Steal a candy bar and maybe you can even get jail time. Steal trillions, more than has been stolen in the history of the world, and if you an international banker, you get rich, and all the little people become your debt slaves.
Text with below video:
Every week Max Keiser looks at all the scandal behind the financial news headlines.
Keiser and Stacy Herbert discuss the wicked web that has been weaved
when banksters first set out to deceive, the first law of
thermo-derivatives which states that risk cannot be destroyed and the
hot tub of fraud in which the taxpayer-owned Royal Bank of Scotland
weaves its web of deception. In the second half of the show, Max Keiser
talks to Mitch Feierstein, author of Planet Ponzi, who shows us what the
Fed's $3 trillion balance sheet would look like in a briefcase and the
Central Banking bag of tricks that include: divert and deflect, delay
and pray and extend and pretend.
* * * *
Steven G. Erickson's LiveLeak.com video uploads are [found here]
* * * *
Debt crisis looming as Washington 'hides the real fiscal cliff numbers’
The US national debt is twenty times higher than is officially
reported, approaching $222 trillion, and today’s children could soon be
paying their parent’s debts, reputed American economist Laurence
Kotlikoff told RT.
According to Kotlikoff, the true extent of
the growing fiscal gap has been concealed by Washington for years, a
process that could ultimately result in debt disaster: China and
Japan, top American money-lenders, could simply stop the cash flow.
in the last few years the Federal Reserve has raised the base money
cap from $800 billion to $3 trillion, creating the foundation for
possible hyperinflation, Kotlikoff said. The whole situation remains
unnoticed by the public while politicians try to avoid the problem,
leaving it to future generations to reach a solution.
RT: Laurence Kotlikoff, Economics Professor at Boston University, pleasure to have you with us today.
Laurence Kotlikoff: It’s great to be with you and great to be in Russia.
the one who stated that America is rogue and in even worse state than
Greece and Ireland. How so? What exactly do you mean by that?
Well, we economists look at all the bills the government has to pay,
and in the US case we have enormous bills that have been kept off the
books. They’re not the official debts, but they are very real. For
example, paying me my social security benefits, my old-age pension –
that’s a real obligation. It’s not part of the official government debt,
but it’s very important because there are 78 million baby boomers
who’re going to get their social security payments, and, in addition,
medical payments from the government. If you look at all those payments,
they are about $3 trillion a year. So we have these huge bills, nobody
has thought about paying for them, and Congress and the presidents
over the years have just focused on official debt, and basically have
not told the public about these big bills.
You said the amount of the fiscal gap in the United States is, in your
estimation, $222 trillion. This is an astonishing number, which is
like three times the world GDP. This is more than what the world makes.
Twenty times higher than the official debt in the hands of the public,
which is $11 trillion. So if you add all the spending obligations into
the distant future, and you compare them with all the taxes, and you
include in the spending all the interest payments, and principal
payments on the debt, and the official debt, you have $222 trillion of
present value. Now, this is 12 per cent of GDP on an ongoing basis, and
we need to get 12 per cent more in GDP either in tax increases or
spending cuts in order to have the fiscal gap in zero.
far too little, too late. It’s like operating on a person with cancer,
and you say, “Well, there’s a big tumor here, we’re just going to take
a little bit out today, and we’ll come back in five years, and we’ll
take out some more.” But maybe in five years the patient is dead
because the tumor got bigger. So this is why we are in worse shape than
Greece – in Greece, it’s about 10 per cent of GDP they need on an
ongoing basis, in Italy it’s about 5 per cent, in Germany it’s about 5
per cent. So when you look at it from this perspective, it’s a whole
different story than if you look just at the official debt because
these governments are making choices what to call official obligations,
and what to call unofficial.
RT: So are they intentionally hiding the enormity of it?
They’re intentionally hiding this. They’ve been spending in our
country six decades, running a massive Ponzi scheme, taking from young
people, giving to old people, and then telling the young people, “Don’t
worry, you’ll get yours when you’re old,” promising pensions,
promising healthcare benefits. And you know this is happening in all
countries. Russia has a pension system, but it doesn’t seem to be in
better shape than ours in terms of paying for its benefits in the
RT: I mean, this number – $222
trillion – where exactly is this money going, who is spending it? I
mean, certainly not the average American. What is it, 1 per cent of the
superrich? The military?
LK: Well, you’ve
got a lot of old people now, they are getting very high benefits, about
$30,000 per person. It’s scheduled to go up to $40,000 when I retire,
which is about 15 years. So you see we’re just very generous to the old
people in our country.
RT: What do you suggest: cut spending, raise taxes? They would be suicidal to any American president.
If we’re running the country, we have to act like adults because our
main responsibility as adults is to make sure our kids have a good
future. So we have to reduce the growth rate of the benefits to the
elderly, and that requires being much more careful about how much we
spend on healthcare because the healthcare benefits have been growing at
twice the growth rate of per capita GDP for 40 years. So it can’t
continue because it’s going to kill the country. We have a huge problem,
it’s being hidden, it’s not being described and discussed and
RT: You just mentioned that you
need to take care of the future generations, ‘clash of generations’ was
the term you used to describe what future awaits the American children
paying up the debts of their fathers, but the United States when you
look at it, really has lived on debt ever since WWII, and increasingly
so in the past 30 years, and they have somehow managed not to collapse.
