just crossed our borders people are thinking of world borrow all agreements must be ratified by the governing bodies of the nation from bar before becoming a back. why was it so important to establish stabilization of the world's currency while for one the memories of world war one still lingered specifically in the unintended consequences of the peace treaty that treat the treaty contributed to germany's bankruptcy hyperinflation and economic collapse which is why when designing the post world war two economic structure the focus was on reconstruction rather than reparations the key goal of britain woods was to ensure a stable global currency regime that would help all sides rebuild their economic structure earlier we talked to ben steel the author of the new book the battle of britain woods i asked him if today's currency wars bear any resemblance to the currency wars of the one nine hundred thirty you know organisation that might have

been last year seems to have broken down as you know there was a lot of buzz surrounding the i.m.f. spring meetings last week over whether japan might kick start a new international currency war but here's the fundamental problem over the past few months you've heard perfectly rational sober economic commentators arguing that the dollar is overvalued that the euro is overvalued that the yen is overvalued that the pound sterling is overvalued these four currencies alone represent over half the global economy they can't all be overvalued yet if policymakers in each country pursues higher net exports through currency depreciation some of them at least are going to be disappointed and that's when you run the risk of over protectionist measures no this is precisely what f.d.r.'s treasury department was trying to stop permanently in the one nine hundred forty s. words but we have a graph here a central bank assets as a percent of g.d.p. europe and the u.s. share of central bank assets are steadily increasing over the past six years. and

japan's are projected to reach sixty percent or higher makes a quantitative easing itself as a relatively recent phenomenon i facially chasing back to japan and she thousand and one is it possible that balance sheet targeting our q.e. itself is a manifestation of new monetary regime and not unlike britain we're in uncharted territory is here a quantitative easing is a reaction to the fact that official policy rates have zero in all these key economic areas so if policymakers want to provide more stimulus they have to use unusual means the interesting thing is that under the treasury department's philosophy back at bretton woods in the one nine hundred forty s. this would have been impossible because they were determined to institute a fixed exchange rate system where it would be really impossible for central banks to operate in such a knot warden to manage all during break and wards of the us heavily advocated for fixed exchange rates but now we see politicians calling for floating exchange rates

why there were criticising switzerland for pegging to be hero or china after paying to the us dollar why have we seen such a drastic shift in attitude well actually the attitude has been very consistent what we saw in the one nine hundred forty s. at bretton woods was a more competitive dollar which is exactly what we're looking for today in the one nine hundred forty s. all the market pressure on the u.s. dollar was upward so by obliging other currencies currencies to fix to the u.s. dollar we were actually hoping to keep the u.s. dollar down over the past ten years of course we've seen downward market pressure on the u.s. dollar baeza be some key emerging market currencies particular in particular china's currency so when countries like china peg to the u.s. dollar they're actually keeping the u.s. dollar higher which is why we support floating exchange rates now as opposed to the fixed exchange rates. supported in the one nine hundred forty s.

what do you see as the outcome of all the quantitative easing well i think we see the risk of a sort of uncoordinated on the ground wing of the international monetary system you you had after the financial crisis world leaders like britain's gordon brown and france's president sarkozy calling for a new bretton woods but we're seeing less and less coordination over time and that could kick start a currency war as countries try to increase net exports through depreciation put again if they're unable to do that then they may pursue more overt protectionist trade barriers i'd like to talk a little bit more about the history of brain waves and from the description and your book that there seem to be quite the political and they're taking even in the choice of location and why why is it that this global economic conference took place inside a small and down town in new hampshire. president roosevelt was determined not to

make the mistakes that president wilson made after world war one in particular not securing republican support for the league of nations so new hampshire had a republican senator charles toby who was going to be in a difficult primary battle and president roosevelt thought well if i can help this isolationist charles toby when his primary campaign he might become a convert to the cause as it were support a new international monetary agreement and convert some of his republican colleagues and you know that's exactly what happened. but this happened in one nine hundred forty four and by aborted and then telling one thousand and forty five so why did this gathering take place for a post war two economy before the war even ended well president roosevelt in particular was not interested in international monetary fairs was very interested in send. a political message to the enemy axis powers that it was the united states

