let. me. good afternoon and welcome to capital account i'm more in this store here in washington d.c. these are your headlines for march twenty third two thousand and twelve ben bernanke today is meeting in washington with central bankers for what sounds like a central bank and love fest where they're gauging the impact of their easy money policies this after the head of the federal reserve has made the rounds this week defending these very policies to students as professor piri is arguing that loose monetary policy did not cause the housing bubble the increase in house prices was way too large to be explained by the relatively small change in interest rates. but

we have the pleasure of breaking that news to investor jim rogers he helps us set the record straight and the white house announces its nominee for the traditionally washington dominated position of world bank president i believe that nobody is more qualified to carry out this mission then dr jim kim. is dr jim yong kim a physician president of dartmouth college not a banker not an economist nor a diplomat also not larry summers he's born in south korea immigrated to the u.s. when he was five so does that still lightly confuse the much bawly prude tradition of an american lock down on the spot in a good way if you get this job or would it simply represent this status quo will discuss and with gold prices dropping recently some headlines are saying and gold loses luster in face of u.s. recovery so is famed economist nouriel roubini right that gold bugs are clueless as he says there in that tweet we asked rogers and this just in according to bloomberg

former m.f. global c.e.o. john gave direct instructions did you hear that direct instructions himself to transfer two hundred million dollars from a customer. fund accounts to meet an overdraft and one of the brokerages j.p. morgan chase accounts in london this is big news we'll talk about it let's get to today's capital account. so as i just said we have gotten news bloomberg news obtained a memo drafted by congressional investors that according to an e-mail a sent by a firm executive at m.f.

global jon made that direct order to transfer customer funds to the tune of two hundred million dollars to j.p. morgan in london before the firm went bankrupt this should be a game changer we'll talk about it with our guests but now let's get to ben bernanke it's been a busy week in the spotlight for the federal reserve chairman today ben bernanke he spoke at the opening of a fed conference in washington with other central bankers this rounds out a week where he gave two lectures in his college class the first ever taught by a sitting bed chairman live stream for everyone to see not just the students they got the spot there now you could call it class or you could call it indoctrination or an attempt to rewrite history or a p.r. offensive in the face of that criticism regardless it's friday so we have some time we took some time to look at his lesson plan with more scrutiny and yesterday he tackled the issue of the housing bubble and the debate over the role of the fed's

loose monetary policy in creating it so here is professor bernie accompanied by his power point slides making his main point and excuse the camera work. the evidence that we've done within the. suggests that monetary policy do not play an important role in raising house prices during. ok first of all this is false on its face because the housing bubble was not just a bubble in house prices it was first and foremost a bubble in mortgage refinancing and because right it that's why you hear about the credit crisis and you cannot have a credit bubble without rates that were too low now he gave a full argument as defending his position we don't have time to dissect the entire argument so we picked one of his main points let's let's talk about a break he argues that boom and bust like we had in the u.s. in housing we're not unique they happened other places with different monetary

policies he cites an example in europe. germany and spain are both share the euro so they have the same central european central bank the same monetary policy germany's house prices absolutely flat throughout the entire crisis spain had enormous house price increase considerably larger than the united states now what carnegie fails to acknowledge is that a rate that was appropriate and dusseldorf germany may not have been appropriate for a borrower in the dritte indeed one of the problems with the euro area is the capital from germany was being extorted to the periphery as a result of a uniform interest rate that was inappropriate for both germany as well as spain now bernie he also claims that countries like the u.k. with their own monetary policy and with higher interest rates also experience their own housing boom but what he fails to acknowledge here as in the case of latvia is that a country's monetary policy can be overwhelmed by that of

a much larger country like the us or japan in latvia as case people were borrowing money and yet where they could do so at a lower interest rate and then they were purchasing real estate in latvia therefore the cheap money policy in japan was responsible for creating the housing bubble in latvia and this is something we've seen time and time again in global markets people and assets well they may be local capital and credit is international now brady says this about why the issue of the housing bubble and getting it right is so important to understand here is this reason going forward we want to think about you know what you know what should we take into account when we look at monetary policy to what extent should we be thinking about things like housing bubbles when we make monetary policy ok i'm sorry to break this to you but let's look at how well that's served him in the past listen to when he was asked about a housing bubble and burst before it all came crashing down. what is the worst case

