oh it's wealth extraction amid economic collapse at work we're going to break down exactly how that works and while we're on debt let's talk about how the u.s. is dealing with it or not dealing with it u.s. president barack obama released his two thousand and thirteen budget today well it will be analyzed touted and attacked why should you care or really why should you not care we'll tell you and as more economists come out saying the federal reserve is making a big mistake if it sticks to keeping interest rates near zero for the next three years will look at how the that even got here it's evolution from passive to central planner buyer of junk war enabler and firefighter of the economic fires it creates itself will speak to g. edward griffin who's been opposing the fed since the sixty's let's get to today's capital account.

ok before we really get into the meat today i just want to touch on this because obama today unveiled his two thousand and thirteen budget he gave a speech at a community college in northern virginia there is to tout it to manage expectations take a listen. we can restore an economy where everybody gets a fair shot everybody does their fair share everybody plays by the same set of rules from washington to wall street to main street. great so the new budget is a solution to america's rising inequality to wall street and corporate welfare and big business is the advantage over the small entrepreneur i've let's see where the budget goes from here well as one book points out in the washington post like the

two thousand and twelve budget it has no chance of being adopted by congress the big ideas in it are d. o. a in the house dead on arrival ok well obviously obama knows this let's listen more. the last thing we need is for washington to stand in the live america's combat it. here we go again and get ready for this game song and dance we've seen in washington already so many times before already look at this house budget committee chairman paul ryan blasted the white house's three point eight trillion dollar budget requests for failing to reduce the deficits or rein in spending on entitlement programs the president obama's fiscal two thousand and thirteen proposal he says is a recipe for a debt crisis and fails to cut the deficit in half during his first term a promise he made three years ago ok so we are not psychic but we've seen this

before we'll see it again the wrangling the twenty four seven coverage of the wrangling the new goshi aiding and compromising that never happens so we will talk about the budget when there is something to talk about and there is actually something that can be passed and get out of washington alive but we wanted to make sure to give you that reality check about the future of this budget as obama's touting it today for now let's talk about something very alive and active in the economy as it stands the federal reserve it does what it wants when it wants that happens whether it gets approval or not it doesn't need approval you don't need approval when you're independent the fed is that it expects to keep short term interest rates near zero until late two thousand and fourteen now we're not fans of this we've talked about it many times on this show now more economists thirty three out of forty nine polled by the wall street journal are criticizing the fed's

guidance saying raising rates then three years from now would be too late now our guest has been opposing the federal reserve since far longer than we have and certainly then when it's become brought into the popular conversation he has been opposing it since the late one nine hundred sixty s. at least calling it a banking cartel and an instrument of war. then he is filmmaker and author. of many books one of them that you see there the creature from jekyll island a second look at the federal reserve and so he's going to really break it all down for us in a way that we maybe have a before because he's got really great contacts so thank you so much for being on the show first of all thank you for inviting me absolutely so you know opposition to the fed has really gotten a lot more attention in the last few years with of course it's been a platform of ron paul's so it's gotten more attention he's a republican presidential hopeful and congressman but you have been opposing it since the one nine hundred sixty s.

when the fed was seemingly a more conservative institution and before other people were really talking about it so why were you so i guess ahead of the curve. well i think it's because i recognize the federal reserve for what it is instead of what it pretends to be all of the items that you mentioned just a moment ago involving criticism of the fed none of those people were challenging the the right of the fed to set interest rates or anything like that their only disagree event is that they're not doing it right the the implication there is if they were doing it it would be better i recognize from the very beginning that the federal reserve system shouldn't i don't even think it should exist because you see it's not a government agency it's a private banking cartel and people don't realize that it's a cartel no different than a bank i mean than an oil cartel or a peanut cartel or sugar cartel it's happens to be a banking cartel and when

a cartel exists it has only one function and that is to promote the best interests of the members of the cartel so when the federal reserve system says it's going to push interest rates towards zero the idea is that they're trying to stimulate the economy for you folks and for me but that's nonsense because everything the fed does has only one purpose and that's to help the banks and once people understand that basic principle then they get off of this trick about well the interest rate should be a little higher a little lower or you know that kind of thing i don't think anybody should be setting interest rates i personally believe that the best way for interest rates to be determined is by the free market by the free interchange of those who have money to lend and those who have and who want to borrow the money but when you give politicians or bankers the authority to sit there and manipulate the interest rates on loans regardless of what people are willing to pay for them and that is a tremendous lever of power they're literally creating money if they lower interest

