now have a great night. i was a new alert and. scared me a little bit. there is breaking news tonight and we are continuing to follow the breaking news. alexander's family cry tears and so well i. think. that there has. at the core of what we found online is the story. playing out in real life. good afternoon and welcome to prime interest i'm harry i'm going and i'm bugging

good and here's the stories that we're tracking today more details are emerging on the commodities manipulation front and federal reserve is reviewing the decision it made ten years ago to allow banks to use customer money to speculate and physical commodities such as copper crude oil and aluminum no word on the gold as that might actually force the fed to admit that it's being manipulated or that bernanke you know something about it will even if the fed reverses itself and bans bank commodities trading guess who gets a pass that's right goldman sachs and morgan stanley since they only became banks in two thousand and eight and they were grandfathered in end users of aluminum cans central to the goldman commodities dominants such as miller coors they are not pleased and they're pressuring the thread to end the practice field so in goes don't fight the fed but in this case we can't help but root for the show here and speaking of market manipulation and barton chilton's dream is slowly coming true.

no he hasn't put a good housekeeping seal of approval on every high frequency trading algo yet yes he actually asked for that winds but under a new i doubt it frank authority has commodity futures trading commission is the launching its first to market manipulation cave's against any firm and just another unintended consequence of monetary policy nearly five years into the year is zero interest rate where most of the printed money ends up right back at the fed we now have hedge funds instead of banks lending to troubled small businesses they were all about free will and free markets here but when shadow banking and that would be hedge fund credit intermediation hits main street something has gone abroad mr chairman and here's what's on your prime interest.

in the aftermath of the financial crisis many nations experienced record budget deficits countries like greece and ireland were forced to slash spending sparking a major debate over the end and the role of government debt during a recession and the u.s. has not been immune either we still hear talk of the sequester and the debt ceiling and that is the u.s. set to hit again shortly after september so joining me now is mark blythe a professor at brown university and author of a sturdy the history of a dangerous idea thank you so much for joining me people are going to be hope well before we get into what a dangerous idea it is can you break down austerity for our viewers and there are a lot of misconceptions about it what exactly does it mean and are there different types so there's lots of different sizes

a very sensible site which is. if you are in a period of growth it's really sensible to pay back debts unfortunately austerity is the end of the study is the idea that somehow by slashing your public spending at the same time as your private sector is effectively trying to pay but that this will increase business confidence and lead to a rebound in the economy that is wrong and can you get into the history of austerity in your book you go all the way back to john locke and david hume and you get into some pretty interesting detail about the philosophy behind it yes sort of the basic insight here there's an argument you've heard before and it goes something like this bog of the foundation of kabul isn't what john locke and his guys were doing the english revolution and then a hundred years later when adam smith and his friends were consolidating and writing about what a wonderful system it is you basically have a bet of going to duplicity going on which is the markets spring forth from the ground no they don't they're made by states as much as they're made by on to put those in kabul is in fact is the cobbles with the state now they want the state to

protect their property rights but also it to give them the lion's share of the profits any state that's probable enough to do that can actually take away your profits so you have this love hate relationship with the state now the big problem how do you pay for something powerful enough to protect you well the government that comes along is a wonderful lease what you're going to do is give them a lot and they're going to pay the whole thing bought plus interest and then they're going to protect your property of the same time here's the weakness in the argument the liberals nightmare that we still hear today but of everybody discovers there's good leads all the money in the contrary ends up going into government securities you end up with too much debt the productive economy suffers and we all end up in hock to china that was literally david hume's arguments you see nothing much has changed in three hundred years well i actually have a quote by david hume of what and it's about debt that i'd like to read to you and get your reaction to and it goes it is very tempting to minister to employ such an expedient as it enables him to make a great figure during his administration without overburdening the people with

