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good afternoon and welcome to prime interest i'm harry and boring and washington d.c. let's get to today's headlines. silicone valley is heating up in the wake of the national security agency whistleblower scandal the american civil liberties union is now involved with attempting to rein in the n.s.a.'s alleged snooping but several tech giants are being proactive as well do no evil google is seeking permission from the u.s. to disclose the volume and scope of a federal request for customer information which twitter officially why but facebook won't join the fray asserting the disclosures would be vague and the meaning. and facebook c.e.o. mark zuckerberg face heat from shareholders yesterday investors angry at the forty percent drop in facebook's i.p.o. price at the goodwill to him for thirty minutes and when asked about the company's

a future profitability the chief financial officer threw his hands up saying i wish i had a crystal ball. and the subject of government surveillance did come up and zuckerberg reiterated earlier statements that uncle sam doesn't plug into facebook servers really really promises. and finally the new york fed have published a paper on his website that calls for the us to see the underwater mortgage is under the premise of eminent domain they would then be refinanced with government largess repackaged into new security and sold to new investors according to the wall street journal kicker will be author of the paperwork or now law professor robert pockets once and drew a paycheck from the very company that first pitched the idea mortgage resolution partner. of course there was no disclosure of this until the wall street journal

made a few phone. halls nice job or bad. and here is what's in your prime interest. good news everyone our goal to see earlier this year the l.a. times wrote the us government's gold and new york is safe and the vaults underneath manhattan and some of the precious metal there is purer than previously thought that's according to a first ever audits of the us gold on deposit at federal reserve banks and new york

and elsewhere first ever audit one wonders who was counting the gold and beans over the last two hundred years anyways the problem is that the u.s. keeps only a small amount of its gold holdings with the federal reserve the bold is warehoused and basis such as for knox in tennessee and west point in new york is the military safeguards the bulk of the nation's gold not the new york fed let's take a look now at just how much gold of the us is supposed to own. as more than eight thousand tons are roughly five per cent of all the gold ever mind from the earth as a value of nearly four hundred billion dollars roughly six point five billion of this resides at the fed. seems as though perpetual thorn in the fed chairman bernanke you side ron paul was behind this audit idea and two thousand and eleven he

sponsored the gold reserve transparency act. it would greatly benefit from a fool inventory audit and a. with detailed explanations of who the gold and who is responsible for ownership. plus. yes he wanted an audit of all of the country's gold reserves not just those at the fed he also wanted to know if the new york fed had a loan or encumbered u.s. gold questioning whether the fed might try to make money on the gold it's supposed to be safeguarding it does this by lending it to third parties whether they be other countries clearing houses or even big banks like j.p. morgan and goldman sachs and this gets back to the problem with this so-called audit it only confirms that the gold was physically present and at the purity it supposed to be and there's really no confirmation of who owns legal title to what

congressmen and the us are worried about who owns their country's gold you can bet others are to germany recently announced it will be clawing back three hundred tons over the next seven years about one fifth of its holdings with the fed other countries follow suit the fact is nearly ninety eight percent of all gold held by the fed is on behalf of other countries which begs the question of what happens if and when these places start withdrawing their gold in mass and as some have alleged it has been loaned out this could create some pretty sticky legal and political battles maybe someday congress will decide to open up the vaults at fort knox and find out for now the best we can say is there is a little transparency on the u.s. gold holdings.

we are seeing a lot of gyrations in the global bond stock in commodities markets gold has taken a downturn after a twelve year bull run and the united states the fed is hemorrhaging cash under a massive bond buying program with consequences that have yet to be seen japan is easing similarly but at an even larger scale relative to their g.d.p. of china's economy has slowed down after several years of self reported steady growth but what do we make of all this and what does it mean for the average consumer who earlier i spoke with the well traveled jim rogers and author of street smarts adventures on the road and the markets i first asked him about black markets

and what country today has the biggest black market. just north korea has a big black market. there where you know in the other post so i go there every black market and i'm not sure what that means but you're exactly right you know a black mark you say this if they bring over the currency it tells you something is wrong you don't know what's wrong. like taking your temperature or you know your neighbor but you don't know exactly what it is it's a big question i don't really know of any black market right there i have to start trying to go some places that have a pretty well i was thinking mostly of cyprus and what they've been through the past several months. i'm sure there's a black market for your insight but i just never been there which are programmed cycle. india where you also talk about agriculture and you've spoken out why about how until it's profitable to grow food that we're not going to see

