good afternoon welcome to capital account i'm lauren lyster here in washington d.c. today new data shows u.s. workers are getting squeezed productivity rose as employers work to workers harder to keep payrolls down to cut costs this just as we heard from the federal reserve yesterday it expects high unemployment to be the norm for a year meanwhile americans are still showing how angry they are over economic conditions like this occupy oakland protest representing the so-called ninety nine percent shut down the seaport last night was on to an ambassador for the one percent who thinks he has some solutions and speaking of solutions the e.u.

is still scrambling for one or many the greek prime minister reportedly scrapped the referendum he called for on the bailout but it's still a very fluid situation so then who is the winner in europe how about switzerland it's expected to pose a budget surplus and what are the u.s. congress learn from this as they move towards a deadline for a deficit cutting agreement that many expect them to fail to deliver on our let's get to the capital account. all right so remember yesterday how we were telling you about how the fed was talking about third quarter economic growth and how it strengthened we call them on that which you can see in a reality check but it turns out productivity of u.s.

workers also strengthen last quarter as companies cut costs by keeping payrolls down and squeezing more from their employees and the fed also yesterday warned that high unemployment will be the norm for years according to their forecast now americans set up over economic conditions like this continue to protest here you see some footage last night occupy oakland saw thousands of demonstrators protest they shut down the port of oakland showing the continuing occupy wall street movement and its momentum they are of course the so-called ninety nine percent what about the one percent c.e.o. of euro pacific capital peter schiff has made waves as kind of an ambassador for the one percent he went on to occupy wall street because he thinks he has some solutions to these folks problems the video of that kind of blew up on the web here's a clip where he was talking to someone about wal-mart were my friend go to wal-mart

you're going to ask the employees that are working in sweatshops type conditions. that don't have health care how is it good why don't they quit i mean wal-mart goes . if they can get a better job why did the right one as you can see it was quite heated earlier i interviewed him and i started off by asking given the occupy wall street protests which he talked to people and told them why he thinks capitalism is the solution to their progress to their problems rather i asked him why he thinks they capitalism and freer markets are the solutions here's what he said. well because i understand capitalism and i understand what the problems are and the problems are the result of government intervention it's not capitalism that created the financial bubble it was government interference in capitalism it was artificially low interest rates it was government subsidies this is what created the malinvestment and this is what

continues to perpetuate those malinvestment you know a lot of the kids there that are protesting are students with a lot of debt the free market never would have saddle them with all that debt without government guaranteed loans they never could have are all this money without access to cheap government loans college universities would have been forced to slash their prices now if people couldn't go to school on the government money they would actually major in things that have significance they would major in engineering not some liberal arts of and you have kids going to school for five six years on government grants and guaranteed loans studying stuff that has no real relevance to the job market and then they graduate they got all this debt there's no good job prospects out there because while the government is subsidizing education they work taxing the job creators in order to pay for the subsidies and so in a baby they simultaneously wipe out all the economic growth for that or the jobs

while they're encouraging kids to go to college to prepare for jobs that don't exist so this is all stuff that the government has done and if the government gets out of the way if we could reduce regulations reduce taxes have higher interest rates we could recreate a type of vibrant economy that might provide employed opportunities for a lot of protesters i want to get into a few of the different aspects that you touched upon again to interest rates later but first when you talk about reducing regulation let's talk about times in history where there have been fewer regulations like in the early one nine hundred you saw disasters you saw tragedies like in the triangle shirtwaist factory where one hundred forty six workers died. why because they were locked in by their managers and couldn't get out the free market didn't protect them from meth well look there are always going to be accidents or there are accidents people die in accidents today you can't put a pick out one example and say this is because we didn't have enough regulation i think if you look at that period in its entirety we have chief substantial economic

growth if you compare the nineteenth century to the twentieth century and you look at the huge increase in the standard of living for middle class and poor americans their living standards increased a lot faster during in one thousand nine hundred than they did in hearing it did twentieth century and now in the twenty first and that's despite the fact that we have a lot better technology today imagine if we can combine today's take knology with that defeat and that we had one hundred years ago i mean that would be a very dynamic combination that would see it on precedent growth in living standards and the only way americans are really going to see their standard of living rise is if we embrace free market capitalism if we try to do it through socialism and we've seen that before i mean if we have a socialist revolution in the united states we're not going to be the first country to try it i mean this is russian t.v. you guys went through a revolution in one nine hundred seventeen dead and look what happened i mean it

