canada. showing appreciation to rule today. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines for wednesday july eighteenth two thousand and twelve ben bernanke was on capitol hill today testifying before the house financial services committee when confronted about the fed's handling of monetary policy and the possibility that congress be given the authority to audit f o m c decisions he said this. the nightmare scenario i have is one in which some future fishermen would decide to say to raise the federal funds rate by twenty five basis point and somebody in this room would say i don't like that decision. rude this is in response of course to ron paul's audit the fed bill i should add will talk to lou

rockwell of the ludwig von mises institute about what he thinks plus previously undisclosed letters from peregrine financial group c.e.o.'s come out according to the wall street journal the c.e.o. said in the notes deceiving regulators was relatively simple allowing him to of course embezzle customer money undetected for two decades he also called those regulators means there it will talk about it plus timothy geithner answered questions about his knowledge of why a bore and response to this. reason why bore i'm reluctant the coldest gambled on a cold eyed larboard. own just just a lie bore a laugh well when you're going in with that assumption it would seem to indicate a real hardball interview ahead we'll show you what did transpire let's get to today's capital account.

so ben bernanke was back on the hill today in his second day of testimony before members of congress this was technically bernanke he's semi annual report to congress but the chairman's regular appearances before the sputtering organs of democracy have become a bit painful to watch because there have been many and they appear to be rather ceremonial at best the chairman certainly doesn't seem to want to be there and many of the congressmen it seems and women see it as a great way to perhaps get on the evening cable news with some kind of catchy soundbite that appeals to their constituents sense of outrage directed at wall street or at the fed or whatever however he has slowly started to change his tune over the course of recent appearances it seems as if this a man who claimed with incredible hubris i might add that the fed could drop money

from helicopters if necessary in order to reliquefy and reignite the economy is now openly stating that there are actually limits to what monetary policy can achieve in fact he actually said that too much q we via treasury and agency security purchases could actually hurt the market to put him exactly he said this. if the fed reserve own too much it would greatly hurt market functioning which would have the effect of reducing the. now the chairman continued a pattern that we've seen in recent testimonies where he's chosen to back pedal some of his confidence in so far as the limits of monetary policy are concerned saying this well this certainly is a cigarette ical limit which is the fact that. the fed reserve can only buy treasuries and agencies. and it isn't just the current fed chairman

expressing concerns about the limits of monetary policy prominent former chairman of the federal reserve paul volcker has had this to say mr bernanke you can talk i'm sure he's warning people about but he doesn't as they say you're going to be measuring going to solve all these brutal problems. so what should we make of this is this a come to jesus moment for the fed chairman has he actually been humbled by reality or is he just holding his best hand from last that's the big question and here to answer it is our guest lou rockwell the or excuse me according to our guest i should mention a little bit about of the rockwell the monetary control act of one thousand nine hundred gives the fed the authority to buy much more than just treasuries and agency debt so that's a key point and he joins us now to discuss the chairman's latest statements as well as the usual brew of financial to cannery lew rockwell chairman of the ludwig von mises institute and author of the left the right and this days so the rockwell

first of all thank you so much for coming on the show and i have to say thanks i had the pleasure of coming on your show yesterday and just sharing a really nice interview with you so it's nice to keep this conversation going. well that was great and you're exactly right about the monetary control act which by the way only ron paul this is nine hundred eighty only ron paul saw what it what this procedure but it changed you change the mandate of the fed it gives them the power to to buy anything i mean they can buy a greek bonds are going by mexican bonds they can buy office furniture and they can buy they can buy anything and turn it into into dollars so this is an agency that's out of control really has been out of control since it was founded nine hundred thirteen but i think bernanke you may be indicating two things about the kinds of things that he said today first of all it's uncertain about seeming to be doing what the democrats want him to do and right now and the republicans are no better about it but the democrats are wanting more q.e.

because they think that will help reelect obama the republicans are opposed to it although if they are for romney becomes president the republicans will be all for huey's so there is that aspect but it may be that the fed is slightly concerned you know they want inflation the break in that famous helicopter effect they want to increase the money supply for the benefit of the banks and the benefit of the government but even they are concerned about tomorrow. you know as ron paul pointed out today in the hearings they created fifteen trillion dollars of new money to bail out banks and governments in europe during during that crisis all seek gold and in secret we still don't know where their money went so even they may be concerned about inflation getting out of hand from their standpoint getting to be a hyperinflation i wish they would look back you had paul volcker polgar was a seems to be the least bad fed chairman ever he actually decrease the money supply he didn't just slow the growth of money in response to the terrible inflation of

