bernanke is rather than learning from the mistakes of allen greenspan, he is repeating them on a bigger scale. greenspan's policies created the housing bubble. yes, fannie and freddie, government created entities were part of the problem. take the fed out of the picture. take the artificially low interest rates that we had for years, we never would have inflated this bubble. we never would have had subprime. we never would have had teaser rates on adjustable rate mortgages the all of this was a creation of the fed. and the fed made these mistakes to try to artificially stimulate the economy from the recession we had in 2001. and when greenspan's bubble burst in 2008 and we have that financial cross-ice chisis whic creation of government, what did ben bernanke do? did he learn from the mistakes? no. not only did he not raise interest rates to 1%, he brought them to zero. even people that didn't see the financial crisis coming. and this conference is full of economists who missed it. even some of those will say that

part of the problem was that fed kept interest rates too low for too long. what is bernanke doing? keeping them at zero even longer? and now the phoney stress test that's came out. they're in the papers today the they -- the federal reserve asks the banks to run the stress tests. under the stress tests, the sum sgs the interest rates stay at zero and the treasury yield is below 2%. why wouldn't the fed ask the banks to run a stress test on a return to normal interest rates? the reason is because all those bank was fail. ben bernanke has got the whole economy hooked now on cheap credit. it is masquerading the economic growth. if you look at the trade deficit that came out last week, it's exploding. the account deficit is getting bigger. the jobs we're creating are making us poorer, not richer. what we need for economic growth, is savings, investment and production. we're not getting that. all we're doing is spending borrowed money. when you spend borrowed money, you can create some jobs like we

created jobs during the housing bubble. but when that bubble bursts, all those jobs disappear. and what you're left with is a gigantic hole which is what we're digging for ourselves right now. we don't have any growth. our economy is getting sicker. ben bernanke refuses to allow the cure. what we need is interest rates to go up. the federal government price fixed interest rates. its not letting the market determine interest rates. because interest rates are too low, americans spend too much, they consume too much, they don't save enough. they don't invest enough. the government is enormous. if you want to know why the budget deficits are so big is because of ben bernanke. if he did his job, if he let interest rates go up and refused to monday he ties government debt, congress would have no choice but to cut spending. but because ben bernanke gives them a way out, gives them an easy way out because he buys all that paper, the government gets bigger and bigger and bigger. the same mistakes took place in europe. look at what is happening in greece right now.

a few years ago greece had very, very low interest rates. almost low as ours. and then they went up. because creditors got worried that they weren't going to get paid back. we can't pay our creditors back either. pretty soon they're going to figure it out. people think we're different than greece because we got a printing press. well, you know, zimbabwe has a printing press. having a printing press doesn't make things better. it makes it worse. what good is it if you get your money back and it has no value? that is the crisis we're heading for. we're going to have a sovereign debt crisis, currency crisis and this next class that is coming. and it's not years and years away. it's coming soon. it's going to be much worse than what happened in 2008. >> thanks, peter. peter seems to think that ben bernanke is a kamikaze. you may be right or wrong. you take a different view. you think the u.s. economy is in a ditch as in a downward spiral

with or without the help of the fed. we're talking a little bit earlier about the best ways to think about the problem the united states faces and the way to get us out of that problem. can you help us frame the way that you think about the current deficit in the u.s. both fiscal and economic? and a away out of that? >> i do tend to side with the atlantic cover story. maybe for different reasons. i actually see an optimistic path for the u.s. economy going forward. we're still dealing with three serious deficits that are holding us back. the first is a demand deficit that has been partly filled by a government transfer payment that's have held up consumption. and there's limits to that, particularly if you're going to get to sustainable growth path.

we're getting a little job creation as you pointed out now that helps in boosting incomes. but we're facing serious global headwinds. and we have a -- another way of framing the demand deficit is that we have supply outstrips demand globally which will get worse with rolling economic crisis in europe which will eventually hit asia and emerging china is beginning to consider dealing with their own type of deleveraging problem. the second deficit is the jobs deficit. which we still have a long way back to anything approaching full employment. the most important deficit, however, in the one i think that responds to peter's concerns is that we actually have an investment opportunity deficit. we have too much savings and idle capital that is looking for too few good investments in the u.s. and in the world economy as a whole. so as a result, the result of

these ultra low interest rates just isn't ben bernanke's policy although he helped it with operation twist, it's because there's too much money looking and not being able to find much investment. it ended up being parked and fixed income because of the resistance to taking on risk at this point. so the challenge is how we put, encourage both a tax and other framework to put this idle savings and capital to work making real investments that create jobs that produce a more productive economy in the future. and governor rendell i think pointed in the right direction. and to do it in a way that gives some real returns to all these aging future retiree that's right now are getting less than

