that afternoon welcome to prime interests i'm perry i'm boring and i'm bob english let's get to our headline it's that day and true to form chairman bernanke you delivered a baffling or is it wall following message that pretty much gives him authority to do whatever the fed wants on the fly all the while pretending to hear to some sort of plan that evans plan or otherwise tapering might be tabled or not it's get is zero hedge points out fannie and freddie also have a hand in all of this now because the government mortgage giants who are supposedly being wound down pave the treasury sixty six billion dollars in profit so the billions uncle sam doesn't need to borrow as much next quarter which means that the eighty five billion dollars per month bond buying plan will monetize nearly seventy percent of all u.s. debt issues in the near future so just to reiterate because our heads are swimming two seven out of every ten dollars borrowed by uncle sam will be bought by because

our government enterprise known as the federal reserve and based on recent trends over two thirds of that money printing will end up in foreign breaks so couldn't corrode encroach away from burning no wonder you're looking for a new gig. and speaking of new gigs the former harvard president who was scorn for a massage and a sick remarks that would be very summers is increasingly being touted as the front runner replacement next year just today obama and harry reid like summers facebook style in the press anyway and. a journalist john said it summers it is totally not against q so just call the skeptical we'll talk to your with your a later in the show and harry and will break down your ministry of you can and makes revised g.d.p. statistics in just a bit o. palooza get in the news but not because of tim cook's desperately needed innovation . apple employees are suing the tech giant because of the time uncle apple's spend

searching their bags going in and out of the office would that we could launch a similar suit against the t.s.a. so we will do a break in the said abby martin on this later. and here is what saying you are a prime interest. i. now the big question on everyone's mind is what happens when the u.s. dollar is no longer the world's reserve currency you know that's inevitable there is a concept called free gold and no it's not about giving away gold for free unfortunately it's a system in which the payment system continues to be the base but savings are made

in gold so i discussed this with investment professional edward moyer earlier and i first asked him about the role of the euro in the new monetary paradigm how it relates to the concept of free gold and how this potentially revolutionary monetary transition could actually occur. if the euro is truly the future if this transition is going to happen how is it going to to occur does that require hyperinflation of the us dollar what are the dynamics involved in the us it doesn't require hyperinflation it's just a very lightly out of probable out of the dollar it's had a couple of near death experiences already you have the last that. you have the shock occurred. in the trim of that occurred in the wake of what is that we have. what happened in the late one nine hundred ninety s. with the gold market. basically i mean i think the hyperinflation of the dollar

is highly likely and free gold doesn't have to the liberation of or gold from paper derivatives does not have to happen with the hyperinflation it's just a much more likely outcome well lets all or i'm sorry go ahead. yet the dollar has basically had no political support since the fall of bretton woods it has had waning structural support which is countries and to buying a u.s. government debt all the support for the the u.s. government debt has been a waning years now hugh we keep mieses they. might call them are a result of that weightings or we now have to have the federal or and it's. its member banks its primary dealers essentially working in tandem to buy up yet

and support the u.s. government's lifestyle so this process is underway we've already had the inflation of the dollar instead of that we've created a massive amount of credit the issue is where does that loss of confidence it's a slow process and i think it's a way yeah and i think it is really it's a crisis of confidence so i'd like to get into the actual mechanics of hyperinflation because i know the free golders have a pretty interesting perspective on this it's not that there is necessarily a demand for cash on the part of the government but it's it's actually on the part of the public is that correct. i think what's the best way to look at it is to think of the u.s. government and its limits and its. they should well entity that is not going to crash it's own lice until it has no choice it is not going to

willingly rain itself and. and so as that waiting support windles. you will see an increase in the kind of operations that we've come to see with quantitative easing ok let's let's talk about quantitative easing we're almost up to two trillion dollars in excess reserves i mean in the federal reserve has bought so much treasury debt that the banks are parking and these are actually mainly foreign banks are parking two trillion dollars or close to it at the federal reserve itself just to earn zero point two five percent inflation and i think what's lost is that this can be created this can be demanded to be created converted to cash at any time so how does this fit into your hyperinflation scenario. well i think it fits in because the government will end up competing against other entities for real goods as the support for the dollar waning

