really like intricate. we want to live like everyone else does. we want to go and play without fear of them being harassed by the police. them. >> that is "america tonight". please come back. tonight" tomorrow. away. i'm ali velshi "on target" tonight. avoiding another financial collapse, the real choices your elected officials will be forced to make when the next recession hits. who you vote for matters more than you think. america's economy is doing well even if turbulence in the rest of the world is causing anxious among economists.

in february, 240 thouds net jobs were added -- 240,000 net jobs were added. unemployment was low. >> observing hourly pay for workers rose by 22.2% over the past 12 mont bs, it's not -- months, it's not fantastic but is a sign employers are confident enough about economic prospects for now to pay workers a little more and add more to the payroll. yet the stock market. the off-sighted barometer for confidence has been looking shaky, as you can see. stock prices have slipped by close to 3%. those sax markets, by the -- same markets, by the way, is still up. all is up 50% over the past five years, tell that to investors as the growth slows down, see europe and japan struggle and add the bad memories that some have of the financial world's implosion of 2008.

and you understand why some, maybe you, get concerned. the truth is that the past eight years of recovery have been slow and painful at times, it was shepherded in large part by the federal reserve. the freed kept the interest rate at historical lows, making money cheep and easy to borrow. the hope was people would spend her way out. the fed was forced to make. lawmakers couldn't and wouldn't enact policies that might have been help: only recently did the fed feel confident enough to raise rates. central banks tried to ix tate the strategy, and had less economic success. they returned to lowing rather than raising interest rates. the problem with business cycles the way they are, it's only time that i don't remember recession

hits. with interest rates at lows, the fed has fewer tools at his disposal than he would the next time around. it needs to be a partisan electoral official, and that is a very scary prospect. here is the chief economic advisor to german financial services firm allianz, and the chair of president obama it said global development council, and the author of a book called "the only game in down", avoiding the next collapse. good to see you, good to see you in person after so long. wonderful to see you. >> let's talk about this. i laid out a scenario. it's correct. we need the handoff.

two in more comprehensive response, which we will only get dysfunctional. >> is this a problem, the reliance on the central bank, or is it worldwide, where the central banks have really been the grown-ups in the room, but politics is politics, and doesn't necessarily make the best decisions. >> it's a problem with the advance economies. the e.c.b. europe and the bank of japan are forced to do more heavy lifting. it's a problem for the advanced world and is becoming a problem for the emerging world as well. >> when you see the volatility we have seen over the last few months, notwithstanding the fact that markets are up more than they were in 2008. they were up so much over that period of time, does the vol tiltity pressage a recession or a pull back, or is this something else? >> for me it signals that the road we have been on is coming

to an end. and there's three reasons why it happens. first, growth is less stable. even though growth has been disappointing, it is has been stable and market lost stability, now with what happened in the world, what is happening in europe, growth is less stable. >> second, there are question marks about the effectiveness aft central banks. the fed is no longer willing to support financial markets. in the case of the bank of japan, it's an issue of effective licence and ability. markets are less confident to having the b.f.f. being in the central bank. put this together. they had volatility. >> what about the underlying officials with respect to oil. is this something we should be worried about. you don't get agreement that prices are too low.

i know drivers don't like it. jobs. >> it would have been unthinkable to say that low oil prices for consuming countries in europe and the u.s. will go from being a blessing to being a curse. that is what is happening. oil prices are not low. three to 7% moves in oil. oil is a widely traded commodity. this volatility is making people nervous. i would argue that it's making people feel that that's more of a curse than a blessing. >> let's talk about what europe did, cutting key interest rates this morning. 0.4. for people that don't get their heads around this, what does that mine. why would i give money to the rates?

>> it tells you how reliable we are. it is absurd for me to lend you money and pay you for the privilege of paying money. that happened on 30% of governments around the world, because of excessive reliance. the e.c.b. has done more than cut rates. it increased the extent to which it has security in an attempt to boost confidence and the economy. they are getting closer to the point where the bank of japan is, where if they are not careful. stimulus will go from being productive to being in effective to counter productive. it happened in japan >> what do you do? >> logically i can explain to people how lower interest rates are stimulative. it causes you to borrow money is easier to get. why not build the extension to the house or factory, and when you tighten policy interest rates goes up.

