more supporters and there's a strategy to it so we're excited that he's not the flavor of the month he's never had a bad. race you know he's he's pulling forward. so now ron paul he has yet to win a caucus but as you just said he seems to be the only one that is steadily on the upswing he's got a very loyal following while the others kind of come up and down with the romney traditionally seen as the front runner front runner losing speed where is it is right now ron paul's time to shine. i think i believe that it is wrong paul's time to shine but i'm perfectly happy with him plugging away and just keep going towards the tampa convention so if i don't see i mean it would be wonderful to win one you know that would be really exciting right now but as i understand it in minnesota he pulled in more delegates even in counties where mitt

romney or send counties were sent to a room was in first place ron paul got most of the delegates so people showed up and they're going forward in the in the caucuses to vote for ron paul and you know last night i obviously a huge victory for santorum after he won all three states so he's proving to be this more conservative alternative to romney who's his critics called a massachusetts moderate so we are seeing this divide within the republican party but ron paul's followers are the most passionate most loyal so what does this divide within the party mean for ron paul's campaign. i think that the votes that are going to santorum and newt gingrich currently are not. being taken for they're not coming from ron paul's base they're just dipping into mitt romney's . voter pool and we already know that newt gingrich and rick santorum are not on

the ballot in multiple states where they were not able to collect enough signatures to get on the ballot they didn't have enough foresight to plan their campaigns and in order to win with i think it's eleven hundred forty four delegates you know they're not eligible for between five and six states each of them so you know a vote for mitt sorry newt gingrich and for santorum is probably a wasted vote unless we're going to have a brokered convention which you know i don't know about that how it's going to pan out but i'm sure that ron paul is gaining delegates as we go along and you know the fact that he is gaining momentum and that he has made it this far is a huge improvement from the last time he was running the last election so would you say that ron paul's image as a fringe candidate has changed. absolutely absolutely there is so much more

support now there's so much more awareness i didn't know about ron paul in the last election i was living overseas and i was you know excited about the hope and change that obama was talking about and i don't really subscribe to. you know party particularly per se you know very much want to support the things that matter to me and what i think mattered to the country as a whole i think that the political divide that we have this is a you know democrats or republicans it's a horse and pony show and i think that right now a lot of people are willing to cross the political divide and register themselves as a republican you know in order to take part in this and that's what ron paul has a lot of people are joining the republican party because you know if you can't beat them join them and get you know you have a lot more chance of making the change that you want to see in the world by taking part getting in there and being active so i mean i do lean more conservatively i'm

fiscally conservative. you know i don't want wars though so on that side i'm very much different from the other g.o.p. candidates i think that the whole g.o.p. is changing we are the new. voice the new generation and people i encourage them no matter if they're liberal democratic libertarian or whatever independent to go ahead and you know make a difference if you could you know do some research and become aware of ron paul's policies and idea and the change that he's trying to make i mean he is the only one talking about. restoring our currency or competing currencies auditing the fed these banks that have been bailed out the money vanishing if you take m.f. global for example you know money is vaporizing and i think that they're setting. stage for something like that to happen here and nobody else is even talking about

it ron paul is the only one who is willing to shine a light into the dark corners of our political parties and these big corporations who are running the show and people are awakening to it and deciding that they can take part and make a difference so. and lastly mary just want to ask you. paul that we see he is gaining some momentum how can he continue to attract more voters we are seeing that he's winning some people over from the mainstream and he does have his loyal base how can he continue to take advantage of this leverage. well everyone who does some researching and gets involved and understands the policies usually gets profoundly moved by them and wants to be active in this and wants to make a difference so i encourage everyone who does come along and decided to support them

paul to talk to your grandparents talk to your neighbors talk to your cousins and aunts and uncles coworkers everyone you need to start raising the issues and and have little political discussions it doesn't always have to be a debate you know people like to call it's called paul bots because you know it's this is such an important conversation to be having we're talking about the future of our country and our impact on the world so you know i encourage everybody to get registered as a republican so that you have a choice when it's time for you know the g.o.p. primary candidate to go against obama you know people are trying to save the conservative or the anti romney come on they're all there it's just a joke to me i could tell you are thoroughly a huge paul fan and thank you so much for going on the show for coming on the show that was a volunteer organization and ron paul supporter mary we'll said. well it is hard to

argue that ron paul isn't in a league of his own but new met rick is there really much of a difference between them larry harvest takes that question to the streets of the big apple. in the u.s. republican presidential hopefuls are duking it out with the gloves are off what is the world's make of these candidates this week let's talk about that do you think there's any difference between mitt and newt no i think they're both. jerks who are sort of exclusionary and don't think a lot about the people they're supposed to be serving is there a big difference between mitt romney and newt gingrich republicans so there's no difference from ron paul's a republican think you there's a difference with him really it's all the same very much. better business. he's done a lot it was something companies in the past yeah but he's also like gotten