Why do think that the new generation will manage it?
Well, over time, the official debt will become a bigger and bigger
share of GDP, and at some point the Chinese and other people will stop
lending us money, and our interest rates will go up dramatically. We’ll
have a bond market collapse and, at that point, the deficit will get
even bigger. The official debt will cumulate even more rapidly. And our
government is also printing a lot of money to pay for these bills. So I
see big problems, and they might not be in 30 years, they might be in
five years or two years. The Chinese and other people start to
understand how bad the situation is. And then we will be in situation of
Greece where people won’t lend us money and then we will have to make
big cuts and everybody will be injured.
You mentioned China and Japan – they top the list of American lenders.
It’s more than $1 trillion of US debts. Should they get used to the
idea they are not getting their money back? They can’t just come out
and say: “Hey, I want part of American GDP.”
If I were anybody – whether Chinese, Japanese or Russian – I would not
be buying 30-year US government treasury bonds. They are yielding 3.5
per cent or something right now because we have printed so much money
since 2007 – it’s really unbelievable. The Federal Reserve has tripled
what is called ‘the base money’ – the basic money supply, the monetary
base. It’s actually gone from $800 billion to about $3 trillion now.
This is more than tripled. So we have the basis in place for more than
tripling the price level right now. We have created the foundation for
hyperinflation. And the baby-boomers have yet to retire. So right now 12
per cent of all the federal spending is based, being financed and paid
for by just printing new dollars – that is what is going on.
we are acting very much like a developing country in terms of actual
finances. I have been concerned about this and writing about it and
speaking about it since the late ’80s. The other economists said about
it as well as some politicians, but it’s getting worse. It’s not like
anybody’s actually looking carefully at these numbers. The politicians
are looking at the official debt numbers and are not really discussing
the magnitude of what is coming.
RT: A lot of
people like you who are critical of the current American financial
system have come out in the street. The Occupy Wall Street movement
voiced their concerns and protests. Do you think a movement like this is
actually capable or able to solve real issues or is it just a red
LK: Well, Occupy Wall Street was
concerned about inequality, and they were concerned about what Wall
Street was actually doing. And I think we need to radically change our
financial system because we have too big problems. And this is true in
every country including Russia. The traditional banking system, the
model, is on a very high leverage. Banks borrow a lot of money, promise
to repay and then there is opacity – they take the money and they do
something with it but they are not telling you what they are doing with
it. So people get very concerned at some points about whether the banks
actually can repay. And then you can have runs on the bank, just
So it’s a very unstable situation when you promise
people things and then you don’t show what you are doing with their
money. And that’s what happening with Lehman Brothers and Bear Sterns
and Merrill Lynch – these companies went under one after the other.
Everybody started worrying because they couldn’t see the assets. So what
we need to do is get rid of this “faith-based banking”. We need to
have no leverage and we have to have transparency. The government has
to disclose what the assets are. The government has to do verification
We should have the government agency verify that
somebody’s mortgage is actually a reasonable mortgage: that person has a
job, that person has an income, that person’s house which is
collateral to the mortgage has actually this value. So we should not
have any liar loans. And we should also have all the banks become what
are called ‘mutual funds’ which just sell shares to these funds. They
take all the money on an equity basis. They don’t borrow money – they
just sell shares of stock: the money comes in and then they buy these
disclosed assets – the mortgages, for example. If you have equity-based
finance and then if the mortgages don’t work out, somebody doesn’t
repay, the shareholder takes a loss, but the financial intermediary,
which is a mutual fund, never fails and never goes bankrupt. So you
have a banking system that can never fail. If it’s made of equity
finance and mutual funds who are buying transparent fully-disclosed
assets – that’s what we need.
The protesters of Wall Street
didn’t know what they wanted, but this is what they need. Now what we
need is also protesters among the young about their fiscal treatment –
that’s a different thing.
RT: That’s the
thing. The fiscal cliff and the possibility of America defaulting that
we hear a lot around us – is this symptomatic agony or is it maybe
artificial political crisis?
LK: I think
the young people don’t fully understand how they are being treated. In
the debates, in the entire campaign, not one of these two candidates
talked about the magnitude of the problem. President Obama said that
our social security system, our basic government pension system has a
small problem that needs to be tweaked, is what he said. If you
actually look at the system and at the trustees report, the thing is 31
per cent underfinanced. So it’s not a small problem. According even to
social security actuaries. It’s a huge problem. So he is on a
different planet from the reality.
Romney felt we could just lower
taxes and get more revenue. So he was equally, you know, crazy on this
stuff. And unfortunately we have children whose future is at stake
here. And they are also under a lot of pressure in other ways because
they are competing with other people all over the world and they are
also competing with these new smart machines that are taking people’s
jobs away. So in our country when you go to a grocery store or a drug
store the checkout person is a machine: there is nobody working there,
it’s just a machine these days. There is actually maybe one person to
help you use the machine. And that replaced a lot of jobs, so we have
young people who are having troubles finding jobs. Even college
graduates are having trouble.
Kotlikoff, thank you very much for a very interesting insight you gave
us on the ongoing financial crisis and it’s great to have you with us
LK: My pleasure. Thank you.