financial engineers figure out new ways to circumvent those laws.
Like when I was working on Wall Street, people said, basically, don't worry about the laws, because if there's a problem, we'll write a new one.
So that's their attitude.
Well, it has been that way for a long time.
I wonder what you think about the Federal Reserve Act of 1913.
Well, that was, of course, based on the Bank of England, which, according to Ben Franklin, was one of the primary reasons America revolted against England, was to escape the Bank of England.
So 1913 was the reintroduction, basically, of the Bank of England.
So what was the point, then, of the revolution?
That's what I always thought, too.
And it really is like that, too.
I guess people just sort of assume you got George Washington on the dollar bill.
It says federal government on it.
That means you can trust it, right?
If it said Goldman Sachs on it or something, you would know that there are sick, evil, top hat-wearing capitalists that you can't trust that are out to get you.
But it's government money, so we all figure that it's pretty much okay.
If it said, this dollar is convertible into x, x, x grams of gold, then it would be worth something.
But it's not.
It's a Federal Reserve note that's not convertible into anything.
It's not.
It's just paper.
And that's the problem.
I mean, we used to have silver-backed notes in the United States, gold-backed notes.
It's in the Constitution.
Only gold and silver are recognized as money by the Constitution.
So anything that's not backed by gold is completely unconstitutional.
Well, so would you favor just a system of free banking with 100 percent reserve standards?
Or what's your idea?
Well, it doesn't have to be 100 percent reserves, but it has to be backed by gold.
And we're entering a period where we have a de facto gold standard anyway, because everyone is just buying gold anyway through various new products.
People are buying gold, and the price of gold keeps going higher.
And at some point, you're going to have the gold-dow ratio will be one-to-one.
So the Dow Jones will be $4,000, and the price of gold will be $4,000.
All right.
Now, I guess last question here.
I've already kept you over time.
I really appreciate you staying on.
For the average schmuck out there who knows better and would like to do better, he knows better than to believe in these guys anyway, but he doesn't know what to do.
He's got maybe limited resources.
How can the average schmuck protect himself from these guys in any way?
Just buy gold coins and bury them in the backyard, or what's the deal?
Well, I mean, as far as financially, gold is going to give some protection.
And not that I'm doing an advertisement or anything, but the goldmoney.com is a good service because it's allocated gold.
It's in your name.
It's held in a vault in either England or Switzerland, and there's no minimum.
Now, that to me sounds like it's a very compelling way to own gold.
So if that's the objective, then it's a good way to do it.
Any other advice?
Well, there's a few things that I think.
The entire economic equation is now in favor of the producers, and the consumers don't really have any power at all.
Now, if you look up in the dictionary a word called monopsony, so a monopsony is the opposite of a monopoly.
Now, a monopoly is a price control by a select few.
A monopsony is price influenced by the mob.
So it's basically another fancy word to say boycott.
And I'm revisiting something I was talking about a couple of years ago, which is that the people need to score a win here to show that the consumers or the people have some power.
So I'm relaunching this idea about taking the Coca-Cola stock down to zero, because this will have huge impact on the equation and how power is distributed in the community, in the society.
Hey, what if we started with like Northrop Grumman or Citigroup?
Because it doesn't work.
In other words, I've done a statistical analysis of all the companies that people hate, and then I screened it for a metric of vulnerability to a boycott.
So Northrop Grumman is not in any way vulnerable to a boycott.
Yeah, true.
There are only about five or six companies that are vulnerable to a boycott.
The one that is the most vulnerable is Coca-Cola.
This is the weak, soft underbelly of the Dow 30.
This is the one that we as consumers can take down to zero.
So my point is, instead of just making some kind of nuanced moral statement that's going to be lost, I say just pick the weakling in the group, which is Coke, and take it to zero.
You know, fight fire with fire.
That sounds good.
Is there an ultimatum to go like, hey, we won't destroy your company if you...
Well, in other words, there can be, but we shouldn't discuss that in the open, because the people at Coke are going to be listening.
We can discuss that behind the scenes.
But let's not.