a lot of people out of jobs with his business he's been a little bit ruthless in his business and so you've got so much money so why would you trust him to represent you in represent the common man oh i don't trust him at all gingrich i don't like either. he is a little funny in his rhetoric is funny to watch entertaining is that important in a presidential candidate. i'm not going to vote for either one of them so it doesn't matter if you had to choose someone to run the u.s. who would you choose on the wrong person i ask i really like any of the candidates yeah but we got a big why didn't we get it to this one i really don't know honestly dying good luck to us right do you think that the rest of the world should care about one who becomes the next president thinks oh yeah why just by some of your marks of global superpower to figure out what should feel well what's going on and some of the effects everybody gets on some level like you should floss your teeth but you don't usually. something like that maybe a little more have you seen any coverage at all in scotland or yes but so in the

news. and when you see it what do you think. will. good luck to you. yeah right of budget talk. so it seems like here in times square today people have mixed emotions about who should be the next u.s. president let's see what u.s. citizens have to say about it come november. all the capital account is up next on our t.v. let's check in with lauren lister to see what's on the agenda today laura and what's in store i liz i heard you talking a bit about the republican presidential race for that nomination and of course we saw three contests last night be taken by rick santorum republican presidential hopeful now this had me looking today back at some of what he said about foreign policy and particularly iran so given that in this saber rattling we're going to

talk about the economic context ok the currency wars the effect on a global recovery and we have the man who wrote the book on currency wars jim rickards here to talk to us about it all is. that is they learned for that on that is coming up next that's going to do it for it being news for more of the stories we covered you can head over to our to dot com we'll see you right back here and a half hour.

more news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. giant corporations are on the day.

good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. here are your headlines for wednesday february eighth u.s. republican presidential hopeful rick santorum won all three republican voting contest last night let me remind you of some of his thoughts on foreign policy. on occasion scientists working on the nuclear program in a wrong turn up there. i think that's a wonderful but. a wonderful thing he's also advocated airstrikes verdun nuclear facilities in iran now as we hear the drumbeat of war from the west towards iran we often see war and politics as separate from the economy they are not putting aside

the human cost we'll look at the price of economic sanctions and any conflict for energy prices currency wars and any global recovery speaking of currency wars the man who wrote the book on the subject is in studio jim rickards after making the rounds to fans on capitol hill before heading to the lion's den of the u.s. treasury he's here to give us the inside scoop and ben bernanke the federal reserve chairman has been on the hill a couple times lately telling lawmakers he does not want higher inflation. but once they were not going to seek higher inflation in order to advance unemployment. the dude said policies belie those words to borrow from jim work records is burning he the lawrence welk of our time conducting fed policy with help from the same tricks. and the money would.

you get it that was a bubble machine we'll talk about it let's get to today's capital account. from currency wars to actual wars we're going to break it all down for you today first what you could call the war on the us dollar you have ben bernanke the federal reserve chairman testifying a couple times on the hill recently saying hey we don't want higher inflation at the fed we won't tolerate it but well listen to an example we're not going to seek higher inflation in order to advance unemployment. it's possible that you know

because we don't control in the short run perfectly obvious leave inflation unemployment to do you could have shocks that would drive both objectives away from their target which and currency wars author jim record says in a recent op ed to paraphrase hey wait a minute higher inflation is exactly what the fed wants inflation to limp dollar an asset bubbles are all in a day's work just think of ben bernanke he is the modern day lawrence welk. with the boys does the show on the way with some shuffle rhythm some but. i do. see that conducting the orchestra with a little help from the bubble machine now if winners prepare for inflation what does that mean does that mean by oil and gold well we'll talk about it and speaking of oil this of course brings us to iran a conflict between the west and iran according to some analysts could mean one hundred fifty dollars a barrel oil even two hundred fifty dollars

a barrel oil and with the win of rick santorum and three u.s. republican presidential nomination contest last night we're reminded of that possibility. but asian scientists working on the nuclear program in iran turned up dead. i think that's a wonderful thing. but i think we should send a very clear message he goes on part of his plan would be if iran doesn't meet u.s. demands there would be airstrikes very public airstrikes on nuclear facilities in iran and the washington post just reported u.s. defense secretary leon panetta believes israel could attack iran as early as this spring so let's talk about all of this soup to nuts currency wars to the actual ones the man i had to talk about is just the man jim rickards the senior managing director of tangent capital partners an officer of this best seller currency wars and we're so thrilled to have you in studio nice to see you thank you are a nice to be here first i just have to thank you for being so sweet in your support of our

