mission street. if you want. good afternoon and welcome to capital account i'm laurin lister here in washington d.c. these are your headlines for april nineteenth two thousand and twelve we're in trouble oh no numbers shows vanishing banks may be running out of easy money to buy spanish bonds to prop up their own balance sheets so with signs of the next fire sparked from the smoldering ashes of the debt crisis in europe it's a good reminder for us that the euro zone's firefighting solutions require nonstop for ever participation by central authorities leaving the free market burns we'll talk about it and all of this brought to you by the power of global bakers and their friends of course at the i.m.f. which is the dentally is gathered in washington for the spring meetings this week

and christine legarde message to global economic risk number one europe is keep up take a listen. keep means implement. the reforms though tough so you can place nationally. so basically you better meet those impossible targets through pitbull austerity as a condition of your eye about bailouts is the message there so as the i.m.f. gets pledges to add to its lending firepower right now in washington is the koolau thing criticism of the washington consensus the same as it ever was for this institution and will the u.s. tax men tax man rather extend its totalitarian reach congress is working on passing a bill that would not only revoke passports for people with seriously delinquent tax debt they would do it with no due process and this bill would also allow uncle sam to shut foreign jurisdictions out of the u.s. financial system or impeding tax and force me to say what we think let's get to

today's capital account. so reports are out that i mentioned that spanish banks which have been recently the primary buyers of spain's debt have used almost all of the money that they borrowed from the e.c.b. so they don't have much left to buy spanish debt you can see the numbers right there ok there's just a little sliver on the right that's left empty space and that's the money that they have left to buy debt it's not enough now the same goes for italy now this is all according to the wall street journal so it looks like we're back to our usual question what are policymakers going to do that's always the question it's always

the policymakers forget the markets they don't matter anymore we will get to our guest about all of this but first allow me to step back for a second have a few words ok the world we live in today really seems not even a little surreal a lot surreal and that's a put it mildly because in the last we've been raised with certain free market principles at the core of our economic price signals are about as fundamental to the operation of markets as you can get but by constantly manipulating and propping up asset prices central bankers and they're too big to fail handler's have really need is simply impossible for anyone to claim that we live in a free market and price discovery was deemed essential to a well functioning economy is now seen as the fly in the central planners point man isn't it prices are a nuisance or so they say and they deem it their job to support them at ever elevated levels from now on to eternity seemingly europe. was the central bankers

latest attempt at letting the banking system with currencies whose supply is now only constrained it seems by the limitations of modern computing but the problem is the real world unlike the one of money and credit has limitations ok wealth unlike credit cannot be conjured out of thin air there are limits to what can be created and what piers. time and it seems we've already reached those limits and central banks are doing everything they can to prevent the overdue onset of reality they are no longer the overseer of free markets if they ever were ok they have taken it upon themselves to act as kind of make up artists make over artists really hell bent on making over and sexing up global asset prices beyond their substance beyond their years and the hopes that the rest of us blazed on easy money for decades won't be able to tell the difference i mean come on but not everyone in the world

is so blindly and you grid some are looking to escape from the centrally planned nightmare of diminishing economic returns we are seeing it for example in the greek town of volos they're borrowing look at this b.b.c. report from the cross to everything here is for sale him a new alternative currency. created by offering goods or services the value is recorded in a central computer network allowing them to spend their time on whatever they choose and it's not just in greece the spanish towns of villa may or decide to go morgado and. have all reportedly reintroduced the old spanish currency you see it right there because that's alongside the euro so here to talk about all of this i have paul craig roberts economist and former assistant secretary of the u.s. treasury under ronald reagan so welcome back to the show nice to see you thanks for

being here. please be with you ok so let's take it from the top because now that l.t.r. own money seems to be drying out we have analysts pointing out that this could lead to a renewed crisis in spanish sovereign bond that's really where the fire is heating up now so years will rise if there is that pressure money available to purchase bonds we already kind of saw that this morning yields rose in the bond auction this is renewed concerns about the solvency of large nation states in europe and other also in law that it only really a few months since that last l.t.r. auction it was in february so my question to you is this really the new normal because it doesn't seem central bankers are ever going to allow the markets to return to normal. well they're not going to allow themselves to be bankrupt and close down and keep in mind that the original approach to sovereign debt was to shift all of the cost to the ordinary people by cutting all of their social safety