nixon and carter nixon ford and carter he cut the money supply that ended the end of the inflation and pave the way for real economic growth that's you know the too bad they can't bring volcker back and you're going to bernanke get what he made tough choices which may be worth the most popular at the time but that set the stage is for as you mentioned growth and it's something that you have to wonder if the volcker would even exist if the fed today seeing how politicized it has become but i want to get into several things that you just said so talking about the monetary control act and keeping that in perspective when you hear ben bernanke today do you think he is having a come to jesus moment recognizing that his policies have limits and the market has more power than perhaps he thought and that he's kind of trying to give himself an ax in the face of failed tenure or given the monetary control act you think there's more to his statements. well i think i think i think he probably is genuinely worried he doesn't want to go down in history as the man who destroyed the dollar

and you know brought on the sort of the final economic crisis of the current era similar to what ron paul talked about today when we had the breakdown of the bretton woods system and other other monetary breakdowns that have taken place since we had a fully money system so i think you know my guess is concerned about it again he's concerned about not seeming to give in to democratic pressure or other kinds of pressure he wants to pretend to be independent although as ron pointed out that actually means secret they can do stuff in secret they're not actually independent as arthur burns who is nixon's chairman of the federal reserve said well you know the chairman of the fed has to do with the president wants of the was we lose our independence so what he actually meant was the fact that they all live it up they live the highest living federal agency they're there isn't all the feds live very well but the people at the federal reserve have a great lifestyle that's what they want to maintain that's what burns meant by independents and you meant the the the phony pretend independence because they're

not independent they're actually do what the executive branch and the big banks want and so bernanke he wants to keep that secret but i think i think there's something i think he's bothered by the idea of just endless money printing even bernanke he is bothered by that idea and because they're worried about it i mean things inflation can get out of hand even by their standards we can go to hyperinflation and this is happened before in the world we're in an entirely new era there's never been a period where the whole world was a currency and where every single government seems to be following john maynard keynes his views print print print print print borrow borrow borrow go into massive debt that's the answer to all our problems and of course it's not the answer it's it's the it's the way do. down a very deep hole into economic destruction the capital. like you cannot even without now that a lot of. radical radical changes which we need radical changes right like getting rid of the fed that if you'd asked or been an out of the street looking for

a job well that you kind of preceded what i wanted to ask and a question because it deals with something that ben bernanke you brought up so you were just talking about this the problems with the secrecy of the fed and and your view and a view of many others that that we hear from that the fed is not independent that it's very much beholden to the interests of the big banks just as as one example so there's that issue but then you have congress wanting to have more of a role in auditing the fed and bernanke being concerned that what happens when suddenly congress is more able to advance its interests with the fed and with federal reserve policies which is something that i don't want either and my view would not be an improvement it would just be the same thing just different interest at daycare so is the answer what you just said is that ending the fed is not the only answer or the only solution to these to these conflicts we need we need we need money that can't be printed up by the government so we certainly don't need a central bank which has been a disastrous institution that has as in power for example all the wars the u.s.

has been involved in and many many other horrible things the government has done so yes we need we need to get rid of the central bank this is true of other countries too these are always very evil institutions that operate to the benefit of the banks and america's case the federal reserve was written by big banks and they got together in a in a secret meeting been secret jackal island georgia before the founding of the fed the rockefeller interest j.p. morgan. kuhn loeb other big banking interests got together and they hired a harvard professor to write the legislation so the idea of these people were all of planning for the public good and concerned about the average person no they were they wrote this act in order to benefit the big banks but of course in order to get the government to pass that they had to benefit the government to which indeed it does but it's been very bad for the regular person you know the the dollar is worth . in the sense of what it was when the federal reserve was founded and i fear we're going to see much more much higher prices much more economic turmoil that's going

to be in this country like it is in europe and until we get rid of keynesianism central banking and these institutions that empower big banks and big governments to poke a stick in the eye of the rest of us to their own benefit we're going to have more and more trouble so if you're concerned about any kind of society and onto our children our grandchildren and not have this runaway government and runaway banks and their collusion against the rest of us you know we need we need and. well if if i do still have you here and looks like maybe we're running into into some problems we have you back again because quickly before we go to break i do want to ask you see more trouble ahead i'm curious what kind of trouble because five years ago we had a massive financial crisis people lost millions of dollars in their investments and savings unemployment lines suddenly were were long and it was a it was a real crisis so when do you see that kind of an event ahead or do you see the u.s.