scenario if in fact we were to see prices come down substantially across the country i guess i don't buy your premise it's a pretty unlikely possibility you've never had a plan house prices and a nation where you nationwide basis what now in our view the fundamental problem ben bernanke and his disciples have there they are and it is that government is that they believe the interest rate should be immune from the laws of supply and demand that every other price in the economy that the interest rate is somehow special and when you have lower interest rates artificially you make enterprise venture investment temporarily more profitable than it otherwise would have been creating unsustainable booms fueled by debts now last night i had the pleasure of breaking the news to our guest that ben bernanke he was teaching this college course jim rogers investor and author of

a bull in china investing profitably in the world's greatest market take a listen to this today his lesson was how loose monetary policy by the federal reserve did not cause the housing bubble do you think he's trying to rewrite history with the most impressionable minds students. right nervous system. goodness of course that's what he was doing he would be the very fact that he's broadcasting and then. of course this is nothing more than to indoctrinate the world we're see teaching this course george washington university students had to apply bright ass days only thirty were selected and you know there were quotes where they were saying that this is the most important guy they were so excited to take a class with him. because he's destroying america and the western world as we know it so yeah that's sort of. for you that are doing

much for in the rest of us you make a fair point there mr rogers as usual i want to tell you what mr bernanke he said to politico about this he said that this outreach is to help as many people as possible including the media to understand that we're doing our very best for the public do you really believe that when he says that unfortunately yes he's not a very smart person for goodness sakes you know of course he's doing is this but that doesn't mean he's doing the right thing he's doing absolutely the wrong he's doing his best and doing the wrong thing you have a dozen to understand currency markets president to stand for this doesn't understand and i know you know this this is printing money so of course he thinks he's doing the right thing and of course he's doing the best he can of course is not good for the rest of us would that's a question that i have for you too because i know i have heard at mark's father your friend say that bernanke he is a madman and that he really is one of those policy makers who is

a true believer and what he's doing i'm curious if you do think he's kind of this ideological fanatic who is looking at his models and is going to apply his theories accordingly no matter what it does even if that means blowing up the global economy . lauren for his entire professional career. in new york it's like a man with a hammer. everything he sees is and. this is everything everything he says he wants to print money he believes what he's doing he just doesn't know what . the problems are all of those i don't think that man is this on his i just think he's. not very smart mr rogers it does appear that the press at least some of us goes along with this balance line there are. old friends at the federal reserve said that it seems to be the press that is not been

as hard on him as politicians have and then there was this cover story of the atlantic i don't know if you saw i but it was this long sympathetic you could say story about bernanke in an interview the cover said the hero and you know i heard an interview with the author where he was asked about a sympathetic viewpoint which he was defending and he started mr rogers by saying you know maybe you can call me a contrary end but and then he went on to defend it my question do you think all the contrary and best care mr rogers is supporting of a contrarian view point. no course not everybody enemy nearly everybody in america supports the. everybody and most regular know there is a federal reserve in order to do no good or understand what it's doing or how it's working and i see your cover you have it on my screen they should call this the maestro. of the same thing about what's his name band yeah i know the

misguided journalist writing about the maestro on course or you are just going to suffer when he went over what the world comes up to realize what's going on well and the idea for a headline that some people had was the zero and started a here which kind of thing you think ok let's switch gears and that by hammering mr bernanke i want to talk about m.f. global because mr rogers you said very early on that m.f. global broke the sacrosanct rules and the commodities market taking money out of segregated accounts mr rogers it has been five months since m.f. global declared bankruptcy customers are still missing their money. is still walking free there have not been a lot of consequences i'm curious where is this leading are we going to see next that you know chase customers wake up one morning and see that there is money taken from their accounts from j.p. morgan is that the message this is sending well it might have been that way but this certainly sending

a terrible message to the world we were never supposed to. first rule one learns in the carotids business and somebody tries to let me know that it's that simple law and this is a bigger issue here nobody's going to jail. in the thirty's a lot of people with the president of the new york stock exchange went to jail in the ninety's when we had the you know what we call the s. and l. problems hundreds of people went to jail who has gone to jail this is just staggering and the problems and the misallocations if you want to be nice about it have been worse than ever and nobody here so and mr rogers i think. except the poor victims except the poor victims i think it's interesting you said the message it sends to the world sitting there in singapore you can attest to the fact that this is not just the us that is getting this message the world is getting its message but on the point that you made about how people have not been prosecuted people have not been put in prison mr rogers we have talked to

a regulator joining us now crisis who is the director of litigation who saw that bank or is that it can a corruption were prosecuted for that we've spoken to program attorneys that are working on behalf of customers in this case we've spoken to futures industry veterans who are just so shocked that this is happening are investigating what is going on and yet they're all saying this is fraud this is criminal and nothing is happening do you think there's something bigger going on here in f.l. but is it. bigger i'm not sure what it is it just may be more incompetence and washing for more than rushing you know with the corps i was a big contributor to. this major player in the democratic party i have no idea what sitting back your risk was especially for people who suffered know that there is something bad in rome and by the way are i think that the people who suffered in all of this that rather have their money back then see people in jail they have a choice really like is their money back is. this is this is not good for anybody.