today's farmers be replaced is obviously a huge problem so you when do you see the food prices on a global scale start to increase and what do you think we should do now to start to mitigate shortages. it's starting to happen now perry and go to the supermarket or go to a restaurant and say that prices are starting to go up for food we got to do something now i mean that farmers around the world are dying and retiring more people in america read the air and study public relations and study agriculture we don't have a young people becoming a most young people are not becoming farmers so the prices have to go up now starting now and they have to go up a bit bit but we're not going to attract a little capital labor advantage but i reproached her and then we want to have any food at any price or about a serious crisis in the next decade or so this is not the next century this is the next decade or so i want to talk to another industry turning to gold and now you

did correctly forecast the recent downturn in gold twelve years up it's a pretty good run how long does a typical correction last and a secular trend and how patient might gold gold have to be. for a normal correction was in stocks bonds anything for a lot of these last a few weeks or a few months i orginally gold is going up twelve years at a row and that anomaly that's not the way market for it so i suspect this correction and go over well have to last longer just to make up with a great period of the great twelve years i don't know i'm not smart enough to really know our area and you should probably watch prime interest to get a better answer i would suspect that's going to go on for a few weeks more and maybe even a year or two but it's going to set a better bottom and all. the bull markets will our geishas of manipulation in the

paper gold and silver markets are legendary in financial circles and some of the conspiracy theory as to have been completely vindicated in recent years i know you're a long term investor but does this play into your decision making in the gold market . you know i'm very skeptical i've been hearing those stories and gold and silver for at least thirty years. i'm not accurate if you asked me if it is but what about the price of gold they should look at india and india is the largest consumer of gold in the world in politicians of this repeatedly this year have been bringing out measures to limit their purchases of gold and they say they're going to do more and after that when the largest purchaser of anything a starts cutting back on demand it has an effect as i think it's fair to say about it what's going on in the world people should should watch prime interest or read the papers or watch what's happening over that's the largest customer and in the wrong by the way

they're wrong but they're looking for a scapegoat all of this as always look for a scapegoat and we'll see more problems coming out of india and therefore it will affect so yes i mean if you don't have to look at it first if there is but i ignore them one deutsche bank is moving nine billion dollars worth of gold to singapore the nations they already have a reputation for respect of private property secrecy in banks for instance don't have to report encounters names to authorities and seek a form becoming the new switzerland. singapore has already attracted staggering amounts of money from. europe are there because the swiss that had such a monopoly you know that god corroded their god a ship that got the expensive god not very competent the results of that many many many places that money is leaving switzerland people have been looking for and europe people with a looking for a competitor at singapore is turning out to be

a great competitor whether it's a new it's a new school it's a lot or no i would suspect it will be. but what you're going to spend twenty years what i moved to saying that for us i moved to singapore not for that reason i had nothing to do with live here but that is something that i noticed there with singapore is it possible about singapore will buckle under pressure from states like the us and eventually turn over customer records as switzerland doing oh. if singapore it was a chip there's a reason the chart over the records they were sort of over this is not some kind of iron clad lockbox a secret they will turn them over if you put this as a good reason ok in this wouldn't be prime interest if we didn't take some time to talk about the federal reserve there's been a lot of chatter from fed officials feeling out that the markets might possible possibly see it raining and if q.e. the so-called tapering possibly as soon as the end of this year how realistic do you think this timetable is. well i whether the owner is there or brains at the end

of the market forces them to it's going to in dr bernanke you say it's going to last until two thousand. but mr bernanke you doesn't know much about markets he doesn't know much about currents or interest rates or ned so much and they are the is never ever been right about any of this public or doubt the market is not going to let this lead you see what's happening in japan i mean those markets collapsing because people suddenly realize wait a bit this cannot go on forever in europe england it was people now realize this is totally artificial just tried going to last whether it in this year or next year it's called in because the market side there let it happen now hopefully if you want to call it the central banks around the world got their act together and stop it that is not good for the world or even that they are not smart or that the market will force them to a bench. after the break we'll continue our interview with jim rogers giving his

a take on the far east then bob being us and i have a tasty when you have bad policy tapering top and you don't want to miss out on. technology these. developments. as you are. let me let me you're going to let me ask you point. one this morning it's one of the things we are in the mindset of. to believe this is staying there to get you to where the readers are not only.

