sigh the human cost will 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 records after making the rounds to fans on capitol hill before heading to the lion's den of the us 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 we were not going to seek higher inflation in order to advance unemployment. the dude said policies belie those words to borrow from james work records is burning the warrants wealth of our time conducting fed policy with help from the same tricks. and.

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 u.s. 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 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. when the boys get the show on the way with some of them some but no one i do. see that conducting the orchestra with a little help from the bubble machine now if winter is 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 dollar 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. obligation scientists working on the nuclear program in iran turned up dead. i think that's a wonderful thing ok 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 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 because he's been on the hill a couple times and people are really focused on the dual mandate because some are really interested in inflation and some are really interested and claimants and there is really this idea that one has to do with the other is their relationship between the two as maybe economic models would imply well historically has been very 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 trade off 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 better results from both gauges 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 a car 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 the bird. 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 risky sets a setter to try to get the economy moving the problem is just creating another bubble another bubble and just to confirm said 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 half 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 deal 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 said valuations to protect the banks you know if housing and commercial real estate and stocks and others from the true non-manipulative level the level they would reach without money printing by 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 the dead make the debt cheaper as 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 clear that's what the united states has done so again i just the by the way two percent inflation the chairman of the press conference answering reporters' questions he made it sound benign they 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 an african 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 if two percent of four percent are 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 mar germany 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 should be able to say 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 get 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 like to belt the banks why not have an investment driven economy encourage savings instead of forcing savers to go out and 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 a gold people buy the hard assets the losers are you know teachers firemen people on a pension insurance policies and nobody's anyone on a fixed income their savings or rode by the fed's policy so it's really a wealth transfer from everyday americans to the elites a really good point it's a while transfer windows 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 and. because earnings are getting hammered with some of their export from cars to electronics is this the kind of covert special ops currency wars with stealth intervention sure we've seen that in china we're still 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 war 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 be more expensive see the 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 us china currency were those us two parents who 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. it's just better out of 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 e three and i think the fed chairman has signaled that in a series of reached recent speeches and interviews if you can see these in coming probably in may or june and may or june as your prediction directs you'll probably be right because you're not with the mainstream economic economists back that is often wrong about come back even though 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 no 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 it. if you can see a foot of surprises just hold on if they're supposed to go down if we need to 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 the 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 but 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 iran 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 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 in cash so what it's called in a lot of that smuggled in through dubai it can be melted down and turned and it gets that's one source of gold for them but what's going on right now they're sort of two kinds of currency were sort of the currency words we've been speaking about us and trying to be cheap in their currencies to promote exports except all you get is inflation but there's cars who are as actual were fair and that's what's going over the ramp with the united states through 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 the rand 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 need a more realistic dollars on the black. 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 iranian 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 into hard assets 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 me to turmoil so that when the elections come in they will be rigged and people will be disappointed again and 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 continuing on this conversation because of course there is 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. currency wars author jim rickards. and still ahead go away with money and what will be the only standing in the currency wars gold which records but first your closing market numbers. technology innovation. developments. blind rushes would be so much brightened if you knew about sun moon from funniest

impressions. from stunts on t.v. don't come. 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 air strikes with iran it doesn't matter who is president or is this going to happen regardless i think it's likely to happen regardless the thing is laurent the main thing is to make sure

that iran does not give the nuclear weapons that's the starting place for all the analysis so how do you stop them or the first way we try was diplomacy which has failed in the bush administration bombing ministration tried very hard on the sea but it didn't work because the iranians were not bargain in good faith the second thing which we're seeing play out is psychological operations cyber warfare sabotage assassination that's been going on for years been fairly effective at disrupting things but hasn't really stopped the iranians in their tracks the third way is regime change we talked a little bit about that before the break in the soul for us is going for it gone forward and absolutely and no one worries that india has nuclear weapons because it's a democracy and it's moderate so it's as much about the regime as it is about the weapons if you get regime change but that probably won't happen there completely with this so the fourth which is war so nobody wants it nobody wants to see it happen but it does seem likely because the rains are not backing away from this nuclear program then the question is timing if you wait till two thousand and thirteen it's too late the rains will test the device in all likelihood before that and can see on the eve of the presidential elections it looks