coverage of davos it was really just very sweet where we were following it closely you were on the ground and you were getting firsthand reports and that was great reporting thank you thank you let's move on to your fantastic reporting and i have this great op ed for a meal and i want to start with the burning because he's been on the hill a couple times and people really focused on the dual mandate because some are really interested in inflation and some are really interested and poignant and there's really this idea that one has to do with the other is their relationship though between the two as maybe economic models would imply well historically it's been very actually very little relationship between inflation and unemployment we've seen examples in the late seventy's early eighty's where we have high inflation and high unemployment we had to invent a new word for it called stagflation the old phillips curve tradeoff where inflation could be lower but unemployment could be higher that was the theory it never worked out in practice the fact is you can get bad results from both cages that was the misery index that ronald reagan talked about and i think we'll see something like that again you know when the chairman says he doesn't see current

place and with regard to the unemployment mandate he does see car inflation with regard to cheapening the value of the dollar this is what the currency wars are all about this for. little doubt they're talking two percent inflation what they want is four percent inflation they want to shock people into thinking that inflation is coming like a runaway freight train so will do what about borrow spend and get their refrigerator get the t.v. set by whiskey sets the senator to try to get the economy moving the problem is just creating another bubble another bubble and just to confirm so the phillips curve is just not even relevant very little have high unemployment and high inflation as the seventy's show very little empirical support for that ok let's stick to inflation because i want to bring up this chart that we saw in zero hedge it shows the growth and the size of the b.o.j. the e.c.b. and the fed's balance sheet over the past year and a have increased by thirty two percent i'm curious how much you think this is driven by these banks trying to prop up asset prices as we've seen in the u.s. and europe certainly and how much is competitive devaluation of the kind that you

write about in your book that well i think the answer is it's both i mean you've got to prop up acid valuations to protect the banks you know if housing and commercial real estate and stocks and others found their true non-manipulative level the level they would reach without money printing about the central banks they'd all be in trouble so that's part of it but then they're also trying to kind of inflate their way out of that make the debt cheaper and i've said before it will say to china here's the trillion dollars we owe you but it's not worth you know you can't buy a car with a phrase that is we're going to we're going to print our way out of it and store it clear that's what the united states has done so again i just the by the way two percent inflation the chairman is the last press conference answering reporters' questions he made it sound and on the go we can live with two percent two percent will cut the value of a dollar by seventy five percent in a normal life time it's you know thirty five years that's a half and then thirty five more years it's in half again four percent inflation will cut the value of the dollar in half by the time you're young children go to college the value of the dollars cut in half so two percent four percent or

cancerous these are not benign rates of inflation i'd like to see zero which means price stability and you know we speak about that too i want to talk a little about zero percent. interest rates because you have to talk about currency wars you have a really poignant part in your book where you're talking about how couples actually committed suicide by putting their heads in ovens to have you know the garbage monoxide poisoning right and why margarine money when there was hyperinflation i'm not at all comparing the united states to that situation but there is a situation of zero percent interest rates of savers not being able to save and it being dismissed as oh ok you know the economy is bad so savers shouldn't be able to save but isn't this the backbone of. the economy that's exactly where you are in the economist paul krugman and others remember doc you talk about consumption and government spending and they have this notion this keynesian notion of aggregate demand and they said we're not buying enough stuff the consumer is not there so we need government spending to make up the shortfall in consumer spending but there's another component of g.d.p.

it's called investment why they would forget the investment account let's have savings because i think they like a consumer driven economy they like inflation they like to belt the banks why not have an investment driven economy encourage savings instead of forcing savers to go out buy riskier assets one that rewards savers when we raise interest rates makes us a magnet for savings from around the world and by the way one more germany you know conversely to say well we cheapen the value of the dollar but so what your wages went up so it all comes out the wash that may be true on average but it's not true individual by individual there are winners and losers but we know the winners are their heads funds their bankers people who buy gold people buy hard assets the losers are you know teachers firemen people a lot of the pension insurance policies and nobody's any one of the fixed income their savings or wrote it by the fed's policy so it's really wealth transfer from everyday americans to the elites have a really good point it's a wild transfer window his way when you know people don't often frame it in that way and it's so important to do i want to ask you about one currency wars related story that's just recently come out because we were talking about the g three

central banks new data shows that japan has used what they're calling stealth intervention in november to stem yang. gains because earnings are getting hammered with some of their export areas from cars to electronics is this a kind of covert special ops currency wars with stealth intervention sure we've seen that in china with stock purchases of gold and now in japan with stuff intervention they're all just variations of the currency wars and remember the thing about a currency were it's a zero sum game not everybody can chip in at once if somebody is going to get cheaper somebody else is going to have to be more expensive so your winners and losers lately you know that we've been trying to the fed the treasurer been trying to cheapen the dollar which by the way implies the stronger your own the stronger yen which has an extra export driven economy they need to achieve and to promote their exports so looks like the focus a lot on the u.s. china currency were those u.s. japan currency were going on also when you see the u.s. come out and criticize japan's move but isn't the u.s. doing the same thing the u.s.