Let's keep our powder dry, and let's just do this the right way.
We don't need to be...
This is the problem with Greenpeace.
Greenpeace tells Exxon everything that they're doing wrong.
Exxon then buys insurance to protect them against what they're doing wrong.
Then to pay for the insurance, they lower their operating standard, which in turn increases the amount of pollution they put into the atmosphere.
So if there was no Greenpeace, there would be less pollution.
So we'll just have to get everybody ready, and then let them know.
Well, yeah, we have ways to communicate.
You know, we don't need to tell our enemies what we're doing.
That's not the way wars are fought.
Now, wait a minute.
If we boycott Coke, am I going to have to stop drinking Dr. Pepper?
Well, all the Coke products across the board, and by the way, of course, the biggest shareholder of Cork is Warren Buffett, so it's like a two-for-one deal.
Oh, yeah.
Yeah, you know, I was going to say earlier when you were talking about all the American people getting suckered into the housing market the way they did, I was remembering some people I met who were from a realtor association convention or something back in about, say, the year 2000, maybe 2001, and they were saying, oh yeah, the computers, that's a big stupid bubble.
It's all about land.
I'm following Warren Buffett.
I do what he says, and I make plenty of money.
Well, yeah, he was just recently, two things.
On the day that, you know, back in March, Moody's, the credit rating agency, got a Wells notice from the SEC that they were under investigation.
Warren Buffett on that day sold his Moody's stock, so that was clearly unethical, as so did the CEO of Moody's on the same day, so they were involved in some highly unethical trading.
Warren Buffett's defense of Goldman Sachs is dubious at best.
You know, I think it's, again, highly unethical, and so now he's been dragged into the mud.
You know, he had a very good reputation for years, but now, thanks to Goldman, he's been dragged into the mud.
Cool.
Well, so, yeah, I like the idea of destroying Coca-Cola.
That sounds fine.
Let me ask you this.
Let me turn you down while I ask you this.
Max Keiser from the streets of Paris, France.
What about the sports franchises and putting all the pressure on the basketball teams and the football teams and stuff like that?
Well, you see that California is boycotting Arizona, and this is having a big economic impact.
You know, boycotts work.
You know, Gandhi's boycott of salt worked.
Martin Luther King's boycott of the bus system worked.
You know, boycotts can work.
You know, I think in this case, it's a strategic economic boycott, and it's tied to a stock price.
If the Coke stock price is going down, then we're winning.
If the stock price is going up, then we're losing.
So we can see every single day if we're succeeding or not.
Just look at the stock price.
The objective is to get the stock price to zero.
Now, there are two or three reasons that you'll hear from people who say this is a bad idea, but I already have worked through all of the objections, and I can tell you why there is no bad reason.
There is no reason why we should not do this.
Cool.
So can you teach me how to do the naked short selling so I can get to work on fighting the Coca-Cola stock for you here?
Well, I mean, you bring up an interesting point.
You're saying if enough people boycott Coke and their revenues start to fall apart, we will attract the attention of predatory hedge funds, who will then start selling the stock short.
And very quickly then, the stock will get crushed.
So we, by our actions, are going to attract the attention of the biggest force in world economics today.
These would be the unregulated predatory hedge funds.
So we get them to work for us, essentially to kill Coke's stock price.
Oh, sounds like a lot of fun.
I hope the ultimatum is good.
I'll tell you what the ultimatum is, but not in the open.
Okay.
Well, yeah, we'll talk about that.
I might have a couple of ideas of my own.
All right.
Well, hey, listen, I can't tell you how much I appreciate this.
It's really been great having you on the show, Max.
Okay.
Well, thanks for having me on.
I've been walking around Paris here, so I may be sounding a little out of breath because I'm trying to dodge traffic.
Oh, yeah.
Well, you know, first things first, you know, traffic first, phone call second.
Everybody, that is the great Max Keiser there.
You can find him at the Huffington Post, where he writes articles there.
And you can find his website, maxkeiser.com.
He hosts On the Edge for Iran's press TV and the Kaiser Report for RT.
And there you go.
