are. older so basically. really been a problem here in the whole. of. the . law. we're going to get something in the range maybe a little more. low if it's a. problem among. your lot. all. right. a lot of.

what the lawmaker is and what the deal did manage to do is help lawmakers avert headlines today of markets plunged under their points on lack of fiscal cliff deal but as you said the actual meeting is really nothing to write home about so let's talk about something more interesting any time these kind of discussions come about about the fiscal cliff or or whatever it may be even we're talking about prescription for the economy we hear plenty of ideas about what it takes to stimulate the economy or help the economy improve whether it's that the government needs to spend to make up for what the consumer isn't spending or whether it's the government know we need to cut spending to shore up the budget and get rid of some of these deficits or the magnitude of them or that you need tax cuts to stimulate the economy now all of these are driven by economics theory by economists and their models but you argue that there's kind of a core problem which is that you can't really separate policy prescriptions from ideology of whoever that economist is or that school of thought is that giving

a policy prescription so how so like i explained that and also you know where is reality fit in. you know the one and i think the sort of the. economic that we're the big we have in the you know that you have this movie. made up of really good who frankly are who they call it in the song was cool and it's basically the guys that are just the first one guy when he got the salt water guys . guys all the hard numbers and the two schools really dominate the heels of that and you're not even there tearing down there's a glee here basically outside the wire. and i think that the problem with the fire is that. so much of their discussion is basically around. and around the political ideology for the most part the chicago guys tend

to be a little bit smaller energy more than they were both on monetary policy and we saw so our guys the more you know the name you know the the similarity between the two schools is that they all start with policy i mean that you know the marchers always. focus on. the treasury spend more money you implement some sort of. help me pond work do we're finding was that they both would make policy agenda if you will the real world guard was the real work so when i started to do with a lot of my work is i started a lot of the fund what we're trying to do with. what we call and now.

we're starting from. we're starting from. the. not in the monetary system and really getting in the muck out of. our system works. our agenda saw a lot this was a world work with a monetary system was designed and this is sort of the core institutional role of the party but we're not really. ok we think that monetary policy by the. word is worse than ok you know the thing. is our work is a work done so it's more broke rather hair right your focus on the descriptive rather than what we hear were so many schools of thought which are both descriptive but also prescriptive which you're saying you can't really then separate the ideology from that so then tell us your reality what are people

missing about the monetary system and their version every idea that doesn't necessarily gel with what's going on. yes i think the biggest. actually for more of the current economic model is a bank. that you know both the small or. they really don't. think of them in their economic model for the most part it's part of the. broader work we've been focusing mostly on the banking system because the banking. i mean credit is the lifeblood of. is the primary form of money. it's the supply. has been all about. what we call banks make money by creating long. they do this who are are without a government. the old. and the law with

a lot of modern economics that they just know that all this core breadbox who find honest in the human body. in the grass. grow more or. understand how to. work with them. that we need to serve them because it's the world our also exactly sensibly performing our show our shore and when that circulatory system isn't performing well the fed comes then and is i don't know what you would compare the fed to the doctor that then supports the circulatory system gets the blood pumping or so we're led to believe so you know what. i got here is that but i am but i'm sure it's very very very funny i'll let you fully respond because what then is the role of something like in federal federal reserve stimulus or cueing what does that

actually do because the idea is that that gets the money to the banking system which in theory should then lend the money. how to get it you can main street for businesses or individuals are or what not but what do you think then really is going on with killing. the weird sort of entity because the primary purpose but actually really for a while. actually go back to the way that it was. actually being brought in from one part of what we call inner bank markets now and then they think we are all moved with the sound process from the way that we are paid you know i buy. if i go out and buy a new car and i think you know the more. things that tend to mark up the bank. almost at the same day. of the store that the.

profit. that in the hundreds of column a lot of who's. going to be involved in the last five years is the. south bank market and the action. on the. guy. who misses them is not injected itself into actually have any impact on policy. quantitative easing off. i think. that's why. you need. monica. we're far more. i think.

we. are not. alone in. the long. haul are you making. then you are. more your grades. are well. or what's more. or. marginal. and the well you need. you know the sort of. credit which are. more. important than the. area there and when we get back we're going to get a break but i want to talk more about the ways in which the monetary system is misunderstood as perhaps lend itself to wrong predictions that we've seen in the past year or so some more calling rush and then it also still ahead how many days' worth of us spending kind of projecting new tax revenue from the fiscal cliff deal

paid for take a guess do not google it will tell you after the break and put the fiscal cliff deal in context plus more with our gas call and growth first or closing market numbers.

