yes 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 dominance such as miller coors they are not pleased and they're pressuring the fed to end the practice the old saying goes don't fight the fed but in this case we can't help but root for the champagne of beers and speaking of market manipulation and barton chilton's dream is slowly coming trailed 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 and dodd frank authority has commodity futures trading commission is the launching its first a market in the manipulation caves against any firm and just another unintended consequence of monetary policy nearly five years into near 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 in 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 the. it is the us that they hit again shortly after september so joining me now

is mark blythe professor at brown university and author of a sturdy the history of a dangerous idea thank you so much for joining me. before we get into what a dangerous idea it is can you break down austerity for viewers and there are a lot of misconceptions about it what exactly does it mean and are there different types sure there's lots of different types is 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 it 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 yeah sure the basic insight here is an argument you've heard before and it goes something like this bog

of the foundation of kabul isn't when 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 bit of a going to duplicity going on which is the market spring forth from the ground no they don't they're made by states as much as they're made by i want 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 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 no 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 to my. the productive economy suffers and we all end up

in hock to china that was a little early david hume's arguments you see nothing much has changed in three hundred years well i actually have a quote by david hume widely and it's about debt that i'd like to read to you and get your reaction to 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 therefore almost infallibly be abused in every government and he was absolutely correct we have a problem with the problems not i got nomics us politics no one in two thousand and six in the us 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 pay that for the rainy day we decided to have let's have more spending and more tax cuts so he'll has a point there but way to falls apart is the following everyone tries to pay but that all at once all you do is 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 micah 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 the 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 is 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 we know support bankruptcies or small localized events governments don't go bankrupt for the simple reason that so long as they can tox intergenerational it 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 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 they're running a deficit which is of course was happened in the periphery and what kept all the gold was the cop it all flows from excess german savings going to the south all of them to buy german products well the problem with this is once the kabul flows dry up as happened in two thousand and eight 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's willing to do that we're 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. in 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 here you

borrow here that invests somewhere else the money goes by the here you bring a buck here in you invest in born's the united states is in a win win position and lock in any credible alternatives 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 oh 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. creating risk rather than

distributed around the system but the whole basically all legit 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 at infinitum well no one can do it in front of the united states and get pretty close i mean fifteen aircraft carriers makes a difference up close the global reserve us 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 eurozone through structural reforms who's going to run the corresponding deficit as martin wolf put a beautiful in the financial times too little 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 dehumanizes 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

would like to take on and the biggest this and this is not about personal morality it's about incentives but a structural level you could take all the public 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 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 that 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 find out 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 gold front no it's far from a failure this deal leveraging by a thousand cuts and you raise your compliance costs you ask you your bonuses you do all these things to make life on comfortable so that the bonds get smaller and see if that 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 are the directors have been calling on britain poised we know you've been missing them here . after costing trillions of dollars are fighting personal freedoms and ingratiating rent seeking corporations can anyone claim the u.s. in the world is any safer from the in cities plans of tears and what you suggest.

between an act of terrorism in western style humanitarian intervention. is eat eat eat eat eat eat eat eat eat eat eat eat eat eat eat eat. eat in the belief. system. i would rather as questions for people in positions of power instead of speak on their behalf and that's why you can find life go larry king now right here on

r.g.p. question more. do we speak your language does anyone have the will or not a day of. school music programs documentaries and spanish more matters to you breaking news a little tonnage of angola's kidneys stories similar. to you here. to enjoy it all to spanish find out more visit. all tito is calm.

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 through operation hope he provides financial literacy empowerment to under-served communities he also sits 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. movement to make free enterprise work for a hundred million americans who find they've got too much month at the end of 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 not issues of whether it's white black red brown or yellow but producing more green as in u.s. currency 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 sick the government has all sorts of programs the fed is printing billions of dollars a month we 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 where there is no vision the people perish that i would is not saying where there is no inflation a lack of it or 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 all jobs are private sector jobs but we what america needs is to create an enabling environment to help with that we need is a million startups a year that's what we need this small business and startups and shoot up an entrepreneur is 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 for every two million startups a year in g.d.p. will go right through the roof jobs will be created as all jobs come from start i was 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 become please 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 sand hurts the low and the middle class price inflation i hear you i think that no jobs. poor in the in the in the in the struggle in class in their quest to make a good point and you say that i think that this is though is the. 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 with all of a reset and i think it's really a crisis of virtues and values and an economic. crisis and so he was using every