and the allies who had the compelling postwar vision he actually believed that this would help bring the war to a successful earlier conclusion. there are also some major political figures that participated in the conference one of them was john maynard keynes who represented the british interest and then harry why it representing the interests of the americans both seemed like i'm likely diplomats how did their personalities play out in the conference they couldn't of contrast to more hairy hairy dexter why it was the son of lithuanian jewish immigrants his father where the hardware peddler john maynard keynes was born of upper middle class cambridge academics and when they came together it was quite explosive and they actually had to go for two years in the run up to bretton woods and they fought fiercely about whose plans would win the cain's plan or the white plan one point in one thousand nine hundred eighty three keynes gets fed up with wife who is jewish and yells at him this is

intolerable throws this plan on the on the floor and yells this is yet another toy to which harry dexter white responds we will try to produce something which your highness understand. well i've found it surprising that the us solved britain as such a threat during the great and white conference and had suffered major blow back staring the war and just a few months earlier of a near bankruptcy the us supplied them with billions of dollars in bailouts during lend-lease fact why why have brought in such a threat to that remarkable harry dexter white from the time that he arrives at the us treasury in one nine hundred thirty four is convinced that britain is the natural geo political rival of the united states actually fundamental in his arc from one thousand thirty six years before bretton woods in which he writes the more sterling countries there are in the world the more powerful position england will be around the conference table when a conference of benchley takes place so he's. and to best the british woods and

bretton woods was really part of a larger geo political agenda that f.d.r.'s treasury high which was to eliminate britain as an economic political and the post-war world and did that happen yes in fact the british agreed a faustine bargain with the united states the united states provided limited financial assistance to britain in the form of lend lease in a post-war transitional loan in return for which the british agreed to three things to eliminate imperial trade preference this is the arrangement by which we gave itself privileged access to the markets of the colonies and dominions it agreed to make the pound sterling vertical into u.s. dollars again a fixed exchange rate which was a mortal threat to british solvency because they had so few dollars and so little gold and finally they would have to accept the u.s. dollar as the global unit of account after the war but as british delegate lionel robbins put it at bretton woods we needed the cash while it sends the u.s.

close the gold window and one nine hundred seventy one we have seen geomagnetic progression and the dollar debt white cat the u.s. dollar as the reserve currency there really wasn't any alternative in fact harry dexter wyatt had said before congress in one thousand nine hundred five when he was trying to convince congress to ratify bretton woods that it was inconceivable that there could ever be a time in which the dollar would not be backed by gold keep the believe that if such a thing work to happen the dollar would no longer maintain its privileged place in the international monetary system but because there was no alternative the world as it were gave the u.s. dollar a second chance and i think it was paul volcker who in the one nine hundred eighty s. sort of restored international confidence in the dollar and kept the international system from under rubble and. paul volcker a combo's accomplish this by raising short term and just rates to over nineteen percent in one thousand nine hundred one which eventually qual the two. while and

volatility in the bond markets and created a name for him as a price inflation fighter a legacy that still earns him praise today that was been steel author of the book the battle of bretton woods stay tuned as we faithfully breakdown money and no that doesn't involve italian motor cars there might be more than you would think than the producer bob inglis and i will discuss the fed's announcement today and this is exactly when ben might step on his tightening to about we should be under quite the ride when interest rates and they're going to be right also reveal who wants to put a good housekeeping seal of approval on every age fifty algo no really finally it will take a look at the just released facebook earnings statement. welcome

to. here you can feel it. there are three choices life first is to work you know michael let's go to live on a miserable like this late. the second is to jump the wall and catch the dream. just as they come on the number of an organisation and get inside the growing trade . you did was something we will never forget. them. good to some lady who did it but i paid for what i've done i would

never stop a. clue

. yes recently yes a disappearing new visa limo there's been a new. thank . you. to where the horses.