and you have to have increasing cheik. of the gas us deficit or the government. we're going to see. the government bidding against. and to do that outside of the u.s. goods. to keep things going which will drive up prices i mean basically prices as you probably know discover the margin. at the dollar now the government deficit has ceded the trade deficit. of iran a kind of one way path that's when you involve government having to. bid for goods that will drive up the price of all kinds of things and americans will have to will will need cash as competence gets lost in that it's the time value of money. as people sense that the ability of currency

to store a value even short periods of time is. minissha that's when you get. the real crisis of confidence ok and let's let's talk about the time value of money why is it important to save in gold as opposed to a feel a currency or maybe anything else for that matter. why is it important to go yeah it's a. well i think the reason it's important to save in gold was that gold is going to be the asset that balances the system that we capitalized. and gold is actually it's a commodity but it's actually has limited industrial use so my understanding of gold is that the very fact that it doesn't have so much of an industrial demand is the reason why it should be saved and is that your understanding and can you elaborate on i think the unique properties of gold are pretty well understood

especially by those who say get it now. and yes it is not it is really a commodity that's the key issue and so it can do you as it won't affect economic activity unlike pretty much any other quote commodity and you can name can you. all over we are all issues you for your silver these are items that are used in day to day life but if you do this with gold you don't disrupt economic activity in the slightest. that was investment professional edward moir. and that g.d.p. numbers are and the economy grew at one point seven percent for the first three

months of the year headlines this morning suggest the u.s. economy is growing faster than expected but is that. good is this bad what does this mean don't worry i've been through the fine print of the numbers and here's a graph of g.d.p. growth per quarter over the past year g.d.p. is up from the first quarter of the year and recovering from almost a standstill point one percent and the fourth quarter of last year. private consumption plus growth and investment plus government spending plus net exports that's c. plus. x. minus am and to break that up the total g.d.p. came in at about sixteen point six trillion dollars which is about twenty five percent of the entire world's g.d.p. consumption or public spending makes the bold at eleven point four trillion dollars which is down point four percent from last quarter now the next category is investment which grew four point seven percent from q one investment is broken down

into residential and nonresidential residential increase in a standing twelve point five percent accounting for a large driver of this so-called recovery however this growth would be difficult to achieve without the federal reserve keeping interest rates artificially low and purchasing forty billion dollars a month in mortgage backed securities nevertheless mortgage rates have increased by over a full percentage point since bernanke he threatened to slow down bond buying the growth and nonresidential investment is best understood as a hollywood make over for government statistics the government is literally rewriting history by quote and proving and modernizing in g.d.p. calculations to keep pace with the ever changing us economy they're changing statistics all the way back to one nine hundred twenty nine and according to the department of commerce business investment now includes research and development this makes the united states the only country in the world that includes r. and d.

in g.d.p. some say r. and d. should not be counted as an investment but as an expense because the. all projects go on to become successful for example the developing cost for a new television show is now counted as an investment because it could have long term revenue and this is where the card actually has come in reality t.v. is not included because it does not meet the three qualities ownership rights long life and repeated use however a show like seinfeld is because even after its initial viewing it could have additional streaming online sales and d.v.d. sales even writing a book or a greeting card could be included in r. and d. because it's considered creating content that can have an investment in the future now the next category of g.d.p. is government spending which makes up about nineteen percent of our economy government spending is down as the sequester kicked in last quarter but state and

local government spending is up. and the last component is not exports or exports minus imports exports increased but growth was offset by increased imports and one more important calculation to note is the implicit price deflator the government subtracts price inflation from g.d.p. to counter rising prices over time which is a federal reserve mandate by law however as heritage scholar james he believes the price to flater is vastly undervalued additionally the recent updates to the way government calculated makes the deflator even smaller the recent changes to the way g.d.p. is calculated and the flavor of g.d.p. by five hundred fifty billion dollars for the last reported quarter is also decreases our debt to our debt to g.d.p. ratio possibly making the us more sustainable to its creditor it's now the government can move the money around all at once but we all still were able to read

what's in the fine print and coming up next bob talk shop with god it's all a lira and because this is private interest you know it's all about the bad and then bob jules was breaking the set abby martin about the new apple lawsuit and our own duel with the star in charge but the facts are. wealthy british style.

