free. video for your media project medio dog. in broadcasting live from our studios in central moscow this is our promise and it's at least four people reportedly killed in a fresh thousands continue to demonstrate across egypt angry at the country's military rulers after violence at a football match on wednesday about seventy four day police in cairo fired volleys of tear gas into the crowds as a third. united nations security council as a new resolution on syria fails to address all of russia's concerns which insists there should be no direct call for regime change moscow stresses that the only way

to reach a settlement is by direct dialogue between the government and the opposition. and all the polling stations across russia are to give their own digital observers prime minister putin orders the installation of webcams to counter potential fraud ahead of the march presidential elections the move comes after tens of thousands protested in moscow and st petersburg following december parliamentary elections alleging a wide spread vote rigging. next on our capital account with lauren lyster who today is taking a look at global financial delusions. good afternoon and welcome to capital account happy friday i'm lauren lyster here in washington d.c. the u.s. unemployment rate dropped to eight point three percent for january naturally it was cheered at a good photo op for the u.s.

president barack obama to say the economy is improving but. these numbers will go up and down in the coming months. there are still four to really emerged. the job that pays better than the one lisa bloom. we couldn't agree more in fact a large chunk of those people who finally found work last month landed low wage jobs and yes numbers will go up and down but those that haven't been able to find work for more than twenty seven weeks that's six months well that number isn't really moving it's stuck at five point five million youth unemployment is stuck at twenty three percent and there's more don't worry we'll break it all down speaking of work say happy birthday to the u.s. income down x. as we hear rallying cry is this presidential election season for raising taxes in the us we have a different message for washington stop stealing from us before you even think about asking for more of our hard earned cash how about start by getting this stock

act done to try to curb insider trading in the halls of congress we'll have a little more advice to share but also we've heard time and time again we've heard it from us republican presidential candidate ron paul. it's time we not only all of the federal reserve but all should. do time get rid of the federal reserve. and the fed we've seen a growing number of people get on board with his calls we've heard people say hey that's just crazy talk luckily author jeffrey tucker is here to break down how exactly the economy would work without a central bank very exciting let's get to today's capital account.

so people are pretty optimistic about these new u.s. jobs numbers that came out showing unemployment tick down point two percentage points to eight point three percent lowest in three years but is even us president barack obama said these numbers will go up and down so i want to take a look at the bigger picture and some of the downside of this report lucky for you i got some numbers to throw up so the long term unemployed that's longer than six months was very little changed at five point five million this stunner for me that accounts for forty two point nine percent of the unemployed that's a big number now the number of people employed part time for economic reasons that was little change that's eight point two million now these are people who were working part time not because they want to take some time off but because their hours have been cut back or because they're unable to find a full time job youth unemployment among sixteen to nineteen year olds that's twenty three percent that's stuck there and per bloomberg about one hundred

thirteen thousand of the two hundred forty three thousand jobs added are low wage jobs that's according to a strategist at c.r.t. capital group so given all of this there are some proposals some solutions to tackling the u.s. economic problems some seem like they're really just aimed at the symptoms though of a sick economy throwing money at the problem you could say no pun intended then there are some who want to perform surgery we've heard republican for republican presidential candidate ron paul for one called end the fed. you can't paper the money in secrecy by the federal reserve in the creation of a well we have gotten the attention the american people dealing with our monetary system and the federal reserve and it's time we not only audit the federal reserve but also in due time get rid of the federal reserve. and then there are some people that say come on that's insanity you can't really end the fed so let's talk about

that let's talk about how this would actually work we criticize the fed a lot but i want to know how we could really know why it's been around for a while now so jeffrey tucker is here lucky for us in studio he's executive editor of la is a fair books contributor to the daily reckoning also author of this book it's a jetsons world private miracles and public crimes which i luckily have a copy of right here and cannot wait to read it but first i want to welcome you to the studio thank you so much for being here pleasure to be here so i want to get to the jobs numbers they are as yes those are big news today but as i said there are some solutions in light of these economic problems that seem like band-aids and then there are some that seem like open heart surgery that you don't know where it's going to go and one would be this argument to end the fed we've heard from ron paul we've seen protests occupy the fed protests in the u.s. we've seen him in europe at the e.c.b. first before we get to how to get rid of it what's your case against the fed well i think it's very interesting we live in

