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please. follow and welcome to crossfire for all things considered i'm peter lavelle the specter of currency wars continues to haunt the global economy the dramatic need to stimulate local economies was a dire necessity at the start of the great contraction five years ago today many are worried the federal reserve's massive easing campaign will produce another global economic crisis it appears the only competition out there is who can print the most money the fastest.

cross-talk currency wars in the new bubble i'm joined by martin henniker in hong kong he's an associate director at the tight group in new york we have. he is the founder of chap would finance dot com and an internationally recognized expert in wealth management and in washington we crossed. he is a senior associate and director of carnegie's international economics program right gentlemen cross-talk rules in effect that means you can jump in anytime you you want martin it's very late for you someone to go to you first what are you more worried about are you worried about currency wars or a bubble. but a lot of odd bet awards because i think you know the main reason via racing to debase the currency is may not actually be really the economy of the export side but really the fact that all of the major best and most of them anyway are really heading for nation of bankruptcy you see japan debt to g.d.p. ratio of two hundred percent in the u.s. we have had warnings from the former comptroller of the united states that the u.s.

is now two years away from that greece was when it had its crisis and then europe is totally broke and hopeless who just spain just pulls another records in instead the highest that accumulation of addition in one hundred years italy is out of control or there isn't any improvement in the economic side and so nothing is under control where that's not a currency war or they did the basement in order to reduce the debt burden in real terms reefing money printing is going to continue on the massive scale and b. don't think that those currencies the dollar the euro the yen and stone actually for that matter and to some extent the global currency is across the board the safe store of value anymore because of that ok where do you jump in on this ok i mean people are talking about a new bubble here i mean i got to tell you there's an old. well i mean there's an old line you know when writing a dead horse dismount and in the united states we continue to print this money and

let's not forget the united states is the largest economy in the world if you take the number two three and four which is china germany japan and adams together they add up to the size of the u.s. economy so as the u.s. economy goes goes the rest of the world we just know that to be a fact in the united states is absolutely just i don't know money investing a lot of signs and you don't understand how for china it is martin go ahead go ahead finish your point ok but we're going to have some of the same time as the size of the economy ok all right ed then we'll go back to martin well the facts are that that's what it is i just want to say sorry saw it. again i just want to say we just got the news that china eclipsed the u.s. in trade so if you're looking at the total number of export on imports of goods in the united states last year that was three point eight two trillion china right eight seven trillion and if you're looking at the g.d.p. that this is you can't just when you look at the nominal g.d.p. but you need to look at the purchasing power adjusted g.d.p.

that really reflects the real size of the economy because on that basis the renminbi is actually still undervalued and so china and many many rick i am sure that's not what i was saying it was that was that you guys are doing it on a me ok i want to go jump in are you i mean are you worried about currency wars in a bubble very go ahead i know in general i'm not worried about it she was i am not worried about put the action as but. being kept in check i also think that one day maybe some years down the road we may have to worry about a big bubble again because of all the money that's being printed but we are not yet in a new bubble economy however i have very good and so we're definitely. traveling and i did record it there's no question about it. yeah and we are probably

traveling in the direction of a bubble i believe but we're not i don't think near the bubble yet i am however while it does martin is particularly with the european situation i think is which but a dog simply has to do with the fact that there isn't enough of a currency war in europe in the fall in the sense that these countries can no longer. individual currencies they cannot change the exchange rate and that is a very important reason. that is persisting and indeed potentially deepening martin and it's are too much liquidity out there i mean i need to throw in the right and go first. at this point. i believe the entire world is in stagflation i mean we have you know lots of printing of money we all know that the cost of goods or our you know the prices

going up from dramatically in the united states they do or horrible job of measuring the cost of living increase they you have the c.p.i. number that's manipulated has been since the early one nine hundred eighty s. and we have very high unemployment around the world as you just said we have it in europe and it's not getting any better quite frankly it's getting worse and you know the question isn't so much protectionism it isn't real so much as you said in europe you know currency war we just see printing of money devaluing of all currencies you see venezuela devaluing their currencies will probably start to see other countries it's a result of there are good and we're not raising at the moment i mean to do a one eighty that's martin go ahead is actually right that it would have to be right now and we need to do a one eighty yet. yeah i absolutely agree this add on a few major things here that we have stock for asian and you know there i mean obviously there's money predation of the inflation rate in the united states and in europe you know probably to some extent around the world but i don't agree anything

at this you know maybe not looking much beyond the u.s. hero and europe to asia i mean it's not true that you have the high unemployment rate around the world asia is actually booming right now maybe you haven't noticed but actually in china the factories can't get enough because you know many many of the workers on returning right now from from chinese new new u.s. holiday to the factories in the south they're finding work as well there's actually a very low unemployment rate in china right now and in many other asian countries so not everybody is cried the same and another interesting point on this or that i would know is that china and russia are so they have actually been massively buying gold recently and i think they're very much preparing for this race for the bottom and run that happens that these western countries are totally debasing be it for the crisis reason or for trying to stay competitive is they less and less i anyway then when that happens maybe china and russia they're ready to implement a gold standard who knows or china or say about your trade in our own currencies i