taxes now this practice will there. abused in every government and he was absolutely correct we have a problem but the problem is not i got all mixes politics no one in two thousand and six in the u.s. senate stand up and stood up and said hey we're making money hand over first everyone's house has become an a.t.m. let's take some of that money and paid for the rainy day we decided to have let's have more spending and more tax cuts so hume has a point there but we're to falls apart as the fall and everyone tries to pay back that all at once all you do a shrink everyone's income stream and you end up with more debt rather than less the politics of the heart of and not with the utils one finds itself today well ed let's talk about detroit that's a big story in the u.s. there is a bankruptcy that mica might go for it might not how does a deal leveraging in detroit fit into your paradigm well very different because local governments and state governments are not only constitutionally bond from doing the type of fiscal policies that states can do when you start to compare houses and families and firms and ultimately countries you're not comparing like

with like for a country particularly a large country what you are spending as an outcome of policy as much as a constraint a family can't import new members into the family intox them in debt in the name for three generations countries can do this mean a simple bankruptcies are small localized events governments don't go bankrupt for the simple reason that so long as they can tax intergenerational they can block their bonds detroit can't do the well in certainly greece has a similar constraint they can issue debt to an extent but they can't control the printing of their own currency so would you be for a unification for instance in europe of fiscal to unite the monetary policy as well well that would make sense if you had again like a condom is but unfortunately you don't what you have if you look at the example of germany is a country that runs. an export plus almost as a reason of state and then of reciprocally the has to be some of the running a deficit which is of course was hot in the periphery and what kept all the gold

was the cop it all flows from excess german. savings going to the south a lot of them to buy german products well the problem with this is once the kabul flows dry up as happened in two thousand the name you end up with a crisis and if you're blaming someone for have a deficit you have to look at the corresponding sort list and no one is willing to do that well in let's talk about that financial crisis in two thousand and eight what do you see the role of the central banks of that especially the federal reserve the crisis in the aftermath well if you compare the e.c.b. and the fed it's very interesting the fed ultimately prints the global reserve that everybody else in order to conduct foreign trade when things go well heeled you borrow he had invests on what else the money goes by the here you bring a buck here in you invest in bones the united states is in a win win position and lock in any credible alternative that continues for the foreseeable future the e.c.b. is not really a central bank it's more a current symbol of the liquidity of pop and what happened in the crisis was people holding your denominated assets figured this out and said my goodness there's a problem here this thing breaks up i'm holding garbage the yields spike everyone

says we need a strategy but in fact what calmed the markets was a role and the ele and druggies promise to do whatever it takes well in terms of causes of the crisis the federal reserve has its own models the banks have their own models the ratings agency had their own models and they didn't really see it coming what do you see as the role of the models in the crisis i think the rules of their models as contributory to the effect of everyone's using the same model they're all tunnelling on the same piece of information you end up using the same hedges to block the same exposures and you end up creating risk rather than distributing around the system but the whole basic ideology that you can basically push risk out on the system and somebody else is always holding it in the same fall asleep of composition that we can all cut spending at once because there will be no income left it's the same principle was rational for one isn't true for the whole well that is it possible for a nation to lose credibility and is it possible that a government can just borrow money ad infinitum well no one can do it in front of

the. get pretty close i mean fifteen aircraft carriers makes a difference up plus the global reserve but you can also take this to the other extreme as everyone tries to run a surplus as seems to be the plan for the utilization through structural reforms who's going to run the corresponding deficit as martin wolf put a beautiful in the financial times whom it all going to explore to martians hardly sounds likely where we also have the asians what do you see as the role of china in all the they have had incredible liquidity squeeze recently and they've actually advertised a major change in policy that they're not going to build these huge villages in these cities of ghost cities what's going to happen in the east right now. to be perfectly honest with you i don't know because i've got a power point slide i use that i'll give you ten reasons why china will rule the world and then the next slide is ten reasons why you've got one hop and i don't know which one to choose at this point in time the numbers coming out of china have slightly less credibility than those coming to the fed to be polite we don't really know what's going on the banks balance sheets over there are extremely well pick

