for that bernanke you know something about it but 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 dominance such as miller coors they are not pleased and they're pressuring the fed 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 champagne of beers and speaking of market mean nipping lieschen 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 the actually asked for that wines but under a new adopted frank authority has come martie futures trading commission is the launching its first a 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. instead of banks lending to troubled small businesses they were all about free will improve 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. i i. i. 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 realize that we have 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 types is a very sensible site which is if you are in a period of girls it's really sensible to pay but that unfortunately all steadily 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 calling for the ends and lead to a rebound in the economy it is wrong and when 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 you know 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 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 two printers and kabul is in fact is the topless 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 loan 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 i'd like and it's about death 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 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 fist everyone's house has become an a.t.m. let's take some of that money and paid that for the rainy day we decided to have let's have more spending and more tax cuts so hume has a point there but where to falls apart is the following everyone tries to pay back

that all at once all you do is shrink everyone's income stream and yonder. 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're 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 are small localized events governments don't go bankrupt for the simple reason that so long as they can tax intergenerational if they can bought the 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 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 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 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 here you borrow here and invests somewhere else and when it 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 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 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 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 will 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 numbers growth no the shining light i think is a little bit naive 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 a 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 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 dodd front now it's far from the failure of this deal leveraging by a thousand cuts and you raise your compliance costs yes call 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 to 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. thank you 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 two directors have been calling on british oil and we know you've been listening them here. nobody chooses to be homeless nobody chooses to me and the sorrow.

is that was four of us. get in the six pm get out six b. six. they were in. school that. day me the class people and. they were against. it's tough to think about all of this comes through. and to know that many may not have only been lost. never in me but they're also do different clue should never have. the. right to see. her struck. and i think that you're.

on army orders. speak the language. programs and documentaries in arabic it's all here on. the will talks to vo ip interview intrigued. arabic to find out more visit our big. dog called.

john hope bryant is known to give you a hand up and not 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. movement to make free

enterprise. work for one hundred million americans who find they got too much month of 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 poor 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 in mind that 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 thereof are fair 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 what we what america needs is to create enabling environment can help with that we need is a million startups a year that's what we need. a small business and startups and should haves and entrepreneurs that 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 the 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. or five hundred employees or less is only nine hundred seventy four businesses employ ten thousand people or more we tell our kids. go to college get a great job at a big company but with all due respect on hiring and using technology small companies are hiring so that's what i think we need is a surge in entrepreneurship an absolute surge. but what about inflation do you think inflation hurts the low in the middle class price inflation i hear you i think that no jobs. poor in the. in the struggling class no question good point and you 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. 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 that call it a reset and i think it's really a crisis of virtues and values and not make a number 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 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 a dollar and 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 actually i only 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. there's a real chance that would not be a line going way down to be it be a cave mark because the whole thing which is going to collapse i think we're 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 there are nine poor people going to be the tent 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 killed 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 free and free labor but it to give them real tools and wealth

and land to actually grow their economy. create jobs and if that had happened you would not have blacks as a poor group today i'm going back to you i just think that we're almost having the wrong debate with the growing bash the 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 as cash on hand bring the economy turned sour but what is inflation is a tax on savings so the fed policy 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 very. 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 been meeting for twenty one years i've never worked in

the morning and go oh my biggest. problem is inflation. yourself every day in the mirror you know yourself ages same thing with them just a price that takes up slightly every society and you don't get i don't disagree with you but look we paid the hidden taxes all the time and we had to drink folgers coffee now we drink starbucks coffee is think about that for us well when we can afford a seven latte you know maybe what do you mean to me when your sponsors and i begin to answer 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 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 do it we'll.

well joining me on the daily duel 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 for a little different well let's jump into bitcoins we had a discussion earlier and you doubt their legitimacy is that 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 but does it is this 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 the oversight needs to be improved dramatically and the accountability of these will 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. 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 like 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 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 that you had people that 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 mere near future never mind the cook is that taking a little heat for not doing too much what about google google glasses google employees thousands and thousands of employees and their 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 yeah they're going to farm that's what we're 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 u.k.'s economy really really i don't know about that one you why not why 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 that 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. 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 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 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.

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 to see as he is willing to meld the h.f. the timing clocks and hamper energy trading as they finally black market. to me marginalize the weight off on a stereo and a great problem 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 we thanks for watching it and make sure you come back tomorrow from everyone at prime interest i'm perry and boring and have a great night. this will go on so no need to updates on you trying to transmission makes for a smoother ride bush and scientists conjure up could see it's crystals the e.u. says he's laser sight sometimes on one of the take giants comes to town. you're on a. clue.

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edward snowden says the leave the transit zone today had been expected because his paperwork yet ready. situation in iraq is spiraling out of control with the prison breaks and fresh terrorist attacks. death tolls. and just across the border in syria. terrorist group holed up two hundred kurdish civilians hostage to try to gauge the many faces of the country's top stories.