net their pensions employment wages selling of national assets. and that this would work and it met opposition in the streets and so the european union came back with a. solution which was well we'll print some money to give to you to buy back you yeah and you'll have to do less with. austerity and selling off of assets so. they they came up with a trillion dollar a trillion euros. and they're finding that it's not enough. and so they seem to be reluctant to create enough new money. to deal with it is sure and they try to bring in the i.m.f. and i know we'll get to that later. it but what's so funny about this all is. none

of the policymakers in europe or the economists there seem to understand that if you create money to buy back yes this can keep interest rates low only temporarily. cause as you create more money particularly if you're imposing austerity at the same time the money is growing relative to the output of goods and services so prices have to rise. and if prices go up interest rates are going to go up and therefore when you create money. the ultimate effect is inflation and very high interest rates so all of this is sort of mindless episode that they're going through trying to avoid one problem they're going to create a much greater problem for the future when they get here draitser got employment and high rates of inflation and since they have central planners and unemployment

while we're on that i want to take the opportunity to ask you this you know every year who knows how many ph d.'s and economics are produced for american universities i don't know hundred or thousands most of whom are taught that if you lower interest rates you'll lower unemployment if the relationship it's illustrated in the phillips curve someone that i have something that anybody who is i get taken in economics casa probably know about but with rates near zero as they've been kept for more than three years now in the us and we know what employment status been pretty stubborn is it safe to say that this relationship is completely bogus. well it was always bogus that was one of the main points that this class of economists established in the early one nine hundred eighty s. the problems curves are bogus it was a product of the wrong policy next and i believe you're raising a broader and deeper question and it's certain you know why are the unemployment in the united states and in europe and in the united states it's

mainly due to go off shoring up so many jobs and industrial manufacturing jobs professional service jobs and this is spread to europe it don't have the same extent but in addition they now have these austerity prop policies imposed on greece italy. ireland portugal spain and these then contrib it so that is you drive economy down and the unemployment rises its ability to service its debts declines so whatever the bailout even if the initial bailout was enough right it's not enough because the economy is where sodomy is is not growing and it's getting worse so than a debt all because of heavier so then i mean dr roberts we're having a conversation it seems all very clear what are causing a person a thing happened i don't understand this well you see i think the whole purpose in

europe. was to use the sovereign debt crisis for two purposes one was to establish that the banks are not responsible for their own mistakes the ordinary citizens are and so if the banks make mistakes and create losses for the years to sions the cost have to be imposed on citizens and citizens have to make good those losses by the banks and other words they are re installing certain. yeah we sense about that a lot along those lines though you're saying these are this is basically going to. service the banks we just heard managing director of the i.m.f. christine lagarde today say that these european rescue mechanisms should be rejigged so that they literally directly give aid to the banks and just cut out the middleman of the sovereign are they just now saying hey cut the crap we're going to stop pussyfooting around this appearance that we're not bailing out banks really this is what it's about well that that's the more honest approach you have to get

over that because that's what they are doing now not bailing out greece they're bailing out banks who are probably. either goldman sachs financing you know the great but i just don't know greek the greeks could play so that's who they're bailing out and i've been you know. wakes and of course the i.m.f. itself is in violation of its own short of money because it's only permitted to live. the balance of payments is not committed. for. the deficit problems. problems so what we see coming out of this crisis is lawlessness. else is disappearing is chary of european central bank is disappearing. its charter and so by refusing to face the

real issue they create a little distance in addition to these other things that we have spoken about yeah and that's something i want to talk to you about after the break in terms of what you think the i.m.f. is really trying to become maybe and also some of the lawlessness that i believe we're seeing in the u.s. we will be back stay here i will come back after the break and have more with paul craig roberts economist and former assistant secretary of the u.s. treasury under ronald reagan and also still ahead payday lending ok it seems the big banks are bankrolling the practice even getting into the business themselves and yelper well as their bank rolling in the process political candidates will give you our three cents but first the closing market numbers.

that we just put a picture of me when i was like nine years old like the children through. the contest and i am a total get over and i love dr because he is a i'm sorry. but he was kind of yesterday. i'm very proud of the world without you it's a place. you know sometimes you see a story and this. is it you understand it and then something else hears you some other part of it and realize that every. charge is like.