a country where we've returned that we love capitalism we love free market we love for him to process and then we have the central planning apparatus that's running our money and banking system we've only had it for one hundred years all throughout the nineteenth century there are debates we have a national national bank going on and typically was the mercantile as the state is the national is the people that wanted to grow government and have a kind of a nineteenth century version of big government programs who always love the central bank we do have one but banking was getting ever more centralized and every time they made a bigger more problems and finally in one thousand thirteen they created some. and look what's happened over since you know the dollar is now worth less than a nickel of what it was at the beginning of the sort of business cycles have gotten worse where more and the moral hazard associated with the financial system is just growing worse and worse we're making our problems even worse now while bernanke so called those solutions are actually just first of all in their worst problems down the line and that's why i think if we in the fed right now ron paul is exactly right the only thing i would take i was

a qualifier says in due time will do this or that you say do it today look as long as this thing is a row i'm going to you it's like if you go to talk to supposin in the patient you go for the guy ok and that's what i think we're doing slowly when a patient. to cut it off you've got to because they're going to keep pursuing the wrong solution everybody more or less agrees that the problems of the housing bubble that we just went through were created by the low interest rate policy during the two thousand and that they created this problem this contributed substantially to so what do we do now we've got bernanke you reduce interest rates to zero yeah i mean like contrary natural laws and saying i mean we've had positive interest rates since the beginning of human history and now this guy shows up a little bit i mean interest rates this get rid of it and it's funny when you look at the federal funds rate after every recession since one thousand eight hundred and lower and lower till there is literally nowhere to go but jeffrey tucker let's really break this down because yes there is a case against the bad guy here and you say it's only been around for one hundred years but it's been around for one hundred years and this economy we've seen

financial services grow is a huge chunk of vegas how do you realistically unwind that at this point and what's the impact of the first thing the first thing we have to do is get we've got to have the hands off the yield curve and you know everybody these days thinks that the fed controls interest rates well look interest rates are part of a free market economy it's a kind of a price of time it's something it's like a price of shoes or price of potatoes or anything else there's a price attached to the food let it freed up which is happening on some of us interest rates would rise that would be very good in many ways but that's what i want to ask you if we just ended the fed right now what interesting an. just i mean even when we mentioned ending the fed when they just showed up to what twelve percent and we'd have massive defaults massive foreclosures massive unemployment and a depression i don't know about the unemployment of the pression part but the thing is the interest has to be good for savers right now as it was needed break there being looted every day and i couldn't agree more but what would be the damage let's be honest what would the damage be if all of a sudden change or

a straight shot up to twelve percent wouldn't we have massive foreclosures massive people cast out on the streets i mean i just don't know how you know a little more conservative and i mean if the if we could lose some so labor's tractions like minimum wages and the new regulations stuff like this and the labor markets too in the resources we go to most valued labor resources nobody wants to work in a job and a boom economy we're going to get fired eventually anyway because the stuff that's sustainable so i don't believe in sustaining unsustainable booms so if we let the market take care of it that we see some reality we're living in a very distorted world right now we don't really even know what these numbers mean we don't know if the banks to really solve the holding all these assets are very prized yeah everything's kind of chaotic and we were flying blind right now when you're going through the unemployment unemployment numbers we don't really even know what those let's say on the amount that it's going to play the distortions introduced by the federal reserve and it's a massively distorted bank it's the basis is broken right now i mean the banks no longer doing what they once did and they think can't make money doing it and we know when you say now what is

a bank do you don't even know you don't answer that but jeffrey i want to we interviewed here it to me by a former vice chairman of the data reserve alan blinder and he asked them about this issue of setting interest rates i first want to play you what he said about the fed's ability to properly forecast the economy and know where interest rates are let's take a listen to that. it would be a better world if the people at the federal reserve had perfect foresight and had a perfect model of how the economy works so they knew exactly what to do at exactly what moment that's a fantasy. ok so he. kind of admitted that the fed doesn't really exactly know where interest rates are supposed to be if the fed doesn't know how do we know that the market would know and how does the market sets them rather markets every does everything to reduce centralized way it gathers information from every individual actor according to the buying and selling decisions of individuals and. explain the process this generates a greater knowledge than any individual has right now we have this i don't know if

