in federal spending if we don't do this now we are going to find ourselves in a monetary collapse ok so not not focusing on gary johnson as a candidate or a politician but this this issue of a significant reduction in federal spending and balancing the budget is this necessary or not mike let's start with you. necessary i mean a question you should be asking is is this completely misguided or not and the answer is yes i mean little over the course of the history of this country we practically never run a balanced budget in the few times that we have have preceded major economic collapses like in the late one nine hundred twenty s. and just recently look in order to remove in order to balance a budget of one point three trillion the deficit right you have to remove one point three trillion dollars from the private sector from the private economy now anyone who could argue that that's a good thing has got to be completely out of their mind and in fact we see them trying to do this in europe where the situation is a little bit different because all those countries over there they're no longer

a currency issue as what we see the outcome the deficits are getting bigger the economies are collapsing on employment is skyrocketing you have social unrest everywhere you look look the public's desire to save is what the search determines the size of the deficit the only way that people can have dollars is if the government spends more dollars than it confiscates from us in the form of taxes that's the only way anyone could have a dollar in their pocket so in order for the government to have a balanced books have balance books it has to remove those dollars from the private sector now who's going to sit there and argue that draining one point three trillion dollars in an economy that's already weak and where people are already lacking in income that that's a good thing it's not and that's precisely why we've never really seen this over the course of our history and the times when i have seen it have preceded major economic collapses well let's get carl's view on your take on history and the

importance of and balancing budgets that that is that there isn't an important day doing so. oh i couldn't disagree more your other guest seems to have forgotten that in nineteen twenty and twenty one the federal government exactly they're out of the federal reserve raised interest rates. by the way the person who counseled against us last name was hoover i think you can figure out what he did after he was involved in commerce what the government has done and what we've done since the one nine hundred fifty s. is one about a three percent spread between accumulation in the economy and gross domestic product and if you compound it over working man's life which is forty five years what you do is this you take an obama box three dollar bill yr and you get to keep at the end of that from your time as a worker about one third of it the rest of it evaporates into the ether and this is why what we're doing now doesn't work because when you emit more credit in the

system you have obviously a larger g.d.p. but what i did was make the dollar worth less and so you denominate something in what the other thing has been diminished and you end up with a fraud we say well it's fifteen trillion in g.d.p. and it was ten before but we're not talking about is that gasoline four years ago it was half the price it is today so why don't we deflate g.d.p. by the price of gasoline or corn or any of these other commodities gee we seem to be going backwards what level that we're not because i'm an ip numbers the g.d.p. numbers all factor in when you look at real g.d.p. there is growth in there as well as if you really want to look at the purchasing power of the money why don't you look at the amount of labor hours because that's what we sell right we sell our labor to earn the dollars to purchase a car or a house or a movie theater ticket all of which have gone up and they always go up in a nominal you know nominally they go up but in terms of the amount of labor required to purchase that good or service it's actually gone down so the purchasing

power has not been reduced it is actually gone up that has not done any studies that show this so you completely wrong on that call i'm sorry ok mike let me let congressman i want to that's part of congo and responded i'm like that's a part you think there is not declined well yeah because. the productivity of the american worker goes up we started with picks and shovels and our ants and then we went to animals and then steam and then mechanized farms and automobiles and trucks and everything else is coal productivity it's called technology and i don't know if you're really advanced but what's being argued here is that the government has the right to steal that how we think it's all healing it with its rating a wealth that's what's going on here and so we should have dramatically higher standards of living than we have today but instead we're redistributing them and playing an arm waving game to make it seem like it's all right ok let me let me move this conversation forward as you guys both respond to that and this is what i want to ask you mike so sixteen trillion dollars and national debt trillion dollar

deficit sure the fagging continue printing money onto affinity but but i address that he did that but ok you said that a subway whenever that the government got a willing money instantly and it's an important point ok so i would say this all the time mike you know i've done this is my show not yours let's answer my question in them and you can make your argument but what i'd like to know is how do you keep the dollar from being devalued when you are increasing the money supply when you are putting more money into the system and when you're running these huge deficits and all of this spending how do you keep the dollar's value not from collapsing because remember there's a foreign exchange market how do you keep a blowout from happening in the foreign exchange market well lauren i think i've already addressed that in the sense that the economy increases in size so more goods and services our producer your real wealth increases and by the way if you want to just take a little litmus test of barometer of what the dollar has done since all this money printing by the fed as you call it if you go back to two thousand and eight when the fed started to really engage in all these extraordinary activities with the