tool he had just throwing it at the problem trying to really working we have a graph here the 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 dollars then only 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 we have 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 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. 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 killed he was a starter freedman's bank to teach free slaves about money he was giving for people forty acres and a mule he's 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 free and free labor but it to give them real tools and wealth and land to actually grow their economy. create jobs and that happened you would not have blacks as a poor group today and so i went back to you i just think that we're almost having the wrong debate with we're going back to small businesses which we agree that that 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 grin the economy turned sour but what is inflation is a tax on savings so the fed policies of 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. yourself every day and then we hear you don't see yourself ages saving with inflation and just a price that ticks up slightly every is a slightly i don't get i don't disagree with you but look we paid hidden taxes all the time and we drink folgers coffee now we drink starbucks coffee think about that for a while when we can afford a seven latte you know maybe one of your service people your sponsors i'm not going

to have this. but i'm just saying that there's all kind of hidden taxes i don't choose the pick on this one i think. and that was my interview with john hope bryant the founder 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 do it we'll. well joining me on the daily dool is our t.v. director kevin colley it's nice to see on this side of the glass for a change it's nice to be here if a little different well let's jump into a bit coins we had a discussion earlier and you doubt the legitimacy is that it's not that i doubt the legitimacy i know there is no legitimacy to

a big point 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 of public versus private pay i firmly believe that the public sector employees should be the highest paid individuals in the light and that's because they work the hardest no actually i believe that their oversight needs to be improved dramatically and their accountability these would be exponentially increased and efficiencies is 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 bureaucracy 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 i jamie dimon the one percent skewed. 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 socially in the private sector where you don't have any of the pensions and you don't have any of the job security you need 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 that 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 one of the produce in the mere near future never mind cook is taking a little heat for not doing too much what about google google glasses google employees thousands and thousands of employees in there innovating i love google don't get me wrong i've been android phone i love google they make a lot of mistakes which i love their accepting of mistakes and failures and they do some things that are like they're going to form that's going on for that's what the private sector does they take risks and then they get rid of the waste and fortunately 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 you know i do not like why not it brings into worst people love these dramatic events people love to do these things it's great p.r. for england it's great p.r. but what kind of a toll is this taking on the government they're spending a lot of money themselves on. ok great point so how much does the palace cause homage to these parades cause sure you can bring in tourists are really well that's what they are there is a lot of pomp and circumstance there so overall a force for good or evil i would say really 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 solution is now being used by retail stores to identify

customers this 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 p. facial recognition software because we believe customer service wins well what i'd like to see is a sticker outside of every store that says they're using is 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 dool.

it was a surreal day here at prime interest the goldman market manipulation plot begins as very manufacturers go toe to toe with chairman bernanke one dial of salvador dali on this one and it seems the see after he has the billing to melt a bit each after the timing clocks them and their energy trading as they finally black buy into the market and if you. to me a much larger life a weight off on a stereo and a great problem and john hope bryant was the rainbow after the storm and giving us a hand up not a handout it's not about me it's about we thanks for watching and make sure you come back tomorrow from everyone at prime interest time perry and boring and have a great night. nobody chooses to be holes going chooses to be in al sorrow.

isidro's for the show to. get in the six pm get out six beat six. there were. three schools. to me the class before. they used the word against her. it's tough to think about all of them to do so and to know that many may not have only been the last two won't should never be but they're also due to foreclosures that never should have.

luck. luck live.

live live. live . my.

snowden's legal limbo could be drawing to an a and when the n.s.a. leaker about to get the papers he needs to leave a moscow airport transit zone and officially and to russia. anyone who's willing to vote was in advance to take on this torrent we are willing to accept it whether it looks like the modern world looks like it looks. from which challenge a free syrian army representative over his group's accomplices or qaida linked militants hold around two hundred kurdish civilians hostage in syria. and the us will finally hold long deferred hearings for dozens of guantanamo bay inmates while eighty six others cleared for release are still unable to leave the prison.