a little hokey you're not going to see it before march because we want to see how the elections play out there's a lot of intelligence content in the election results so that leaves a window of kind of made august and i don't know what the secret war plans are but that's when i would look for it sometime in the june july time when we're going to have war with iran and quantitative easing that well they've made a way that i mean they may not be on the way to the border goes to three hundred you're going to need some current. and that's my question ok we've had a lot of predictions of what happens if there is any kind of conflict with iraq two hundred fifty dollars barrel oil is what i've heard from one analyst roubini says we have a global recession what would be the impact of any on any global recovery or on a global recession if there was any kind of concert with iran one of whose very famous general in the german general world war one he said no battle plan survives the first shot you may think you know what's going to happen and you do the best you can to model it but the truth is you're just playing wild cards at that point so of course we would expect the price of oil to go up significantly but well people take a naive view of what would happen in the straits of hormuz that the iranians close

and they'll say well the u.s. will clean it up in a day might not be a day it might be a month i mean that's the kind of thing where we could lose a vessel sadly i mean a lot of things could play out unexpected ways there are a lot of a lot of hezbollah in lebanon well guess what there's a lot of hezbollah in south america they could find their way to the united states you might see general clapper was warning the other day about domestic uranium back terrorism in the united states so there could be sharks in disruption that are not on anybody's radar screen i don't think all this is fully priced in the market look people understand it we're talking about another is talking about it but markets are sometimes slow to react so this is not fully priced interesting and what about what we were talking about with financial warfare you actually think that think that there could be a blowback in the form of cancer just moving away from the u.s. dollar but it's starting already part of the because of bernanke his policies you know when it when you can have a strong national security without a strong dollar we've been printing so many dollars and trying to cheapen our currency the countries that already started to think about getting out of the

dollar system now we're giving them another reason which is we're using it as a weapon i'm not saying we shouldn't do that because we need to confront the iranian regime but the iranians are some reports of the they're talking to the indians about doing a gold for oil swap there's a lot of gold in india so that actually is feasible it's interesting that the saudi arabians have stepped up to supply the shore oil shortfall to china so if china can have a rainy an oil they'll get it from the sort. the ravens but what about the indians they need oil to they're kind of like the cold so they're talking to the indians or the indians talking to the right is china may get in the act i could see a russian chinese indian iranian central asian clearinghouse that would be non dollar denominated could be commodities could be local currency backed so the message system they could be completely outside the dollar system very interesting and we just have thirty seconds but does all of this mean that gold comes out the winner it sounds like there is no there's no question about it or you know it's that gold is constant everything else is the loser but yes short answer is the

dollar price of gold will go up significantly gold will perform well relative to all currencies because you know as you showed in your graphic all the major central banks are printing like crazy so you know there may be leads and lags and noise in the crossover gold is going to go way up well i have to thank you so much for being on the show and you're always so nice to have your insight is just amazing and if anybody has an they should read the book that's out there and senior managing director of tangent capital partners. all right before we go we just want to break down a few stories give us your our three cents on them we have dimitri kovtun us in

studio and shannon donahoe in the control room to talk about this we didn't get a chance yesterday to break down consumer credit but there was consumer credit came out way higher than expected ok it was like nineteen billion dollars for december expectations were seven billion dollars turns out what is driving this largely student debt how much of a disaster is that i just we had to talk about it on the show because i think that that's just a terrible sign well i mean it's part of the problem why your prices keep getting larger larger more debt so you give people the ability to afford what they can afford many told what they have to pay when they can't which is the whole problem we talk about all the time with and i just want to remind people because we were we were talking a little bit about the jobs numbers b.l.s. forecasts and they forecast that the top jobs looking forward to two thousand and twenty are all the top five none of them require even a i don't think a bachelor's degree it's like you know home health aides retail associates office