a little. and welcome back to prime interest continuing our conversation with jim rogers we were just discussing chairman bernanke ease decision to skip this year's jackson hole meeting something that's unusual for a sitting fed chairman i asked him if he thinks that this signaled bernanke he is on his way out next january and won't seek a third term. let's try this their way through if i get it wrong and so you know it's dead over the president i suspect it does me right to try to stay around if your doctor but i think what you're get out to i mean the results are we're in when

we're in the reality sinks in the next couple years it going to be terrible the world's going to have your problems and i would dr bernanke i would want to be around in a quarterly but somebody else will bring that a little but it's in a spreadsheet is probably the largest cause this to anybody even dr greenspan or the choko put so that really messed up the world of the last i would try to get out to well let's go back to japan who has embarked on the most aggressive our monetary and fiscal stimulus program in their history so called abba nomics and initially the end we can consider. really over twenty five percent against the u.s. dollar and the japanese stock market went up but there's been egg credible ball until the end their bond market and now the nikkei has given up significant gains what's going to happen next over there. being a good question there yet if i were smart enough to know that i'd be rich but that if he says that he's dug me mr babbitt has said that he's going to print unlimited

that's his word unlimited about the money so it should make the pan out of shining star of inflation japan has got serious problems they've got that they've got a declining population yes i suspect when we look back in twenty years. well the end of japan and everybody will lay out it goes to obviate the base a new currency is something that sometimes works in the short term but in the long term it's always going to call that it's always always early because france tried to get like tried it pretty strident many people have tried it for decades that has never led to a socialist or a thing or in japan what's going to happen the short term i don't have a clue. i don't own any japanese sold all my jeopardy jew by all the little bit of this because it went down so much i'm hoping it's going to rally but i don't have much confidence in japan at all at the present was it bad it's

a wonderful product that was anyway well i know it's very difficult to time these types of things and you said you're not the world's best market timer but do you think that japanese will have a crisis before in the us or even your. so you know i want to correct you on the world's worst markets because what that's what i've said and i am a good question that word japan i would suspect. that japan would have a crisis before europe those. europe is already ahead its all of the way crisis so we all know about that the surprise the next the prows will probably out of japan after the election this summer you know the upper out problem out of japan has alleged in the summer i suspect we were so i would say a serious problem after the election before the you know when i was a legend everybody everything together for the election after the election i would suspect there would be a problem and certainly after the german election in the fall because by then you

know things in the cards are moving apart in many parts of the world. you said you're not the world's best market timer but you also noted the slowdown in the chinese economy and how this has depressed commodity prices but you're also on record as being bullish on china and their currency the rim and be in particular so when what do you see is the middle ground here i mean how bad could things get in china and what would need to happen to finally see them deep haggis from the u.s. dollar for you know if i were china i would do it by two thousand and gender two thousand and eleven or two thousand and twelve just shows you how much i know about when they got to. the chinese have no reason not to make their current convertible that i'm not chinese so obviously got to do what they want to i would expect that to come in a time now they've been making more and more strides towards opening it up as a response though they've been opening it since two thousand and five in a recent thing they've certainly made

a lot of progress or. a vote on. caminiti problem in the next two or three years they're going the chinese have slowed down their economy for good reasons they haven't placement they have a property folks and they said we're going to do something about it and that they are doing something about it and as you know their customers america europe japan of slowdown so it's not a surprise to me i do is watch prime interest read the newspapers and you would know that there's a slowdown in china it's apparent why can't china have a recession i mean in the nineteenth century as america was rising we had fifteen depression with a we did a pretty good job in the twentieth century but china can certainly have slowed down the idea that china cannot have a recession poppycock. and that was my interview with gemma rogers the author of street smarts.

