Their own stock and the executives around these Companies Say remember if you have options on your stock and the stock and you know guarantee theres no risk the stocks will go higher the options can go from a 1. 00 to 100. 00 or 300. 00 so an executive can make 5100200000000. 00 thats why we have so many billionaires in america is by playing this game of guaranteed upside by money printing and owning the options on your own stock and so if you strip out those numbers you would have markets that are a lot lower youd have a lot more parity between classes in america you would have the wealth and income gap you wouldnt have the social unrest and you wouldnt have a lot of all these other problems so its very stark very plain to see for those who want to say hey were going to show you some charts to show you visibly how big it is but in terms of kind of a lean duck president coming in biden whos you know very very old and doesnt have. The senate and his leader says majority and the Congress MemberJerome Powell had said last week that we need more fiscal stimulus because all i can do at the fed is create these can tell you an heiress and so here were having a situation where there will be you know free money for the people because theres no you know you dont have a populous vibrant young leader who might be around for many years and youre going to like you want to be in his favor if youre in the senate might want to do some deals but there is no will to do some deals because you dont want to give the lame duck president any you know points that you yourself when youre in power want to achieve so you know this soc gen data again they said so the stock market the s. And p. 500 is that 3500 it should be at 800 and they say that the nasdaq should be closer to 5000 then 11000 which is totally remarkable and just to show you the charts on the s. This is the s. And p. 500 where it is and thats where it should be the red line if it werent for q. E. And nasdaq 100. 00 you see the huge gap there and of course gaps usually close should this quantitative easing ever and if it ever can and right that thats like a whole nother story to cover but lets compare biden he comes into office potentially and this means that i believe were going to see a repeat of 2008 remember Obama Took Office and because obama was a pretty young guy at the time and didnt come through finance and he was. A law student and very good with constitutional law but he didnt know anything about wall street he kind of threw the keys of wall street over Larry Summers and all these other folks and they went ahead and they created the Global Financial crisis. After a fact that seemed to benefit the can tell you theres a remarkable way remember the billionaires after the 2008 crisis all quadruple or more of their wealth while vast swathes of American Population live by. Lost their house so im pretty sure going to see a repeat of that by thats why they say from 11 years ago 2008 when obama was elected thats the point where it starts and thats those that the trillions of dollars you know that gap represents trillions of dollars trillions and thats why theyre so wealthy and youre not and of course like as weve already covered on Election Night when you know its like a few days afterward to determine to declare a winner but at that night when trump was ahead chinese currency crashed and then when it was biden it soared so you know that is something that ordinary you know the deplorable people across this country have to consider that this is the system theyre stuck with for the next 4 years china continues to eat your lunch and you arent even going to get free money there is going to be no m. M. T. For all theres just going to be more can tell you created and. Soc gen also looks at the bond market and theyre saying by the way that you know is the fed buying all these bonds that drives the Risk Appetite which is directly then causing the stock market to soar so in the bond market this is what the 10 year treasury should be instead for their part the soc gen analysts using a mix of wheat glee Macro Economic indicators running back to 2005 took a stab at estimating the effect of the feds bond buying effort on the benchmark 10 year treasury yield no they concluded that q. E. Likely knocked around 180. 00 basis points or 1. 00 Percentage Points off the 10 year yield so again putting it into the storable context the 10 year yield in an American Economy that is capitalist is foundationally constructed on a central bank and Banking System feeding into the not for normal class the long term rates are traditionally and you can make a strong case for them to be without. Equivocation around 4 to 5 percent that give savers enough money to save for retirement if they work hard in the economy when the fed started buying back these bonds and dropping raise to near 0 they transferred trillions of cash from savers you know your mom and your dad out there they probably have grandpa they called you up and said hey you know my retirement account dropped 8090 percent of income that was this wholesale thievery going on by moving that capital to wall street and then use it to speculate and as i point out about their comment about risk the dea risking of the economy know that if you know beforehand. Before the roulette wheel stops that its going to land on red then you know were going to put a lot of a lot of money on red when wall street knows that as as was said during the 2000 a crisis the news that Goldman Sachs got ahead of everyone else at the bailout was coming allow them to put go all in and they quadrupled their wealth overnight again so that thats money thats been extracted from the real economy using this machination pass through a mechanism that looks like a market economy but its actually a rigged kind a way to feed