fugitive mogul boris berezovsky in a london court finally approaches its conclusion. and coming out of u.s. anti-piracy laws and who's likely to cash in on them among the topics discussed in today's edition of capital account that's coming up stay with us. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. now the federal reserve has more than tripled the size of its balance sheet since the financial crisis printing money in order to do it whose decision was that not yours unless of course you're one of the handful of members of the federal open market committee next week they meet some are predicting more quantitative easing may be on the menu but what is all this money printing really amounted to we'll talk about it and speaking of bailouts. so do you know that taxpayers actually made money on the wall street bailout. but it is they may not on g.m.

but they did on the on the wall street for the bailout well that's certainly one main stream take on them thank goodness there is an entire world of alternative financial media to tell you what's missing from that conversation you just heard. and people the u.s. anti-piracy bills change all that we've seen the protests from silicon valley today we'll break down why the financial blogosphere is going to war over a never ending witch hunt in the words of one blogger and we all remember the u.s. debt ceiling debate where the nation came this close to default well we're not hearing it now even though u.s. president barack obama is moving to raise the debt ceiling by a more than a trillion bucks again that's because of a deal lawmakers reached the last time around but hey guess what that didn't stop congress from rejecting the debt ceiling increase again but for what we'll discuss let's get to today's capital account.

all right so in the. race for the white house texas governor rick perry has announced he'll drop out of it he's going to endorse newt gingrich so naturally a lot of the u.s. media is focused on what this means for the republican field on who can be elected u.s. president in two thousand and twelve but here is one area where it most likely won't matter at all who is president and where you if you're us voter literally have no say either but nonetheless it affects you it affects me it affects people all over the world i'm talking about the actions of the federal reserve and its control over monetary policy if you're watching this show i don't have to tell you twice now the central banks decisions do not have to be approved by the president or by congress

it is independent yet it is more than tripled the money supply largely through quantitative easing since the financial crisis pumping up the banking system creating zombie banks you can see how a base money the money supply has increased right there the feds also lower interest rates to zero so wall street can speculate with cheap cash for free and borrow on the cheap to cover losses on assets mark to make believe that savers like you and me can barely make a dime and may be looking to do more talking about the fed at its next meeting even though it's run out of bullets according to people like mohamed el arion the c.e.o. of pimco the largest bond fund in the world at least that's what he's what he told me when i talked to him and interviewed him on friday and as a side note i do want to say the reason i say most likely it won't matter who is u.s. president when it comes to the fed is because there is one hitch we know wrong paul wants to abolish the fed entirely so that's a wild card there but here to tell us what the cost of all this money printing has

been investment advisor for sick pacific capital mike shad locke is here he's better known as mish he also writes a very popular blog global economic trend analysis is going to break it all down for us mish nice to see it thanks for being on the show. as a version of the. on the show lauren right back at ya so let's talk about that because that is tripled the size of its balance sheet in the last three years trying to stimulate the economy which you can see i want to show our viewers again has expanded now based on money supply like i said you know why hasn't this translated into that narrative price inflation even hyper inflation that we've heard a lot of people warning that we heard it back in two thousand and nine a lot. a lot of people have a misguided theory. when the fed prints money that is going to be lanced and then redeposited and land and land and learn all over again people have this idea that this money is going to be learned ten times over i've said as as has economic

professor steve steve keen in australia that that's really not the way the system works banks land when as long as they're not terrible purveyor impaired provided they've got credit worthy borrowers that want to borrow we're seeing a situation right now we're banks are impaired they don't learn of course there are hiding they're still hiding a lot of losses primarily in real estate on the books we've got. and but what business is want to expand in this environment here i don't see any reason we've got unemployment the five it's much higher than stated actually you unemployment would be close to seventeen percent if you added up all the people that wanted a job and didn't have to have a job you've got a lot of distortion in the markets you've got china slowing you've got a situation in europe that's quite literally blowing out of europe it's heading into a major major recession and regardless of what people think that is going to impact

the united states so if you're a u.s. business why do you want to expand in this environment so they're not doing you know bernanke is pushing on a string and yet a keynesian afternoon i don't i don't see it that way but that's that's what the keynesians would say that he's pushing on a string. so all this money is just not making it into the real economy they've expanded the fence balance sheet by one point two trillion since the start of the recession and one point six trillion of that is sitting on deposit at the federal reserve making point two five percent interest ok so you got into so much right there that i want to dive further into the excess reserves here at all of this but first just kind of break down because there's a difference between inflation and i when we're talking about price inflation things like food and computer chips or the government's key measure the c.p.i. which came out today is basically i'm changed month to month and inflation in the broader money supply can you just kind of distinguish that because some of our