what drives the world the fear mongering you've got politicians who makes decisions . who can you trust no one. with global machinery see where are we heading state controlled capitalism is called sessions when nobody dares to ask we do our t.v. question more. welcome back before the break we were talking about the lawlessness of the i.m.f. and the e.c.b. and other institutions that's the case according to my guess that's what paul craig roberts believes he's economist and former assistant secretary of the u.s. treasury under ronald reagan so i want to bring him back in here to stick to this

to see what he really thinks as is the goal here then so dr roberts we talked about the i.m.f. before the great you think that they are doing a lot less so than regardless of what christine legarde says about the i.m.f. wanting europe to take care of its own business do you think that in reality the i.m.f. is wanting to become more like a central bank. it's not clear what some other way they are in america that maybe they just don't want to be without a role in some big crisis. had made it maybe they think that there is a crisis and they're not part of it that they somehow are their own sidelines but according to the i.m.f. charter is not what i think is just what the facts are. they were formed and their purpose is to learn the countries who are experiencing balance payments difficulties and their charter prohibits the iron out from lending to governments for other purposes yet they are in the middle of lending to governments for other

purposes i doubt you know and look at the role of the media and us see today bloomberg reported only i.m.f. getting three hundred twenty billion in new questions and this is this is what the report suggests for a short japan denmark its whistle there among the countries to rally this week to look cards carl for a bigger living capacity jaan the current three hundred eighty billion to shield the world's economy against any deepening of europe's debt carol. well this report is nonsensical the loans are not shielding the world economy the loans shielding the private right from the own mistakes at the experience of the world economy i like that rewriting that headline there dr roberts i think your take is much more telling was speaking of the mainstream media when you talk about alternative currencies they would definitely i think

a look down our nose turned out there and our regular eyebrows but yet we see in grays and in towns in spain countries adopted sydney towns adopting their their currency before the euro or alternatives to the euro to get around the current system so what do you think some of these initiatives offer add to that have any staying power in your view where you say globalism is supposed to unite the world economy instead it's fragmented and it's a great white wealth and these people are having to resort to local border in order to protect themselves from being rians served by globalization now the trouble with these schemes is they don't they will work if they have if the countries need a connection internationally because they can border internationally not with the american. reserve currency system so but it can work locally but if

greece for example is dependent on imports of international goods they won't be able to order from that very effectively though we see for example. the so-called brics you know brazil india russia china where they're trying to develop also an alternative system to the current can occur dollar based reserve currency system so what we may be witnessing now at the local level is the break up with the dollar gauge enemy. just as a rising congressman. rush. term to great. international law to see how that all pans out and on what time frame while we are waiting on that while we're on lawlessness it is kind of the thing i really want to ask you about this bill that's making its way through the u.s. congress ok there's a provision in it that would for one revoke passports of people with what's deemed

seriously delinquent tax that this is even if they have not been charged with a crime they don't have due process know what you think is driving this because there's one angle which is financial and the government needs the money and then there's another angle which is that we've really seen an encroachment and civil liberties and due process in many different ways since nine eleven i'm curious what you think. the story of the. rights because you know the government has already proved it doesn't need money and we have a huge terrorist group for research. so this law is being applied to people who are delinquent fifty thousand dollars yet i realize there's a that wouldn't i would pay through work thirty second civil war in afghanistan right it's not because it's meaningful. if the federal reserve is pretty money you would know where to turn another fifty thousand dollars so your

whole thing has nothing to do with the need for money. it would be very interesting to see senators don't write bills the bills come into our either from the private interests that fund their campaigns or from the executive branch. and i don't know where this bill came from and i don't really know what the motive here i suspect is just part of the shutdown of the liberty of the american people that's been going on pell mell you know through the bush regimes and in the regime yeah and there are so many there are so many different instances of that and this is just one where that adds to down the whole laundry list really i appreciate you being on the show and talking about all of this that was that paul craig roberts economist and former reagan administration official yes.