and essential is a lot of stories coming out about companies being shell companies investments not paying off by western companies and chinese companies so they are ultimately export dependent upon what's going on in europe in the united states so to look at them isn't a tall i'm as good although the shining light i think is a little bit naïve it does seem naive and you mention the banks and we have put these human faces on these banks like giant jamie dimon is j.p. morgan john corazon was m.f. global but it did humanizes the entire system to a certain extent i think you write a little bit about that. yes absolutely i mean essentially one of the lines that i like to take on and the biggest to say this is not about personal morality it's about incentives but of the structural level you could take all the parts from the two thousand and seven two thousand and eight drama replace them with other people and run the experiment again they would have behaved in the same ways because a lot of the way the banks were incentivized and until we talk a lot of the core level you're not really talking to problems and how do we tackle this at a core

a level what's your prescription for the future well the. to some extent market forces are already taking care of it if you think about it the way the banks made money for the past thirty years was to follow up their trading book take on huge amounts of leverage and run a free option in the public in the form of being too big to fail you get to play the trick once if you look at dodd frank no it's far from the failure of his deal leveraging by a thousand cuts you raise your compliance costs you ask your bonuses you do all these things to make life on comfortable so that the bonds get smaller and safe and at the same time alternatives as one of your reports just mentioned hedge funds doing the type of stuff that investment banks used to do arise to take their place and most of them at least look too small to cause trouble if they go bust so the banking system is changing as we speak well thank you for joining me this is mark blythe in austria author of austerity and professor of international political economy at brown university thank you so much. coming up period interviews john hope bryant the founder chairman and c.e.o. of operation hope we'll talk about the silver rights movement and what's wrong with

our troubled economy and the role of yes monetary policy and then all jewel our directors have been poly on because we know you've been missing them here. i would rather as questions for people in positions of power instead of speaking on their behalf and that's why you can find micro larry king now right here on our team question more.

the british stock. market. can. find out what's really happening to the global economy. there are no holds global financial headlines kaiser report. will include. science technology innovation all the latest developments from around russia. the future covered. a story so you think you understand it and then he. hears. and realized

everything. john hope bryant is known to give you a hand up and a hand out he used his life to bridge the gap between civil rights and the silver rights movements throughout aeration hope he provides financial literacy empowerment to under-served communities he also says on the u.s. president's advisory council on financial capability and has advised three sitting presidents on financial mobility but does he know how the federal reserve's

monetary policy affects the lower class earlier i spoke with mr bryant and i first asked him to tell us about the silver rights movement. to make free enterprise work four hundred million americans who fly they got too much money into their money. it is the system to make free enterprise finally work for the least of these god's children from a historical perspective it's picking up where dr king's work left off with the civil rights movement when he was killed in memphis he was focused on helping the poor of every race because there's more poor whites in america than for anybody else in the south where your family comes from as an example and so it was about issues of whether it's white. red brown and yellow with producing more green as in us. and so it's lifting people out giving them aspiration giving them hope opportunity really redefining freedom for a new generation of self-determination so what is wrong with the economy today is

clearly saying the government has all sorts of programs the fed is printing billions of dollars and mine had stimulus package is and it just seems that we're kind of on life support here so what is wrong because the bible says that there is no vision the people perish that i would is not saying where there is no inflation a lack of there of our faith the people perish the reality is the government can only do probably only going to really only do that which keeps us from falling into the ocean they can only build water they can't create jobs pricing to create jobs ninety percent of our jobs are private sector jobs what we what america needs is to create enabling environment can help with that we need is a million startups a year we need. a small business and startups and shoot ups and entrepreneurs what we have is about three hundred fifty thousand startups a year so you want to solve the economic problems is real simple get a million two million startups a year in g.d.p.