billions to your friends of course when you just talked about grandpa you know and their pension being eaten by the feds quantitative easing policy. I thought of cenk uygur of the young turks he tweeted that he was so glad to have like a grandpa in office and i say this guy still has to work because of the feds q. E. Policy like thats why we have this you know this gerontocracy as they call it here in america remember theyre replacing capitalism based on supply and demand free Market Economics with what they call progressivism like so theyre trying to base an economy on progressivism just bad economics they wanted to do mt theyre not going to be able to do that but remember on the campaign trail in the very last week what were buying and then harris having to say they love fracking they love fracking and this is the bad economics that again kaiser reports been right for years on this because not only did the fed encourage this the growth not even encouraged but created the growth of this can tell you our class and encourage risk taking and forced Pension Funds into risky assets and they forced Pension Funds into private equity funds that were invested in what shale ok well you know biden love shell but ill tell you what exxon mobil which used to be the Biggest Company in the world the biggest American Company in the world and now its being displaced by high tech of course but exxon warns of 30000000000. 00 shell right down a decade after buying x t o again this goes back to that 2011 p. R. In 11 years ago syria had that all this cheap money the quantitative easing drove people into the shale sector which never made money ever even when Interest Rates are 0 even when oil prices were over 100 even all of that stuff and they never ever made money so you know people tell us were wrong and theyll tell their wrong for 30000000000. 00 you know how much exxon how much how many shares are in Pension Funds in grandpas pension fund you know theyre having. Right down there shale investment because of the patriotic fervor that was happening that and and this delusion that there was somehow that this was that a great investment because the yields are so high and blah blah blah 70 percent of our fracking rigs begin life negative cash flow and never make money the remaining 30 percent end up losing money within 3 years the industry as a whole is cash flow negative and is only exist for one reason to allow wall street to create junk bonds to sell into Pension Funds and they missed sell they did not state that those bonds if you look at those junk bonds for a pension for shayla history and those that theyre all catastrophic play down and they all will go to 0 and then what will the politicians say particularly those who are saying we love fracking oh thats right they forgot to take a pencil and a piece of paper and add 2 plus 2 and come up with for the politicians whoevers novice will say 2 plus 2 is actually. Were not sure so sorry. But sorry if youre sorry that youre poor i guess thats the thats the main with awake right now are your poor no its called have fun staying or have fun staying for the main with awake so if youre in the shell business have fun staying for well Energy Stocks have lost 50 percent more value than the s. And p. 500 has the biggest drop of any sector going back to 1928 which was like just the decade before biden was born so i think its like its quite interesting that this is like a full circle that this this industry this era is over were at the end of fee outs at 0 percent where 0 pounds were hit weve hit 0 dollars over by even came into office 97. 00 to just after we went off the Gold Standard so this is just coming full circle and were going to sleep and who beats us in high tech of course is china and thats what the market said is where thats what the market said it has been decided and thats right i think the current whoever is there in the white house Going Forward thats a bit of a poisoned chalice because theyre going to be in power during the worst collapse ever in history i think theres a 99 percent chance that well theres a 100 percent chance were going to take a break and when we come back much more coming your way. The or tactics that can be used to get innocent people to confess to crimes they didnt commit i dont even think people in the u. S. Really get that the police are allowed to lie to the person who falsely fast actually came to believe the lie that they were told about their own behavior one supposed confession is taken the case is closed and nobody really can tell the difference between a good confession and one that is. Well the demick no certainly no border is just blind to nationalities. As americans we dont come with me we took a back seat the whole world needs to be. Judged. Commentary crisis with this system to modern times we can do better we should be doing better. Everyone is contributing way but we also know that this crisis will not go on forever the challenges create the response has been masked so many good people are helping us. It makes us feel very proud that were in it together. You know close will sleep will push through the door but. Do you love a boy who was. Sure. Boarded up doesnt actually matter the age to put a gun most of. You got to go with us because all of these to do just about because those stories could be game we will see in the. Vehicle is with it would seem the most serious but its the most insidious some of what is in your speech come off and used. The 20th century was doing in a revolution the Great Depression and world war the 21st century of mental illness. Those arent my words thats what surfaced some psychiatrys to tell us the only question is since it is a fact. Welcome back to the kaiser report imax times or time had to go to lynn all the lin all the Investment Strategy linda