the be. played. it. look look played. the muppet.

police. more news today violence has once again flared up. these are the images the world has been seeing from the streets of canada. the giant corporations are all today. plug. welcome back so we're talking about monetary mechanics and this issue of monetary mechanics brings me to economic predictions that never came to be with the fed's unprecedented actions starting back in two thousand and eight and since we've had

many a prediction for massive inflation one that our guest was writing about was a gentleman named robert murphy who made a bet in two thousand and nine as the story goes that headline inflation would hit time percent by january of two thousand and thirteen that is now it hasn't done so here's just a look at the consumer price index for all urban consumers just for a little context so you can see that it's not anywhere near that mark and we don't need to single this guy out ok plenty of people thought this would happen i'm sure there were many of bets like this so what are these folks missed and what we're talking about missing predictions the fed has missed the mark on plenty of its predictions ok here the fed's forecast of growth versus actual grow ok which would be more funny and less concerning to us if it weren't for the recent guidance that the fed issued wish included for example that the committee currently anticipates that it's exceptionally low range for the federal funds rate will be appropriate for at least as long as inflation is between one or between one and two years ahead

is projected to be no more than a half a percentage point of the committee's two percent longer run goals so i don't know what could be the impact of the fact fact that the fed is in accurate with its predictions it is basing its guidance on the let's ask our guest colin rose because we're talking all about the monetary system and how it really works in the role of bank so cool and with that first issue of inflation predictions predictions that we would have massive inflation by now what if people kind a miss. well the party goes back over probably about. understanding really the core of the modern. understanding modern banking and well are you going back. it was going to be very much the deborah. we think. if you look back and look at my work i think that something like. that out of the banking system in our private sector is the core misunderstanding

of the way that the intervention not more. important quantitative even what they're really doing is they're swapping treasury bonds. with the people obviously understanding that when bones make won't they don't do so they don't deserve. this and they do it based on our mission and if you look at what do we do you really respond to the bond or reserve actually doesn't seem to the tower vision of the bank at all so they're afraid more sir rather make more in both of them a loan and thirty back than that going i'm sorry i got thirty seconds before we go i just really quickly want to ask if we should be concerned about ben bernanke and his colleagues at the fed wrong predictions. yeah well you know the problem is that you know a lot of these guys. have actually very little actual thinking background so now

you've got a guy running right now the more bank in the world. bank or more academic. very little real world. who really hearing them work or who programs in the world. with great power comes with ability to acclimate. that is huge and i think that the record sort of. the in the what are the various work. in the future of the proposed new and i think the broader. issue brown why is that policy hard not. to be that broccoli dropped so it doesn't bode well for the future but we're happy that you are to explain what people should know looking for i appreciate it con rush founder of our campaign anshul group and he is a pragmatic capitalist. all

right it's time for a reality check i think it's fair to say more political theater lies ahead when it comes to the fiscal cliff deal but let's just quickly touch on it ok when it comes to the tax hikes that were passed by congress as part of this deal those are set to raise six hundred billion dollars in new revenue over the next ten years that's according to the wall street journal but just put into perspective what does six hundred billion dollars over ten years actually bob because it's important to know that right so let's put it in a little perspective one year's additional revenue from the six hundred billion dollars us sixty billion could cover the u.s. as current expenses for how long oh

a temporary five billion dollars that is less than six days that is five point seven days according to tim phillips of townhall dot com you've crunched the numbers or the additional revenue if you started saving it for about five years so half way through that ten year projection you could pay for the f. thirty five fighter plane program which will clock in it three hundred thirty one billion dollars according to forbes citing defense department in two thousand and twelve dollars so house way through you can get to that number of one plane program morning we have not adjusted these numbers for inflation and based on expectations of inflation but hey these are estimates to begin wessel let's just keep having some fun so at the end of ten years if you saved all of that money this six hundred billion dollars in additional revenue you're really good you saved it you didn't spend it you could pay for one year of defense spending after all that saving one year. at least as far as we can tell from projections that in two thousand and

