that we would be imposing a embargo on all the rons exports that was not in the cards a year ago a year ago it was a matter of trying to block iran from importing refined refined petroleum. but we've gotten so caught up in this game of whack a mole where we're trying to close off every avenue that iran may possibly have and they're constantly outsmarting in finding ways out of the same sions and then we slap new sanctions and we've sort of lost sight of what is this exercise all about what are we actually trying to achieve here nobody really knows what it is is it to topple the government is it to convince the government to come to the table for talks. there isn't a clear policy directive there and then response that an iran has threatened to take was to close this this critical waterway the strait of hormuz ron paul last night also went on to say that iran they really don't want to close that waterway because it's not really going to help that just as much as it's not going to help the other countries that that use this this waterway iran depends on the strait of

hormuz in order to ship out its oil i think that the case could be made that if a successful embargoed is placed on iran then they have little incentive to keep that strait open because they're not sure they get anything out of there however i don't think that that's ever going to be the case so what i really think this is. a ratcheting up of pressure by iran this is the leverage that they have and the funny thing is that when he run does stuff like this it drives the cost of oil up anything that iran is losing in terms of being able to export its oil it's making up in the increase in prices because of the tension that has been ratcheted up and some and as you said this will affect oil prices in some countries in the u. e.u. are worried that this act this action well will end up hurting their own economies so i mean is this really a double edged sword very well could be a double edged sword and that's why the e.u. put a six month timeline on when they would actually put this into effect. greece spain

italy particularly greece are dependent on iranian oil. one third of its oil comes from iran and they buy it on credit because nobody else is really willing to extend greece credit given their situation so six months from now the e.u. is actually going to have to make the real decision already to go through with this and is this potentially going to topple one two three economies in the eurozone iran does have leverage here and it's really a matter of at some point the parties realizing ok we have more to lose than we do to gain by continuing down this course and well with the e.u. now jumping on board. what effect do you think that will have now that the e.u. is backing the u.s. and these sanctions and the bigger picture i mean is that is that going to help relations i mean is it going to get its intended effect or are really what are the consequences of the e.u. now now joining i think that the consequence is really that we're running out of moves here on this chess board every time that we take another step that's one less

move that we have and brings us closer to war if in six months we go forward with the oil embargo does iran retaliate do they you know play games in the strait of hormuz. i see less and less ways out of this situation there are less available off ramps to us every time we ratchet up so that remains to be seen there are talks that are supposedly coming up the question is ok are these. oil embargoes sanctions going to be used as leverage at the table are we actually using this as a lever that we can poll to compel iran to cooperate with what the west wants or are these sanctions that are just designed to put pressure on iran for the sake of pressure and really quickly is this another sign that diplomacy is not an option and not on the table and and that war seems to be the only thing that is left on the table. i mean it's not off the table yet but it's going to take some bold initiatives by both sides in the really going to get their house in order in order

to pursue real diplomacy jamal thank you so much for weighing in as always a pleasure to have you here that was policy director for the national iranian american council jamal abdi. well as we just discussed. has already bought iranian oil using gold instead of u.s. dollars and this is extremely significant because every year india actually spends twelve billion u.s. dollars on iranian oil and now actually beijing is also saying that it might want to jump on board with new delhi and also look into some sort of agreement with iran

to continue to get oil new delhi and beijing actually account for forty percent of the imports of iranian oil the e.u. only counts for twenty percent obviously we've been talking about all week about this oil embargo that the e.u. announced on monday that they're hoping to roll out and put into place by chalabi first and obviously if new delhi and beijing find a way to continue trading with iran using gold instead of u.s. dollars this would severely hurt what the european union in washington is trying to do russia has also said that it wants to continue trading with the run using domestic currencies instead of u.s. dollars obviously the point of the e.u. oil embargo would be to bring iran back to the negotiation table over its nuclear program obviously iran has consistently maintained that this is the peaceful nuclear program the west believes that they are potentially developing nuclear weapons so in response to the use announcement on monday that it will place in oil