you might have seen one of these cruising the streets as the five hundred the first models introduced in italy and one nine hundred fifty seven could go from zero to sixty mph in a whopping twelve seconds a few years ago the u.s. treasury thanks to tarp intervention guided chrysler into a merger with now the new and improved five hundred excel rates along you have a much quicker six point seven seconds but there is another in the monetary world with more torque and acceleration potential than a whole car could ever generate so let's break down money or currency investopedia says a government declares a currency to be legal tender despite the fact that it has no intrinsic value and is not backed by reserves historically most currencies were based on physical commodities such as gold or silver but. money is based solely on faith so why would anyone value this paper money well for one thing governments make them legal

tender meaning all debts but most importantly taxes must be settled in them big coins the open source internet currency are another example particularly because they have no such official backing talk about a. after world war two when the us dollar became the official world's reserve currency the bretton woods agreement fix the price of gold at thirty five dollars an ounce and other countries were pegged to the dollar in specific ratios this was not technically a monetary system since governments but not ordinary citizens could regime dollars for gold but at the current as the cost of the vietnam war escalated there was a run on us gold and other countries realize that president nixon was spending far too many dollars in what could be redeemed in gold so what the nixon do well and nine hundred seventy one he permanently severed of a link between the dollar and gold when he closed the gold window. i have the rest

of the secretary of the treasury to take the action necessary to defend the dollar against the speculators i have directed secretary connally to suspend temporarily the convert ability of the dollar. or other was. and late one nine hundred seventy two and i.m.f. committee on finance ministers and central bankers met to discuss monetary reform and according to an a.p. report the committee of twenty eight will be working to build a more flexible system and then the dollars one special status as the chief reserve currency but this didn't happen because the most important commodity in the world which is crude oil would be rising all only in u.s. dollars whether this was by design or accidental this would allow the us. price inflation to be contained and in essence at exported inflation to its trade partners so what has been the net effect of linking the dollar from gold since one nine hundred seventy one the us dollar has lost more than eighty percent of its

value and the supply of money has inflated upwards of nine hundred percent we'll have to wait to find out but one wonders if the slope on this chart can accelerate forever and that's how we break down the money. it's time now for our daily joining me is prime interest producer great to be here again with you perry and thanks so much for joining me so exciting things happening today the kind of yeah well the federal open market committee released their announcement they said the labor market has shown improvement some improvement there preparing to encrease or reduce purchase

a hits so what does that mean they're going both ways you know they like to do that they don't like to scare the markets too much so what they've done here ben bernanke and some of the other governors and the voting members have hinted that they're going to finally raise interest rates we're going to year five of near zero interest rate policy but they might do it by the end of the year so this little sentence syria's been inserted into their announcement which comes out about every six weeks and so we might see interest rates rising later in the year and that has tremendous consequences for the markets and that's one of the things that we're going to be covering here of course well i have great news for you ok i know how much you love the fed ok you can now live at the fed and where is this antenna thing the downtown fed building a private retail or a private real estate company has an old fed building and they're renovating it and it's going to be called the last at the reserve and it costs about twelve to eighteen hundred dollars to stay there and are they keeping any of the old remnants

from the old federal reserve there are there yeah there remodelling it in a way to preserve a lot of those are called purposes and parts of building ok i wonder if it's going to be haunted by the ghosts of the currency some day i guess we'll have to say i'm wondering if you can call the for. in washington have them just printed the money to pay for the rent but that would be one way of going about it here it could be securitized somehow and sold off by moody's and sold off to investors in charge somewhere. well also chicago high frequency changers on the chicago mercantile exchange are gaining information before the markets by renting server space directly from the exchange in the data center so they're getting a lot of heat for this where you. i think it's important for people to realize that high frequency trading of what is this exactly. a lot of these programs reside on the actual floor of the data centers so we have the new york stock exchange we know that he has a big presence in stocks but it's also in the futures industry and in chicago this

is this has to do with the chicago mercantile exchange we have these goes which apparently have been front running trades for years coincidentally or not coincidentally enough actually yesterday gary gensler who's the head of the c.f. to see was pushing for a resolution or something to see that would monitor those and try to rein them in and this is after last week's you know going to stamp on each one well this is this and he said this a couple years ago he said he wants to put a good housekeeping stamp of approval on every i'll go i just literally impossible leave it up to him to figure out no so we have the capacity to do. certainly doesn't at least goes crying to the senate budget committee again for funding this year well i think you know what's really important to understand is that these companies who are engaging in this are trading and milliseconds and macro seconds so we're talking about thousands of a second billions of