right and we'll have more with jim rogers but still ahead president obama announced his nominee for president of the world bank this morning and luckily he's got just what he needs for the job dance moves i'll give you our three cents but first the closing marking a market. has put a picture of me when i was like nine years old when she told the truth. i'm a contestant and i am a total get over friends that i love rap and hip hop is a philanthropist. i discovered yesterday.

i'm very proud of the all the belgians you just played. oh. you know sometimes you see a story and it seems so you think you understand it and then a glimpse something else hears you some other part of it and realize that everything is ok if you don't i'm sorry welcome to the big picture. what drives the world the fear mongering used by politicians who makes decisions break through that sort of if you may who can you trust no one who is you maybe you would have noble mission or easy where we had a state controlled capitalism is called sessions when nobody dares to

ask we do our tea question more. before the break we were talking and the locals sticking to this subject there is a larger story here larger than one bank a story too big to fail you heard my report the breaking news that john. had the funds the customer funds transferred to j. p. morgan two hundred million dollars to its largest creditor i talked about this that too big to fail angle but jen rogers there is the too big to fail thread there is john corazon you is the head of goldman sachs as you pointed out very politically connected that is see if he see one of the regulators also former goldman sachs the largest creditor j.p.

morgan my question to you has too big to fail allowed created a corollary which is to small to succeed which means if you're a small firm a small investor not as politically connected not as systemically important institution or firm but you're just simply too small to sixty. if you are small or those of our play by the rules do or are as the you can make the best successes in america in the world not just in america but nearly everywhere in the world to go to war you play by the rules and if you're smart and it was a great success i don't know mr rogers not everyone is as smart as you and when i hear a lot of small firms are being crippled by zero percent interest rates for example . that's a different story as an atari it was it makes it very hard to break in body printed by smart or dumb and it doesn't let it go this is a mystery that has destroyed a class of people which say even in this and throughout history when you destroy

the people who say and do things the right way your society holds them really has the huge price war and that's what he's doing he's wiping out all the people who got it right at the expense of the people who did it wrong people who took out who is mortgages and. he's saving those people i think spirits of the other people who play by the proper rules and speaking by playing by the rules or not playing by the rules i want to know what your take is on this whole goldman sachs thing i don't know if you saw the whole brouhaha that ensued after this op ed britain by greg smith but one of the things that i guess on my show has worked in and around wall street for many years she worked at goldman sachs in the eighty's said you know the fact is they're so big and have their hands in everything so maybe they haven't lost clients because people have to kind of do business with them and one way or another to spite the fact that according to this guy greg they're called muppets my

question in your experience does goldman treat its clients like muppets. well i don't know's i'm not a client of. yours. so i have no idea but i saw all of this mr i was so it was a distro to. get his own. i don't read too much since there are no in the brochure or look this guy who. writes it much attention to it i'm sure you are too most people will have forgotten it well one thing that i know you do pay attention to you are at least in the past and we talk seems like it was cold and maybe hey m.f. global one of the things that that would do is make people want to own it because there may be concerned about their money but there is a story that i just saw come out that gold is losing its luster because of the us recovery and it cites gold prices down nine percent it cites that something that is kind of a litmus for gold performance or investment sentiment is the us ness sales america

of american eagle gold coins which fell to the lowest level since may two thousand and eight so does nuria or beanie have it right is gold in a bubble and are gold bugs who we sure like to tweet about a lot clueless. none of those are sort of not in a bubble or just if you have some things in a bubble everybody's buying and i suspect you know very few people who own gold if you walk around the streets of america hardly anybody owns carol is not in a boat that doesn't mean it's not going to continue to go down gold is going up eleven years in a row mr and that's very unusual for any asset anywhere in the world throughout history so gold is taking a well deserved rest it goes around thirty forty percent you said down nine percent since february i think you said if you go down significantly america in the one nine hundred seventy s. no one now percent. and scared a lot of people out and then went up eight hundred fifty percent that's the way more conservative people don't understand that about markets they should not be