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there has been much speculation over who will take over as a federal reserve chairman or chairwoman next year it could be former treasury secretary larry summers or current said bice chairman janet yellen so earlier i spoke with gonzalo lira economic blogger and founder of the strategic planning group about who he expects will take the reins out of the fed in the next year. yeah and has are being very concerned about the. math taking offense dual mandate which is price stability and full employment janet yellen historically throughout her career since going back in ninety five she's been very concerned about

employment and she is considered one of the dumps and so far as few meeting on the music that is she has a reputation for being in favor of continuing cutey. agreement at this point in time not the federal reserve board is very much divided on the quantitative easing now it is known that larry summers is an anti q e. and that is that against you read he has a proposition. also larry summers is not personally popular with are there. are many people is a mystery and there are a lot of it will point directly to the. summers is a terrible matter to be made catastrophic bets when he was president are are going down in the last several billions of dollars because it is decisions in europe were decisions decisions which at the time we're obviously going wrong headed and which proved even worse after the fact that after two thousand and eight crisis so

a lot of people are saying that larry summers is the last person you want on earth to be chairman of the federal reserve and the fact that he lost out on the world on the presidency of the world bank she said that even when. it chairman points at this point of these to me that barack obama will probably not go with larry summers no matter how much lobbying larry summers and coterie. you can deploy and so far she has i think that janet yellen is going to be the next fed chairman but larry summers is an extraordinarily capable of such and he knows how to swim the washington. so quickly i would think that he could very well wind up in spectrum and i think that if he does it would be catastrophic. because he's terrible but you know you never know you know you never know but let me go back to something you said before you were talking about money printing and critic and i know you're also talking about hyperinflation on your blog critics say that we haven't seen the price inflation yet you know and we have these almost now two trillion dollars in

excess reserves do they really matter. what i think they do the thing is prices have risen so far. specifically boyo and global have risen since two thousand and eight doubled since then since their two thousand levels right and so i wouldn't go so far there hasn't been even i say it's obviously not a deflationary pressures have been far greater than the inflationary pressures up to this point. and so as a as an about hyperinflation east i absolutely have to say that there hasn't been the price rises that would be expected at this point. will they not happen in the future i believe that they are that they are going to have a teacher because i don't see any other solution to the amount of. hooty to be injected into the markets. at this point it's obviously not happening will it happen in the future i do believe so and i have very good reasons to believe so.

going back to the issue of. bond markets quantitative easing has been supporting the fed the treasury bond market and that's one of the things i was thinking bat while it was a loss of faith in the treasury bond markets that commodities would rise much further than the hat like to wait and see oh we will have to wait and see we are seeing a bond yields rise as we wait here and i would ask you one further question about this what do you think is going to be the trigger event that would spike bond yields that would spike this hyper inflation that you're waiting for. it could be anything and i would suspect something stupid because he has a lot of times when you're standing on the very edge of a cliff and it's not like a big closure that sends you oh it's just a little. it's a trivial event if you recall in one thousand each. i think that's part and he said it was a little trivial incident that happened in between ukrainian gunships and

a u.s. destroyer it doesn't even know confrontation say it was just a little. shot across the aisle and that's what triggered the eighty seven. in my case of what would have been. lost in the dollar because she i don't think that it's something to be trivial that will something more and so certainly we could see there is this analogy it's called fingers of instability it's grains of sand coming down and you never know where this little avalanche is going to occur and unfortunately we're out of time here so thank you so much for joining me this is going sala lire economic blogger and founder of lira strategic planning group.