embargo on iran and iran has said that it's going to shut the strait of hormuz which is actually worth twenty to thirty percent of the world's oil supplies shuttles through in the united states is that it will absolutely not allow that to happen even sort of alluding to the fact that it could potentially use military force to make sure that that strait stays open moscow has also said that think sions are an obsolete form of sort of punishing a country and that it's actually going to be counterproductive another interesting thing to note here is that if beijing and new delhi continue to trade with iran with gold it's actually going to increase the value of gold and decreased. the value of the u.s. dollar as the global reserve currency is. those are to his own priya sridhar. well what if i told you that president obama had a program in which the u.s. was able to monitor iran and its nuclear activities from the moon well first of all i'd be lying we don't own the moon nobody does that we know of at least but lots of

people would believe it and do believe just about anything they hear laurie harshness with the resident dot net that a little experiment in time square in new york and here's what she found. in the case of iran's nuclear capabilities people are quick to make judgments based on what they hear in the media but are they actually listening to what's being said this week let's talk about that do you agree with president obama's initiative to monitor iran's nuclear program from the moon. yes. i think it's important to know what's going on or do you know why well just because of the threat to the world what is the threat specifically. or safety. we cannot talk he says initiative but to monitor iran's nuclear program from the base on the most yeah yeah i think that's crazy it's just crazy to monitor it from

the moon or what they're doing whatever you believe do you agree with his program bob moon. you're putting me on you don't believe that from the moon. maybe from a satellite but i think you're putting me on would you be surprised to know that a lot of people just say blindly that they agree with the program from the moon oh that wouldn't surprise me at all that people not humans are lemmings well for things i like to jump off cliffs doesn't the media have a responsibility to guide the lemmings down a better path no lemmings should have their mind of their own and they should be educated i mean people are watching t.v. radio internet so it's if you know even if you're looking for some going of disease you know you find so many interpretations so which one is the right on this difficult time people say i sought an internet so i believe it's absolutely true so it's very hard to find the right source most people just don't have the time don't

have the inclination come people that they get into if you ever try to have a meaningful discussion with someone about politics i try every day it's pretty pretty bad to be honest so you never going to know anyway even if they did personally up there you wouldn't know anyway so. we don't know if he has a year's overstress or not so yeah but do you think common sense takes over a little bit oh yes ok we don't know because that deep space but our moon you think we would know. tonight they're going to look up there to see if it is for the anything or make a digital camera so it seems like some people are listening to what's being said and are thinking for themselves let's just have think catch the much more subtle inaccuracy as they're bombarded with by the media every day. and be sure to stay tuned for

a special episode of the capital account coming up next lauren lester is in davos switzerland at the world economic forum and she will be giving us a preview of what's you expect. does a for now for more of the stories we covered you can head over to r.t. dot com slash usa and also check out our youtube page it's youtube dot com slash artsy america you can also follow me on twitter as well we'll see you right back here and a half hour. down

the official g.o.p. keisha. called talk from the. video. feed with the palm of your. on the dot com.

good afternoon and welcome to capital account i live in the finest in washington d.c. filling in for laura lister who's in davos covering the world economic forum heads of state central bankers c.e.o.'s of multinational corporations and international finance fears make up more than sixteen hundred of the business leaders now pouring in from all over the globe to this tiny ski resort town of davos for the world economic forum it's invite only high on the agenda is capitalism itself its problems and its future so what does this mean for the rest of us were there fill you in we'll hear from lauren just checked in with us later in the show.

and back in the u.s. the president's annual state of the union what really is the state of our union. and i must say to you. that the state of the union is not good. gerald ford delivered those famous words during a time of rising trade and budget deficits and expanding national debt and high unemployment america had already started down the road to empire long before that but almost forty years later what do we have to show for our next guest co-writer and coke and producer of award winning documentary io usa and best selling author of the two thousand and six empire of that the rise of the an epic financial crisis joined me earlier to discuss just that. and with the today f o m c meeting kicking off this morning the only thing we've been promised is more transparency kind of interest rate forecasts of individual committee members will now be made public but

considering that the fed has already committed to keeping rates near zero as far as the eye can see is this really a concession or just more helpless p.r. by a central bank that has reached the limits of one not so great moderation let's get to the days capital account. yesterday i had the pleasure of traveling to the headquarters of a gore a financial in baltimore and interviewing best selling author and publisher out in wigan who along with bill bonner started one of the first online financial news letters the daily reckoning back in one thousand nine hundred nine a very a veteran of alternative financial media and investing addison not only predicted