will go right through the roof jobs will be created because all jobs come from start ups from year three through year seven and half of all jobs in america are one hundred employees or less seventy percent of all jobs in america are five hundred employees or less is only nine hundred seventy four businesses and employ ten thousand people or more we tell our kids go to k. through twelve go to college get a great job at a big company but because with all due respect on hiring these in technology small companies hiring so that's what i think we need is a surge in entrepreneurship an absolute surge. but what about inflation do you think and hurts the low and the middle class price inflation i hear you i think that no jobs. well the poor in the in the. in the struggle in class in their quest to make a good point and we say that i think this is though is the and now it has to rearranging the deck chairs on the titanic the ship is sinking but we're paying

we're sort of changing the drapes on the top floor i think that clearly the poor unfortunately pay the more the most in interest rates in services and goods in prices and yes inflation i'm sure has a knock on effect but bernanke who who i'm a supporter of was literally trying to keep. the whole ship together during this global economic shake down i mean call it a recession the dollar to reset and i think it's really a crisis of virtues and values and i'm economic crisis and so i thought he was using every tool he had just throwing it at the problem trying to really working we have a graph here devaluation of the dollar versus the money supply and you can see over the years that the value of the dollar has just gone down significantly and in one thousand nine hundred two which was the year you started operation hope i die then only it's equal sixty cents today a gallon of milk in one thousand nine hundred two was two dollars and fourteen

cents today is around three dollars and forty six cents so actually one disagreement with you in the graph the graph is obviously accurate the only disagreement is we're still here i think that there was a real chance that would not be a line going way down to be a cave mark because the whole thing which is going to collapse i think we were really close to global economic collapse where you and i are like trading bread in like stones together that the system was just frozen again i think you know tama poor people let's just be direct about it you think around nine poor people are going to be the tenant so poverty is a coach or. wealth as a culture we need to get a culture of entrepreneurship small business ownership of entrepreneurship i mean president lincoln was on to a great thing when he was key. you know he was a starter freedman's bank to teach free slaves about money he was giving for people for years and a mule has given them the tools and the opportunity to not just have free labor and

grow america's economy through slavery but to give because i was economics it wasn't about slavery or free and free labor but it to give them real tools and wealth and land to actually grow their economy. create jobs and that that had happened you would not have blacks as a poor group today and so i went back to i just think there were almost having the wrong debate with the going back to small businesses in which we agree that it really is the powerhouse of the economy that they do all the hiring so over fifty percent of small businesses fail in the first four years and one of the major reasons is because they don't have enough savings and cash on hand a grim the economy turned sour but what is inflation is a tax on savings so the fed policy expanding the money supply in the price inflation could we could make the argument that it's hurting small business from succeeding because it takes away from their savings. and i don't disagree. think

this is easy i agree but it's a roll of the i'm a business owner my payroll is three hundred thousand dollars every two weeks i'm really focused on my payroll i've been meeting for twenty one years i've never worked in the morning and go oh my biggest problem is inflation. that is going to your job every day and then we're you know to see yourself ages same thing with them just a price that takes up slightly every is a slightly i don't get i don't disagree with you but look we pay the hidden taxes all the time i mean we used to drink folgers coffee now we drink starbucks coffee is think about that when we can afford a seven latte you know maybe one of you i mean your sponsors are not going to have this. but i'm just saying that there's all kind of hidden taxes i don't choose to pick on this one i think. and that was my interview with john hope. bryant the founder and chairman and c.e.o. of operation hope and member of the president's advisory council on financial capability now let's get to today's daily deal or.

well joining me on the daily duel is our two director kevin callie it's nice to see on this side of the glass for a change it's nice to be here for a little different well let's jump into bitcoins we had a discussion earlier and you doubt their legitimacy is that true or not it's not that i doubt their legitimacy i know there is no legitimacy to a big point but it's there's no point if you give me a bunch of big coins i will give them back to you and ask for a banana ok well i actually went to a big quinn conference and i have this to give to you and later on maybe you can give me a because it is for real this is the only thing i know it actually does nothing well so that proves my point because these are completely useless let's move on to the next topic is

