not think that our asset purchase programs are having a significant effect on thend bala very simple point that, when we "bias" sets, and our total purchases by the way are pretty small share of the global amount of safe assets but anyway, when we buy safe assets, we of course pay for them with bank reserves which is another safe asset and one that is even more liquid. so i don't think our asset purchases are affecting the net supply of safe assets. that is one we looked at as we thought about margining and liquidity policy. >> the fed navigate ad minefield at the edge of fed policy sometimes generating questions

about fed independence and challenging questions about independence. central bank independence is a topic many audience members study and work on. can i ask you where you think the greatest threat to central bank independence comes from? is it from innovative policies on the macro prudentialside? >> you're watching money with melissa francis. i'm melissa francis. fed chairman ben bernanke is doing question and answer session. what it means for markets. we'll listen back in. >> dealing with the stimulus type role? >> that is political economy question. i'm not sure i could do it justice. let me say a preliminary thing which is, i don't think the central bank should be equally independent in all of its functions. there are good reasons to have independence in monetary policying subject to a mandate or subject to objectives set by the democratic parliament or legislature. we understand those, those

reasons having to do with avoiding short-run political intervention in monetary policy and the like but in many of its other activity, you know, for example, as a bank regulator, while we believe that bank regulators should be independent to make their own judgments about the quality of banks, i don't think the fed can presume to be anymore or less independent in that function than is the occ or some other bank regulator. it is just another aspect of our activities. in our provision of payment services there probably is no real case for independence and it is entirely appropriate for the congress to ask questions about, you know, what we're charging for those services and how we're providing them and so on. so i think it depend very much on the, on the aspect of the particular activity that the central bank is involved in. independence is a subtle concept.

what it means varies according to the particular activity or particular function. there is always, again, if we're worried about independence, the place where all central banks worry about independence is mostly in the monetary policy side and there i think the best we can do is to do our very best to meet the mandate that congress has given us. if we don't meet that mandate, then they would have, if we don't meet it and can't show why we didn't meet it at least, they would have a reasonable basis to ask why. so, i think in the long run, the best thing we can do to maintain monetary policy independence is to show that is we will take all reasonable measures to meet the objectives that the congress has set for us. and of course that's what we intend to do. >> shifting from the domestic pressures to the international pressures, some have argued that in the last few years the policies at the fed and those of

some of the european central bank have risked igniting a currency war of sorts. i'm curious whether you view that as a, you know, an inappropriate argument, it's simply wrong or whether there's some validity to the worry about it simply was a cost that had to be born as a consequence of other objectives that the fed was trying to achieve? >> well i gave some remarks on this at a london event for mervin king's retirement and i, appropriate of today's discussion i used historical example. i made the distinction of during the 199 '30s during the great depression, as countries left the gold standard, their currencies temporarily depreciated relative to other countries. and they had a temporary trade advantage because of that. but over time as all the countries left the gold standard

exchange rates kind of normalized, kind of went back to where they started from but nevertheless the whole world was much better off because there was a global monetary expansion which was desperately needed at that time in the 1930's. that was a positive sum game. it was a situation where everybody gains because the benefits of that particular context, the benefits of growth-enhancing domestic policies spilled over into other economies. i contrasted that with the smoot-hawley tariff which was more of a zero-sum game or negative sum because what was going on there, each country was trying to divert trade in its own favor at the expense of its trading partners. and as that activity continued and reprisals and, payback continued, actually it destroyed

the global trade pattern and was very costly to everybody. so what does this got to do with your questioning, i'm sure you're wondering [laughter] what it has to do with today is that it is one thing to use trade or other kind of interventions to divert, to artificially weaken your currency or otherwise to divert exports to your own producers at the against of -- expense of other, other countries. that's a very different thing from a situation where countries are using monetary policy appropriately to achieve domestic growth, domestic reflation and that growth spills over and helps the economies of, of other countries as well. so i think that's very much the

difference. exchange effects and currency effects are very much different. what is important that each country have monetary accommodation or fiscal accommodation to achieve, to achieve its potential output and this, i should say this view is not just my own. this is a view that's been adopted by the g 7 and the g 20 as a. in doing monetary policy in the united states, we're very much consistent with that g20 perspective. i would close this answer by saying if you look at the dollar, it is not exactly falling recently. it seems to be doing okay. so i don't think we are, trying to divert exports away from anybody else.