the current bull market in gold over a decade ago but has also been writing about many of the perils associated with our collective addiction to debt and over consumption imperial expansion and the hollowing out of the american economy for even longer today i will be paying playing a small part of my hour long interview with him i started by addicts asking addison if he has been surprised at all by the federal reserve's inability to reinflate what he has dubbed the mother of all bubbles addison wiggin publisher of financial . to use the war metaphor because it seems so popular with with the media there is a war between deflation which is the natural de leveraging process that happens at the end of a credit bubble and inflation which is the natural result of trying to reinflate the bubble and that's that's when we get the federal reserve. meeting minutes that's the debate that they're having they're trying to reinflate the

bubble and then we are reassured by mr bernanke the fed governors that they'll be able to measure the moment at which they put on the pedal too much and the and inflation is going to take off and that's the debate. is going to meet this week and we're going to hear more about whether they think they're injecting enough money into the economy or not enough that's the way the system is regulated the danger is we just enter into a period where people lose interest in the stock market entirely they don't consume as much they certainly don't produce as much as they used to and the entire economy just slows down and you have an extended period of slow growth and low employment and that's what we've been experiencing since two thousand and eight despite all the efforts with the quantitative easing and even purchasing of treasuries and mortgage backed securities that the federal reserve has done and that period can go on for a long long time and if you're interested in growing your own wealth that's presents

a significant challenge and the other thing that we've seen that makes it very difficult for people to understand these big macro trends in the economy is the debt crisis the sovereign debt crisis in europe the challenges that japan has had getting its economy back on track after two decades following their own credit bubble collapse is that the dollar and treasuries remain the reserve asset class whenever the debt crisis begins to spike again in is when we hear greece or a couple weeks ago as in p. downgraded nine different. nine economy is in europe. people. treasuries i think as well because historically treasuries have been the safety trade and the safest place to put your money gold has played a role certainly since one nine hundred ninety nine when we begin recommending it

was two fifty three now it's hovering around sixteen hundred it has had a good run but in the financial markets the paper asset that is represented by the us treasury still maintains its flight to safety status and to my mind that just in bold ins. mr geithner and mr bernanke even more because they believe that that that status will be maintained regardless of what happens even if congress can't get its act together and balance the budget the the treasuries and the dollar have asserted themselves as specially you know i was especially shocked in september of two thousand and eight the dollar rallied twenty two percent right after lehman brothers declared bankruptcy in a very real way it reasserted itself as the trade went to some extent of course and that's also there's a website because so much of it is the character that you've written about right many years right and that's that's there's that tension in the economy is something

that's our daily bread because when i and i say when not if there is an alternative to the u.s. dollar i believe that people rush for the exits so how do you see that do you see that as something playing out in the near term how do you see that happening in terms of alternative because the one alternative to the u.s. dollar has been essentially precious metals or commodities basically people seem to play hot potato instead of thinking that maybe maybe towards the late ninety's people were thinking more how to make money a lot of people now are worrying about how to avoid getting hit and i think it's a big paradigm shift at least among sophisticated as well it's a paradigm shift that we recognized throughout history in financial reckoning day we did a whole chapter on john law and the misuse scheme. will we see these big financial bubbles in history and then on the down side during the collapse people are more concerned about preserving their capital than they are making money anymore and those periods last for a long period of time and we expect this one to last seven to ten years and we're

only three years into it so there's a period of time where people become disgusted with stocks and they get worried more about the return of their capital than their return on capital. and then you have periods of time where treasuries actually go negative people are willing to lose money they give it to the government then put it in the stock market or invest in their own innovative enterprises and that's the deflation because the feeding on itself and people are trying to stay there for it because they still have bills to pay because still if you use dollars to pay bills in the den to pay bills and they just lose trust in the system so on the downside of a collapsing bubble you have a period of mistrust and it takes a long period of time before that trust can be reestablished and then people start looking for alternatives that's the phase that we're in right now but if you look at countries like china russia brazil they're all holding in massive amounts of

u.s. dollars and u.s. that china i mean japan india south korea these countries are all dependent on their their reserves their dollar based reserves. and they're fearful too so they're looking for alternatives they're trying to figure out ways to trade with one another using their own currencies we've had announcements from russia and china and brazil trading in things like oil but settling those accounts in their own currencies rather than the dollar and every time a major announcement comes out. i remember specifically one time i was sitting in a hotel room in dubai and there was a headline story in dubai which is twelve are twelve hours ahead of the markets open in the us where there are. some finance ministers from saudi arabia and the gulf six countries had gotten together and suggested that they might put

together one currency back it partially buy gold and then begin selling oil in that in that new dinar i remember it was going to be in the dollar index before the open in new york got whacked for two points because the fear is that some kind of alternative to the u.s. dollar would get created and people would rush for the exits because all all of these reserves are being held in what. what most people recognize is a risky asset so what is preventing the diversification why wouldn't they just move away right now because there is no alternative right now and if you ask big money managers or people that are managing the reserves of the central banks they have no alternative they've been trying to accumulate gold we know that china is buying gold and storing more of it but there's not enough. of an alternative.

