hello and welcome to crossfire 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. here is the

founder of chap would finance dot com and an internationally recognized expert in wealth management and in washington we cross the early 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 like 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 our bet awards because i think you know the main reason why racing to debase the currency is may not actually be really the economy or the export side but really the fact that all of the major vests and countries and most of them anyway are really heading for nation of bankruptcy you see japan they've got a debt to g.d.p. ratio of two hundred percent in the u.s. they 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 the highest the addition in one hundred years italy is out of control 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 stern 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 ed 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 and japan and adam 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 in there being a lot of signs and you don't understand how for china it is martin go ahead go ahead finish your point ok but you're going to have some of the same time as i do with 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. to be in there 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 point eight seven trillion and if you're looking at the g.d.p. statistics are conscious 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 remedy is actually still undervalued and so china and many many wriggler that's not what i

was saying what i said was that you guys are doing 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 we're definitely traveling and i did record it there's no question about it. yeah and we are probably traveling into the action 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 if there 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 are are you know the price is going up from dramatically in the united states they do or horrible job of measuring the cost of living increase that 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 got it 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 palatial in all 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 effect there is going to get enough go up 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 tried 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 even if 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 will say well if you trade in our own kanzi that we make the remnant be one of the new reserve currencies they may be very very ready and prepared for it but to western countries and realize and have prepared

for they have been to some extent still selling the gold only now drum you 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 gore stories in the united states or the u.k. but really do you think there's a race to the bottom. i look i think all the. monetary expansion is motivated by trying to establish a semblance of growth in the india advanced economies that have been very badly hit by the financial crisis i don't think they're lacing with each other in any meaningful way trying to lead us to economies i think they're printing money to. 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 accounts back into balance unfortunately to central banks have been left as and particular so he knew and have been left as the only game in town and they are doing what they can how does i go not having as they think that what they're doing is now particularly effective way wait wait i don't think what they're doing now is particularly effective at the same time i don't think dad gracing 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 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 bag name unable i would. put the housing sector because as you all know 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 i 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 resigned i have to tell you is helping a little bit that's just not true what you're saying. yeah you look i live here i live and breathe this every day i'm here you know as a wife and what you just said is just not true all right gentlemen i mean i hear day all day and here day life is short break we'll continue our discussion after that will continue our discussion on the printing press stay with our team. you know presumably soon. as. you know sometimes you see a story and it seems so for lengthly 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 knew you don't know i'm tom hartman welcome to the big picture. here is mitt romney trying to figure out the name of that thing that we americans call a dog. i'm sorry i'm just a guy who cares an awful lot about my country music stars are you know what kind of my self but i don't want to give us a defeat terrorism be on the ball and the christian. can secure good stuff out of the. you know the corporate media distracts us from what you and i should care about because their profit driven industry that sells of sensationalistic garbage

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dot. com. let me let me let me ask you a question. here. is what we're having in the bank we have our knives out. but if you get this right what's bad staying there to get here in a great way to talk about the surveillance. as

a. mum. welcome back to all things are considered i'm peter lavelle to remind you we're discussing currencies and bubbles. martin how worried are the chinese about this printing press ok and their future. well there are quite warry 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 wiki 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 news john saying the u.s. and europe have all their suppress the rising price of war 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 us in maintaining the dollar's role as 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 few variously to try and make the remnant the support the remnant be those gold backing to make it more acceptable to would be a world and be ready and then when the dollar or maybe even the u.s. loses control of the dollar inflation problem saw now obviously very void in terms

of whether right now the u.s. dollar is unfairly valuev low against the remnant be you know that's very questionable also if they get now why you'd lower than the remedy not really on the purchasing power basis so i don't think either that japan has done something on fairly recently but but as a whole a good friend but maybe feeling their economies are tried 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 isn't 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 a he should know that the. i'm not a great fan i'm not a great fan of this big monitoring expansion that's happening at the same time i don't think you should exaggerate its impact yet. we are seeing

very little indication anywhere india advanced countries of the inflationary pressures and. quantitative easing and i think has had small impact small positive impact on short 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. 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 thank you and why they keep saying that you ok because russia feels this and russia is very angry about it as well go ahead a ten year they should be angry the whole world should be angry because 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 we've actually the not let him in 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 at all barclay go ahead every i think i think we have i think we have a 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 that are not adequately 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 we have no hearing which we are not yet. we are not yet in that situation i am was it about it again i wonder still 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 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 in our hands but i would have a central bank you know that actually. wanted to go to hong kong fair time i just say as i say it's wrong i mean the thing is i generally i want a grievous exit on most things inflation is a real problem you know what i need to basically because it's 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 bloomed you know it's just a lot of nonsense but but at the same time right now and the other thing i would just warn about what if the us stopped printing because the us is already basically broke they have got unfunded liabilities of over two hundred trillion you can google laurence kotlikoff calculations about 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 a default is going to be better than printing a lot of money i don't know but it's going to require it's quite a difficult court if they stop printing they're also quite doom 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 gordhan 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 to go visit a 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 united states does have a physical problem it needs to collect its physical 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 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 run away 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 maybe doing too much of it i don't think it is equally meant. as you saying. but lazy in taxes and cutting spending a lot of does what you need to do when you have a big budget deficit you're not going to fix the budget deficit and one expenditure is just not realistic. martin you just know and what do you tell investors only subtly 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 and our capital should 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 drunk loads wrong because it pm and the head of

the euro group he was quoted in may two thousand and eleven a saying when it becomes serious you have to live 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 a 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 in your i pod is that everything's ok and things are just going to get better it's just 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 guests 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. well. sunny it's technology innovation all the news developments from around russia we've got the future covered potentially deadly blizzard taking aim for the northeast it's expected to hit starting in a few hours from new york to maine we have team coverage of the storm. but what we're watching is the very heavy snow moving into boston proper earlier today it was very sticky you can see it start to become much more powdery down the line there's still a lot of snow out here

a good place for snowball fight. decent it is going to pretty incredible day there and even record snowfall throughout much of in life nobody's allowed to be driving lessons from emergency exceptions. you know how sometimes you see a story and it seems so for langley you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture. on. morning news today violence is once again flared up.

in these are the images cobol has been seeing from the streets of canada. giant corporations are all today.