what we're trying to do is achieve domestic growth using the tools that we have. >> this next question will take you back to, in terms of historical perspective of your talk. i guess it really has two components to it. the first over the first 100 years of the federal reserve do you believe on balance the fed has given too little weight to issues of regulation and financial stability relative to other objectives? and the second part of the question is, that in looking at the lessons over this period, are there, there tends to be a focus on issues associated with the great depression. in looking at the early years of the fed do you think that there are other important periods and say the first 50 years of the fed that can convey important lessons for thinking about current policy? >> sure. there are many interesting episode. on the financial stable of course the fed was founded, as i mentioned the fed was founded for the purpose of preserving

financial stability. it had some success early on. then of course the great depression came and for various reasons stigma was mentioned earlier but i think there were other reasons as well including a lack of sufficiently aggressive policy on the part of the federal reserve the fed didn't meet its financial stability mandate during the '30s. that was obviously the most egregious example of failure on that particular front. now a less attention to financial stability during the period from 1934 until 1980 or so would be understandable because of structural changes and regulatory changes. that of course was a very calm period in u.s. financial markets and as a result, the, the tension to financial stability became less over time. as chairman volcker reminded us

earlier though it's not just recently we've seen financial stability issues. the mexican debt crisis, the latin american debt crisis, the crises of the 19 '90s. the wall street stock market crash. and other events, should have reminded us and did remind us that financial instability remains a concern, remains a problem. what we look or what didn't happen, fortunately of course is that between 1934 and 2007 there was no financial collapse of a magnitude that had serious negative implications for the u.s. economy. now that we've seen that, and as i mentioned in my remarks, that i think is a very important lesson and the federal reserve and other central banks have accordingly elevated financial stability, increased the resources we put into helping to

preserve financial stability. and greatly increased the emphasis we put on that particular objective. so, i think there was a long period where the fed didn't pay much attention to it but it was kind of an accident related to the fact that we did have very calm global financial environment for quite a long time. we now know of course that financial stability is very important even in advanced industrial countries like the united states and i suspect we won't forget that lesson for quite a while. >> this question must have come from our financial historians. the financial act of 1912 was substantial oil political achievement. given the washington today, if the federal reserve act had to be enacted and how would it differ from the fed original legislation and how would it be passed? >> there would be more than one federal reserve bank than one in

the western united states. that is my answer. >> on that note, my last question is a legacy question. at some point, and i'm not going to ask you when you think this might be, your time as chair of the federal reserve will conclude. now i happen to know and some people here probably do you already have a legacy that i believe no other federal reserve chairman has which is that there is an interchange on i-95 in dylan, south carolina, which is named the bernanke interchange. i will challenge anyone, even in the economic history group to find another interchange on the interstate highway system named after a federal reserve governor. but all seriously, as you think about the legacy that you will have as a chairman of the fed, what would you hope the high points of that would be and where would you like to see people focusing on the contributions? >> well, of course that's going to be for others to determine.

i guess, what i would hope to be able to say is several things. first, i came into the federal reserve as a governor. now some 11 years ago, quite a long time with a lot of interest in communication and transparency and i think, you know, in the last 11 years or eight years, however you want to count, the federal reserve has made significant strides in that area, including for example as i mentioned the press conference, the stating of a numerical objective for median term inflation, and other communications innovations as well. so i think that's something i think is quite, has changed over the last decade. for better or worse of course i was at the fed during the crisis and the aftermath.

we have, you know, the future again will judge the response to that but what is certainly true that the federal reserve as an institution has changed very sharply in terms of its structure around the resources being devoted to financial stability questions and i would say that this relates both to the actions we took at the height of the crisis, which, i viewed as bringing badges of wisdom. letter of last resort which is many dom to the modern context but also the work we're doing now to try to reduce the risk that another financial crisis will hit some day. that include our monitoring, our oversight of systematically-important firms, our post-traumatic stress disorder tests which i think is an important development until financial regulation and more generally our macro prudential approach to financial stability which again means we not only look at individual firms just as important as that is but we also