muddling through the wage upin has for decades with structural unemployment and just economic despair that's just perpetual i hope we're lucky enough to take the japanese path but i think that's the that's not going to be the case i think we're going to have something that's going to make the last crisis look look almost like a happy time i think we're going to have terrible much more unemployment than we have now to cause the government lies about the unemployment statistics it's not you know it's not what they say it's about double what they say we're going to have much more trouble for businesses the government is going to be cracking down on everybody we already see this of course with the american police state but there's going to be an economic crisis going to make the last one look much worse and so therefore the changes are going to have to happen and i hope to goodness that the americans are educated enough about economics and about politics. going to stand what we have to do not give more power to the government this is the only institution of course they want to fall flat on its face people want to give it

more power we can't have that anymore we have to take away their power return the power to the people take away the power from the banks then we have a chance of building some economic growth and some prosperity but what we're facing right now is a most a very scary situation and we have to pin the tail on mr bernanke he and the rest of the donkey's who have given this to us their ego things like that a lot of people have the blindfold still on and may not be able to do the have but we're certainly trying to help people get the information they need to make their decision i want to talk about so much more of the rock wall if you'll just stay there we're going to go to a quick break and have much more with lou rockwell author and chairman of the ludwig von mises institute still ahead a new survey says wall street banks and the stock market are not winning the high school popularity contest we'll talk about in loose change but first the closing market numbers.

what drives the world the fear mongering used by politicians who makes decisions to break through that sort of to be made who can you trust no one who is you who view you with a global machinery to see where we had a state controlled capitalism it's called sasha when nobody dares to ask we do our tea question more. you know sometimes you see a story and it seems so. you think you understand it and then you glimpse something else or see some other part of it and realize that everything. i'm tarp is a big. we're

going to. look into the alone and so we'll get to the real headlines with none of them are the problem with the mainstream media today is that they're completely disconnected from the viewers and what actually matters to those viewers and so that's why young people just don't watch t.v. anymore if they want news they go online and read it but we're trying to take those stories that people actually care about and transfer them back to t.v. . you know we've spoken a lot on this show about the idea and the evidence behind a two tiered criminal justice system with financial crimes where maybe on the one hand you have the c.e.o. of peregrine financial group which although there was

a smoking gun you saw him very quickly arrested and charged verses john corazon the head of m.f. global where much more customer money went missing but we've yet to see a perp walk or handcuffs or fraud charges well i want to extend this idea to a slightly different area of national policy of domestic policy and first i want to play you a sound bite from charles ferguson take a listen there have been several cases where individuals in the united states have been prosecuted in prison for. boy leading money laundering laws. here on other. states rogue states. income interest we know the circle very. actively assisted iran in money laundering hundreds of millions of dollars. and he said they've gone

unprosecuted and the reason i bring this up is because h.s.b.c. the big bank that has been dealing with for a decade issues having to do with them allowing money laundering allowing illegal transfers of money it's been something the regulators have been trying to rein in for a decade reportedly and some execs were on the hill yesterday and and fact one of them the compliance executive resigned and they were apologetic but those are prosecutions and it was interesting the most interesting part i thought was that the senate subcommittee used h.s.b.c. as a case study for problems it said are widespread in the finance industry having to do with money laundering and illegal transfers of money involving states or organization sanctioned by the u.s. government for national security reasons so i'm really curious to get our guests reaction to this again he's the rockwell author and chairman of the ludwig von mises institute and mr rockwell i'm really interested to hear your take on this because you and i have talked about the two tier criminal justice system where it

where it's not it's not people are on equal footing it very much depends i'm wondering if this also applies to national security is there a two tiered situation we're looking at in regards to national security where a big bank can get away with. advancing interests that are very much against the u.s. interests and where in fact the u.s. has sanctions against certain countries and these big banks get away with laundering money for them anyway. well certainly in the terms of national security you have companies that are that are immune from any trouble if they're special contractors of the pentagon my guess is that h.s.b.c. was gone after because it's a foreign bank you know they don't like especially a bank that's good that's connected with china so that's something that the u.s. wants to make china its new enemy in the cold war along with russia in the second cold war so i think that's that's part of it and. that's why they went after that bank they would never go after j.p. morgan chase or bank of america or goldman sachs on these terms so there's

a there absolutely is a two tier system. all of the money laundering is a sort of a new crime right it's it's maybe just using your own money in a way the government doesn't approve of maybe you're carrying cash or whatever you earned it legitimately and honestly you pay taxes on it but you take it through a control point over that can confiscate it even though it's your own money so i think you know the whole money laundering thing it seems to me a murky system but as to the two tier business absolutely maybe as a twelve tier is something there are some companies some banks that are immune from anything happening to them because they're in bed with the government and h.s.b.c. they're not immune and so we'll have to see what happens but i think i'm always very distrustful when the government brings executives when this bunch of criminals in the congress in the senate bring a business executive there i want to interrogate them and remember this when this happened to the toyota company over the prius and i said and believe it i don't