clerks i mean i don't know if people should be loading up on the student debt based on the kind of jobs that are actually available or projected to be available words like that serve them well yeah shannon you want to weigh in. i mean obviously the economy is down so people are going to go to school but yeah i mean you make a good point that the jobs that are out there the jobs that are available are. are going to be filled by these people who now have their masters in higher education and they're not going to get the pay raise do expect and that's the rationale exactly what you said the economy's bad not a lot of jobs people are going back to school but all i'm saying i'm not discouraging education at all i advocate great education i definitely am appreciative of mine all i'm saying is take a look at where the economy is going and where jobs are going to be. maybe you can get one here because this is what's in the pipeline trump made it to pennsylvania avenue if we could go to the next story here in d.c.

after all maybe not the white house but take a look at this. whether terry or terrific i think he'd be the best person because he's he's done so many other things i've watched to show donald trump plans to turn the old headquarters of the post office at the turn of the twentieth century it to a troubled hotel. so the government announced tuesday that trump's real estate company has been selected to turn the old washington post office billion into a luxury hotel so i think this is great this isn't you know great use of a public building you know we always talk about the inefficiency of washington the more you know private business we can get him to run it efficiently i really do really want donald trump as the member of the president i mean he's not going to leave her and he's just going to have a business venture i mean he could be i mean like with too close for comfort you don't want someone like donald trump looked on purpose so bitter like he can't become president so what is the he buys a hotel he look it's a leveraged buy to have that much money you just you know borrow the money to buy

cozier books obama is just a little odd don't don't go personal no ad hominem attacks here i basically i think that if he actually is there which you won't be i think that could bring a lot of more color and light into the washington. news cycle because he always has something interesting to say shannon i think you should actually fix the post office if it's the old post office building and there is a post office in there maybe you should donate some money to the post office supposed to making a luxury hotel. bill because his religion will and the post office is broke and there's all sorts of ideas about what could happen out of that but let's talk about this because we've been dying to february is national tent time management month and though it isn't an officially standing holiday with government it was created maybe by super organized people like shannon to bring attention to productivity maybe it's not a national holiday because productivity is actually really high in this country

because workers have to work harder because there's fewer jobs but we wanted to give you a sneak peek at our productivity. because what's what's going to have lines. on hold on a second this is. say oh. yeah that's how the magic happens the thing is that is so true you are true all i barely ever look at you is about to learn how to share and i am busy producing i was job for our wonderful viewers ok we work very hard i'm going to cut out any comments from the peanut gallery i don't marcuse that was obviously a joke ok. thank you so much for tuning into our show feel free to follow me on twitter at lauren lyster to get you direct mail tomorrow and give us feedback at youtube dot com slash capital account we will also back by popular demand i promise

to bring you more words of the day all of our viewers have been asking for it we'll get back on the ball stopping so i'm productive and produce those but for now from everyone here at capital account thank you so much for watching and have a great. russia

warns against outside military intervention in syria saying the only way to end of the bloodshed is for both government and opposition to enter talks. outrage in the u.k. as in a tourist terror suspect is to be freed after the european court of human rights blogs has extradition qatada is wanted in jordan where he has been convicted in absentia of a plot to kill tourists. and egypt remains firm on prosecuting foreign funded non-governmental organizations it accuses of feeling instability in the country this despite threats from washington it could cut more than a billion dollars into military aid to egypt. but brings you up to date for now i'll be back with more headlines in around thirty minutes but before that we have the all we want to show from washington d.c. don't go away.

welcome the la nischelle we'll get the real headlines with none of the mersey coming live out of washington d.c. now and i'm going to take a look at a new poll that shows that americans overwhelmingly approve of the obama administration's use of drones in targeted killings even in cases where it's an american citizen so what does that say about our society that the state department is reportedly going to have to slash its personnel in iraq to do what some described as a rocky obstructionism but whoever thought it was a good idea to keep.