try to identify risks and vulnerabilities to the financial system more broadly. in monetary policy, you know, we've confront ad zero lower bound. again people will have to judge whether we confronted it successfully but we've used new policies to do that and i thinn we have in fact changed to some extent our approach to one that is more tied to, to the forecasts and tries to lay out in more detail how monetary policy will react over time to changing economic conditions. so there's some changes in monetary policy. but finally i think the federal receive is a remarkable institution. it has a superb staff a great deal of expertise and, i hope that during the time that i've been there that we have succeeded in preserving those strengths and adding to those

strengths, increasing the amount of expertise we have in critical areas like some of the financial stability areas, increasing interdisciplinary cooperation and work and just making institution stronger as an institution going forward because i think one of the lessons, i mean we had a very fascinating day today talking about 100 years of the federal reserve. it is a essential institution in the united states. it has a very, very important role in the economy and in the lives of ordinary americans and it's critical that it be a strong, well-managed, well-staffed institution an these internal management issues which are pretty invisible i think to outsiders are very important because they're the factors that determine how strong an institution this will be over the next 100 years. >> all right. chairman bernanke, thank you very much for joining us today

melissa: that was chairman ben bernanke. so what is in store for the street tomorrow? what does it all mean? our power panel is here to break it all down. we've got economist peter morici and alec young with s&p capital iq. i thought there was a lot more information in that then there were in the minutes, maybe because it was more spontaneous. peter, let me start with you. one thing he said that was interesting that he thought the unemployment rate of 7.6% if anything, understates how serious the employment situation is or overstates the recovery. basically doesn't represent what's really going on out

there, it's worse than what we think. do you agree with that? >> yeah, and he said many other things that support that. the notion that the economy is going to need a lot of liquidity and monetary ease or expansionary monetary policy for quite a long time. the markets have misunderstood his statements about quantitativetitative easing hasf negative side-effects. he i will will not talk about those but they're well-documented, they're well discussioned in the profession by people across the spectrum. what he would like to do is shift this process of supporting the economy away from quantitative easing to the other instruments and i think he believes that the economy and the recovery is resilient enough to accept that. but, no time soon are we going to see the federal fund rate right abover near zero percent. melissa: he wants to shift to what other instruments? what do you think he wants to do, peter? >> already he has got the federal fund rate near zero. melissa: right. >> i think they can continue that, to use that and perhaps

the rate of interest they pay on bank deposits at the fed and so forth to adequately support the economy. just as we were able to scale back from the level of stimulus in the federal budget. melissa: yeah. >> and not have the economy, you know, slow down apparently -- melissa: okay. >> we can probably start to scale back quantitative easing without abandoning it completely. remember he is talking about reducing the rate over a period of time. melissa: yeah. >> and not have negative effects. melissa: i don't know about that. >> to jolt us so much. melissa: i want to get your take on that. do you agree with that? as far as using other instruments i feel like he taken his bag out and dumped it up side down on the table and used everything in there. there is nothing left. what other instruments? >> my takeaway he was doveish. melissa: yeah. >> pointing out that the unemployment rate understates how bad the job market is, he send a signal to the stock market that he is not in a hurry as we thought to do any

tapering. we've seen futures move on that. melissa: very doveish. >> dove vision commentary from the chairman. bullish for the stock market. melissa: peter, another thing he said he seemed to be nervous about inflation. he talked about how the inflation rate is much below what their target is and in the past when he said things like that, it feels like he is maybe making excuses for why they can keep this kind of a policy going and going. for me this had a different tone. boy i wish we could spark inflation. for the audience that doesn't know, why would we want more inflation and do you think that is the way to go? >> it is important to remember that we're having asset inflation which doesn't get measured by cpi. for example, rising housing prices. >> sure. >> we're not getting goods and services inflation. i'm not in agreement with the profession on this. economist seem to think inflation is deflation is inherently a bad thing. we're not in deflation.

