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 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. will be true but once we were not good to seek higher inflation in order to advance unemployment. the dude said policies belie those words to borrow from jim work records is burning the lawrence welk of our time conducting fed policy with help

from the same tricks. and oh my we were. alone rooms world. 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 targets 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 rhythm somebody. 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. obligation 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 records the senior managing director of tangent capital partners an officer of this bestseller 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 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 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 of 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 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 there's very. 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 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 sheets 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 said 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 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 it 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 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 an african four percent inflation would

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 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 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 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 kinzie an ocean of good 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 don't 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 or their heads funds their bankers people who buy gold people buy hardasses the losers are you know teachers firemen people who want to mention insurance policies annuities anyone on a fixed income their savings or wrote it by the fed's policy so it's really a wealth transfer from everyday americans to the elites have 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 exports from cars to electronics is this the kind of covertly 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 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 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 currency is in this big can of the chinese do it the japanese do it the europeans to the u.s. it'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 easing 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 reached recent speeches and interviews he you can see these in coming probably in may or june and may or june is your prediction director you'll probably be right because you're not with the mainstream economic economists packed day is often wrong about come back even we'll see you do over that's how that's how it looks i'm going to want you to just to back up quickly when you say 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 it. if you can see and. if surprise is just hold or 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 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 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 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 it's gold in a lot of it 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 were as 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 currency wars actual were fair and that's what's going on with the ram what the united states to the president post sanctions on the central

bank of iran bank 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 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 running banks raise their interest rates to twenty percent to stop a run on the back because people were pulling the reality out that dump them in the 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 there are economy to talk turmoil so that when the elections come and they will be rigged and people will be disappointed again maybe we'll get the green revolution to get all this on

to get regime change to stop the nuclear program so it's a massive play i want to keep it continue on this conversation because of course there is the the alternative of what if there actually is some kind of warfare conflict and 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 and ammunition what will be the only fighter left standing in the currency wars let's talk gold with jim records but first your closing market number. well. it's technology innovation all the developments around russia we. covered.

welcome back we are here with jim records 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 and jim records you 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 and does it 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 the u.s. has gone for it and 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 major 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 well who's a 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 to the iranians close and they'll say well the u.s. will clean it up in a day might not be a day 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 was 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 backed 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 that 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 arabians 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. 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 back so the message system they could just 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's 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 cross or gold is going to go way up well i have to thank you so much for being on the show it's always nice to have your insight is just amazing and if anybody has an they should read the book that's off 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 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 then you tell them to have to pay it back when they can't which is the whole problem when 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. that serve them well. shannon you want to and. 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 ones 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 they would 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 terri or terrific i think he'd be the best person because he's he's done so many other things i've watched the show donald trump plans to turn the old headquarters of the post office at the turn of the twentieth century it to a trial hotel. so the government announced tuesday that trump's real estate company has been selected to turn the old washington post office the billion into a luxury hotel so i think this is great this is a 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 would you really want donald trump as the member of the president i mean this is the scope of your 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 look dumb proper so bitter but he can't become president so what is the he buys a hotel he look it's

a leveraged buyout that means he doesn't have that much money you just you know borrow the money to buy cozier books obama is just going to do i 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 there and there is a post office in there maybe he 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 graze you and i am busy producing a show for our wonderful viewers ok we work very hard i'm going to cut out any comments from the peanut gallery i don't mark as that was obviously a joke ok. thank you so much for joining in to our show feel free to follow me on twitter at lauren lyster to get you through until 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 will 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. top

stories this hour in our teeth the u.n. is considering a joint mission with the arab league to end the bloodshed in syria with ever conflicting reports of the number of casualties it's proving hard to get a true picture of events. but the greek government plans more thirty cards to secure one hundred thirty billion euro bailout amid public anger at the technocrats in brussels say they think that these measures will be enough to win the rescue plan. that europe plans its oil embargo on iran there are concerns the move could get countries most dependent on and remain crude like spain. will have more on those stories in full in the bout enough for now and also in updating our main stories in health and in the meantime why america approves the use of drone attacks even when they're against the country's own citizens and the owner delves into some

contentious capitol hill policies in the new ownership. well. it's technology innovation all the developments around russia we've got the future covered. welcomed a lot of shell will get the real headlines with none of the mersey come alive out of washington d.c. now it's not 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.