investing so could record go down and if it does i hope i'm smart enough to buy more so then should marry our beanie not be tweeting about gold is the not smart about how to think. that this is a free country it's a cruel and that most people can make boots of themselves if they where they want to. very well said mr rogers it's a pleasure to speak to you as usual you have a illuminated with all of this and. thank you as this list you again sometime thank you. thank you. thank you you thank . all right let's wrap up with the loose change let me get to meet three and shannon in here because drum roll please president obama revealed his nominee for

world bank the president of course he is the president of dartmouth his name is jim yong kim he's not a banker nor an economist nor a diplomat but he does have what every head of a global financial institution obviously needs which is rocking skills and dance moves take a look. we'd like. so there he is doing a dance as part of the dartmouth idol's finals last year he's pretty good if you ask me he's also a physician and an anthropologist now he wasn't a name thrown around by the press ahead of this nomination people like larry summers and jeffrey sachs were he is south korean born moved here reportedly when he was five so what do we think of this nomination normal firm and i think this is a good first of all i like they're trying to bridge the gap in this creative way to warn us of the united states raised in america alike but i also love the fact that

as you pointed out there's not a banker or an economist and it's another polishes which is great because we need to understand and i've studied people and the way that herds of people migrate from place to place and apologist and it could be could be much better to have a guy like that running the world bank than somebody proposes against my vision probably going to slow using when he gets a drop. you are usually critical of academics iris is an academic. i have a problem with weathermen who also happens to like the measure of the weather right so i'd rather have an apologist who doesn't think that he's so smart that he knows what interest rates and what the world should look like the other side of the show you know right now not that they set interest rates but to your point i do think one of the reactions i've seen today is we he's not an economist he's not a banker he's not a diplomat and not seen as surprising at the same time that can be a hugely good thing ok as we heard jim rogers say if someone is that you know trained to be a carpenter and use a hammer everything they see is going to be

a nail it's probably a maybe a beneficial thing that it's not a banker who's going to constantly want to get people in debt and make money and that sort of thing however i do think you know he is a break from the white men who have always been americans that have run this bank we did show a picture of there they are so you know it's a bunch of white guys americans that have run the world bank this is been a criticism. the united states as the developing economies have become a much larger part of the global economy and i think that maybe they're trying to send a message that ok while the u.s. is going to this position you know he's south korean or he's a break from the white man american trying however this doesn't address the main criticism which is that this needs to be a war meritocratic process and needs to be broadened of course confluences that is not a banker that's key here the guy's not a banker or let's not let's not rosy over those go right finally if you are going to loose change then and you want to do you want anything i just think he's good

for. business was a pretty good use since if you didn't get to know her to drop what he would do. know is that our nation owes stuff that's just wrong ok moving on the n.f.l. has taken a harsh stance on bounties recently that's one player's receive extra cash for hits but her particular opponents the organization suspended new orleans saints coach sean payton for all of next season and indefinitely banned you were and former defensive coordinator gregg williams for this process but guess who else wants an in on the bounty gate. i commend the national football only for taking swish swift and decisive action to discipline those involved in the saints but only program but we need to make sure this never happens again so senator dick durbin of illinois setting up the judiciary committee hearing about bounties in professional football

he says congress should at least explore whether it's necessary to have a federal legislation in this area come on while someone should send reggie white into congress and tackle that there are been getting fifty concussions because these guys are wasting our time with these hearings ok we have bigger issues like i'm of course or don't care for people sticking needles up there but with steroids and other freaking guys tackling other people all right don't worry about what we're about fraud fair enough scan in a regulated stand. he did not i'm sorry. grown so version one he isn't being. able to watch you know what he's looking for because if congress and everybody gets involved with federal legislation in the end of so he might not have any chicago bears left. and as you pointed out earlier the n.f.l. already took disciplinary measures why is the government getting involved you gotta be kidding me and i'm not going to because i want to do that that's it ok well he's

not cool in our eyes that's all we have time for thanks so much for tuning and don't forget to follow me on twitter out lauren list very good to be back on the show you tube dot com fashion capital account and everyone here thank you for watching and have a great night. you know how sometimes you see a story and it seems so for like you think you understand it and then it limps

something else and you hear or see some other part of it and realize that everything you thought you knew you don't talk i'm tom harpur welcome to the big picture.