what is supposed to happen in a negative interest rate world. >> what is supposed to happen is more of what you said. >> the bod thing is what happens in -- the bad thing is what happens in japan. they said the situation is so bad. rather than spending more, they spend less. to make is worse, they said why should i keep money in the bank, i would rather buy a safe. when i grew up, you'd open a bank account and get a toaster. at least days, occupy an account in europe and japan and pay them for the privilege. you get mediation, and that undermines economic growth. >> japan's interest rates are negative. other countries, denmark, switzerland, sweden, you have a worry about negative inflation. a deflation. what is more of a worry to you,

deflation or stagg flayings where nothing happens. >> the scariest is stagnation, which is -- stagg flayings, and that is what brazil has. inflation is high prices, stag is low income. you have the worst worlds. i think in the case of europe, you don't worry as much about deplagues as recession. i think recession is a risk that a politician had to be care offul of and they had to -- careful of and stop relying on the central bank. that does mean that governments, elected officials have to take greater responsibility in doing what. in formulating better budgets. being more, doing more to create economic stackibility. >> four elements, one invest in growth engines, infrastructure, corporate tax reforms, better

labour functioning. two is to match the will and the wallop to spend. where there's a will to spend greece, there's no wallet. you have a problem of demand. third, you have to deal with indebtedness. i know it's difficult. if you don't remove it, it will crush certain countries, finally you have to complete the financial architecture. europe was the stool with four legs, it has 1.5 legs. it has the leg of monetary policy, and half of leg of banking union. integration. they need to move on these things. facing the prospect of britain leaving. let's take a wreak, when we come back, i want to ask you about the antiestablishment movement in the united states, that is

>>it's crazy money that you can make here. it's a ticking time bomb. >>do you know what chemicals have been in that tank? >> my big brother didn't wake up the next day. al jazeera america's... >> today they will be arrested. >>they're firing canisters of gas at us. >> we have to get out of here.

>> this is one of the most important sites in the century. >> this linked the mafia and the church. >> why do you think you didn't get the medal of honor? >> i can't allow you not to go into that because that is your job. >> we gonna bring this city back one note at a time. >> proudest moment in my life.

it's been eight years since the great recession wreaked havoc on the world economy. central banks like the federal reserve were forced to step in and shepherd the long and painful recovering. disfunctional politicians couldn't set aside differences long enough to enact the recovering. weir back with the chief economic advisor at the financial firm, and chair of president obama's global development council, and mohammed and i were together working through it in real time. economically. this antiestablishment feeling that has taken hold in america, which is supporting donald trump, and supporting bernie sanders. is this unique to america or are world? >> you see it in europe. it's the result of not just inadequate growth, but the fact

that the benefits of the growth have gone to a small segment of the population. people are angry. what do angry? >> they are attracted to antiestablishment movements, impacting the governance issue, because it changes the behaviour of traditional parties. the u.k., protection, we would not have a referendum if it weren't for the u.k.i.p. party forcing conservatives to do something they wouldn't have done series. into they were frustrated feeling that britain was not getting the fair share of the relationship with europe. >> easiest thing to do when you have problems is blame the neighbours, that is what happened. it game real. there was a conservative risk of losing the political base and they had to promise the referendum. now we have an uncertainty that couldn't be there. >> when you look at the volatility in the stock markets,

many attribute that to what is going on in politics. i tend to think that the world is a bigger place, maybe the markets are worried about other things, including china's slowing growth, engs in the middle east. how much of this is about markets trouble the by donald trump, bernie sanders, both of them? >> i agree with it you, it has less to do with the politics, more to do with what is happening around the world. why? the latter is bigger. there are many possibility outcomes in this primary season in the united states, that the markets can't price everything. markets have been looking at that, bemused like other people, and waiting. over the next few weeks we'll have greater similar itty, at that point you'll see the outcome. now they can't do that. there's too many possibilities season. >> on the democratic side bernie sanders has a long road to go if

he were to overtake hillary clinton, but on the republican side donald trump is looking like a potential nominee. how do the markets interpret that. what does one make of donald president? >> there are two narratives, right. people are really split and they haven't been forced to make up their mind. it's not clear whether his path is as guaranteed as he may believe it is. the first is this is all rhetoric. at the end of the day he's a pragmatist. he's a besideman, doing what he needs to do to attract a solid base. he will pivot, and he'll pivot towards the center. the other view is no, this could be deeper. don't forget that the system has a lot of checks and balances, so that there's little scope as president obama found out to implement policies. so the system will have checks

