so the fiscal cliff has been averted kind of by a deal that pushes more wrangling into the future by a few months so i'll say the play by play of the twenty four hour cable network news that we are hearing and will continue to hear for at least. so let's just a little bit touch on the fiscal cliff and then we will move right past it we

didn't go off it exactly still more dealmaking to come in in a few months on the debt ceiling and on those spending cuts that they pushed off in terms of the sequester ration that was supposed to go through we do have some tax hikes we do have some permanent bush tax cuts i don't know what's your take away on this deal. or. you. know. we're going to get. maybe a little more. low if it's a. problem

in. your lunch hour. all. right. a lot of. what the lawmakers what the deal did manage to do is help lawmakers avert headlines today of markets plunge under the 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 when we're talking about prescriptions 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 they're 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 the policy prescriptions so how so like explain this and also you know where does reality fit in. and i think the sort of the. economic that we're the big we have in the you know that you have. made up of really good to be cool professional are cool they call it in the fall was cool and it's basically the guys that are in chicago the first one guy when he bought the saltwater guys. guys all the hard numbers and the two schools really dominate the heels of that and you're not even there paragon did agree to

physically outside of the higher economic. and i think that the problem with the schools fire is that they. were focused on monetary policy and the. salt water guys tend to be more than them you know. the similarity between the two schools is that they all start with. i mean that you know the monsters always. focus on. the treasury spend more money you implement some sort of. help me. i think it was both

a policy agenda if you will guard with the real world you know what i do with a lot of my work. a lot of the what we're trying to do with. what we call and now. we're starting from work from a reform. of the monetary system and really getting into the motherboard out of. our system work. away from our genocide say look this is not a world work with a monetary system was designed this is sort of the core institutional role in the party but we're not really. ok we think that monetary policy will power were dispersed and ok you know the banking system is a core business model to our work because work is done

so if more of those programs are care what 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 origin every idea that doesn't necessarily gel with what's going on. yes i think the biggest that actually for most of the current economic model is a bank that is that you're both adults or. they really don't. think that they've been their economic model for the most part is far . broader work brought this is mostly young banking system because the banking. being credited by my mother. is the primary form of money just part of.

its beauty supply. has been all about. one called make money by creating long. they do this who are are without a government. all of. our. ever law with a lot of modern economics that they just know that all this core from the boss who signed on this in the human body. in the grass. grows more or. if you don't understand how to. work with. me you know the search because it's a low dollar also exacting sensibly performing our market short 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 are. i could hear you 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 name straight for businesses or individuals or 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 the song was actually big broad in one part of what we call interbank market and they think we really are all part of this move with the sound process from the way

that we are that are paid you know i buy. if i go out and buy a new car and i think you know the more. things that then the bank. all work. for the sort of the. sound profit. that in the hundred days with the 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. home is the sum it's not injected into actually have any impact on policy. quantitative easing or are i think. that's why.

you need. a monitor. we're far more human we. are. in. then you. are. more. or. more to look. at the world. you know.

and i get there and when we get back we're going to go to 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 color in a minute also still ahead how many days' worth of u.s. spending can the projected new tax revenue from the fiscal cliff deal pay for take a guess do not google it will tell you after the break and put the fiscal cliff deal in context class more with our guests calling growth first or closing market numbers. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something

else here sees some other part of it and realize that everything you. don't. is a big. if . the russians would be soon which brightened if you knew more about song from feinstein freshens. whose phone starts ati dot com. download the official ati application to your cell phone choose your language stream quality and enjoy your favorites from alzheimer's if you're away from your

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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 that 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 are the fed's forecasts 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 which 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 part of those bungalow were probably about. understanding really

the core of the modern. understanding modern banking well are you going to stay back. it was going to be very much the problem are 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 actually more. important quantitative even what they're really doing is they're swapping treasury bonds. with the people i'm exploring in all of them understanding that when both make won't they don't do so they don't do surveys on their condition they do it based on our mission and if you look at what we hear in the response to the bond or reserve actually doesn't change the congregation of the bank at all so they're

afraid more sir rather make more in both of them a loan and thirty bank 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 organic in the world. bank or my more academic you know these are. very little real world. who really hearing the word in order to progress in the world. has great power with ability to acclimate. that is huge and i think that the record sort of. in this what are the various work

. in the future of the for both you and i think the broad. brown why fed policy have. to be that property. 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 russia founder of our campaign anthem 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. 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 we'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 with the 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 about 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 will oh it's pay for 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 see below 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. lest 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 and i rail against subsidies for all of 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 twenty nine and this is a disaster and i'll tell you what they were very clear. 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 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 we don't have that warming lobal warming when you're one there certainly is these cows the proverbial butterfly and 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 underneath the catacombs 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 safe from price increases in

two thousand and thirteen now this is a list of twelve to just give you a couple grocery cases conflicts pectin to rise remember we had a drought this really you know impacted food prices. another when 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. fedex 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 particularly we're going to you're 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 still getting a long time to get from second or first it's the fifth year ok ok you nailed it the first time around all right let's go to the node. 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 from from the stimulus in two thousand. there being too much austerity in the patriotic thing 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 cliff 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 that we need it we don't need it

blah blah blah austerity oh gosh austerity austerity protests while the law and paying their fair share what is that even mean and this one of the wild card for me were arguing i don't think it would hurry policy debate policy is just a normal word in the dictionary and it's become a great thing where the makes me vom want to vomit all over myself because you guys are going to be able to like we have a justice policy group tweak this policy so maybe. it would be better bedwetting really doesn't have any policy tools are worth is the thing that. policy makers i only want this method i don't want. policy no more policy i don't want policy i just want markets get some markets and here we are our prices are our prices i'm going to go so i thank you so much for watching be sure to come back tomorrow until then have a great night. the

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