all right let's wrap up with a loose change i demetrius and to keep talking about what i was talking with paul craig roberts about of the end of our interview about this bill it's called senate bill eight hundred thirteen and it may have brought down partisan bickering and the senate at least which has to take a listen. remember. i said let's look at what is in the fine print ok what's happening is bill so the secretary of state can revoke or deny a passport to any u.s. citizen who the i.r.s. commissioner determines to have seriously delinquent tax debt the seriously

delinquent tax debt as you heard our guest say is defined in an amount in excess of fifty thousand dollars no due process there is more ok let's look at another provision if the u.s. government decides a foreign jurisdiction is impeding tax and force me uncle sam can shut them out of the u.s. the mantle system this passed in the senate hasn't in the house so that's where it stands right now this is pretty concerning the whole the reach into foreign jurisdictions is something we've seen with for example swiss banks that won't let americans open accounts there anymore because they've had you know the government come into u.b.s. and say hand over your client names and that's where they now hey if you don't do that it sounds like they could say your set of us can handle system which is really required to do so many transactions globally and it's just one more step we've seen this along the way and a lot of people that it's pretty good measures over the years and it has been this sort of stuff because as you mentioned with paul craig roberts we've seen we saw a big change in this regard and i love in the future to speed up as far as the

tarion state reaching in and one of things are going to great is that people could immigrate here still if they were more free and there are more opportunities now your passports have our future it's if you want to go somewhere i mean it's it's all part of this this breakdown in the spirit of the law rewriting of laws that control grateful and you know if they do on the flip side of this revote people's passports people they're worried about their money hey maybe they won't care because we did a story recently about how people are lining up to turn in their passports because they don't want theirs but isn't just can and you want to i mean thing you completely stole my god. oh and our silver lining because people are lining up to turn in their past we're turning away so this passes could be good for the people of realigning this is a thing of unintended consequences that policymakers never understand you're pushing people out of the country you're pushing the wealthiest people and the most capable people of experience out you're pushing the village elders out of the village ok and if you don't have the village elders who's going to give guidance

for the rest of the people in the village and that's the problem who's going to invest and we're going to have any ideas in the system of capitalism you need capital ok but they don't want that they want to move to a post capitalist system where all they have is banks but issue credits notes of credit card nothing and they steer the economy straight into the gutter or maybe businesses can go on the internet and do some crowdfunding with very little regulation or jobs act maybe that's the trade off speaking to people that need money if these people flee that has money payday lender is something that some people may do you see in their commercials before they're used by people who need a short term loan when they're between paychecks take a look need extra cash right now my car broke down and i wasn't i think if you took friday whatever the reason when you needed emergency cash with pain when i made a phone call and that was payday one is here around the clock. ok well now not only are wall street banks getting into this practice payday lenders are spending big

when it comes to politics those two always seem to go together don't they so while spargo has become making begun making advances to customers checking accounts that interest rates are going up two hundred seventy four percent for a five hundred dollar loan and second according to a d.c. watchdog group payday lenders are increasing campaign contributions for political candidates so these two go hand in hand we have wall street now looking at this as their revenue stream and then at the same time now all of a sudden this is getting more involved in the political process with candy contributions and i would imagine lobbying you know i was going to be different. but when i saw the commercial it just made realize it just reminded me going to this hole in this world we live in where these people have real needs and they're the product that's being sold to them is credit a credit line ok so no more do we support the idea of autonomous individuals and sauber individuals now individuals need to have constant access to credit because

otherwise they can't pay their bills they can't because through loans they can eventually be able to get food once they have food stamps and the whole country will be on food stamps and you can more will be issued with cars and what does it say about the fact that this is where there is growth ok people used to need money to borrow money in order to buy a home something very has been said now they need money in order to literally make ends meet between paychecks and that's where the growth is coming from that we were really serious notion you want to throw in a light note for ten seconds here's really quick question for both of you yes or no should we regulate payday lenders. we should raise interest i think we should irish everyone right around yeah i'm sorry you have to regulate payday lenders are you kidding you want to see it coming like w. stars because they already have no money and then they're really in trouble that's all we have time for our so let us know what you think of payday lenders to be regulated and that's all we have time for those that thanks for tuning in don't forget to follow me on twitter at lauren lyster and give us feedback on the show at

youtube dot com slash capital accounts mouse fridays that means i will respond and tell then from everyone here it at capital account thanks so much for watching and have a great. wealthy british soil some time to explain exactly what. this. market why not. why not what's really happening to the global economy with my stronger run over holds barred look at the global financial headlines tune in to cause report on r.g.p. . the official and he hope we can join so long called touch from the choose

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