1% or 2% on their fixed income, investment and pension funds are having enormous difficulty being able to meet the returns because of this low yield. the answer in my view is that we need to invest in the missing piece in the new american growth story. there is a powerful new american growth story that is emerging out there around the synergistic convergence of the oil/gas revolution which with the new exploration will cut our trade deaf it? half in three to five years if we develop these resources. the accompanying rebirth and revitalization of the manufacturing sector, partly made possible by the cheap energy. we've had a huge swing in the chemical and chemical manufacturing sector because of the dramatically lower cost of natural gas feed stocks in the u.s. in comparison to the middle east and asia and europe. third, we're beginning to talk

seriously about the conversion of large part 25% of our fuel consumption is by certain delivery vehicles, trucking and whatever. all which we move from diesel to natural gas in a very cost effective way. now if we get serious in investing in infrastructure, what is mising is on a federal framework to make this happen so it spreads out to the widest population. but we're -- we have enormous infrastructure bottle necks. we have all this oil hsitting i the middle of america. we're not able to move it to other places. so if you get serious with a plan about building out the infrastructure for transportation, for the conversion of transportation, through natural gas and for all the other infrastructure roads and in them the water ways. then this new emergence is

necessary. they're deleveraging. they insulate us from the slow growth from the rest of the world. >> thank you. i want to come back you to. i saw you nodding when you mentioned manufacturing. on the one hand, the manufacturing has declined significantly since it employed 40% of all workers in 1950. at the same time, health care, education, business services, these jobs equal group wiquadru. so on the one hand, i see that manufacturing is in its own structural decline. it seems to be recovering some of the jobs that lost in the '90s and 2000s. the service economy seems to point towards our growth future. do you see it differently or do you soo he thee it differently manufacturing having a revival that could have a multiplier

effect? >> well then the short run there's a great role for traditional manufacturing. and i'm sorry he said it absolutely. if we develop our own energy here, interestingly shale is a biggish knew pennsylvania and remains a big issue. i'm a great supporter of extracting natural gas from shale. i do believe it can be done in an environmentally sound way. we've got to master that. but it's enormous job creator in itself. construction of the wells, the actual process. but it's a great manufacturing boost. the single biggest advocate for the shale industry in pennsylvania, other than the companies themselves, is john sorma of u.s. steel. all those drills require significant amount of steel. that's true for wind. wind energy, where do the turbines come from? what are they made of? if we develop our own energy,

just think of all the new type of gas station that's have to be constructed. so there is an infrastructure itself. the big secret is it's not just jobs on the construction site. stimulus, according to economic reports produce 1.1 million jobs on the construction site, 400,000 jobs back in manufacturing plants. so in the short run, as we build up our economy, infrastructure and energy, i think manufacturing can play a big role in the recovery. those things are going to become more automated as time goes on. but we also ought to look to advanced manufacturing. advanced manufacturing, pennsylvania has the lowest unemployment rate of any big industrial state and has had for over the last eight years. it wasn't all my doing.

we have converted in both the southwest and the pittsburgh area and the southeast and the philadelphia area where we do a lot of pharmaceutical manufacturing. those viagra pills, someone has to manufacture them. so, yeah, i think there is a significant role. you were talking about raising wages. we were talking about raising wages, i'll take a manufacturing job against two service jobs any time, any time. >> let me say something about manufacturing. >> sure. >> first of all, if we're ever going to have a real recovery, not a stimulus induced temporary high, it's going have to be led by manufacturing. the problem is that manufacturing is declined so much because of government policy. we now have more people that work for government than who work in manufacturing. and the reason we've been able to get away with this is because the world has taken the money we print and exchanged the stuff they produce. we run enormous trade deficits. the dollar is the reserve

currency. we have used that privilege and we're going to lose it. americans are going to only be able to consume what we produce or if we want to import something, we're going to have to export something of equal value not just money. and then we're going to have to have a lot of manufacturing. that's not going to happen unless we have a lot less regulation, a lot less taxes that have helped drive the manufacturers out of business. and it's going to mean that we're going to have to spend a lot less money on things like education and health care and services. we spend too much money, thanks to all these government subsidies, we waste so much money on education. you think it's, you know, talk about education. we've got kids borrowing hundred thousand dollars plus based on government guaranteed student loans to go and get worthless liberal arts degrees that have no marketable value. yet when they could be out learning real skills in the real world but we stick them in the universities so we can't think -- you know, yeah, we need to spend more money on educat n

