little. russia and china vetoed a u.n. security council's resolution on syria at a vote in new york this is a live video from the security council chamber at the u.n. in moscow want it all references to regime change change taken out of the draft the meeting comes amid reports from syria of a crackdown in the city of homes with hundreds more to be killed. more than two hundred thousand people braved the bitter cold across russia to ensure their views on national politics are heard one group demanding fair elections march through the streets others rallied in support of the current leadership. europeans demand a free internet as people flood the streets in protest against an anti-piracy act being signed across the continent activists want to prevent a new law be ratified in european parliament. capital account with laura lister

coming up stay with us. 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 or two million merchants who need a job or the job that pays better than the one lisa bloom. yeah 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 us income tax as we hear rallying cry is this presidential election season for raising taxes in the u.s. 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 u.s. 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've 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 and for the creation of 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 unwind 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 jetson's 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 because 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 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 pause 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 want 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 create this. 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 business cycles have gotten worse we're more in debt the moral hazard associated with the financial system is just growing worse and worse we're making our problems even worse now all bernanke so called those solutions are actually just first of all in the worst problems down the line and that's why i think if we in the fed right now we ron paul's exactly right the only thing i would take i was a qualifier he says in due time will do this it's about 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 a doctor who's present in the patient you go to for the guy ok and that's what i think we're doing slowly when the patient got it cut it off will joe 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 and this contributed substantially to so what do we do now we've got bernanke you reduce interest rates to zero yeah i mean like contra 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 on meet interest rates 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 has happened 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. straits 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 that high interest rates to be good for savers right now and savers need a break they're 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 when we had massive foreclosures massive people cast out on the streets and i just don't know how you know a little more concerted tend to go if we can loosen up so labor's directions like minimum wages and a new regulation stuff like this labor markets to in the resources we go to most valued labor resources nobody wants to work in a job and a boom economy is 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 then we see some reality we're living in a very distorted world but we don't really even know what these numbers mean we don't know if the banks are really solve the holding all these assets of the great

prized yeah everything's kind of chaotic and we were flying blind right now and you're going through the employment unemployment numbers we don't really even know what those wednesday on the amount that it's going to play is distortions introduced by the federal reserve and it's a massively distorted bank and so 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 the bank do you don't even know you don't answer to that but jeffrey i want to interview here dimitri did the by former vice chairman of the better 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 through a decentralized 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 it 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 nationalize the bay 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 to nationalize banking system you know this is go back to free market going further and we not 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 and you know it's more common to 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 which 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 exam. ample of the market being 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. and they sometimes produce very dysfunctional results and they did. so mr jeffrey tucker mr whiskey and gunpowder are wildcats still as wyoming and well they once were here they were not wild they're the defense of banking 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 get along and agree. to be far preferred and we have to look at what what caused those banking firms were at least two and 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 hurt yeah but at least two very complicated when you're

really sick sometimes you have to agree but at least if you have competition you have a condo 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 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 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 every word about this from two thousand and eight that we've got to have this gigantic trillions of dollars in bailouts and it's all propaganda you know we would. through a little bit of a tough time would be tricky but the market does amazing things every day for us

you know from giving us groceries and digital media and i phones and everything you can make oil from the bottom of the c two to your gas station i think the market can handle money and banking 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 that a fed song will have more with jeffrey tucker so stick around. and still ahead 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 but first your closing market numbers. from the time.

we're talking. because this seems not to. the mysterious sons of russia. welcome back to capital account let's get straight to it because jeffrey tucker is in studio 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 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 that supposed 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 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 they created this income tax there was

a one percent tax that applied to one percent i know that yeah william jennings bryan when i was 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 what i mean this is you know it's losing us every day not just the income tax payroll tax which for a lot of people is a much larger portion of the tax burden than the income tax and so in your opposed to the income tax you know and there's a philosophical reason because there's a presumption behind the income tax that the government owns your income they can 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 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 a basic safety net of some kind how do we pay for that without an income tax well the presumption in 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 yeah 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 that 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 to the private sector russia and take care of whatever whatever we need what proof is there of that oh you give me some of it all of 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 while the great 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 that 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 kind of struck 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 glowing about it but that lot 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 into 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 hostile 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 and they can't move because of this ridiculous regulations and look at the minimum wage it's been increasing more dramatically over the last decade and. and if you use of this this is a limb it's a violation of human rights and so so he will not about were will then want to get rid of child labor laws and what you have five year olds being born the word we have we have thirteen rules we're going to grocery stores it's a great start ok well where i go that's a whole other conversation about how to leave it at that we get to hear your song. he's good your song is good lucky for us we are going to see your debate tonight with dean baker and we will film your song and it gives everybody something to look forward to because you will hear it jeffrey tucker about the it's 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 scathing e-mail 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 on her show as an economic expert it drives me nuts he views things the same as lauren lyster 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 but 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 for. 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. so our argument this is something we talk about all the time ok savers when interest rates are kept artificially low it directly punishes savers borrowers on the other hand and less their large financial institutions do not necessarily benefit from 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 that 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 though 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. 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 a relative question what does it look like on a standalone basis but what does it look like relative to 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 the 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 tube 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 funny how lifelong 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 is counting have a good there.