"The one good thing about the Fed (E1493)"
The Keiser Report (E1493) (Janurary 25, 2020)
In this episode of the Keiser Report, Max and Stacy watch in amazement at the epic historical bull run, as American heads into election 2020 with Trump’s stock market charging ahead like there is nothing that can stop it. The price to sales ratio has hit an all-time high, suggesting that investors have zero concern about actual sales. While earnings can be massaged with clever accounting, sales is what the company actually manages to sell and there is no disguising that, and every dollar of sales is now worth a whopping $2.4 in stock market cap. They also discuss how Obamacare high deductible policies are wiping out rural hospitals across the US. In the second half, Max continues his conversation with Chris Martenson of PeakProsperity.com about the death of bug splatter, the rise of evil frog robots, and ‘the one good thing about the Fed.’
Max Keiser: "You know, Medievalism is coming back in a big, big way. What do I mean? Stacy:
[0:09] Stacy Herbert: "I have no idea. But I will tell you something. We do see continuing all these bubbles around the world, and the interventions from the Fed. And the Fed keeps on intervening, as we've been talking about since September, October of 2019, in the REPO market. It's expanding and it's expanding. And do you know what else is expanding because everybody is looking at and waiting for a market crash. And they've been, of course, waiting for this market crash to happen for the last few years. And it never comes. It never comes."
"But here's an interesting indicator, and this is one that I know that you were involved with at Karma Bank a long time ago. Seventeen, eighteen years ago? And that was the price-to-sales ratio. Because this us an interesting one to look at." [shows screen shot]
The Price to Sales Ratio in the S-and-P 500 (2.4x) is the highest in Bloomberg data history (1990) -- The Bear Traps Report
Max Keiser: "Yes. Stock price as a multiple of sales. So if Coca Cola does a dollar in sales and the stock is at 5 dollars, the stock is trading at five-times sales. So, it's an indicator -- gives you an indication -- of where stocks are valuation-wise, historically. Price/Earnings Ratio is also one looked-at. Price-to-Book is another one to look at.
What I mean by Medievalism, and I think we're heading into this, is that the metrics that are being used to measure stock valuations are meaningless in the twenty-first century when you 0% interest rates, effectively, and you have unlimited credit available to, what under Theodore Roosevelt in American history, would have been called monopolies. But, continue:"
[1:45] Stacy Herbert: "Well, of course, I would say that the Fed are like in Medieval times. They're the ones that supposedly have all the knowledge. They have a special book that nobody else can read. There's no printing press. There's no ability to read and understand and sit in a room and read this knowledge, and share it, allegedly. But what they're doing to what they see as wrong is money printing, which is the equivalent of putting a leech on somebody's head or drilling a hole in it and putting the leech on top of it trying to suck out the spirits, the evil spirits.
And in terms of what the Fed has done, or whether or not we're in bubble territory, or who's driving who? Rembember, I keep on saying, Which came first: the chicken or the Fed? Because, if you look at this chart of Apple and Tesla, they were going up and down, sometimes in tandem, until ... da dat dah ... the Fed started intervening in the REPO market. And now you see there's this genuine parabolic move that they've had since then. As you know, Apple, a huge corporation,the biggest in the world, or the second biggest, doubled in a year. So, that's unusual to double from a large size company like that. But it has, along with Tesla. So, either their fundamentals are exactly the same and their CEOs are doing something uniquely interesting and creating wealth possibilities and a future that looks bright, equally at the same time, or perhaps the Fed is doing this."
[3:14] Max Keiser: "Right. And in the case of Apple, the biggest company in the world at 1.4 trillion dollars, they are grossing themselves out on the free money they get from the central bank to buy back their own stock. And they're becoming bigger than many nation states. And now there are only four or five of these huge mega-corporations. And, again, my theme of Medievalism. You have these fiefdoms, with kingships. You have the Lands of Apple and the Land of Tesla and the Land of Google. And the people who live outside the gates of these castles are serfs, are nomads, are without anything. In San Francisco, they're literally getting Medieval diseases like typhus from open defecation in the street. This is the Medievalism, this what I call neo-Feudalism, and it's now happening at an accelerated rate."