a recent survey by the council of state governments shows that most state governors are paid less than state executives this includes employees charged with overseeing waste management or education this year many state executives got raises to keep their paid competitive with the private sector i'll give you the floor here public versus private pay i firmly believe that the public sector employees should be the highest paid individuals in the it and that's because they work the hardest no actually i believe that there are oversight needs to be improved dramatically and there accountability these would be exponentially increased and efficiencies like zero at the moment it should be at least five but how do you do that. how do you just pay them more if you pay them more then more people will want to do the work where it's like. once you start having an institution like a. see it's the bad people that rise towards the top and i think some of these statistics are being a little bit skewed because we're taking in compensation of c.e.o.'s like jamie diamond the one percent skew some of these statistics so i would say that the

public sector they get paid a little bit too much and you have to consider they're taking into consideration public benefits like pension benefits as well. i agree that they get paid very well ok and i will agree that when compared to certain other individuals that it is relatively unfair ok so actually in the private sector where you don't have any of the pensions and you don't have any of the job security and you don't have any of those things maybe we take some of that into the public sector and if people were a little bit more fearful of their jobs but they got paid well then you would get more of the good employees get people to do the job really well unfortunately i would say the way a bureaucracy works is by by design you have incompetence rising to the top by design how is that any different than any other organization that's more than like a hundred employees will look at apple apple innovates they have thousands of beats what do they produce in the near near future never mind that tim cook is taking

a little heat for not doing too much what about google google glasses google employees thousands and thousands of employees and they're innovating i love google don't get me wrong i have an android phone i love google they make a lot of mistakes which i love they're accepting of mistakes and failures and they do some things that are like they're going to run a farm that's going for that's what the private sector does they take risks and then they get rid of their waste unfortunately we don't see that in the public sector i'm going to get we're going to move on to the next topic here i think we're going to talk about the baby the big baby story today this week the telegraph reported that the birth of the royal baby could provide a temporary boost to the ukase economy really really i don't know about that one year why not why why not it brings into worst people love these dramatic. benz people love to do these things it's great p.r. for england it's great p.r. bubble kind of a toll is this taking on the government they're spending a lot of money themselves point ok great point so how much does the palace cause

how much do these parades cause sure you can bring interest rates that's what they are there's a lot of pomp and circumstance there so overall a force for good or evil i would say it is a very good for raising a profile but very negative in the grand scheme of public events olympics waste of money in my opinion all right we've got less than a minute we're going to get to our last topic it's about going incognito and it's suddenly become much more difficult because identification identification technology designed by nec solution is now being used by retail stores to identify customers this sounds scary to you. not just scary it sounds like crazy i read one piece of an article that was like the store owner was like we're not going to use the i p facial recognition software because we believe customer service wins well what i would like to see is a sticker outside of every store that says they're using it so i can choose not to get it kevin thank you for joining me if you want to weigh in today's show be sure

to like this on facebook at facebook dot com slash prime interest and you can follow me english kevin thank you for joining me and today's daily duel. i. and it was a surreal day here at prime interest the goldman market manipulation plot and as very manufacturers go toe to toe with chairman bernanke one day i love salvador dalí i. and this one and it seems the c f t c is willing to meld the eight f.t. timing clocks of panther energy trading as they finally black buy into the market

manipulation meme marginalize the weight off on our stereo and the great album and john hope bryant was the rainbow after the storm giving us a hand up not a handout it's not about me it's about how we thanks for watching and make sure you come back tomorrow from everyone at prime interest i'm perry i'm boring and have a great night.

today on larry king the stars of franklin's bash mark paul goslar and brechin myre on their new costars had a lock where we're both nude in the scene with her sitting next to her with our codpieces on the phone. and i call mine is a cod on being a part of two iconic ninety's hits you a fan of that child was a friend of that show that this is the set once you go and makes up these stories i did not make anything of you are not nice and you had weird yellow hair a new route plus i have a hundred bromance sure yeah. that's next on larry king now. welcome to larry king now it is the hit legal.