fall of lehman and you look at the dollar index at that time and you look at the dollar index now and i use the dollar and it's because so many of these dollar bears maybe you perhaps even look at that and say oh my god it's crashing it's actually up ok so how do you explain that because we printed the. the trillion or the fed has printed three trillion in reserves and the dollar has gone up and by the way you could look at the same thing in japan you could look at the same thing in europe with massive so-called money printing by the central bank and it has not had any effect on these currencies the what would have an effect on the currency is if the government just started printing money willy nilly without the ability to expand the economy and have that flow into greater output greater employment greater production of goods and services then yes you'd actually have the situation of too much money chasing too few goods but you don't have that now you have

capacity sitting idle you have millions of people unemployed you have homes that are empty you have factories that are running at seventy percent of their capacity so i mean you have enormous ability to continue to create wealth to produce real goods and services and we're worried about basically an accounting issue here well which is all that the dollar is ok it's a keystroke on a keyboard ok i want to i want to allow crowd responded i do want to say there's an argument there's a debt deflation going on the question now is what happens when the deal leveraging is done what happens when interest rates do return to normal and you have these enormous enjoyable game if you're not zero they haven't been at zero this is a historical law that we've seen since the financial crisis didn't going to go rained down down down what's normal normal to you ok a month above zero which you don't argue that any amount that they would go up about now would make a material difference to the amount that the u.s. government's paying interest on the debt so my question is when they do rise what happens to the amount of money the government is spending on interest payments and

how sustainable is that karl i want to allow you to respond. let's let's just take a look at this from a standpoint of what's happened to the economy we know here four years of running roughly ten percent deficit twelve to general rich and what is actually occurred is that the median. family income in nominal terms before inflation adjustments has gone down so we have an argument here that we can print money we can have and that is what's going on the government is issuing credit the federal reserve is taking credit up in the form of quantitative easing that is what has been occurring and what's really happening here is they are trying to fill the hole in bank balance sheets that the banks created by issuing unbacked credit for their derivative and other trading applications and as a result they're protecting that the banks none of it is going into the economy kill it chill this stops right problem with doing it is that the value of every dollar that's out there is being debased by this action so you have its real

incomes decreasing in nominal terms and then when you add the inflation adjustment to it it's even worse ok now i have your opportunity to respond and also to test plane why i'm misguided when i think money printing well first of all let me respond that the deficit of the government is equal to the savings with a change in the size of the deficit is equal to the change of the savings of the non-government that's come and we and you could look at this very graphically it's very evident when the government went from basically almost a balanced budget in early two thousand and seven to a one point five trillion deficit we saw a private sector savings go from negative to a record nominal high of seven hundred something billion yes the rest flowed out into the rest of the world because we run trade deficits current account deficits but how does karl explain that in his in his view of the world that's it has sucked savings away from the private sector yet what it did with add exactly the same

amount to the penny because if the government spends more then it takes away from you in taxes in other words that's called the deficit that money has to go somewhere and it goes into the non-government the private sector and it balances out i mean equally the gun might have mine let me buy whatever we have right now one has ever. before we get to the break i want to have a few seconds to respond to what you said then we'll get to money printing later carl and you were shaking your head and mike was kind of hammering it what he had there is say oh this is just or i'm waving nonsense loren this is on. the no grass so how do i was let go i didn't want to tell him that you know that this argument comes up the bottle boy you know this is that they claim that there is such a thing as a free lunch there is no such thing as a free lunch when you know this could lead to the economy to go you if they were single dollar goes out their g.d.p. you know middle terms goes up because you must but you haven't actually produced went on the real terms of it will end up in real terms i just said that ok they are over one night he was on ok take out

a plugs out here you know what everybody in radio arrives in your ears for a second and stop speaking if we have to go to israel so where are we going to i mean where are the armed opposition on the on a moment to have some truth here ok and we're going to go to break in my government we've got to go to break mike girl don't worry we'll have plenty of time to respond i got a had a break we'll be back in a couple minutes still ahead we will continue we'll also delve into the battle of goldman sachs versus goldman sachs all explain everything in tonight's least change but first our closing market numbers. and this is free. education free. for charge free. range was free. three stooges free.