education. we just spent a lot less money on education and a lot of other things. meanwhile, we spend all this money on education and 15% of the population is unemployed. and we have a $50 billion month trade deficit because nobody is making anything. >> can i just respond to that? >> does anybody know what the h 1 n visa is? american industry goes if and asks congress for temporary ver por for airy veez ya -- tempora. we bring a million a year of program nears the united states because we don't have young people trained enough to take those 40,000 to 50,000 jobs with benefits. >> they're getting drunk with student loans at fraternity parties studying liberal arts courses, that's why, and taking humanities and sociology. >> and the bottom line is there are tons of 23 and 24-year-olds in every american city who would love to have those jobs but we

didn't educate them well. we didn't show them how to use technology. we didn't train them well. it's not just about spending money. whose fault is that? >> i want to move the conversation a little bit down here. doug? on the subject of education this is the topic that i want to discuss. to a certain extent i'm pleased this is where we landed. you were talking earlier this is the four guiding principles of public policy. one of them is education. and it's interesting to me because on the one hand, it's hard it see what is the real education crisis? is it -- is it the 40% of people that don't go to college?

are they not seeing the same rising benefit they were getting in the '50s and '60s. which of these is the most effective place to focus our attention when we're making public policy? >> so i have been in this town long enough that i'm going to agree with everything this guy said. we're really generating enormous social inequities and certainly not preparing students to be able to succeed at a college level education. so many of them are not graduating. when they are ready for college education, they borrow a lot of money. i actually want to agree that our financing in higher education leaves a serious problem. we have a student loan port

follow y -- portfolio fund that is going to go south. i think the core about skills and competency and being successful in k-12 and then figure out the college finance thing. we have turned the college system into the mirror image of our health care problem. we can't just keep pouring money in. >> you know, i do want to talk about the kind of investing that families need to think about if they're going to send kids to college. we reached a point where even with more and more people going to school, middle income wages have flat lined which means with the rising cost of college, people have to borrow more in order to get this necessary, arguably, degree in order to advance the world, get the kind of skills whether it's to be a designer or to be a software engineer.

>> whether we're talking to the certified financial planners around the country, what wear hearing and what we saw in the research results is a real conflict with middle american, middle-income families being able just to meet short term obligations like paying the mortgage or filling the tank with gas. and at the same time, preparing for retirement. i think one of the gs was a litt in conflict with what the governor said was that it's not just college. i think it's finishing a training program of some type. a high school diploma alone does not prepare. that doesn't mean that it's a

fancy four-year liberal arts degree necessarily but could very well be additional training to be a plumber or an electrician or one of the skilled trades. what do you see as the most likely and most important low hanging fruit that this congress in either the next six months or as the governor mentioned in the first five months and speed up the next administration that we should really focus on and give us our biggest bang for the buck in terms of getting the right kind of productivity and the right kind of growth to the u.s.? >> i think republicans are moving to the pass aversion of the infrastructure bill which is

terribly important both for the macro economy and the real productive economy. i think a number of little twists could be put on that to have -- and this is where i think some also democratic concessions, obama administration's concessions on speeding up -- speeding up environmental approval which i know governor rendell has spoken about for certain transportation and infrastructure projects. izing the oversight and approval of the oil and gas industry. i think we're beginning to pinpoint the problems are with certain deficient wells and not the horizontal fraking. i think certain numbers of pointing towards an infrastructure bank. i know that is probably beyond the pale.

but additional loan programs that make it possible -- corporations right now are in a better position to borrow in the capital markets and those record corporate borrowing glass, they're borrowing at 3% coupons to be able to pay out more dividends and buy back more stock. yet it's very difficult because of the 15 to 30-year time horizons to borrow for extensive natural gas pipelines that take 10 to 15 to 20 years or for retrofitting utilities to convert from coal to natural gas even though there's major cost advantages. so i think having a couple add ones will give us a lot of bang for the buck in terms of both

offsetting the headwinds but moving us forward with this -- with what i call a potential very important american growth story. >> we haven't talked about financial reform. the steps we have to take three, four years ago doesn't happen again. what you are looking for washington to do in the next year that gets us closer to a point where you feel like the banks are safer and that government is more responsible, more aware of the kind of risks that the banks are taking? >> i think we're in the implement phase of dodd/frank. i think that is addressing to the full extent that is possible