you've read those transcripts from the f a mostly that came out recently from two thousand and six but you know the fed is a dysfunctional corporation i mean it is just crazy i mean it's like a comic routine reading these guys ok well that's what i want to ask so even a more nefarious way i guess part of the reason the fed was created was because of public opinion that was against a private banking cartel has the feds solve that or do they now have a public private cartel you know that's really what happened i mean eventually the government basically nationalized the base system in cooperation with the banks and you know there are now two sides of the bait the republicans more or less want the fed to be controlled by the big banks and big corporations and the democrats want to turn it over to congress and i'm saying there's a third option this is you know we don't we don't need a nationalized banking system you know this this goes back to a free market going further and so we just need free banking but we should consider private production of money it was i've heard is very argument in the years of the industrial revolution people made their own money and it worked beautifully and it

could happen again today especially in the digital world where it all money and yet there's no money i mean it's more common you see these attempts since the internet opened it's opened its doors we've seen more and more attempts to try to create digital currencies we should give it a try and in fact this is the whole suggestion that and i did that's an idea let me ask you this though you said the fed's only been around for one hundred years there were times where it was done just fine without one but i want to go back to this interview with alan blinder because one of the things dimitri asked him was if the period between the second bank of the us and the civil war wasn't an example of the market. able to set interest rates and it was called the wildcat banking here's what alan blinder said. to me the best way to answer this is that we didn't call it the wildcat banking era for nothing wild cats are wild cats and they sometimes produce very dysfunctional results and they did. so mr jeffrey tucker mr whiskey and gunpowder are wildcats still as wyoming the only ones who are here

again not while they're in the defense of bacon at least they produce local problems that were solved locally and now we have national and international problems that are solved in this interim out of there never solved it along and agree. to be far preferred and we have to look at what caused those banking firms were at least they went bankrupt you know i mean this is part of the free market is that you not only make profits make losses too so we need a system of banks do can and do go belly up bankruptcy can be a sign of a healthy functioning progressing economy but those while there are a lot of consequences where hurts yeah but leash a very complicated when you're really sick sometimes you have to carry but at least if you have competition you have honor of working towards excellence in service of the customer you know over time the markets are never straight move forward all the time but you're the one who's also very influenced at the time by all these kind of railroad records that were going on and these little mini explosions of booms the bankers even back then were working with the politicians you know trying yeah

that's true that's true we went on and what led to the creation of the fed is that the banking system ever more wanted to kind of have a puffy life where everything was perfect we're protected from market forces all that still happens but dr jeffrey tucker before we go to break really quickly we know it's a confidence game these days that is i mean i hear part of it all how do we know that everything the financial system wouldn't just collapse once everybody knew that we were ending the fed i don't believe this i don't believe you know everyone about this two thousand and eight that we've got to have this gigantic trillions of dollars in bailouts or that it's all propaganda you know we would go through a little bit of a tough. on would be tricky but the market does amazing things every day for us you know from giving this groceries and digital media and i phones that you know everything you can make oil from the bottom of the c two to your gas station i think the market can handle money and buy in just fine we just have to let it have a chance all right well we have to go to break quickly when we come back i want to hear your song if you can give us a preview you got a fed song we'll have more with jeffrey tucker so stick around. and still i had to

say happy birthday to the income tax and write your wish list for what you'd like government to give up before they talk about raising it we will after the break first your closing market numbers.