would make the remnant be one of the new reserve currencies they may be very very ready and prepared for it but the best of countries haven't realized and haven't prepared for they have been to some extent still selling their gold only now germany starts to wake up very slowly to take some gold bet that they're stored at the fed which may not even be there but it but then give them seven years you know why they should all take the gold immediately you know you bunch wouldn't trust the ghost stories in the united states or the u.k. really do you think there's a race to the bottom. i look i think all the. monetary expansion is motivated by trying to reestablish a semblance of growth in the india advanced economies that have been very badly hit by the financial crisis i don't think they sing with each other in any meaningful way trying to lead us to economies i

think they're printing money to. a willing to my chance to idea well well they kind of land out of options right now because. their government debt is is high they can only do so much more fiscal stimulus they have to actually cut back on government spending in order to get the government a council back into balance unfortunately to central banks have been left as and particular so you have been left as the only game in town and they are doing what they can how does i don't get happiness to think that what you're doing is now particularly effective way wait wait i don't think what they're doing now is particularly effective to same time i don't think dad racing with each other in any significant way and i think that. at least in the case of the united states

you're seeing the private sector in the act you're seeing a good tool improvement of the economy a much more worried about the european situation where you have been go ahead and go ahead we're do you see an improvement in the united states what do you see that and also do you think a monetary policy is going to get you anywhere while you have to balance sheets of every country and the printing of money is destroying it is doing the complete opposite of what you wanted to do. go ahead well do you noticed united states economy is definitely on an improving bad housing sector is coming back and name a name or i would. put the housing sector because as you know most of the housing is going through my confit consumer confidence is not a measure of economic activity look a lot a lot a lot of the problem with that now or has been since the financial crisis is the

absence of confidence and overly leverage households and corporations not corporations so much households and banks. these situations are slowly getting better the united states has the flexibility you're listen i you know i was going to have to tell you is helping a little bit that's just not true what you're saying. yeah look i live here i live and breathe this every day i'm here you know i say why and what you just said is just not true all right gentlemen i mean i hear they have been here to believe you know how the story frame will continue our discussion after that we'll continue our discussion on the printing press stay with r.t. .

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welcome back to all things are considered i'm. discussing currencies and bubbles. martin how worried are the chinese about this printing press ok and their future. well there are quite warry it which is you know one of the reasons probably why they're buying a lot of gold actually there's an interesting cable that you can find on the internet which was released by vicki leaks that's a cable from the u.s. embassy in beijing to the headquarters in washington from the twenty eighth of april two thousand and nine and just want to briefly read that. one quote here read

this quote from the chinese boat news john saying the u.s. and europe have all their suppress the rising price of gold that intends to rekindle its function as an international reserve currency and don't want to see other countries turning to gold instead of the dollar and the euro therefore suppressing the price of oil is very beneficial for the u.s. in maintaining the dollars rolling as the international reserve currency but in china and once to increase gold reserves and then also the ones that will support the remnant be internationalization so china is really working behind the scenes quite a few variously to try and make the remnant to support the remnant be this gold backing to make it more acceptable to would be a word and be ready when the dollar or maybe even the us loses control of the dollar inflation problem saw now obviously very void in terms of whether right now the u.s. dollar is unfairly value low against the remnant be you know that's a very questionable also if they get now while you'd lower than the remedy not

really on the purchasing power basis so i don't think either that japan has done something i'm fairly recently but but as a whole a good friend with a b. fing there in concert tonight with bridge there in competition to print right now with the americans. yes they are in right now in a studio just get going to jump in. peter peter. peter i want to say that just the other you know not too long ago they came out the fed and said guess what we're probably going to curtail our printing of money out of thin air because it's not having any effect so when is the world going to realize the printing of money devalues the currency destroys balance sheets in all these countries and everyone needs to take austerity measures cut taxes and stimulate their economy that way because europe it is a work and it isn't working in the united states it isn't going to work in other places like japan and we're going to continue this until somebody stands up and says time out it's over stop doing it and the idea that you can continue to try to

tell people it's going to work i can tell you i look like brad pitt who's a movie star here in the united states but it isn't true i can tell you that we're going to continue to print money and things are going to get better it isn't true it's not going to work larry how can printing money help ok in this day and age now five years after the fact look look i don't want to i don't want to come and go first of all i wanted to tell the head that i am indeed united states i am in washington d.c. that's where i live and that's where i'm talking from just he should know that the the. i'm not a great fan i'm not a great fan of this big monetary expansion that's happening at the same time i don't think you should exaggerate it impact yet. we are seeing very little indication anywhere india advanced countries of the inflationary