to move into that wouldn't also crash the dollar at this is it or is it fair to say that the people that investors are looking to take the lead looking for central banks to take the lead they're waiting to see what the people bank of china is going to do with their reserves what what global central banks that are trading partners with the u.s. would do because i'm not the reason i ask that is because it would seem to me that there are not written right in our place they've experienced help pump this bubble up so high this point that they depend on a consumer they can't afford their own goods so they have a political problem which is a plate is that's exactly right it's a political problem because. investors in banks around the world are dependent on a currency and a bond that unanimously people agree is unsustainable because of the deficits that the u.s. government has been running and the the entitlement problems that we

foresee but are unable to address address politically and also just the mounting interest that we need to pay on the the existing debt these are problems that have been politically impossible to even discuss and yet you have all these reserves around the world waiting to see what's going to happen and so it's pretty goes back to what we're saying which is that people are just waiting to see which way the wrecking ball is in a swing and they want to head out of the way so everyone's playing the same game and does that mean that eventually think at some point something completely unexpected will happen that it will that the deal leveraging will occur unexpectedly in some form or fashion that's what we're expecting will happen and is very difficult as you know to forecast when that is going to happen or in what form it will happen and it's fair to say that a reason a very strong reason why the deal leveraging hasn't happened yet is because there are other crises around the world that are even more egregious than the ones we're facing and people are still fleeing to treasuries in the dollar in the meantime.

because you know the central bank of brazil is holding them because china is still holding in china still holding them because japan is still holding them there there is no alternative on a scale large enough to accommodate a. flight from the dollar. and still ahead more from my interview with bestselling author and producer addison reagan where i ask him how long he thinks it will take for this credit bubble to finally be flayed and what he thinks the american economy will look like when it does but first their closing market numbers.

you just put a picture of me when i was like nine years old and don't you tell the truth. i may confess and i am a total get of friends that i love driving hip hop music and pretty. much it was kind of a yesterday. i'm very proud of the will without you she has played. the. guitar sometimes you see a story and it seems so. you think you understand it and then you glimpse something else you hear see some other part of it and realize that everything is ok if you don't know i'm tom or welcome is a big issue. what

drives the world the fear mongering used by politicians who makes decisions to break through it's already been made who can you trust no one who is human view with the global machinery to see where we had a state controlled capitalism is called sasha's when nobody dares to ask we do our t. question more. welcome back in this second part of my interview with addison i asked him what he his time frame is how he sees the bursting of a decades long credit bubble playing out and if you think that this depression will get so bad that the american government will stop at nothing to prevent the economy

from bottoming out as americans agree to forfeit whatever liberties they have left for the promise of ever more security history shows that on the down side of a big asset bubble the credit bubble the government. gets more aggressive and they start looking for ways to bounce their own books off the backs of the producers and i think we're in a period where that hasn't really begun yet. that's what makes people fearful that's why people are sitting on the sidelines waiting for the next thing the next the next moment where they can jump back in and begin deploying their capital and making money again i know again the one of the things we spoke with before is having rather they reckon i know that you have a very human very humble theme to the work of theirs and you never want to say this will happen and this will not happen would be your guest your best guess if you just play it out theoretically in terms of how this will develop and the time frame

do you have a general idea yeah i think the history shows that there's a long period of malays after a credit bust and we saw one in two thousand and eight we could expect that to go on for ten years twelve years so it's if you put that into perspective we're only three years into it we're only in the the initial shock of the collapse because the stock market still reasonably high people are still watching the housing numbers expecting somehow there to be a resurgence in activity in new homes in construction we're still talking about the crisis in the same terms we were before two thousand and eight happened. before this cycle is done we will no one's going to care about housing at all the stock market is going to be like it was in one thousand nine hundred one when businessweek ran the the title the death of stocks people lose interest entirely.