at this point a number of the issues at least that we're determined to have been a problem and the causes of the financial difficulties in 2008. we can't be in a steady state. obviously with dodd frank we' l going to see reforms on the capital size and with predential regulation and also with basic regulation of the derivatives markets which really was largely needed. but i think going forward there is still so much that is going to be left to do if you really take it down to the individual investor level. to some extent, a lot of what needs to be done is not being address because of bandwidth issues at the agencies. i think there were a number of reforms that mary schapiro came in. i think she came in really

wanting to improve the kinds of disclosure that investors received so that it's more informative. i think what we have now are individuals who, you know, a barrage with information about financial products but don't know what to do with it. and to some extent a lot of the information that they get is more developed, you know, from a litigation standpoint than it is investor and informative standpoint. what we really need is a complete rethinking of how we deliver information to investors so that they get information that is useful. and obviously the other thung we need to do is to continue to work on insuring that investors are protected. >> can i vote? possible to fit these sortseat. of twitter size thoughts? >> twitter size thoughts? i know that peter -- with me. but we think one of those

investor protections in that is holding anybody who gives to a douchery standard of care. >> i was going to say that. i agree with you that one of the things that, again i think would have been higher on the list of priorities but for bandwidth implementation issues with dodd/frank is creating a standard of care and whether they are investment advisors or broker dealers have the same obligations to the investors. and that's something that -- >> and peter, your tweet? >> that will force me to close my broker dealership. but that is a whole different subject. i want to get back on to dodd/frank and because, you know, i said earlier that the architect of the housing bubble was greenspan and the ensuing financial crisis. did he have help in congress. his two biggest helpers are chris dodd and barney frank. they're the most culpable in the

congress. i think it's only fitting that they had written financial reform which did nothing to get at the underlying causes of the financial crisis. they have a commission in congress to study why they had a financial crisis. i tried to get them to call me. by the way, i've been forecasting it for years. i wrote a book predicting it. they didn't want me to testify. they didn't want someone predicting the crisis why it happened. they were looking for a reason to justify more government involvement. they did nothing in dodd/frank to take power away from the fed. in fact, the fed got more power. they didn't even touch fannie and freddie. fannie and freddie and the fha are insuring more mortgages now than they did before the crisis. so nothing has been prevented. and, of course, the bigger problem, too, is the moral hazard that is implicit in having the fdic insuring all the banks. if the fdic didn't insure the banks, they wouldn't have done the risky stuff. but since the government created all the moral hazard by telling depositors, put your money in any bank you want because the government is going to bail them

out if they fail. that is the problem. and we made it worse. and the financial crisis is worse because of dodd/frank. we haven't prevented. we guaranteed it. >> we have one more brief comment. >> just to clarify the record, i was a member of the financial crisis commission. two great accomplishments were it began and ended. but it has nothing to do with dodd/frank. it went ahead with the legislation before we did any of our hearings, delivered any bad reports. we covered a lot of ground so i'm sure there are thoughts. as i survey the room. we have a thought walking. thank you.

>> wee'll start with you, sir. >> it's jack warner. it was clear that there were like 600,000 jobs out there right now that we can't fill. and companies like boyd have to go from a seven-week training period to a 14, 16-week training period to train folks to be able to fill jobs in their company. i think the government was pointing out is that the education process and what we're doing in terms of what we're doing with education is not focused in the right direction. colleges, community colleges, they're not connecting with the industry to find out what it is that skill sets, the knowledge that's needed for these new jobs. >> i think that's so important. our workforce investment boards and we have the ten in the ten different regions of the state, we would make sure we had private sector people on them and we would survey the private sector in each region and ask what do you need?

because to do it without doing that makes no sense at all. so what we need, we then start putting in training programs and in our community colleges and our technical schools to fulfill the needs. there is absolutely no question about that. and we work with private industry. in the allentown bethlehem area, it's a big u.p.s. area. u.p.s. actually came in and one of our trade schools set up equivalent of a ups facility. and trained kids right there on the job. and guaranteed them jobs. so, yeah, the companies have to anticipate and survey and find out what's the need out there. because to have 600,000 jobs and my guess is it's more and if you count the h 1 n 1 guys, it's probably a million six that could be filled by americans, decent jobs, it's a sin what's going on because there isn't that type of coordination.