rates that stimulates people to borrow and they don't realize when you go to the bank and you borrow twenty thousand dollars the bank doesn't have that to lend. they create it out of nothing and lend it to you and charge interest on it you say so by lowering interest rates that means more people will borrow that puts more money into creation and into the economy and we've got this ugly thing called inflation so what we're really dealing with here is that i personally think that the federal reserve is a mechanism that is in the way of recovery in fact it's the mechanism that caused the problem in the first place so let's break down some of these things because first you're calling it a private cartel now some people say oh the fed is a public and to kill him because it's foreign by the government some people say this is a private institution because look at how it's structured it's a corporate structure you think it's a private cartel but i think you've also said that at the public private partnership so can you kind of break down how you come to this conclusion what yes it is really it's a hybrid isn't it it has some of the characteristics of

a government agency because as the the police power behind it what they basically did when they created the fed back in one nine hundred thirteen they actually drafted a cartel agreement between the big banks and then they took this cartel agreement washington got a bigger racer and took the words off the top of the paper that says cartel agreement and they wrote in the words federal reserve act and so it was passed into law and now it has the force of the police and enforcing every provision of the cartel agreement so we think it's a government agency because if you violate the rules of the banks you go to prison so it seems like it's government agency but it's really not it's it's a private institution like any cartel to made up of the largest banks in america and it but it's not really a purely private institution either because if it were and it does issue stock of course the banks all hold some stock in it but if that was real genuine stock like in any other corporation they'd be able to sell it wouldn't they if you if you own something you can sell it but the member banks are not allowed to sell their stock

they don't have voting rights they can't select who's their chairman they can put people on the board of directors so it's the appearance of. being a private corporation is so in essence we're dealing with a hybrid it's nothing more but a legal framework that makes the operation of the banking cartel so powerful because it's backed by the force of the government and i want to get into another thing you said which is that the federal reserve is there to support the banks that the federal reserve is doing the bidding of the bank then supporting the baking sector oh did i get you wrong go ahead and clarify no args they are the banks the federal reserve are the banks if that's what they are that's a cartel you say ok it's like opec it's like opec what is opec well it's the oil producing countries when the fed then has the ability to issue money and to affect interest rates that interest rates all of these things and yet when i've suggested or when people have suggested that it is acting to support the banks that i've

argued with people about that some people would be calling you know conspiratorial first suggesting that it's not obviously the fed's official mandate so how do we know that. and how does that work exactly did you know lloyd blankfein pick up the phone and tell bernanke you did jump and he says how high. well bernanke doesn't really set the policies remember he's working for the banks isn't me is the chairman of the federal reserve and the federal reserve is a cartel back over that track again and so bernanke he doesn't really determine these policies before he announces something he's on the phone talking to his employers the banks say and how do you mean no that is for the banks of the banks and so forth just follow the money that's the old adage isn't that if you want to know what's going on follow the money so you take all of these so-called bailouts that have been going on starting in big big time since two thousand and eight billions and billions and now we find out trillions of dollars being created out of

nothing by the federal reserve and pumped into the economy where does it go goes to the banks doesn't it and some of it of course goes to the big corporations like general motors and. to countries mexico and so forth but what is so unique about those corporations in those countries it's always the same thing they owe money to the banks and they can't pay and that's why we send money to those corporations and to the countries so they can continue those interest payments to the bank all of this money if you follow it comes back to the banks and if you can't figure that out i'm you know it's pretty simple and so you know it's interesting because economists on on both sides of the political spectrum whether they support the bad some do but they still say that despite that the fed has been corrupted. it hasn't been very successful at its mandates is this because it's official mandates are really its mandate. that's right what is the mandate of

a cartel it's to promote the interests of the members of the cartel but we're taught in school i was taught in school that the mandate of the federal reserve was to stabilize the economy stabilize the purchasing power of the dollar you know and to do to make america a better place you know that's the mandate that we were told well if you give the federal reserve a report card on how well it did in and meeting this mandate they get sailing marks all the way up and down the line they haven't done any of those things we've had the period of greatest inflation and economic booms and busts and we've had chaos in the market so it's sales but if you recognize it's true mandate it's true purpose is to benefit the banks and if necessary plunder the american people to bail out the banks and make sure that they have made plenty of profits now if that's what you recognize is its goal now it gets age on his report card all the way up and down the line yeah maybe if they were more more forthcoming about it they wouldn't be under such scrutiny now because as you said they delivered on that

on that agenda is sure to have delivered a sarah have i want to talk you more about that creature of jekyll island and where this always hats but we got to go to break quickly so we will be back in just a moment with jihad where griffin he's author and filmmaker. and still ahead greece's parliament attempts to as english the risk of default well outside athens will break down where last night's vote fits into greece's political history and what lessons you all should be taking from it but first your closing market numbers . well with. its technology innovations. all the latest developments around russia we've got the future covered.