joining me is breaking this host abby martin thank you for coming back here on man how are you i'm doing great let's talk. let's talk some apple because it looks like there's a new lawsuit and no it's not for transferring corporate profits to ireland and other offshore tax havens this time apple is under the microscope for subjecting employees to mandatory bag screenings these are searches that are intended to prevent theft supposedly in the suit to former employees are demanding overtime compensation for the bag searches that took place after their ships were older so what is what is your take on this all it's better than having suicide nets around fox com which is a manufacturing plant in china that they were now barely allowing workers i mean i had to sign a promissory note i won't commit suicide so i guess it's a step above that but still i mean mandatory searches i think it's your overall even from even. for a private company that they just want to protect themselves from i'm always looking out with the good i'm on the clock and that's why we always are saying ok they want

to compensation for the time they said it takes five to ten minutes on top and cutting into their lunch hours to be searched mandatorily but what does this remind us of t.s.a. i mean seriously could we see the t.s.a. for all the time that they waste when we have to wait in their lines i don't. i mean i don't know i think it's different you're talking about people who are subject to t.s.a. measures in order to fly whereas people who are actually working for a company getting paid and then having their free time by having mandatory searches ok but apple is under a lot of scrutiny lady lately do you think this is just part of an overall scheme to like just stick it to him. what scrutiny or then they have all these offshore profits and in ireland like hundreds of billions of dollars and i would say further that seems like there's pushback on the tech industry it seems like the government really wants to they want to push people whatever it is they want to regulate tech industry and so they're promoting these stories in order to put these companies

under the gun could it just be a big publicity hunt well i think i think i'm going to go on the opposite side of where you i think that you're really trying to protect this giant corporation whereas i'm on the side of the employees in the workers saying you know maybe at the end of the day they can get searched once but i mean every time they leave the story i think it's a little bit stop ok it seems ok i'm on the side of the employees in that they should be compensated for their time i'm not just trying to protect any big corporation i see the tech field as one of the last bastions of true free market capitalism so i think there is definitely a push against that and we're going to have to go into that all right so we hear about privatization of schools and prisons but what about privatization of water now the former c.e.o. and current chairman of the nestle corporation you know about a little bit about brave act recently commented that water should not be a common good but a privatized commodity so keep in mind the number one seller of water is in fact. nestle right here we hear a lot about the chocolate industry when you think of nestle and this isn't even

about the slave labor in the chocolate fields this is about water and i think when you're thinking about water it's a resource that every living thing on the planet depends on to survive i mean it's like air except for bacteria at the bottom is that. so i mean when we have this. and this giant corporation wanting to privatized monopolize a resource that's integral for human life i think that that's a troubling aspect ok well we actually you called him out on this recently we actually have a clip of you kind of call him out and they've responded so let's play that right now. so that i'm stephanie from nestlé we saw the video you post on you tube criticizing nestlé overwater so here's a response. you claimed we make huge profits on both water but the think as you quoted was wrong in reality we pay move all water other groundwater uses and override so where does the land does this come from i mean it comes from

a lot of places a lot of places that actually incur drought as well and nestle has actually over local government policies to say that we are going to continue extracting water during drought the sheer profit margin is fifty three million percent not take into account the bottling of wasteful plastic around water there's actually that causes the amount of time but i had a little bit time to push back on your privatisation or you would think privatisation you know when you're privatizing water that's next era oh sure if you want to work through the show be sure to like us on facebook at facebook dot com slash barometers and don't forget you can follow me on twitter at abby martin you can follow me at and wish p.r.i. be thank you centuries.

and it was a predictable day on prime interest the fed speak was same old same old as we say no more q e but is just a matter of time before it's tapered off in the meantime bernanke he might just end up monetizing health. do you think his replacement will be summers or yellen or going out of a lamb and saying it's neither but a there's no news and the truth great and the hit job on apple continues no one seems to consider the future of our monetary madness gonzalo lira and edward moyer are keeping their eyes on the ball and we just knew abby martin will get worked. up about some of our favorite fortune five hundred s. that are all it's not ours and thanks for watching it makes or to come back tomorrow from everyone at prime interest i'm parian boring and have a great night. do

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