[4:01] Stacy Herbert: "Again, here is the Fed intervention and what they're creating with their putting leeches on the global financial system. Perhaps its working. They seem to think it's working, but on the other side, you might sort of look at this information I'm about to tell you and think, Oh my god. You've got to take these leeches off." [shows screen shot]:
Big companies have never dominated the S-and-P 500 like they do now. Top5 Apple, Microsoft, Google, Amazon, Facebook nw make up a record 18% share of the benchmark's cap thanks to monopolistic rents. -- Holger Zschaeptiz (Twitter.com)
[4:44] Max Keiser: "Right. And I believe that no metric measuring the valuation of the stock market applies anymore. When you have those four or five companies have got 18% of the overall capitalization, that number will go to 80%, I predict, in the next five years. Because we are heading toward a neo-Feudal period where those top five companies and some private equity firms and a few like Blackrock own everything. The entire stock market and bond market is being taken private. With Free Money. And the result will be Medievalism, neo-Feudalism. It's clear as day."
[5:17] Stacy Herbert: "Well, they do say something like over 40% of companies on on the S-and-P 500 -- i.e., not those top five -- they're zombies, essentially. If it weren't for the Fed's free money, they would disappear. They would be gone. They would be out of business. But I think part of what all this invtervention is, is crowd control. It's perception. They need to pretend like there's 500 companies.What are they going to have, the S-and-P 5?"
[5:44]"But that is, indeed, the fact. However, we need the illusion. We need the audience. We need the population to believe that we all could possibly be in the S-and-P 500. That there IS competition. We do have capitalism. And therefore they need to have 500 companies survive. So that's why they pretend that those companies, that's part of why they have to intervene and put all these leeches on the economy, to make it look like there is indeed some sort of capitalism and competition. And, of course, as you and I have talked about since moving back here and having to subject ourselves to Obama Care, and note that we're on this ACA Marketplace. It's called a marketplace, but there is only one provider for health insurance in many states. And we're going to look at another story related to this macabre system where it's all a Potempkin Economy. It's not really there. There is no competition. There is nothing real there." [shows screen shot]:
High-Deductible Plans Jeopardize Financial Health of Patients and Rural Hospitals.
According to the nonprofit National Rural Health Association, bad debt for rural hospitals has gone up about 50% since the passage of the Affordable Care Act in 2010. -- khn.org
[6:43] Stacy Herbert: "Why has this happened? Because of the high deductibles. And we'll get to that in a second."
"People in rurual America were buying plans maybe for the first time, but buying plans they couldn't afford," said Maggie Elehwany, the group's vice president for government affairs and policy. The plans "seemed to make sense at the time, until they got sick."-- khn.org
So what happens at these rural hospitals, is that these people have $1000 deductibles out, say, somewhere in Wyoming, the Dakotas, or Colorado, remote areas. And the rural hospitals are not equipped to deal with huge, major, catastrophic injury in a car accident or a heart attack situation. What they do, is the patient is brought there to the rurual hospital. They stabilize the person so they survive for the next hour or two. Then they transport them to a big city hospital which has the facilities. Well, the first hospital to see them gets stuck with the deductible. The $10,000 deductible. The insurance company pays for anything over $10,000, i.e., the big city hospital. The first hospital, the rurual hospital has to rely on the patient to have that $10,000 and, chances are, they're not going to get paid."
[8:12] Max Keiser: "Right. So there are these rural hospitals that are collapsing. So health care is collapsing. Infant mortality goes up. Life expectancy in America goes down. Opiate addiction goes up. Suicide rates go up. Because private equity has gotten into the health care business. And they are the biggest leeches of all. And they will suck every penny out of everyone's orifices until they're all dead. And there'll be sudden collapse. But you see it in the statistics. I see it in the news all the time where people say there's a temporary fall in America's life expectancy over the past three years. They keep saying, 'Oh. It's a temporary fall.' No. It's an institutionalized permanent fall in life expectancy because you're promoting suicide and private equity to kill your populations. So, it's permanent, you fricking idiot."