the first fifty. first. degree. welcome back before the break we were talking about some of the criticisms of the fed today but let's talk about how we got here i want to bring kiev were griffin filmmaker and author of the creature from jekyll island a second look at the federal reserve bank and to tell us about that jekyll island meeting now he also has the web site reality zone dot com i should mention so your book is creature of jekyll island and when you go back to these meetings that jekyll island a handful of bankers and policymakers obviously

a very feminine moment in your view why was this so important to central banking in the united states. well it would say because it was brought into being at a secret meeting and the reason that the the bill was drafted on jekyll island is an amazing story in itself in fact when i first first started to research this i couldn't hardly believe what i was finding the fact that challenge did i didn't i didn't believe it and here we have something as important as the federal reserve act the creation of a national bank and setting of monetary policy for the nation and it wasn't drafted in washington d.c. it was drafted on a private island off the coast of georgia called jekyll island and not only that but the conditions under which that meeting took place were were very secret i can tell you that very few wars of history have been plotted under conditions of greater secrecy than that there were six men that were told to arrive separately at the new jersey railroad station in november of one nine hundred ten and there they

were to board the private railroad car of senator nelson aldridge private railroad car was there and readiness for these other five gentleman and they were told to come to the station wanted to time not to be seen together not to talk to newspaper reporters one of them carried a shotgun in a big black case so in case someone had asked them where he was going and why i'm just going duck hunting he was supposed to say we find out later from his children and from his biographers that that was neat but his conti never fired a gun in his life he just bought. it's for the purposes of deception and when they got on board the train they were instructed when talking to each other in that private car not to use their last names first names only and two of the men even dropped their first names and used code names and i thought when i was reading this can this really be true and then i found out it was true because it was written about by one of the gentlemen that was on the train and he told about all of this in detail it was published in the saturday evening post a few years later and to cut to the chase the reason for all of the secrecy and the

reason they went to jekyll island away from the prying eyes of the world was because they were writing a bill which was being sold to the american people as a way to break the grip of the money trust that was the phrase they used at those days people were concerned about this concentration of economic power in the hands of a few very large investment firms and wall street and they wanted legislation to control those big bad bankers and so these are the guys or these were the big bad bankers every one of them writing their own legislation to control themselves that had the public been known that this bill to break the grip of the money trust was written by the money trust where then the scam would have been out in the open and that was the reason for the secrecy so are you saying because one view is that i thank you ladies who are some of the most wealthy and powerful people in the country basically trying to preserve that power and wealth and to continue to grow it while on the surface looking like they were doing something for the populist movements

that were rising up against the private cartels and the money that you that's exactly what was happening these these people are not stupid you know and they knew that there was this public wave of resentment and they knew there was going to become some kind of legislation so they didn't wait for it to happen they said let's do it let's write it ourselves in a lead lead their own opposition is what they basically have done and you see that happening in politics all the time even today but yes they they formed. till and they made it look like it was a legislative act to control the banks when well it controlled the banks but it was chording to their rules love it or hate it though some people would say you know no matter how the bed was hatched there were panics every twenty years in the late eighteen hundred and early one thousand nine hundred and those got better after the federal reserve was created so what would you say to that well i'd say that they're get half credit for that because there were panics of course leading up to the

creation of the fed there were big bank failures and panics but the reason for those was exactly the same reason that we've had them ever since the fed is because private banks not national banks but the state banks and wildcat banks and so forth were running wild creating money out of nothing and inflating the money supply and all that they did when they created the federal reserve they didn't put a stop to that what they did is they got it all together and organized and institutionalized so now it was happening on a national level is set at a state level interesting and real quickly before we go because we are going to talk about greece and you know the debate has kept coming back to what do creditors want what do banks want is there something to these private cartels where the banking system is consolidated and then it does the bidding of what the banks want before everybody else is that in effect in europe right now. i think that's a pretty good summary i think the old adage you know you follow the money and the other one who you know has the gold makes the rules that's the golden rule and when

you give the banks and banking cartel has the power to create the money for the nation the politicians get in line for that because they need the money to please the voters and give out the all the goodies of the benefits and so over a period of time i don't think it started that way but it doesn't take too long a decade or two there's this gravity of power shifts away from government into the financial world and you've you find a melding of the two or it's hard to separate which is the which is the banking interest in which is the government interest today we have people like you know timothy geithner and other secretaries of the treasury they all come from the banking fraternity don't have it right how can you say that the treasury is separate from banking and they're supposed to be you know one controlling the other well we certainly appreciate you being on the show and helping the best that we can to separate those two things that day at least make sense of it that with an author and filmmaker you can be sure to check out his website or you should be sure to check out his web site every hour on.