believe the congressman in the senate is i don't think toyota was actually guilty of what they said h.s.b.c. maybe they are guilty i don't know but they've it is a made up crimes as well but that maybe they're not something that in. a free market and of private legal system would actually be considered crimes or rather they're just government crimes that's that's a really interesting point you always have them they are different side that i wouldn't have thought of before i. a long line of regulation p.s.g. the firm that a forest went bankrupt and two hundred million dollars in customer money they stole well the c.e.o. more notes have come out from him before he attempted suicide and one of them he said you know deceiving regulators is pretty simple and it allowed him to steal money for twenty years undetected we're showing that c.e.o. right now so our audience has just some reference but my question for you i know you are no fan of regulation but does this really illustrate that regulation and relevant and regulators in this sense give customers

a false sense of security that their money is safe with these firms is safe with these brokerages where really this safety does not exist you know it's absolute truth in that same thing happened with bernie made of people assume well the f.c.c. is supervising him so they're not super they can't you know there are so many billions of transactions the big players thank goodness there are a lot of government agents to do it also the people who go into government shall i say are not exactly top of their class at harvard many of them out that these are not the smartest people in the country who go into these government offices also regulations exist to benefit the big boys at the expense of these small companies just like everything else in the government so you have a government regulation is in favor of the big companies and is used against different small companies from coming into existence or events from growing and competing with the big companies so regulation is a disaster right across the board because it benefits the big guys also would gain as you're exactly right gives a false sense of security to customers when we are we are responsible for own due

diligence and if we didn't have the government pretending to protect us we would take the responsibility that we were for example we'd be rule reliable private regulators and private investigators that would tell us about these companies would be infinitely more. something that would be relied on than anything that comes out of washington d.c. that's interesting point to end on i appreciate you being on the show so much it's always great to talk to you thanks so much for your insight lou rockwell author and chairman of the ludwig von mises institute. all right let's wrap up with loose change dimitri kofi miss we are back in the

saddle are gone she can watch the video see my favorites an hour after wall street which we took on we're not in a graveyard but we are here right a bull's eye behind you that we're not behind a bull but we do have some bulls report because treasury secretary timothy geithner defended the u.s. response his response really to the two thousand and eight library concerns is this the n.b.c. institutional investor delivering alpha conference here's a little bit of it. i took enough to brief. the entire u.s. regulatory new year on this at a very early stage early may. my staff then brief this as the c.c.c. we brought it to the tension of the bridge and took the exceptional step of writing them putting in writing to them a set of recommendations that revealed the extent of the concerns in the context. so what's funny to me about his explanation is he goes on to say how he briefed

everybody so basically everyone knew all of the regulators knew and more was kind to me is like timothy geithner that's not making your case you're saying that basically you told everybody and still there wasn't a lot of action taken a lot to at least stop this sooner bring some kind of investigation to its combination sooner i mean come on there's going to be like kumi accounting of the governor's really good that's why you were noticed when he speaks it was like. i think that the system as a whole given the leverage past the attention of letter i mean give me a break all right the reality is talked about home i have given. me a break i wish i had his number but anyway because those numbers are. kudlow given a set that interview because those are just part of the capitalism report yeah yeah

well i love the way carlos started off that interview he says i want to call this a scandal let me call this a lie bore flat a very really it's not a scandal all of these banks are under investigation and at least one has settled over this and it's not a scandal he's so funny he's so good at the things that i was again that one couple of charming that's the thing that's what i said even if you know you can't stand we're called the saying the way he says it is so charming that he gets away with this and we'll just call it a full flat. mr treasury secretary don't worry about it just a little flap let me give you a little softball interview here let's move on really quickly we probably don't have to time to play this sound bite but let's get to one more story yeah because finance usually doesn't win the high school popularity contest when it comes to classes but. is there hope because some teens are talking and a new study conducted by the financial literacy group reveals most high school students don't like or trust wall street banks and think the stock market is rigged

. so what do you think that's about they're smarter than a lot of adults and i think we're going through two kids and i'm glad you guys are watching capital account address any bankers don't trust wall street don't presume percentage of straights don't trust first whether it's by. her zero zero zero or straight out to like m.f. global and p.g. i mean the kids are obviously wising up and we're aware of this what maybe there's hope in this new generation of teens but i think this they know they know the story they know the enemy we're out of time but this is the is the generation that perhaps has their parents losing their jobs losing their homes to these wall street banks and so i think that might inform them in a different way that's very experiential villa going to the bankers yeah forget the bankers but yeah well i would use another word but yeah i was down there is only going to be around there ok well that's all we have time for it so thank you so much for joining us and don't forget to come back tomorrow and in the meantime you

can follow me on twitter at lauren lyster and give us feedback at youtube dot com slash capital account watch any shows you missed and subscribe watches in h.d. on hulu and have a great night. for sure is that so much and there's a huge music history lesson on the market so bring syria witnessing a new generation of warfare and information for your peers no doubt western media games to construct a concert. we'll see british style. it's no time to. go.

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