viewers may know that distinction but some may not and it's important our conversation so could you explain why that matters there's actually three distinctions we need to make your first we need before we can discuss inflation and how much it is we have to agree on what it is and there's not a lot of agreement out there most people think inflation in terms of prices i think of inflation in terms of expansion of money supply and credit and most people believe that credit out and more importantly that those the few that do think about credit don't think about credit mark to market so you know the banks have all these loans on the books are they going to be paid back you know and i know they're not and that's whether or not lending but unless the banks are lending then businesses are expanding no one's hiring you you have these real estate slumps you have asset bubbles and those who are in and that's what i mean by deflation if someone says ok well prices are going up you know gasoline is going up but so that's another measure the gasoline could be going up because of oil because of inflation in china

and certainly money supply and credit is expanding at a rapid rate in china that is indeed impacting a lot of global commodities like comp or and then you know there's there's the third view that says oh my god you know this. the hyperinflation if you look you know how much modern you know the fed is troubled as you say you know monetary base in a very short time and they're expecting this big calamity to happen war and total credit market in the united states is fifty is coast of fifty five trillion dollars so on a relative basis what is there one point eight trillion going to do especially when one point six trillion of it is sitting parked at the fed this is not going to doris one of the fed's policies. you know wrecked havoc with the money supply they created a property bubble. and we're in the aftermath of that and they're trying to do the

same thing they did that created the property bubble in the first place i don't agree with that but there's no way you can go from here to hyperinflation and i want to get more into the people making a hyperinflation argument but i want to apply some of what you're saying to your at because you mentioned the crisis that something we talk about a lot and despite the e.c.b. the efforts to get money out into the economy through things like the s. and p. and l. t.r.o. which we've talked about on this show i want to show our viewers what's happened to the money supply in italy and it shows if we can bring that up a drop it will be up in a second but i want you to tell us what this is telling us and what similarities there are to the u.s. this is actually quite shocking to see this money supply ambrose evans pritchard at the telegraph came out and said you know this is an indication of the e.c.b. is pushing italy into deflation you know maybe that's debatable maybe not but certainly spain is in deflation right excuse me in

a depression right now spain has entered depression greece is in a depression portugal is in a depression and i think a strong case can be made that italy is actually heading there and i did a post a few actually right before christmas talking about the plunge in christmas sales i got up to. from the person who actually lives in europe. who is from italy so there are the numbers just came out today at a shocking twenty percent decline in after christmas sales are doing well in contras united states over in europe especially in italy these after sales vents are as big as the christmas sales so you know imagine what would happen here if there was a twenty percent plunge in the united states in christmas sales that's what we're talking about here in italy we have austerity measures out the union being imposed on top of that and not only these austerity measures worst of all tax increases taxes increases in spending tax increases in italy tax increases in greece in tax

increases in france and on top of that france and germany are pushing for a tax on on financial transactions that's going to dry up with quitting and for the actual transactions if they do that europe is heading into an absolute stunning disaster ok headed for a stunning disaster and you've outlined a lot of reasons why but back to kind of tying the scent of the monetary policy and into the fed for the u.s. and the inflation argument despite the fact that you're saying the fed's behavior saying that what they're doing is not going to create zero to hyperinflation because of the amount of money at stake despite that we still hear a lot of these kind of arguments in the mainstream media to get a lot of play and the alternative media to absolutely let me place them. and if we destroy our currency which is what the obama point of my do if we have hyperinflation it's not going to matter how much money we have because we're not going to buy anything with the stock market on this day as it is there are missing

a inflationary hole because at because they don't know what else to do and they're making mistakes all right so mis why do you think these kind of arguments have gotten so much play compared to the debt deflation argument that you and people like steve king who you mentioned is a friend of the show also make. because there are sexy arguments people like to hear these doom and gloom things they like to spread them around you know oh i've got to go look at all this stuff it's got to happen here no look at this look at this. it also ties into the you know buy gold transaction and ties into some of the things that ron paul is saying ron paul is very popular certainly a big big big fan of ron paul i want to end the fed i want to stop all these distortions certainly i would agree with peter schiff that this stuff is very distortionary we don't want to do it this is one of the things fractional reserve lending coupled with greenspan pounding out money supply in the wake of the two

thousand and two two thousand and three recession is what created the property bubble and they're back in the same old tricks you know so we need to put an end to it right but that doesn't necessarily cause i've heard flourish and given what they're all missing is the total credit market that that's the argument that shifts miss he looks at this stuff in terms of money supply alone and says my gosh look what's happening and i say gosh look at the credit markets look at what's happening and we can see who is arguments men right today so you know whether or not that's always going to be the case but the reason why i like good gold is central bankers throughout the world are doing this which is the other side of the place an argument that no one seems to mention the money supply in credit is soaring in china looking for inflation looking to china in the weird thing is these people screaming i've been a lot of them are big big china balls i think europe is going to crash is around it

way more unsustainable path than the united states all right miss i would not be right there because we actually have to get a break quickly i want to keep it there because i want to get in a couple more questions on this issue of federal reserve policy i also want to talk so hang on right there and we will have more with mike said lot after this break. and still ahead it's back the u.s. house of representatives is putting some rain on the debt ceiling for a guest the same parade from last summer i'll give you our three cents but first here closing market numbers. technology innovation. developments around. the future covered.