was a people felt that they were disenfranchised that there was a group of i thought you know an elite that work there are oppressing everybody and so the solution in russia was the to adopt as marxist ideology and look at how long the soviet stagnated i look at the look at the standard of living that the soviets . endure and so they finally. got rid of it i mean so we don't want to follow in that and it was that example we want to go back to our founders and relive that example we want to recreate that revolution of limited government and economic freedom but. peter you free markets can also the kind that you're talking about they can also produce collusion a can produce monopolies you saw j.p. morgan put insiders on the boards of corporations that he had a vested interest in to reduce competition so he could get his money back so he could make good on his investments and this is not the kind of free market functioning that you're talking about and government wasn't the problem here the

lure of the thing is governments create far more monopolies than they prevent in fact if we had a lot less government we would have fewer monopolies because most of the opposite exist if i called it up ways do it because the government grants the monopoly or if you have it all a cop really it's because the government makes it illegal so you compete in a free market is very good for called for somebody to monopolize a particular business and if they do if they succeed a monopoly is normally because they're such a good competitor they're producing a product that's so good and so inexpensive that nobody can compete and ultimately if that's the case if the monopolist is giving consumers a better deal than anybody else then there's nothing wrong with that going to awfully it's only of the monopolist can get out the consumer but he can't do that without the protection of the government it when did your vision of capitalism actually exists what examples can you points here. well look we know we had capitalism in the united states for the first century and for

a good part of the twentieth century it is started to what road up to to a road of course with the introduction of the federal reserve and then a lot more with the new deal but we still had a lot of capitalism in the economy it wasn't predominately the way it is today but over the years we have had an erosion of capitalism in favor of collectivism or or socialism but you could look at examples of capitalism all around the world and you can compare for example i china to taiwan or touch china don cog to you know the same people but we're living at what one more free and month one more socialized you could look at north and south korea you can look at the differences there you can look at east and west germany and you could look at situations where you have two groups of people and then you just separate them and one leans more to the left and one to the right one is relatively free and well as what is not you can see the difference but yeah i mean peter they all kept looks and is rare and human history

i mean that's why you know for for centuries or centuries there was very little progress and if you take a look at the way human beings lives in the sixteen hundreds it's not that much different from the way they lived in the six hundred. the real advancement in human history came in the in the nineteenth century the industrial revolution and yet cantor i'm glad that i had times i don't mean to cut you off but we do have to go to break quickly i just want to clarify one thing before we do so i wanted to ask you earlier we were talking about the factory fire so you're saying there shouldn't just be simple regulations per se feed it make it the day people can't get locked into a factory and die in a fire you know factory owner wants his workers to die and in a fire again there's there and nobody wants to work in a factory where you're likely to die in a fire so you don't need to federal government to put these these codes in but i am not against local cities or local towns where they want to have ordinances on

a local level for fire safety that's fine. i mean we have so much more with peter schiff in just a minute after a break and first we've got to get the word of the day. all right time now for word of the day where i break down a financial term or concept for our very smart viewer but perhaps not a financial expert in the crowd so we're stock rose he's got the word of the day for you or. you know what it is nice to have you back especially since so many people missed us i got a lot of it back where is word of the day yes i know mr joseph but could be well you're back and we'll see you again because we just took a break yesterday because we had some big news ok so what's the word of the day today it is capital and it is very important because not only isn't it is it in the

name of our show but peter and i were just talking about capitalism and capital as a hot topic at the g. twenty summit which is going on right now here's an example this is from an article there is a clear need to restore confidence in europe's banks i asked managing director charles dallara said today in a letter to the group of twenty nations on the eve of their summit in conference yet the extra capital requirements at the center of the e.u. strategy will come with considerable cost because of a flawed scope and approach he said that's his take it's not ours that's just our example of capital and it has to do with the e.u.'s plan to recapitalize banks which we're hearing a lot about right now and also strategies so let's take a look at what capital means so we can understand this better so what exactly is capital potential assets or the financial value of assets such as cash or the factories machinery and equipment owned by a business so capital was traditionally in economic terms a factor of production so things like

a plow but when you hear it today the word capital thrown around a lot like for existence when we hear calls for banks to hold more capital like we're hearing now in europe we've heard in the us. yes this is usually referring to financial capital and that's broken down even into tears and this is money and assets that can be easily liquidated which means easily sold so something like stock that a company can sell on the stock market or cash reserves and the reason you hear calls for more of it is because it gives thanks a buffer so they can absorb the losses and not go bankrupt or not require bailouts like we saw in two thousand and eight to avoid bankruptcy and now there's also intellectual capital which we have a lot of it. but as many other meetings i just have to throw that one in there because now you know what capital is. and stick around don't go away still right here on capital of count the federal reserve announced it wouldn't be changing interest rates but should the bad even be cutting interest rates at all to the bad

even if this we'll talk to peter schiff for more and first your closing stop numbers. you just put a picture of me when i was like nine years old i want to tell the truth. i confess and i am a total get over friends that i love driving hip hop music the manuscript. i do is kind of it yesterday. i'm very proud of the with its place. oh.