before we go we got into a little bit with them but we've got to cover greece ok we've got to me trick of us who has literally been glued to the live feed at the parliament i think ever since last week or something and you have a unique perspective because you've covered these and you are greek let's be honest here so the first you know there are what we hear very frequently you know the austerity and the riots that's what a lot of the coverage has been focused on but dimitri it's so much more than that as you obviously very well know and one thing that we've been talking about is

wealth extraction and how that happens when a country is in this situation where it's so in a depression basically and it's being extracted how does that work that you've been talking about on a very personal level with with people that are there i mean the simplest way to say it is it's you so it's the it's the fifth year of a recession so it's a depression so a lot of people could have been considered wealthy before they might have had a part of buildings that still do they don't have liquidity just like when a bank gets into it into a liquidity crisis what does that mean the banks don't have money they have a lot of assets but they don't have cash coming in so they have to sell and they say well we're wealthy but we don't want to sell our assets so give us a bailout this isn't happen for the people the people now are in a liquidity crunch the same with the banks work in two thousand and eight in a liquidity crisis because they don't have money because incomes have been one of incomes are being cut but also its mission has dried up right and there's also a psychological effect which is that people people have now are pricing in a depression and so they're not spending and so money supply contracts and you can see that those official numbers for the bank of greece but it's also logical to expect that money is not circulating that's why you hear

a lot in greece. money is not circulating and that means that liquidity is drying up and the people that have all these assets have to sell them eventually that's how that wealth attraction works and we had that in greece during the german occupation people have to sell everything they had wealthy people just to get a loaf of bread but who do they sell to greece is in a depression nobody wants to spend money so what happens well i mean eventually the idea is that they sell them to people that are able to price in a bottom at some point it could be rich foreigners it could be rich politicians internally but it's a fire sale your four or five at a level that's very cheap because you're in a crunch right basically it's an impoverished of the people i mean that's it's there's nothing in the crazy about that but in the sense that it's not something that surprises anyone but it people just they just don't seem to understand that when they talk about when you hear these politicians talking about greece in these numbers most of us fictitious the countries of a deep depression and people are there they don't have money i mean one of a famous member of the communist party had given the speech in parliament

a few months ago and that was that she bought a piece of bread and a card of milk and she should do the math for how much that costs and the cost of living in greece is far and beyond now what what normal people can afford and use that people don't have money and it's very crazy situation that people don't quite comprehend so let's just bring up a couple of the things that we've seen just to kind of show that you know there is there was an old man believing on the street you said it was the nicest area of athens you had this and he throwing the agreement right there that bookie takes any checks that there it is flying through the air at the people that are sneaking in parliament you know i don't know what is really the significance of these things so what you're seeing in various levels in the society in this case you're seeing it in the heart of the parliament of the democratic institution you're seeing. you're seeing kind of a kind of anarchy in the sense that you're under arrest you have those those are part of the communist part of the course vote against the memorandum and there. he

threw that memorandum. was the economic minister of the vice premier while he was speaking so you got the good side is being torn that's being torn apart and that's why protests you'll see these. are the people wearing the dark masks and they're just. you know causing trouble you see run into them an old man both getting hit so this is why there's torn and it's being it's being torn on its course so it's a very tragic situation to see and it's and the lesson i guess for the viewers i would say for for people that are greek is that this can and will happen to other countries totally and that's what you were saying as you were watching it say anybody in the u.s. who says debt doesn't matter it matters ok i don't care who you are we're going to leave it at that but it's really good to get that sense of what really is at stake here so that was dimitri filling us and that's all we have time for thank you so much for tuning in the free to follow me on twitter at lauren lyster give us feedback on the show at youtube dot com slash capital account come back tomorrow

and from everyone here at capital account have a great night. turn

turn rises and tell everybody who uses iran of being behind the times targeting israeli embassies in children and the media and people were injured in a car bomb blast in new delhi while in police it device was discovered before it when told. russia has announced its regrets the arab league winding down its observers work in syria and stresses a proposed peacekeeping mission kind of deployed only once the government and opposition forces agreed to seize. brussels is relieved the greek parliament processes a new austerity bill demanded by the u.i. to die met to secure another one hundred and said to been very loud despite serious public opposition but the relief is likely to be short lived as the euro crisis

continues where the rating agency moody's downgrading united states. as the headline is up next also he's on your show from our washington studios concentrating on the republican race for the white house. we'll get the real headlines with none of the mercy or live out of washington d.c. now it's not going to host a monday panel talking about obama's budget see back and the g.o.p. race.