welcome back so we saw blackouts yesterday online sites like google and wikipedia unless you didn't go online there is no way you get to miss those they're protesting sopa and pipa the stop online piracy act to protect ip act anti-piracy bills that are working their way through congress critics say these are efforts to censor the internet now we know that you know the tech sector those protests were heard millions signed google's petition calling congress some lawmakers change their positions but the financial blogosphere has been targeted well at least here

is one depiction of what could happen an artist made a headline sopa blacks out zero hedge thousands forced to experience c n.b.c. now mitt has been speaking out against soap on his financial blog and he also used to work on tech so he's going to tell us what the impact. could be so mike said like i want to bring back into the conversation and get his advisor at sic pacific capital and mitch before we get to so because this is really interesting stuff i want to just circle back around to the fed to ask one question about these excess reserves i want to bring dimitri is going to jump in here to meet your thing as our producer him is so i want to i want to say one more thing about we're talking about before regarding base money printing the fed printed a lot of money and they use that money to buy up a lot of assets which is why its portfolio expanded by over three times and we saw base money expand by that much but that money didn't actually get into the economy i want to see if we can bring up actually a graph we have of loan growth relative to base money it's up there so our viewers

can see that loan growth has collapsed collapse relative to the basement that the federal reserve is creating because banks aren't loaning that money out as we saw in europe the l.t.r. o. the s. and p. program banks be getting money but that money is going right back to the deposit facility in the e.c.b. in the fed is going right back to the fed and they're getting interest on excess reserves that small amount of interest is still better than what they're they're willing to go up by taking risks my question is what can the fed do at this point hypothetically if it really wanted to inflate would have to go out and really buy indices i mean what could it do theoretically if it wanted to inflate this economy . i don't think the fed can i think it's in fact even admitted that it was quite surprising actually but you know bernanke you had a realization moment i think it was last october when he when he came flat out and he said something that effect you know we're at the end of what the fed can do and he was and so you what you're seeing now is the fed getting into congressional territory even though the fed got very very upset when congress started questioning

what the fed was going to do so i guess the rules of the game are one where you're in favor of the fed of course but so you're saying you don't burn out you saying things like well you know we. need to get deficit spending under control but not right now course no one ever wants to do anything right now so i think we are at the limits of fed policy certainly they could try some very very risky thanks for i don't think they will you know because risky things can blow up and people have talked about the fed having a a negative interest rate to force banks to lend but i don't think that would work i think that might push them into a situation where if they did start running or the losses would be enormous i don't think the fed will do that i think it would be very very destabilizing so i think all the people that said well the feds really in control here if the fed was in

control here we would have had this credit collapse in two thousand and two thousand and nine and you think that that really control here banks would be lending so they're not and i don't think i very much they will do anything on that string analogy comes back it sounds like you think that that that a ball that's next let's let's get to so bad now because your financial blogger you also used to work in tact but as it pertains to your blog what do you think the impact of this bill could be will they always start these things out small an innocuous laurie you know then then they go on from here i mean you know who the patriot act for example is supposed to be temporary you know every president wants it now because it gives them more control over things in europe we've seen governments actually take over the internet impose fines i can what country that was very many. for anyone visiting a prohibited site you've got rules and regulations in these piracy acts this is the

government or someone can come down and enforce it provider to take a website down you know imagine the allegations against zero hedge or me or calculated risk or max kaiser or someone you know when someone says oh you know use two senses of copyright material should have been done you should have. done that so we're going to take you down we're going to target in these instances we're going to target all the people that are saying our government things are going to be talking or targeting all the people or maybe they're standing out in favor of free speech they're going to target the people the. support ron paul you know there's the danger in these things you start down the slippery slope of taking away freedoms well. you know you can't ensure freedom by taking it away that's really the bottom line yeah it's a really great point we'll have to see what happens with this whole campaign but we cannot imagine a world without blogs like yours mesh so you know we'll keep talking about this we appreciate you being on the show and your insight as mike said locke his investment advisor for sick of pacific capital.