we're close to zero at times. we're not in deflation. i don't think we need to be worried about the floor on prices just yet. this is art past switch in policy by pulling out of quantitative easing he starts to take away some of the support for inflated agricultural land values. speculators moving into the housing market as they have, creating shortages of housing in some markets while prices rise and folks can't buy. he is not dealing with one inflation but he is dealing with several. one he focused on the cpi is to the extent he can get away wit, and rely on other tools. melissa: i agree with interpretation that he seemed very doveish. alec, talk about the comment he made about the volatility we've

seen since june was interesting. when he talked about comments the fed made. more clarity when they might be leaving the market. he said it is great from what we saw on that because we're getting that out of the way basically. better to have volatility. now we maybe avoided it having later. do you think that was right? do you agree with that? is that accurate? >> i think on the one hand i think some policymakers might have been taken aback by a pretty violent move in markets. some overseas markets were hit much harder than we were on the tapering worries. on bernanke's point there is something to be said for getting the news out there. that does help get it discounted in the market and reduce any future shock effects but my overall take today would be that, you know, it is very much a data depend ant call and the majority of the members on the fed are not ready to stop taper start tapering until they see more effect on the job market.

melissa: peter what do you think about the moved we've seen in the 10-year? the yield rose yet again today. it is sitting at 2.68%. they haven't even done anything yet. what is the bond market telling us, peter? >> the bond market is anticipating some lessening of quantitative easing. whether that continues after today's remarks remains to be seen and we'll find that out tomorrow. however i would point out to you, we vane seen any great negative effects because of the treasurys going up and the mortgage rate going up. there's such a thing, a child has a fever. give it two st. joseph aspirins the way the bottle says. melissa: yeah. >> for a while we're giving the child six and we don't need to that to do on a continuing basis. once more it could have dell terrorist effects. which don't need to give the economy as much of a jolt as it is getting from monetary policy but the markets don't believe that. that is part of his conundrum. melissa: yeah.

aspirin. so it got to be a lot every month. >> we have this big pill. melissa: right, right. crushing all of us. gentlemen, thanks so much for joining us. we appreciate it. >> thank you. melissa: next on "money," wal-mart versus washington, d.c. in battle of wages. will the retailer dump plans to build stores in the area causing a loss of 2,000 jobs. we have the latest developments. more "money" coming up. it's been that way since e day you met. but your erectile dysfunction - itld be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you cabe more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to gothe same frequently or urgently. the only daily ed tablet tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause unsafe drop in blood pressure. do not dri alcohol in excess with cialis.

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does this make economic sense? the governor has 10 days to veto. we have a couple guest with us. thank you for joining us. peter, what is the impact? if you say that wal-mart has to pay $12.50 per hour where does the money come from? >> that is the question. wal-mart is portrayed as the bad guy that it will lessen profits but it has a business plan. id allows it to hire hundreds of thousands of employees to offer products at low prices. to pay the living wage as you call it, will inhibit them from doing so. melissa: it rich, it doesn't seem that it makes economic sense a and it is targeted to wal-mart there is also in

theory to home depot or macy's but there is the grandfather clause but it seems that only applies to wal-mart that means a 1800 less jobs in the area. >> the question becomes economics the answer for the community or for the wal-mart family? in 2007 i was in georgia in an upscale community. melissa: is not like there is a wal-mart guy who is collecting this. it is shareholders also a pension fund. the money will come from higher prices in the store which is passed on to consumers, or it will come from a few were workers did not higher people and the

many is not there at all. >> wages matter as much as prices for consumers. if you have consumers, if you have wages in you don't have people who can spend the money that affects the community. but when i lived in georgia i learned firsthand their concerns about sewer treatment and water treatment. wal-mart uses public resources. melissa: that does make sense. you say they don't want to store data with the congestion. >> not that they don't want to the store but they don't allow wal-mart to dictate the terms. it does like to act like a bully. melissa: it sounds like they say we just don't want your store. that they try to completely

blocking it from coming in its as i will not pay the prices they say that despite. we don't want the 1800 jobs. >> the city council doesn't do a good job of its own budget now it wants to spend wal-mart's monday. but wal-mart does not have to do business here it decides not to come into the district of columbia of the community will lose. bottle the 2,000 jobs, better retailer that provides food and product data low-price, this city's will lose millions in tax revenue and those that would be spawned by the stores will not open. melissa: is that the acceptable? >> absolutely those 1800 mediocre jobs with wal-mart's terms are not worth the benefits it pretends that it gives people. people in minnesota in wal-mart work full time but

still available for public assistance. melissa: would be interesting defied the 1800 unemployed in washington d.c. to see if they would have a job a wal-mart or none at all. wireless companies charging the government for snooping. we pay the government to listen to us? the reporter is here with the shocking details. case you ever have too much money? i'm a careful investor.