and balances in it. let's look at this divide that people perceive as we talked about, it's in the united states, it's in europe. it had something to do with the arab spring. everywhere in the world there's a feeling that the 1% is growing richer and the rest of us are not. have you seen a move to fix that, we have spent the last few years realising it, and have studies and reports coming out saying this small group under 100 people control more wealth than the bottom 50% of humanity. have we accepted that that is a problem, or not necessarily so? >> awareness is up here. we accepted that's a problem, and republicans and democrats are talking about it. and responses are down here. >> in fact, if anything, we've inadvertently made it worse in terms of policy response. let's talk about the central banks. in order to promote economic growth, they have to keep the growth low. >> why. they want to encourage fcial

risk taking. >> it's no good for most of the population that does not own stocks. it's those that own stacks. by boosting asset prices, they have inadvertently continued to wealth ipp e quality. first call. we have not had an active budget for five years. but budget making is the most basic element of economic governance, in terms of redistribution, yet congress has been chosen, we have made things worse by policy choices. elsewhere. >> do you see that changing. i have a belief at some point that the political system responds. i don't know how bad a crisis we need before if happens, yes it will change at some point. i hope is doesn't have to get really bad.

>> always a pleasure to see you. mohammed the chief economic advisor, and the author of the only game in town. it's worth a read, we know we have economic turmoil ahead of us. more on what that could mean on people living here in america coming up. >> "inside story" takes you beyond the headlines, beyond the quick cuts, beyond the sound bites. we're giving you a deeper dive into the stories that are making our world what it is. >> ray suarez hosts "inside story". only on al jazeera america.

america's economy is doing pretty well, but much of the rest of the world is not doing so hot. in particular a slow down in one country, china, causing anxious angst and economies across the globe. in january i participated in dubos, where economists and journalists gather to forecast economic trends. i sat with a chief economist at mcgrath hill financial to talk about the second largest economy after the united states, and what the slowing economy means for the rest of us, here is what he told me. >> china is the epicentre of global market attention, that

was a shift in 2005. there's a reason for of the emphasis on china is for a number of reasons. they are an important economy. >> it continued to grow 8%, and has given global growth. the last 2-3 years it has been slowing. and that is starting to cause concerns. the markets can cope with slow growth, but there's concern about the debt or credit overhang. china did not grow spectacularly in the wake of that global crisis by chance. they pumped up credit and investment leaving them with an investment credit overhang. as growth is slowing, and as they are trying to unleech market forces in the economy. that's a worrying mix. can china gets through this without having the hard landing. >> what is different from the fact that we knew china was slowing to now.

is it that what the evidence this we see that they are not always as transparent. >> can you trust the numbers, that is an issue that is important. again, why was 2015 to important for china. if you look back, two major markets drove the attention, one was equity, one was foreign exchange. in both of those markets china implemented reform policies. this is the point about china. it is a developing economy story. it's an economy in transition. and they are in the middle of one of the greatest reform processes in the history of the world. markets are changing. united nations are changing and that can be disruptive. it happened in the equity and infoxchange markets.

>> let's talk about equity market, in america and western counties we associate that with economic performance, is that a fair way to prepare things in china, when we saw double digit growth in china there was no equity movement. now there's huge equity movement and rough markets, didn't really growths. >> when you get you people look at the shanghai market, the schenk zen market almost as if it's on the par with other markets, and it's not. china is a transitional economy. the chinese equity market is where the western market were 30, 40, 50, 70 years ago. to put it on the same level and judge it in the same standard,you'll get critical.

that is a long-term reform process, the key question is are they making the changes or not. to give them short-term interventions. in terms of the linkage, it's less direct than it would be in the major developing areas. >> if you use the equity mark, you'd say oh, my gosh, china is going into the tank. how would you describe the economy. it is slowing. we think they continue to slow. it is adjusting with normal, trying to rebalance the economy, reining in the growth and shifting to consumption, services and dransicing the economy. growth is slowing. the government assist is saying the government is saying more

than 7% growth is gone. they'll aim to 6.5 and 7%. per not talking about growth. >> you talked about foreiinfoxchange - about foreign exchange. there was talk about imposing tariffs from china, taxes on goods. if china does not deal with the currency, increase the value of their currency. talk about that for me. >> some of the policy rhetoric, and what ultimately see the light of day. there's a big difference. that. china is doing a lot of things that the west and america has

been pushing for it to do. moving to a fleshible ploeting exchange rate. that is causing concern that it is strengthening. you can't have is both ways they are not quite there yet. and not have moves reflecting fundamentals, you can make a good argument that if you let it become more flexible, it wouldn't be a surprise if it started to weaken. that's what it's doing. that's what it's supposed to do. >> standard and poor's commit, that is our show, i'm ali velshi, thank you for joining us. news is here