welcome back to capital account let's get straight to it because geoffrey tucker is in studio it is the birthday of the income tax and i think he has a birthday wish for it he's author of that book you see there jetsons world private miracles and public crimes so jeffrey tucker it's the birthday of the income tax started ratified in one nine hundred thirteen now we hear this discussion around this presidential election about raising taxes we have an idea a capital account before you even talk about raising taxes for any of us you've got a sacrifice there at washington you hear that you need to cut the waste fraud and abuse you need to eliminate all of this stealing one good start would be this act as opposed to curb insider trading can we bring up that comic really quickly ok so this we love dad i'm considering a career in organized crime the dad says government or private sector i mean that kind of sums up what we're saying what do you think it's not fair for you to sack of for you to ask us to sacrifice more washington until you can you know get it

together well that's been true for a very long time a couple hundred years actually you know so another bad thing we've been talking about the fed but in one thousand thirteen you know they threw this income tax it was a one percent tax that applied to one percent i know that yeah william jennings bryan when i was at a tax on the rich yes it was and it was an attempt to convert this place the tariff at the time and that's why a lot of people favorite favorite is first in the south in the west because as opposed to replace the tariff and the taxes northern industrial guys and we get that washington off our back but eventually look i mean this is you know it's losing us every day not just to the income tax with payroll tax which works for a lot of people is a much larger portion of the tax burden than the income tax itself so in your opposed to the income tax you know there's a philosophical reason because there's a presumption behind the income tax that the government owns your income. take whatever it wants and whatever they leave you is just sort of a favor they give you with this is runs contrary to everything classical liberalism

ever taught i mean thomas jefferson in his inaugural address in one thousand nine hundred when he when he became one to be president so that the workers deserve the fruit of his labor. should not be touched by government and i hear you but then how do you pay for basic services that we can all agree should be around for people i mean we do have a social contract we don't live in the jungle i don't believe that there shouldn't be basic basic safety net of some kind how do we pay for that without an income tax well the presumption of the mountain century was that the tariff is going to cover us you know and if you drive the and drive people crazy so if you have high tariffs then there's political pressure to lower them and we can keep them as low as possible frankly government is going to cut back so you think just get rid of the income tax and cut back ever and you have to just get rid of the whole thing and look at what a wonderful thing it would be if you make money you keep the money that's the kind of system we need to have well i hear you but at the same time you know i want to make my money and keep my money but if i suddenly got unemployed and there was literally nowhere for me to turn and i was cast out and i had nothing to do i would want some kind of unemployment insurance benefits that you know everybody agreed

were a good thing well for talking about insurance you know insurance is a private industry that could probably provide it probably is probably plenty of programs that would emerge lotions government does things and they displace the private sector if the government sub doing it with the private sector russia and take care of whatever whatever we need what proof is there of that give me some of it all with human history. really i mean if once you start looking i mean the really great impression that people you know that you're on about these these these were about people died and starved whether good lined up for bread in the first place great pressure was caused by the government and prolonged by the government so the taxes the all the nonsense all the crazy unemployment programs over that made everything worse and they're doing the same thing to look at those unemployment numbers among these this is catastrophic i mean you know it is well wait let's talk about why because some of the biggest things to come out of that report today people are blue. going about it but that law that youth unemployment sixteen to nineteen year olds twenty three percent are stuck there we're almost out of time why is that so significant well it's significant because we're in

a whole generation and they're not learning to work and learning how to enter the marketplace and in the commercial world and this is this is terrible for the habits of mind for their training and everything else and it's caused directly in this case by a series of government regulations really i think the child labor laws are. as they are now listening to talk about children talking about young teenagers you know we've got your people thirteen fourteen fifteen who want to work they can't move because of this ridiculous regulations and look at the minimum wage has been increasing more dramatically over the last decade and appeared in the previous fifty years of this this is the limits of violation of human rights and so as to how they will that about work will then want to get rid of child labor laws and what you have five year olds being for in the world we have we have thirteen rules we're going to grocery stores that's a great start ok well you know that's a whole other conversation will have to leave it at that we didn't get to hear your song but as long as good your song is good lucky for us we are going to see your debate tonight with the baker and he will film your song and it gives everybody

something to look forward to because you will hear it jeffrey tucker about the the fed. all right it's friday and it's been a while since i've been able to respond to you though i do on twitter quite regularly but i want to do a more formal response we received one long email of criticism i can't read the whole e-mail but i did want to respond to a few pieces and mazzy emailed and said alona has repeatedly had anthony randolph go on her show as an economic expert it drives me nuts he views things the same as warren lister through the same lens as a wall street broker it makes me crazy because every time i see him i hear him