[9:01] Stacy Herbert: "It's like neo-liberalism. Neo-liberalism is that a market will solve every single thing. And there has to be a market price and all this sort of stuff. So what you have in the financial markets, what's happening, the Fed is saying: 'You consumers are not spending enough. So therefore we're going to punish you. We're going to have repressive tax rates and inflation rates. Also, we're going to have negative interest rates. We're going to take your money. If you save even a thousand bucks, it's not worth it. Just go spend it. And it causes negative side effects. Here is where Obama really really genuinely believed in creating these marketplaces, even though he could see the fact that there was only one provider in the entire area. And he believed, fervently, and he and his McKinzie consultants working for him designing Obamacare, they met with the insurance companies and what they said was that a very high deductible will make consumers really active consumers. They'll go shopping around for the best cost and all this sort of stuff."
[10:13] "Well, as all these rural hospitals are showing, when you show up in a coma, it's very very difficult to negotiate prices. It's very difficult while they're pumping your heart trying to stabilize you while you're having a heart attack. 'Who are you? How much are you costing? What are you putting into me? Wait. Do you have a cheaper supplier?' Like, you can't do that in that situation. So these high deductibles are, in fact, not causing people in heart attacks, having strokes, accidents, any of these life-threatening situations. You're not turning them into brilliant consumers."
[10:48] Max Keiser: "The word ther being 'neoliberalism.' This idea, really I guess from Milton Friedman forward under the Reagan/Thatcher doctrine, that markets are sacrosanct. And we entered into a period called 'Market Fundamentalism.' And it became similar to religious fundamentalism. That Americans would believe in the sanctity of markets above all else. They worshipped price discovery. Even though this price discovery was driven by monopolists, predators, shady bankers, hedge funds, and Ben Bernanke. Just the worst cast of characters you could possibly assemble in one place, without it being actually the opposite of Heaven. And the result is predictably horrible."
[11:37] Stacy Herbert: "So 120 rural hospitals have gone out of business in the last three years, most of them in the 'loser' states, 'deplorables,' all those places that Hillary said are the 'losers.' Again, this is a cycle of 'Your policies don't work so blame the victim of your policies.' You know, we put a leech on your financial system and we've destroyed it. Drilled a hole in it, and it's all leaking out. All your wealth. All your life force is leaking out to Manhattan and San Francisco and LA, and you're the loser for this. According to the woman they're interviewing here for the Government and Affairs Policy for the National Rural Health Association:"
"The exchanges have never worked the way they were envisioned," Elehwany said. "The goal was you go on your computer and it's going to be like buying an airline ticket, and just shopping around for what makes sense for you. There's no shopping in rural America. You have one choice." -- khn.org
[12:19] Max Keiser: "People are notoriously stupid when it comes to making economic decisions in the short term. This is what drives folks to make bad consumer choices, which is the essential component of the American economy with 70% bad consumer choices. Which has led to the opiate addiction, the life-expectancy crisis, the infant mortality crisis, and the ecological crisis. So let's apply that faulty logic to health care, so that people will voluntarity make bad choices in the short term about their health care on top of all the other bad choices they're making in the short term. Thanks, Obama.
[13:11] Stacy Herbert: "The bad choices are evident in the fact that 1 in 4 dollars in our overpriced system is spent on diabetes. And most of that diabetes, some of it is caused by people being born with Diabetes Type 1, but Diabetes Type 2, which is brought on by obesity and bad choices about food, again partly because of all the subsidies and the interventions in the market which caused an oversupply of corn, which means now we have corn syrup in every single thing because there was too much production of that. These are the bad choices that lead to a single supplier marketplace. Everybody is acting like we don't see the Wizard of Oz, he's just a guy behind a screen, nobody seems to mention in all these Democratic debates, for example, there's just one provider. Like how is that a marketplace? Why are we not calling out this Potempkin Economy?"
[end of first half of program. ... At the end of the second half, Max Keiser asks his guest, Chris Martenson]:
"One final point here. Your write that 'One good thing abot the Fed is that it destroys our future. It is inadvertently giving us one precious resource.' Elaborate on this. We've got about thirty seconds:
[25:00] Chris Martenson: "It's given us time. All of this market-propping-up and all of this is just a little bit more time. I want people to use that time wisely. Understand that it will end. When it ends, where are you going to be? What's it going to look like? It could be uglier than 2008. Are you ready for that? There's a lot of goodness that comes with these kickinf-the-can-down-the-road, but you need to be ready for when it ends."