welcome to the kaiser report thanks for having me i love your show oh excellent so Jerome Powell is as were having this interview hes testifying before congress and his one of his comments i want to get your comment on he says that fiscal policy is absolutely essential here hes kind of throwing it back to congress and saying you know we need to do a dress festival policy so what does he mean when he says that some of that has to do with the transmission the transmission mechanism for you know the asset purchases that he wants to do so for example when the fed buys you know treasuries Mortgage Backed securities or apple bonds or whatever the case may be that doesnt make it out to the average person right so that thats thats mostly you know a liquidity boost up asset prices but you know you know large fiscal deficits whether its in the form of stimulus checks or other things can get out to the you know the average person so basically that you know the Federal Reserve here theyve already done you know wait wait a bunch of programs for Monetary Policy but they cant really target you know to individuals the way that the treasury can which is basically saying is you know if they want you want the treasury to do more of the targeting and then the federal would be to you know to finance that to buy the bonds as needed to maintain a little liquid treasure market its an interesting phenomenon because he has been doing money printing over there at the fed by the trillions and trillions of dollars hes saying now that we cant get individuals youve got to work on that over there and congress concurrently with that we see that the velocity of money has been collapsing for years up until recently maybe theres a slight. James we can comment on that what does that tell us when the fed saying were trying to create inflation by printing trillions for years but if the velocity keeps going down are they hot damn they keep doing that whats whats going on here well so if you look at money velocity that you know that most refers to the broad money supply and the federally has partial control over that so when they print money that mostly gets in the Bank Reserves and the 2 ways that that broad money supply can increase are either banks lend it to individuals and corporations and use the broad money supply that way or the federal government runs these massive deficits that are monetized by the fed and of course this year we saw the 2nd of that so we saw you know the treasury ran very large deficits and a large portion of that chese issuance was purchased by the fed so instead of extracted from the economy somewhere from taxes or lending and then put back an economy somewhere else it was extracted from nowhere as extracted from new dollars and then inserted elsewhere in the economy so we saw this big increase in the money supply but we havent seen it you know weve seen a g. D. P. Decrease this year because of the pandemic and because of you know theres a variety of factors there so theres wealth concentration generally results at lower velocity and also aging demographics in technology increases so were seeing basically that broad money supply is going up a lot faster than g. D. P. Over the long run and thats a recent philosophy caught out you missed a couple things there about bank lending and wealth concentration so the banks are not lending back france philosophy went back a lines to bank b. And then Bank Bailouts the banks say you know that creates velocity of money and with Interest Rates at 0 percent and with no blending from bank to bank the last it goes down that would suggest that theres no demand for money theres no demand for credit and here in the United States there. Are millions of entrepreneurs who are always looking for capital to start businesses. And then you mention a wealth warning and so my question is are banks courting wealth in a way that theyre not making it available to small to medium sized enterprises. Which is walk us through how theyre able to do that because if Interest Rates are so low as they are today and we know that there are millions of entrepreneurs who want to to do business what are the banks doing how do they get away with that it seems to me like theyre doing something that is economically unsound or on the dodgy side of things or what do you say to this well yeah the challenge is that when the banks perspective they just want to maximize their profits and so whenever they look at a loan theyre looking at the risks and the potential rewards from it and so when you have very low Interest Rates you know the overall upsides pretty much kept the risk is still meaningful that they could lose the entire loan if its a bad loan and so you know there are some places where were actually seeing you know for example look at credit card Interest Rates theyre extraordinarily high and thats because you know thats an area that hasnt really been held down artificially so that market jelly represents more the true risk of that sort of lending where theyre lending out but then theyre getting really high Interest Rates in return resume look at the mortgage sector or you look at corporate loans or you know smaller personal loans Business Loans basically that the race is pretty low and so the credit worthy demand for that is somewhat lacking and is the way that things are set up now you know part of why weve seen you know what many people have called a k. Shaped recovery is that Large Businesses they could Access Capital markets whether its bond issue its you know even with the fed you know helping to push down yields they can get access to capital whereas as you point out Small Businesses you know there is a lot more kind of a higher risk and theyre more reliant on banks and just banks have seen it in their favor you know the cost. Benefit analysis to do a