a second and ever firm in this in this market space and they have the ability to take advantage of the lane see issue at the c.m.e. all they have to do is update their servers to be a part of it it's a disgrace and you have to figure that the people who are making the most money. hippie firms and all the big banks old and sacks have their have their tentacles into this goldman sachs is one of the largest traders historically they have been and what what's on the opposite side of the exchange is they have to make sure they're required by law to make sure that there's a fair market for the people like you and me who might want to buy futures contracts or stocks but they're only getting a limited investment revenue stream from the space that they're lending out so it doesn't seem like it's that balance because the money is the nature of their lending the space that millions of other gaming billions on the order of probably an order of magnitude of difference to me i want to say is that they're you know they're lending the space and which may or may not give them information beforehand

we're showing the evidence of it but we heard from someone at the c.m.e. saying that this isn't all the time and it's not to malign all of two strategies that they're not all they're not all causing much market disruptions but one of the arguments against them that they tout is they say they provide liquidity and when we saw it i think we have a graph of this if we can go to a graph of last week's twitter a.p. fiasco the dow jones this is actually some five hundred crashed about one percent within a couple of minutes and then it recovered over the next few minutes and this is something that was affected the futures markets and also the stock market and it was all based on somebody who had to twitter account which is kind of ludicrous for the whole reason why their rate they're releasing server space so they can have direct access to the c.m.e. so now we're hardening on them for using that information that they're paying for well that's true but the exchanges are the regulators doing doing their job by allowing this to happen in the way that it's happening and that's the order well i

think what's more important is the infrastructure of these exchanges who's sitting on the board of these exchanges so to see i mean has one of the largest boards in existence you should see its lending that this is an issue that goes way before high frequency trading was at. in existence as a baby every structure of the of these comings to begin with can be questionable well if you look at the new york stock exchange it's a public company now but it was operated a lot differently what it was just it was just a member exchange ever since it came became public that's when it started having to please the shareholders that's when it started having to generate revenue and that's when it started renting out leasing its server space next to each of the firms right next to its status and here's all right let's move on to facebook just released their quarterly earnings today and they say parts were good parts were bad to happen. ok it looks like there is a bit of miss one hundred one point four six billion in revenue from thirty eight percent from q one two thousand and twelve ok so this was

a beat and analysts were looking at earnings per share of thirteen cents they only got twelve cents you know big i think you know the problem with facebook is when you have an i.p.o. the stock is supposed to go up and there are so many problems in the stock is down right now and that's why investors are suing facebook they're saying that mark zuckerberg and company didn't provide adequate disclosures but it's all because they're losing money not being that goes back to when they issued their i.p.o. there were a lot of traders who had no information for days because well the system wasn't. there a lot of trading problems the day of the the day of the i.p.o. so there was that and i think the underwriters being sued separately for that you know we're going to see what happens with facebook thanks. to that oh.

it was a ho hum day at the fed but that didn't stop us from. ducting the fred non speak chairman does like to have a bronze and hold them do you can't eat a bowl and. we also discuss the flamboyant campaigns and it's us rival harry white as they duke it out in the woods of bread and for the future of currency we broke down the money and then closed by only looking at the frequency which which trades can be made when you're sitting next to the exchange data server and it's pretty high which margin like a bird might be after a b. and immense on his facebook earnings and speaking of which be sure to follow us on facebook at facebook dot com prime interest thanks for watching and make sure to come back tomorrow and for all of us here at prime enjoy as have a great night oh.

oh. i think going down of the song and good morning we will remember that we will. choose your language. call if we can we know if they're going to. choose the the consensus to. choose the opinions that you think are great to. choose the stories could impact the life choose the access to your office.

the united nations can damns what it calls the torture of detainees at guantanamo

bay while a lawyer for one of the captives says u.s. authorities are not doing enough to end the mass hunger strike there. the countdown is on for the grand opening of same pettis bergson new multi-million dollar mariinsky two seater we take here on an exclusive tour of the venue. displaced by violence in their homelands but on welcome in the west we look at the lines of impoverished refugees who have had the year asylum claims rejected by the u.k. leaving them with no word to go.