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melissa: when it comes to the government spying on you and me that companies like at&t and verizon the charge the government to look at your records. it adds up to millions and who pays the bill? the taxpayer. here to tell us about it is a reporter reporting the story for the ap per barbara shock and outrage. it takes a lot these days but i had no radio. be actually pay for the government to spy on us? how did you find this out? been a thank you for having me. basically when i started to look into this that every single company with the exception of facebook charges the government to have access to your data.

this has gone on since the early 1990's with the law enforcement said we need access to the network to wiretap the bad guys and the company said that cost many we are a business so yoo have to help us defray the cost and that is how it was started the. melissa: estimating the different amounts they need to defray the cost. verizon they are the capitalist charging $775 for the first month but then 500 after that but at&t they have a $325 activation fee. like you are getting cable to log into the records been $10 per day to keep it going others are much cheaper. u.s. cellular only charges $250. did they say?

>> since edward snowden they have not been saying a lot. i talked to the lobbyist for the people that work with the carrier's it as a reporter i was looking for the industry standard. but to be fair a couple of things of the companies all use different technologies and networks it may require different things to facilitate a wiretap. some people said i don't know if this amounts to that much money it is to us but maybe not to everybody else. melissa: before they said the authorities come to us the want the records to prevent terror attacks because we are forced to maybe it is our duty they could at least hide behind a shield. when they charge, it is

dirty like when a cop in my neighborhood did you see that accident? maybe i did but i need $20 to tell you what i paid no. doesn't make it feel dirty that they take taxpayer money? >> the flat side is what if they did not charge anything ? right now we have all of the web based tech companies like google's or facebook better not charging a lot. are you more comfortable with of overcharging to have access to discourage gratuitous request or just rather give it for free? the companies are in a bad position. melissa: i think when they charged they look greedy but at least they tried to preserve my privacy as opposed behalf to making a buck. figure for coming on. egypt on the brink of the anarchy.

says setting -- a severe sending f-16 fighter jets? will be live to regret it? piles of money coming up.

melissa: now to egypt as the

situation deteriorates the aid dollars are pouring in. the prosecutor also ordering the muslim brotherhood leaders saying the massacre that killed 50 people on monday but surrounding countries are stepping up with richer relief as an $4 billion in aid cutoff of saudi arabia a billion dollars, united arab emirates we have the mideast expert and fox news contributor here. what does that mean to us that they contributed that many? does that put more pressure on the answer doesn't relieve the pressure? we but we should be extremely happy everybody is chipping in because we should be as happy as the gulf nations that them muslim brotherhood includes is decreasing. we should show enthusiasm. but over the last two years to have there eye on egypt

but these influences why did they give the money? we shall be of the mindset to pour the many into egypt. melissa: we have been purged in that situation before. >> absolutely but the good news is there is a lot of concern. going forward that the people of egypt did not settle. some voted for morsi was democratically elected but we do not know if it was legitimate. but he did not govern to radically and was more concerned about making the country more extreme bringing his islamic views. how does he fix the economy? melissa: we should step in with money? we also have the f-16 jets. >> our aid has been closely the army and that is how it

will remain. in the late '70s we were paid them to maintain our interest. that is where our interests are best at the same time the egyptians need food and jobs. melissa: for people that are out there watching they see a lot of violence and bloodshed. said to take the fighter jets to send them to do period that is exploding it makes no sense. >> it does in the long run but in the short term of lot of it will be used for product, petroleum, right into the central bank but in the long term we look to fortify the country coming keep our interest in place but what we really need to do is not just to hand over

the military aid but not put conditions on everything. melissa: how long will it take to stabilize? >> i think it will be awhile but the interim government is trying to expedite that to put out the six month plan that the muslim brotherhood digit -- rejected an arresting them from the top down. they want to go hard because they want to put an end to this to bring him to the table to bring these people to the negotiating table. that his deal the way to go forward. melissa: great perspective. thank you. so how does the price affect you? wheel closing at the 15 month high because of the unrest in egypt. joining me now is patrick from gas betty.com. this has been an enormous job tinkered we have seen