complain about the government keeping the interest low lauren lyster has made this same argument now i can't speak for anthony randolph maybe you know we'll get a chance to hear from him but as for me first if this person thinks i see things through the same lens as a wall street broker then i don't know how much she's seen of the show because i don't think you hear wall street complaining too much about low interest rates you see them benefiting from them and all we do on this show is analyze what's wrong with wall street so to go on let's get more specific as lister has done they lament the fact that they are not making money from interest being low for god's sake we're in the middle of a housing crisis there are probably millions of us who are making our mortgage payments on time who will foreclose when rates go up if we are not able to stabilize these loans when interest rates are kept artificially low need to sustain these laws so our argument this is something we talk about all the time ok this savers when interest rates are kept artificially low it directly punishes savers borrowers on the other hand and less there are large financial institutions do not

necessarily benefit from. in these low rates we haven't really seen that banks still have to be willing to lend you money and what we've seen is the banks are more concerned about padding their balance sheets then they are in extending credit to mom and pop in other words the fed can lower the federal funds rate all it wants it can keep it is zero as it's done and will do but this does not mean that you're going to get an affordable rate on your mortgage in fact as we've seen mortgage rates are still out of reach for many people despite the easy money policies of the fed to go on she says a number of people have been talking publicly about reducing principal and canceling debt it really does make sense of course the banks are not going to want to do it but we should be as bold as a country and force them into a new paradigm we agree this is something we talk about all the time debt forgiveness or default there is

a point at which debt levels become so large that they begin to economic growth as opposed to promoting it this is where we are today so we hear you on that now she also said a few things about how i make a lot of money and probably have no problem paying my mortgage which if you know anything about journalism is kind of laughable i don't have a mortgage when i will but i know plenty of people personally who are struggling very much during these times so i don't want you to take my position as unsympathetic towards yours i believe. but i do want to address your e-mail on the criticism because we'll continue to talk about this issue of savers and interest rates sticking to interest rates let's go to twitter because i got into a bit of a back and forth that i really didn't have time to respond to is during davos things are busy chasing people mark dow tweeted that the data tells us unambiguous lee the fed is debasing the dollar assertion is wrong to which i replied well it sure did basing my savings account he tweeted back and said how do you measure if

we can advance that how do you measure the extent to which government is debasing your savings. i didn't get a chance to respond i measure it by the fact the market interest rates are lower than the cost of living so i'm losing money if it's sitting in savings financial repression now this spark more responses on twitter the conversation me and mark had from other people mark said it's hard to argue about debasement if the u.s. dollar is slightly stronger since printing started hedge fund invest said that's more a testament to other currencies just doing worse as a reflection of economies and what he's getting at is that the dollar's traded relative to other currencies here's mohamed el area and c.e.o. of pimco explaining to me the dollar's relative strength. extreme rates are. very different because they are relative to the dollar versus the euro dollar versus the year. when you look at exchange rates you have to ask the relative question what does it look like on a standalone basis but what does it look like on the exchange which. cleanest dirty

shirt to use their analogy what matters is not how many zimbabwe dollars i can buy with my u.s. dollars what matters is how much of this stuff i need to sustain my living standards that's how you measure debasement moving on i want to thank everyone for the positive responses to my davos coverage which i have which i responded to on twitter and i just want to reassess reassert that also earlier this week we got into a debate over savers versus speculators and one of our guests brought up a recent bank earnings as a sign that fed policy zero interest rates don't benefit banks whenever you choose euro said this newsflash the bankers might not be living the high life like ten years ago but none of them are getting foreclosed on they still make millions and billions and we're going to say hey it's ok at least they are hurting too well it's funny how life long investors like jim rogers and mark father don't buy into this and make money honestly investing i just want to make sure that you got

a chance to catch my jim rogers interview where i asked him about this earlier this week you can catch it on line because that is all we have time for thank you so much for watching the show don't forget to follow me on twitter at lauren lyster give us feedback at youtube dot com slash capital account have a great weekend and from everyone here at capital account have a good night.