you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and cheers you some other part of it and realize that everything you thought you knew you don't know i'm sorry welcome to the big picture. what drives the world with your mongering used by politicians who makes decisions to. be made who can you trust no one who is in view with a global missionary see where we had a state controlled capitalism school. sessions when nobody dares to ask we do our t.v. question more.

welcome back to capital account so earlier we heard from c.e.o. of your euro pacific capital peter schiff on free markets i want to talk to him about in his model if he thinks workers should be able to organize for better wages because to remind you look at what wages have been like in this chart you can see that bottom line is the average wages of workers over about the last thirty years and it is just stagnated i mean ish is a full lot lied and that skyrocketing green line is what's happened to executive pay it's exploded now at the same time private sector union membership has declined significantly you can see there from thirty four percent and sixteen percent for men and women respectively down to eight and six percent now the reasons behind that really depend on who you talk to but as far as my conversation with peter i i

asked him about this and he said yeah workers should be able to organize but he believes government should stay out of it and here's what he said. if you want a business it's your right to make decisions who you want to hire and who you don't want to hire and if the if the unionized workers if they don't like that they're free to work someplace else or they're free to start their own businesses and if they don't like the working conditions if they don't like the wages of the company that they work for it's a free country go start their own company nobody's stopping them but what if there are better options i mean right now we see that there is such a vast and by between rich and poor and we see that unemployment is so high so what if they're just simply are no better options for a lot of people i get that are you at all the time that people say you know when i was at down of the occupy wall street protest and somebody was saying well wal-mart is exploiting people it's giving them these low wages and i said well then why don't they quit me get a better job to do so well there are no better jobs but precisely if the best job is the low wages that they're getting at wal-mart then what mart is doing them

a favor wal-mart is offering them a job that is better than any other job that they could get because if they could get a better job they would quit and take it but the fact that wal-mart is providing them with their best alternative means that wal-mart is doing them that is good i'm a service and to say hey you're not paying enough you have to pay more well maybe if you force the pay more they would pay nothing because the job wouldn't exist yet peter i mean there's a whole issue that people have to eat and they have to be able to afford you know the basic necessities of life which is a separate conversation that you get into what you're talking about that there should be a level playing field you also talk about socialize risks and how essentially wall street has had their rest socialized by the federal government which is a problem that you pointed out as well so my that's my question i've got is is the problem then exactly what occupy wall street is saying one of the main themes money in politics that wall street has influence washington so significantly with campaign contributions and lobbying and that's a problem that needs to be ended but it is a problem it's not just wall street that has influence in washington and washington

is selling its influence all around the country and so the problem isn't wall street lobbying for government. perks the problem is the government being able to hand out those perks in exchange for money or help getting reelected so my point with occupy wall street is don't waste your time going after the recipients of the government benefits go after the government for making those benefits available we have to start by reforming washington if we don't reform washington nothing is going to change if we don't take power away from washington people are always going to lobby for that power to be used for their advantage so then you argue that money should be taken out of politics that people should not be able to contribute announce that they are able to enter politics corporation and solitary person no it's we don't take that we have to take the power away from the politicians that's what needs to happen i'm not talking about limiting i can't paint contributions in fact i think the campaign finance rules that are in existence right now are that's

part of the problem you know i ran for office in the u.s. senate and the campaign finance laws really got in my way i would have had a much easier time breaking into politics as a first time or as a businessman if i didn't have to raise money based on the limitations that the government put obvious so in this case it was the campaign finance laws that kept career politicians in office and prevented someone like me who actually wanted to help the country from getting a senate seat so i think we've done a lot more damage with these campaign finance laws what we have to because where the power and that's easy to do we got repeal all these rules and regulations we've got to get the government to follow the constitution to abide by the constitution secondary car you pay taxes are in congress that in time should they abolished the federal reserve because you are opposed to pretty much everything they do. yeah well i would like to phase them out i think if we have dollars the right away we could replace it with something different i think it has a transition to givenchy getting rid of the federal reserve we should at least rein

in their power and maybe re store the original mission you know into federer's or was originally established federal reserve notes had to be back forty percent by gold bullion and the federal reserve was not to allow allowed to have any u.s. treasuries on its balance sheet you know so i like to go back to that i don't want the federal reserve to be an engine of debt monetization and inflation which is what it is today we need to go back to sound money and that was the original goal of the federal reserve was to provide sound money it failed miserably but you know we should at least try it again but ultimately i think the reason it failed is because you can't trust the central bank but you we're out of time but you are saying just yes or no eventual pay that out i think we'd be better off without it yes. there you go peter schiff of all of that he's c.e.o. and chief global strategist for euro pacific capital.