and the daily deal with bob if you hungry cut off later sounds good all right it started well done health and wrath the unofficial fed spokesman at the wall street journal was added again yesterday apparently fed officials don't like the word tapering right and that's the plan to wind down to a bond purchases which are currently running at eighty five billion dollars per month and the theory about tapering is there will be a gradual reduction of q.e. bond purchases over time to ease the amount of shock to the markets and even though i said officials use the term tapering themselves i guess they're having second thoughts anyways and here is what helps in wrath wrote or this is a quote because fed officials are uncertain about the economic outlook and the pros

and cons of their own program they might reduce their bond purchases once and then do nothing for a while or they might cut their bond buying once and then later increase it if the economy falters or they might indeed reduce their purchases in a series of steps if warranted by economic developments but they don't want the markets to think that's a set plan it is as a fed officials like to say data dependent dependent and that pretty much gives the fed leeway to do anything and everything and then reverse on a dime maybe every fifteen minutes or so and this directly contradicts the historical pattern of the fed which is that they would raise interest rates over a period of years in the lower and it just seems like bernanke you can do anything he wants now willy nilly and let the markets be confused in the meantime exactly so we've come up with air. own little fed menu. and here is here is. a first we have

a slow cook to entrust reserves on. accessories right so you're from the south you like slow cooked meals don't you think that. exactly ok what is what's the point here the fed can raise interest on excess reserves over time to keep all that money that's parked at the fed one point seven trillion dollars in excess reserves but you know that money is going to go to the big banks right now it's going to the treasury because the fed is paying such a little amount of interest rate but like i said that's going to change eventually you don't have your own final there you know i don't think. i've next we have marinated at mortgage backed securities a hand of a negative kind of vaccine this kind of sounds like something only you could. you know actually it was cooked up by bernanke himself when he decided that he was going to do present mortgage backed securities or the yields of them to make housing more affordable for everybody and support the mortgage market and this was several years ago as part of q.e. one and he just couldn't stop he's been doing it ever since it's been crazy yes it

has also flash frozen fed the bills the hybrid for future consumption kind of sounds like something i saw in your desk it's probably still there and it will be next week to clean that up anyway this is the third term deposit facility it's another way of the fed being able to keep money in the federal reserve as opposed to out in the system creating price inflation maybe hyper inflation it's kind of i call it a fed bill because it has all the characteristics of a treasury bill except the fed is issuing it and paradoxically enough the fed isn't really supposed to be doing this kind of stuff but it says it has that authority and on this side you can have it pickle to reverse the repos infused with money market fund liquidity i think only you could during something like that. but bernanke is going to have to drink it himself because. as these money market funds have a lot of cash and bernanke has decided that he wants to be able to tap that cash

there's too much money in the system now what does that do for them in a liquidity crisis i don't know but it doesn't sound like it would be very good for the money market fund holders and that includes people like probably you and me it seems like we have interesting futures and our in our future yes on in germany there are a bank employee fell asleep on her desk and accidentally transferred to two to two to two to two point two two euros it turns higher in the bank account the correct amount was only sixty two point four you're out of this up and she fell asleep at her desk you know that we've got the will of the us and what would happen if the fed the maybe that's how we got this crazy policy of q.e. in the first place very possible the woman lost her job rightfully so i don't know about that i mean the bank had internal control systems and you know they caught the error before it was made so i don't think it was a situation for them well she got her job back good for her thanks for joining us you can follow us on facebook at facebook dot com and interest in follow bob on

twitter at english and you can follow me at perry and r t bob thanks for joining us like you. and i was a globe trotting day here at prime interests first we tracked to silicon valley to see mark zuckerberg going palms begging for absolution on facebook last and share price given twitter were nearby petitioning uncle sam for permission to release their snooping details when we sailed over to the. force it's absolutely an estimable example rogers as he led us through the office of dental oriental central

bank or door good luck all bank finally we doubled back to the basement of the fed the fines on hills and wrath and ben bernanke the breaking bread outlining the fed's next p.r. campaign well thanks for watching come back tomorrow from everyone at prime interest i'm harry and boring have a great. wealthy british style sun. sometimes right on. market why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to conjure reports

. if you live on one hundred thirty three bucks a month for food. you know how. many i mean. i know as i'm sitting in the same thing really messed up. in there all very so closely apologized and said that. the worst cure for that was a long flight out sick of a. radio guy in fort lauderdale minestrone click. on watch a bunch close for a politician because you've never seen anything like this and i'm telling. you.