is the biggest currency manipulator in the world look all major countries manipulate their currencies in this big can of the chinese do it the japanese do it the europeans to the u.s. just better at it than anybody else because we would bigger printing press and we sort of say hey you want to print money we'll show you how to print money we'll print more by the way this is the key to q e three if you see a weak dollar there might not be easy but if you see a stronger dollar a dollar holding its own that's the green light for q three and i think the fed chairman has signaled that in a series of reaches we've seen speeches and interviews and you can see these in coming probably in may or june and may or june is your prediction rex you'll probably be right because you're not with the mainstream economic economists back that is often wrong about come back if you can we'll see you do over that's how that's how it looks from home and i want you to just to back up quickly when you said you think the fed is creating a bubble where do you think we're going to see that. sure well the place you see is in gold that's the ultimate cross trade and you know gold did have that many boom in august and then backed off a little bit but now it's back up into the mid seventy's fifty's i think that will

continue to get stronger we're seeing in oil prices so that's really a geo political factor because of what's going on in the persian gulf but remember . if you can see and that's a bubble of surprises just hold their own if they're supposed to go down if we need lower prices to clear markets and create new investment but they were up here even if they're not skyrocketing that's a form of inflation based on the difference between where they are and where they should be normally if the if it was not being manipulated and so that's a different kind of that's a bubble but the fed we're seeing in the stock market i've actually said this will be a good year for stocks not not based on fundamentals are based on money pretty wall street loves free money yeah they sure love easy money speaking of geopolitical issues let's talk about iran with rick santorum winning several of the primaries last night i was going back through his sound bites at the saber rattling at iran and he's certainly not alone i mean there are reports that there could be an israeli attack this spring i'm from multiple sources first let's talk about the currency war aspect though because you were telling me that there's

a whole financial warfare aspect of this and there was that report that like looking back at ron has been diversifying out of the dollar and into gold and then we've seen economic sanctions which have frozen the central bank and them from trading in gold so there seems to be this whole currency war aspect there too so maybe you could speak to that there is i mean iran has been trying to get out of the get there in dollars in world markets by selling oil now the sanctions are tightening up lately but they have a they have a lot of dollars to their account they've been trying to buy gold they buy a lot of what's called scrap and scrap it's just a jewelry and so when it's gold and a lot of it smuggled in through dubai it can be melted down and turned into and gets that's one source of gold for them but what's going on right now there's sort of two kinds of currents who are sort of the currents who are as we've been speaking about us and trying to be cheap in their currencies to promote exports except you get as inflation but there's cars who are as actual were fair and that's what's going on with the ram what the united states the president post sanctions on the central bank of iran back more k.z. cut them out of the dollar system suddenly if you're a merchant in iran and you need dollars to buy imports they had to double their

local currency prices things went from two hundred thousand reales to four hundred thousand reales because they needed more realistic dollars on the block. market so they could get the dollars to import goods so their currency dropped forty percent against the dollar in one day then they imported hyperinflation and we injected hyperinflation into iraq because they had to raise the local currency prices the running banks raised their interest rates to twenty percent to stop a run on the back because people were pulling the reality out to dump them in the heart that sets so we gave them a trashed currency hyperinflation a twenty percent interest rates for weeks before the elections and this is not a coincidence in my view is what we're trying to do is generate regime change so this is sort of trying to reboot the green revolution part to put there are economy to talk turmoil so that when the elections come in they will be rigged and the people will be disappointed again maybe we'll get the green revolution to get all designed to get regime change to stop the nuclear program so it's a massive play i want to keep and continue on this conversation because of course

there is the the alternative of what if there actually is some kind of warfare a conflict i want to get your take on that we have to go to break quickly but we will be right back with with currency wars author jim rickards. and still ahead do not go away with money as ammunition what will be the only fighter left standing in the currency wars we'll talk gold with jim records but first your closing market numbers. we just put a picture of me when i was like nine years old and she told the truth. i think i am going to get a friend that i was driving. and. she

was kind of yesterday. i'm very proud of the world with its place. you know sometimes you see a story and it seems so. you think you understand it and then something else some other part of it and realize that everything. is a big picture. of. 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 you know who 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.v. question more. welcome back we are here with jim record senior managing director of tangent capital partners author of currency wars before the break we were talking about financial warfare that is already being committed against iran in jim rickards view now let's talk about what would happen if there were actual warfare because first i want to know obviously you have g.o.p. saber rattling in some of these reports that there will be an attack do you think there will be some kind of actual armed conflict or airstrikes with iran and does it matter who's president or is this going to happen regardless i think it's likely to happen regardless the thing is the main thing is to make sure that iran.