pressures and. quantitative easing you know and i think has had a small impact small positive impact on showed on long term interest rates. i think there are a lot of problems associated with that but i don't think it's the disaster. that. is painting though there is some advantage that i have to respond as an employee is activism ok ed go ahead ok i'm still looking for the for i'm still looking for the virtues of the federal response because i hear people i hear people all the time talking about that we've seen no evidence of inflation will just look at your bills remember they manipulate how they calculate this and everyone who falls back on the idea that printing of money doesn't have a damaging effect is ignoring the fact that your bills are going up at a dramatic rate you see energy prices going up in russia yes thank you and well

they keep saying that you ok because russia feels this and russia is very angry about it as well go ahead a day knew they should be angry the whole world should be angry you know the day the guy you know won over and met with drug and said hey i know how you're going to fix your economy just start printing money when you guys should not let him in you know that he should never been allowed in to go go to europe because that idea is just another way to destroy the world economy and the idea that we don't see any inflation the united states is just prove your b.s. . martin how to fix it completely don't really early go ahead really respond in order barclay go ahead and. i think i think we have i think we have very moderate inflation in the united states. good arguments why inflation is understated there are also good arguments why inflation is. overstated for example quality improvements done or that equipment captured in the price index and other reasons

but if i had a large inflation is under control and whoever you talk to who independent experts very very knowledgeable people will come. will confirm that fact so we are not yet in in a financial bubble not know yet not yet not yet so they should know hearing what we are not yet. we are not yet in that situation i am was it about it again i want to steal a i am not saying that this is the best of all worlds it's possible that a year from now or two years from now we will be seeing the manifestations of inflation and all of a financial bubble and then the central banks will be under a lot of pressure to tighten quickly and we could have a major problem on our hands but i would not essential bank you know it actually mari's on you want to go to hong kong fair time i just say as i say it's wrong i

mean the thing is i generally i would agree this expert on most things inflation is a real problem you know they are totally debasing the currency is now and that doesn't make anybody rich printing money you know otherwise than bob it would be raised by my germany at the time it would have boomed you know it's just a lot of nonsense but but at the same time right now another thing i would just warn about what if the u.s. stopped printing because the u.s. is already basically broke they have got unfunded liabilities of over two hundred trillion you can google lawrence korb because calculations of all of this if they stop printing now they have a go broke because interest rates will start rise the debt actually immediately goes out of control so they really got only two choices right now default or print maybe default is going to be better than printing a lot of money i don't know but it's going to require quite a difficult court if they stop printing they are also quite doomed sort of thing either way you wouldn't want to hold treasuries dollar and be very cautious on the day of the developed markets you know and accumulate gord and those countries that

still look healthy and have less debt problems like a lot of the emerging markets economy china russia and so on jump in go ahead you agree or disagree with mark martin martin martin agree more i mean i did larry cautley golf is a good friend of mine you're likely kutluk of your good friend of mine and and i class and a former classmate however i completely disagree with. it's two hundred trillion calculation it is a huge exaggeration of what is going on the united states does have a physical problem it needs to collect its fiscal well mommy needs to laze taxes cut expenditures but this can be done with home on a major client goodness i know i get all that here live raises can have done over the period of five to ten is it is a manageable problem it is a manageable problem. go go you know what let me let me point this out to you we have runaway unemployment the words really closer to about fifteen percent in this

country we have rising prices i don't care what you see in terms of what you look at look at the top five hundred items people spend money on i actually have my own index called the chaplet index that measures exactly the price appreciation and your prices go up about ten percent you're down in washington your cost of living increase from last year to this year is close to ten percent for the items just look at your beef prices i can go on and on and on without all your adjustments in addition to that you have your very slow economic commie actually you have contractions so i just don't see what you're seeing and maybe you and i could have a conversation and you can convince me but the idea of raising taxes will not do anything your idea is raise taxes print money and somehow we're going to solve the world's problems in england i happen very go ahead where time go ahead. again i'm not a great fan of printing money they may be doing too much of it i don't think.

as you saying. but they seem taxes and cutting expenditure in lieu of does what you need to do when you have a big budget deficit you're not going to fix the budget deficit one expenditure is just not realistic. martin you just know i do yell inventor and we sadly what do you tell investors martin. i mean you know this solution for the best in countries as awful people living there leave if you could only for russia investors should also leave you now maybe they have few investment opportunities but out that much you know competition would leave go to other countries and people have back and they're lying there are problems out of control or there is no easy fix and you know even junk logs wrong because a pm and the head of the euro group he was quoted in may two thousand and eleven are saying when it becomes serious you have to lie said don't believe them don't

believe if you train even if they fix it's not you know they're really screwed and i'm going to give you the last word of the program go well for everyone watching around the world listen to me listen to martin and yuri you seem like a nice man but i'll tell you your policies and your ideas that everything's ok and things are just going to get better so it's not going to happen until we change the way we approach things the whole world is relying on the united states and other countries that are printing money to stop and try to find another way to fix their fiscal house ok well i don't think that's going to happen any time soon we're out of time gentlemen many thanks today to my guest in new york in washington and in hong kong and thanks to our viewers for watching us here are see you next time and remember profitable. legal.

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