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over a decade of north almost terrorist attack. x. hostages let us into their lives and after the tragedy. still gives try to cross out the past. because they're to share the written. the. motion would be soon which brightened if you knew about sun move from phones to freshen it's. nice for instance on t.v.

don't come. welcome back we're having a spirited debate today about fiscal policy and monetary policy in light of some of the talking points at last night's third party candidate debate where some of the issues that were addressed were actually addressed in a more in-depth way than what we've heard from the mainstream financial debate and one of those issues i felt was student loan debt we actually had some discussion

about what is fueling increases intuition what is. possibly complicating the student loan what some called a bubble a trillion dollars in outstanding student loan debt so i want to play a little mash up of what some of the candidates had to say. we can't afford more federal. and we can't afford war because of government student loans no one has the excuse for not going to education and so because of that institutions of higher learning colleges and universities. from pricing i think it's time to public higher education free. ok so we saw a couple of different takes there there's one that i want to focus on with our guest let's bring back and karl denninger and mike norman gentlemen thank you for let me go to the break let's continue on on this topic and i want to go to you first carl i want to ask you one thing that stuck out to me was you had gary

johnson and another candidate to talking about the impact of government spending government backing these loans governing the government issuing these student loans and the impact that that has had on driving up college tuition prices is that an issue. of course simple economic theory price and quantity are connected when you if steak was of no cost to the consumer everybody would eat it every night and that the classical definition of inflation is too much money chasing too few goods so when you make money cheaper freely available the price of a particular commodity rises because demand becomes infinite if there is no check and balance that is provided through price then the demand has no boundary and that's what we've seen happen with colleges it's what we've seen happen with medical care it's what we've seen happen with all sorts of different government programs and it continues apace because we continue to believe that value in tone terms of time which is expressed in interest rates of ought at least today to be zero and mike i want to i want to ask you about this because you're talking about

government spending federal spending and it is an assessment about what about this flip side of it driving up prices and in this case college tuitions. ok well you know certain schools are not seeing precipitous increases in tuitions they could be local schools community colleges cetera we see major universities definitely skyrocketing tuition and a lot of that has to do also don't forget with the extremely extremely difficult job market that we have right now if there are very few opportunities out there in terms of work people and students are going to compete for these elite schools because that they believe that will give them some sort of an advantage in the job market and that's driving up my my response to this or my remedy for this would be to focus again on the economy and creating jobs if there's an abundance of jobs and if employers were looking for employees they'd be happy to employ look i went to an

ivy league school ok there's no difference in the world between me and somebody else say this right now who came out of a community college same lately he's talking about i completely disagree i completely disagree there are. certain there you're good at and he's really and what basis there are certain barrier to entry and certain fields and certain companies where you have to have gone to a good school i'm just being honest just from my personal experience for you to hire me there's very little difference in the insurance and perception and perception matters i mean in terms of employers that have hired me in the past and financial especially they one of the reasons is nearly as i went to a good school they would have otherwise boring you're making my point here you're making my point here and however not a good job if the economy was strong and booming and employers needed to employ people they would gladly hire from secondary schools there's nothing wrong with those schools that don't be surprised that there isn't somebody you know who is from one of these institutions watching this right now who's who are you saying

your comment because it's a total putdown not only sound like ok as i said you know it's not it is no it's not not at all my point on a second i'm not criticizing any education i know people that have a smart and a reach you know i'm not i'm saying my experience and the experience that i have seen with perception barriers to entry in certain fields i'm not criticizing education are the quality of it or what people can achieve so then let me ask you this what is the proper amount of sending in order to create jobs with the proper number of deficit because i want to show a chart of the democrats that have been run over the last several presidential administrations and so in the obama administration you can see much bigger deficits and we're getting one point seven per cent of g.d.p. growth so what's the right enough mounted deficit spending this is a very easy question the answer you know you you spend till you're at full employment and then you know that the deficit is where it should be we're so focused on this concept of the money which is an accounting unit ok how is it created by

a keystroke when we are dealing really what we're dealing with here and the real shame of this whole thing is we're not facing a lack we don't have a lack of institutions we don't have a lack of housing we don't have a lack of workers we don't have a lack of production. capacity what we have a lack of is understanding of how the monetary system works you know we need to utilize and to create the real goods and services that that make up the define our wealth and not continue to focus on the monetary number because the number is a relevant so you spend until i have full employment help i and my definition of you're creating the greatest wealth your economy can create ok let me want that we have a minute i hate don't we want that karl what's the what's the problem with the mikes and you got a minute oh be nice if that was true unfortunately the reality of the situation isn't it and your creation comes from capital formation capital formation comes from savings and when i take a dollar that i earn a twenty and it turns into

a third of a dollar by the time i was sixty five and when i was in my capital that i have been witness to for a business destroyed kate and it is a little while i let him he said i'm at my stage this i'm going to direct shines or at it it never changes there's one time that we did this the other way around in one thousand nine hundred twenty one and the result was that what was a massive to slay sherri contraction in the economy reversed and we had full employment eighteen months that's a fact and nobody wants to talk about it because it goes directly against all this nonsense that these people have been talking about for the last five years and it hasn't worked just like it did in the one nine hundred thirty s. and that is where we're going to have to leave it for today thank you gentlemen so much for being on the show for a very spirited conversation mike norman chief economist of john thomas financial author and traitor karl denninger thank you.