we've gone through some very serious stuff today so now let's get into some lighter financial headlines and you don't have to just listen to me banter on and on who are joined by dimitri kovtun as our producer as well as shannon donahoe our producer in the control room was multitasking over there does both what they think about this so protesters in seattle at the sheraton outside of it they went to protest j.p. morgan c.e.o. jamie and jamie dimon he's really kind of a hot target for protests in occupy wall street protesters and surprisingly i don't know if this is a little brush of p.r. genius on his part he spun it is speech to agree with the protesters however he kind of recuse j.p.

morgan saying that things have become or any one there are big institutions to blame but in his bank and he doesn't qualify you can't lump everybody together this is great. i mean honestly it ok so if his net worth two hundred billion and he makes twenty two million annually so that any of those people that he was i don't know the people that are out there some of that might not even make twenty two thousand a year but this is really great because he did say keep the faith in the media so you serious only serve it so this kind of keeps with our whole theme of bankers being holier now holier than thou hell of a guy who they are protests. there is outside protesting them and yet they can't even see them. as being part. of the proof closers the michael jackson michael jackson's of the protests someone's dog. ok i just

you know jamie dimon i do have to give him credit for kind of what was a good way to work that into his speech a little bit of p.r. there but come on this is the guy who's arguing against capital requirements saying that basically they're anti american and you know saying that he's not part of the problem and part of the. yeah i don't i don't argue with jamie dimon he's keeping the faith according to him remember those fundamentals as other wise words about keeping the faith meanwhile as speaking of keeping the faith and i guess this guy was getting worried that a good faith loan was going to get repaid or at least he got a little bit antsy to get repaid so he offered his sexual services for repayment of a loan he was arrested as a prostitute and a three year old prostitute doesn't sound like a very successful prostitute because i don't think this woman wanted. to be kissed by this guy hitting and kissing her without consent so i don't know is bail prostitution bartering but it's coming to you for payback of loans you know i mean

it looks like it looks like this guy discovered. sewing his body could actually be a way to kind of repay his underwater mortgage and i think it's an interesting kind of story but selling anything you need to have a customer and i don't think a lot of people. didn't didn't have a customer doesn't sound like was the problem was in the license to cross himself i think that he was in the legal process or they didn't have a license this may be age discrimination in my opinion or maybe this comes down to regulations you know it's very difficult for small businesses in this small entrepreneurs to kind of get through the red tape to get off the ground these days . i think for us. i don't think prostitution is legal and so. but your point is moot if you do use an even legal in iowa i don't think prostitution is legal when you're eighty three and look like that then surely. you

can do that yeah well i don't know i do think that you've gone to something with a barter system for repayment of loans i could really help a lot of underwater borrowers who can't refinance despite all of the low rates on mortgages something else that maybe you can do if you are able to barter your way out of a low is buy meat evidently lots of americans still are despite the tough economic times meat exports are strong u.s. consumption is still strong especially for nicer cuts and some people are really capitalizing on this with the new machines watch. he says they sell about ten to twenty items a day. you know three of them. full charge. certain knowing full turn around sausage is he right. that is the smart butcher and i think the only thing smart about it is maybe the guys that are capitalizing on this bull market in need but those poor consumers are going to die from that disgusting

me or in america you know a vending machine that puts out slabs of me. my dimitri exports are on the rise you could see these coming to countries all over the world and the machines yeah i don't know only i don't know that's something that you don't see like a sudden love of yours i think but why not make a big donald to spread all over the world it's a response of all for some countries that were you know normal sized people becoming obese so you know why wouldn't meat vending machines catch on as well you know it was interesting you might actually see these guys kind of just like i think that raul has their way. is a could really a side thing with a grill it extra money that it is like a dollar that's pretty good deal down that's a really good deal especially on the right right as they're rising and there you go there's our next business plan all right that's it maybe you can go start a meat vending machine company because that's all we have time for on our show you can feel free to follow me on twitter at war and mr please do give us feedback on the show at youtube dot com slash capital account because we are going to start.

having it on the show we're going to sponsor you so go say something and until tomorrow everyone here on the capital account i'm lauren lyster have a great. wealthy british style. markets why not. find out what's really happening to the global economy with mike's cancer for a no holds barred look at the global financial headlines tune in to kaiser report on our g.