right before we go we have gone over debt deflation and inflation and guess what other issue is back ok first i want to introduce or bring in you guys now and dimitri kovtun as our producer to talk about this and also shannon donahoe are the producer hold down the fort in the control room maybe january but guess what issue is back raising the debt ceiling by another one point two trillion bucks so why haven't we heard this again. i want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit. right now. he

was saying you know basically they were reaching default there was the huge debt debate we saw a while back the country was this close to defaulting but back then there was a bipartisan deal struck in august it was stacked on purpose in president obama's favor. so that he could get through another passage of raising the debt ceiling even so in a symbolic vote wednesday the house chose to reject their one point two trillion dollars raise to the federal debt ceiling even though this doesn't matter what does this mean for you dimitri would you care about this oh sure republicans are a bunch of bozos and so. the national debt under reagan exploded under bush and now you know a bomb is a disaster as well for different reasons but. they're the ones supposedly fiscally conservative so they just want to masquerade around and pretend like it's only because obama's in office now that all we care about that i didn't give a crap about it before when reagan or bush went off it absolutely i mean the debt ceiling was raised ten times in ten years under all different administrations

republican and democrat i just think that it's so absurd that this charade still goes on even when it doesn't matter just so people can go back to their districts and say oh we're tough on the deficit when really no one's doing anything actually about the deficit because people don't want to work right so politicians especially the washroom was the nice and cozy pitcher from government the good pitcher from the obvious so they don't want to work they don't actually do anything or make sense to me i'm not surprised charades is what it's all about parties b.s. and n.p.r. and give you a free money in a month or you give me a job afterwards when i go work in or out of the country or a firm when i'm out of office shannon. it's all about the record for one thing brantley run for president one day. certainly hope i certainly have not as many members of the houses voted for this are thinking of running for president as there are a lot continuing around d.c. let's stick to this because you will never guess who is bailing out the washington

monument let's take a look. at the billionaire in philanthropy david rubenstein has graciously donated seven and a half a million dollars to help repair the washington landmark. i mean is that just pathetic so the washington monument got a little day during that earthquake we had in washington which was so not a big deal coming from california why are people ducking covering this is absurd. in the last it's getting a bailout from a billionaire he's the co-founder of the d.c. based carlyle group and a global asset management firm reportedly worth two point seven billion come on isn't there a better use of his money can you put that toward something that if in fact people's lives why does he have to respect this guy i think it's pathetic that the government can't find the money the few million dollars to fix the washington monument but think about one hundred eighty billion dollars to give a.r.g. the pass over to the bank and goldman sachs j.p.

morgan and whatever credit suisse and other banks i'm sure that you know the government could spend that money if they actually cared but they don't actually i think that's what's really pathetic they would rather literally the symbols of washington of this country crumble rather than have any bank crumble because i think i think for them they're like you know we need to find more than just to find a real life metaphor to describe just how much they're screwing up the country through the nation's capital you know what not only is washington crumbling metaphorically speaking it's actually literally crumbling so why have you literally crumbling i think that they just want to just want to kind of stamp a message home hammer them at the time don't expect much guys where nations monuments are crumbling shannen well the government actually is spending money to fix the washington monument has just provided the rest how much of the government spending i don't have the exact numbers but it's the private sector participation of fix the washington monument public private partnership to me to physically go in

europe with the banks and then the i mean this is absurd this bench are willing to participate in a haircut a private haircut but a private guys willing to fix the government is how backwards and screwed up this country is and in general the governments and private sector service are you bringing. thank you shannon you stand the point over me then of the new make the connection just really quickly do we had a story where someone died and donated their money to the government to help pay down the debt which is a better private donation that or this guy just because i was a sucker because he died he could not manage with the money where he basically said i'm going to write a check to the ferry to the to the to the tooth fairy and they're going to magically pay them a good don't explains this guy can see where his money goes have a label on it or that's all we have time for we'll leave it there that's all we have time for on our show thanks so much for watching feel free to follow me on twitter at lauren lyster give us feedback at youtube dot com slash capital account and get ready next week i am heading to davos i'm going to be your eyes and ears at

the world economic forum with all of the richest most powerful people in the world to meet your coffee and as our producer will be filling in the air we have really amazing interviews lined up so get excited until next time i'm more or less or have a great day.

cockers strike back at anonymous cripples major us government and corporate side center responds to a cracked out of bile sharing website and pending anti-piracy law. syria's opposition holds more mass rallies to demand more prisoners be released despite a general amnesty earlier this week critics say only regime change will satisfy the protest leaders now. at a multi-billion pound battle between a russian tycoon romanov a row vision fugitive mobile boris berezovsky in a london court finally approaches its conclusion. and us for more on these stories and plenty more at the top of the next hour up next from our washington studios the old.