all right let's wrap of the list change dimitri lauren that was fun that was first like no arguing for the day so i let you have all this must be exhausted and i feel excited actually to talk about this because greg smith book is out well actually i don't know if it's out but some journalists have gotten copies now he's doing some press and we have some footage from the bloomberg interview with greg smith the goldman defector let's take a look. transparent organization you should be able to walk into the lloyd blankfein office and say i have these problems now i want you he would have taken off for you wrote this little five hundred million dollars settlement with us you see a member of the board being convicted for insider trading a judge in delaware kucing goldman of being on both sides of a deal like you know things that you have been on that understood goldman's

position that in two thousand and eleven you want to double your comp at a time where they were having one of their worst years in fire ten percent of employees and you said pay me a million bucks even though you made five hundred grand a year before it can be what you were involved in where there was real wrongdoing stephanie you know you know the irony of all this the reason no one has gone to jail to eventually crisis is this stuff is all legal. so those are some highlights why you think they're all right so first of purpose and say i actually like bloomberg and to do a really good job in general i like stuff in a rule which is really smart. but i think that this this really first and foremost shows the limitations of the mainstream financial news networks because even though even bloomer which i like more than its competitor it's still you see that stephanie rule was not willing to engage greg smith on any of the the substantive points he was making about goldman sachs or wall street when he talked about subsidized profiteering when you talk about prop trading your clients and making money directly but then you get your clients brought the abacus deal she would

bring it back to why did you want more compensation write a thing or you know where you want happy that these guys had the lofts and you didn't have a you didn't have a. membership at soho house it was like it was as if she was channeling goldman sachs's p.r. department in the day before that or a few days before that they had the head of h.r. right so basically in the first and foremost thing i want to make clear is that you can't go to these mainstream news outlets and expect to get a conversation about what most people care about with respect to wall street what you're going to get at the end of day is they're all saying that what most people care about with regards to wall street is what's really going on and the issue is not the character of greg smith yeah exactly people look maybe there's a disgruntled employee they want to hit by goldman sachs five but he was actually bringing up a really good important point it was a gift an opportunity for stephanie ruhle or anyone else of bloomberg that actually broached this discussion but of course she was going to do that i wasn't expecting her to really know i mean she's she's in the making industry she probably has much of

a very valid insight that maybe somebody else would not but i don't think that's what it is i don't really they are going to make it about let's not is again i think seventy rules fantastic she's smart she's great she's good for what she does but again what she does is not investigate wall street fraud and corruption m.f. global even bloomberg gave it scant coverage all right yeah john of course is still walking around there's no wonder so we just have to be very clear understand that these major financial news networks are not there to look objectively. what the problems are in the financial sector they're there as a entertainment p.r. source for wall street that's what they're there for i just want to make that very clear that you are and we are going no longer to be fair though it is my view on it for us to go that route and to be fair though i mean to play the devil's advocate a little bit don't you think when someone comes out with a book and he's making his one point five million dollars from his book or whatever that they paid him to write this though the money i want to about goldman your last name i know what i look and in your book and i think it's a very fair thing to ask in interviews the motivations for their book and kind of pulling apart that's all you know where motivation that's all the interview was he would bring up ad because i want to pivot it yet again i guess i like the funeral i

develop an example i mean to be fair i because there's all news we're going to leave it there that is all we have time for ad thank you so much for watching the show to come back tomorrow and meantime you know you can follow me on twitter at lauren lyster you can like us on our facebook page you can watch just on you tube or hulu and have a great. it's a. disease.

i. want you to know so. sorry to. radioactive fallout of government to try to put the government of law and laws and claude and claude how can the truth be revealed if there's. no official evidence there was indeed a very bright day to the service make a search who will given no problem protection and to the people of this country generally because of radio like the full. the secrets of the tests.

to see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you don't i'm tom harpur welcome to the big picture. in the news a secret laboratory to mccurry was able to build a new most sophisticated robot which fortunately doesn't dorna found anything tunes

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