twenty two defense spending will be six hundred eighteen billion dollars that's under obama's budget estimated by the c b o and the office of budget management and after ten years saving all that dough it well oh it's pay what were the federal spending on the net interest on america's debt which is estimated to be seven hundred forty three billion dollars and twenty twenty two again this is according to cvo and o.m.b. based on obama's budget finally this six hundred billion dollars if you save that all could pay less than one sixth of the four trillion dollar deficits this c.b.s. says this deal is also likely to create because it makes most bush tax cuts permanent so much for curbing our national debt just a quick reality check for you. all

right let's wrap up at least change dimitri. let's we get from cliff let's talk about one more because there was another clip that lawmakers worried about this week the dairy cliff one provision of the measure passed by the senate avoids the so-called dairy cliff it extends portions of an expired farm bill through september so that will prevent milk price increases without the legislation mentioned this yesterday milk prices were expected to double up to eight dollars. why is the government involved in subsidizing the price of milk milk is not even good for you we are the only mammals that drink our own milk this is not a good thing to be involved in not that the government should be involved in the prices of anything you mean we're the only mammals that drink other mammals milk

yes that's it i'm. sorry it's ridiculous i rail against subsidies the subsidies in the farms to go back at least as far as before right part of the great depression when the farm industry and agriculture was hit hard before the crash of twenty nine and this is a disaster and i'll tell you what they were very clear about the methane hot air balloon bubble because the reality is that these subsidies for milk i've seen reports of sixty percent ok of humans cannot digest milk are lactose intolerant we are not built to go there it doesn't so we're subsidizing human farts plus plus cows apparently fart like crazy as he reports that there's a huge concern that could actually be from cows methane could actually be contributing goble warming so they're creating these for capturing devices that they put on the backs of cows and plug them in and then that methane gas goes and somehow it's basically it's a threat to global warming so when you said that warming lobel warming when you are

one thing sandy is these cows you know the proverbial butterfly like the cow or whatever these cows are being like alice california happy cows are from barton cows though not well i'll tell you when you're talking about the methane bubble that is one bubble you would really not want to be on the wrong side of when it pops a special there's a lot of the lighter standing on its behind the character of the cows below it all up ok let's move along from the fart jokes ok so milk may be saved but according to the web site deal news here are products that will not be saved from price increases in two thousand and thirteen now this is a list of twelve i just gave you a couple grocery cases cost expected to rise remember we had a drought this really you know impacted. prices another one copper prices rise which could impact the price of beer can drink wine or drink milk instead of college according to the college board advocacy and policy center tuitions will increase because i guess uncle sam can't subsidize in-state institutions as much

and shipping u.p.s. that x. announced that consumers can expect a five percent hike and shipping costs this year so milk is saved but these are not the copper calculation was based on the fact that now it can be speculative with like the j.p. morgan e.t.f. i don't we were particularly worried about any of these particular i'm. worried about the one that you're about to tell us about more and i want to talk about that i want to go to one of those say we are sure that it was saved milk right now i'm sure it was the next. how do you remember why i know i'm going to memorize it and i was still in a different gear you're so good a long time to get from second or first it's the fifth year ok it's ok you nailed it the first time around all right let's go to google groups only on a third story of two thousand and twelve we had so many phrases that we were over and over again. the effects of the fiscal cliff so-called dairy cliff i don't want to use this phrase but kick the can

down the road tax credits for the stimulus in two thousand and nine. for them to do is to pay their fair share. so we have six phrases that we would really like to retire in two thousand and thirteen clips of any kind gary club's fiscal cliff patent cliffs earnings class no more kicking the can down the road over here that one more time i'm going to. jump off a cliff yes jump off a cliff with a can in my hand so it can't be kicked stimulus and we need it we don't need a blah blah blah austerity oh gosh austerity austerity protest while the law and paying their fair share what is that even mean and this one of the wild card for me green or arguing i don't think it's a liberty policy debate policy is just a normal word the dictionary it's become a great thing word. over myself because you've got guys are going to be built on like we have a justice policy group tweak this policy so maybe there's

a certain word you know would be better. of any policy tool in our word is disgusting that. both foreign policy and what policy on. your language. actually make it with no different rules and restrictions in the.

truest sense to. try to get the great. truths the story is going to. transpire.

mum. lives. in an. enemy.

wealthy british style stock.

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