even if they say it's not, it's always about money. dollars what is behind that? >> i think it is arabs spring 2013. egypt is not significant with the oil produces but if we go back at 2011 that problems in in the east spilled over into ultimately did impact what was shipped out of the middle east. that is the chief concern oil prices have reacted sharply that is the bigger piece but in the backdrop to say all the sudden out of nowhere over 20 million barrels have dropped? >> how does that happen? >> we saw the refinery may ince and the amount of crude oil in point was at a lower level of now in the middle

of summer driving season we have expansion that is beginning to open more crude oil falling into refineries means more coming in out of inventories. melissa: what can they expect to see at the pump? >> it is bad news for both sides eia data as well it means competing crees of the national average of tanner $0.20 plus it could get worse before it gets better. melissa: what about the decline of the crude-oil inventories? will they watch things to come down or stabilize? what will happen with the oil inventory? >> that was a tough call. it probably will not recover quickly.

weedon't see inventory glut 20 million barrels in a single week that is a significant decline but also a significant job. they are still near the upper average limits for this time of year so it is good news as long as they don't continue a dramatic decline if think we will be okay. melissa: 16 month high that will hurt. thank you for coming on. ben bernanke making use a short time ago and we will hash that out with our fox business all stars. more money on the other side of the break. myantra? always go the extra mile. to treat mlow testosterone, i did my research.

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melissa: in case you missed it ben bernanke made it news at the top of the hour and we're here for a recap. hell with the market react tomorrow? >> that is a great question. that was a little bit weak suffering from low volume but. >> i feat this stocks will rally because the fomc of the 12 votes said we need to start ouiga board at the end of the year but then bernanke a couple weeks ago said the original under a private figure was 6.5 but did he made the comments a couple weeks ago the be around 7% we will slow down the purchase is now it is 6.5. melissa: is really that doesn't represent what it is really like it is really a lot worse.

>> what stood out to me was if he has any regrets about the last fed meeting to paraphrase, of course, he got into the weeds but he said our comments definitely rattled the markets but maybe it took the froth off the rally that we will continue to buy bonds for ever saw the market knows it is not for ever in we need to prepare some maybe we have normalized interest rates. i know they are higher and oil and gas prices are coming up, but the market was ripping one month ago and it seems to have come down to reality. maybe it was a test. melissa: even now they said the tip of volatility of the table right now eliot got it out of the way. do you believe that? >> is a market already

pricing in what happened? i don't think because the headlights will be tapering will be coming see you cannot dismiss it. so tomorrow watched the yield that will be important. the market will tell us tomorrow of what he said today. if that goes up that will say they expect the tapering is coming souders. >> it doesn't matter what the fed does of reducing bond purchases. you are the balance sheet experts. melissa: that we watch the ted your margin higher and higher. >> but then by 2016? >> right now the market tells us to expect to begin the taper but tomorrow it will tell us if it is the end of this year or next year. >> but with higher interest rates will also indicate.

>> mortgage originations fell 23%. melissa: but i wonder in this economy. >> he says enough is enough we will verbalize interest-rate this is what they should be the economic cycle. melissa: does that killed the recovery? housing has driven the recovery so far if we see those mortgage rates go up? >> i've been this morning central banker sertorius lee whenever there has been a problem they step in the notoriously rule in the ending and they've let so yes i do think they will mess it up they will make it worse. melissa: that is not good. >> i don't know i do think rates are historically low

and rates are historically low. i think it inspires people to get into the market because they know the rates are going up. melissa: has to be the point you saw the rates going up to say i getting in now. there people on the sidelines if they see the home prices and mortgage rates going up do they get off the fence? >> i did not get off the fence. but of the subside you could make the argument those of our conservative with their money, why even get into the mess again? stare they are with a really low interest-rate did we will call it a day. >> but those rates are fake and we come back to reality. >> but not 27 warriors. melissa: it will be interesting how it shakes out.

we will watch you at 1:00 p.m. eastern on fox business. that is all the many we have. we will see you tomorrow. >> tonight. a major breakthrough to fight heart disease new information for millions of americans. also is the late actor to get hit with a death tax? in the wear of the farm fresh produce we're watching held for you tonight on "the willis report."