good afternoon and welcome to prime interest i'm harry and boring and i bob inglis gets it states have. both federal money is pouring right back into the u.s. over the last few years burning cheap quantitative easing money flowed outwards and to developing countries but countries such as the n.d.p. indonesia and thailand have seen currency devaluations of up to forty percent hedge funds are losing massive amounts of money on bad and developing countries they're dealing with price inflation not seen in decades bob talks of emerging markets with locking in just a minute and very and will break down inflation later in the show but back to the main point the unintended consequences of massive money printing not only in the u.s. but in japan and europe to a lesser degree are finally being felt but the directional flow is not what you

might think that's right according to the s. and p. shiller report released this morning las vegas and phoenix are in yet another property film where we say bubble only five years ago prices had begun plummeting at a foreclosed houses were scooped up by private equity groups and hedge fund but as we've discussed there cashing out unfortunately looks like detroit will be able to do the same thing in july the city manager recalculated the two pension funds future obligations to retirees and the number he came up with a three point five billion dollars shortfall just the pension plans are much worse shape than dollars. and now there is a showdown and federal bankruptcy courts and all we can say is meredith whitney was just a few years early on her mini meltdown prediction without further ado let's get into what's in your prime interest.

india the third largest asian economy has been in an uproar just last week india's currency the rupee sank to a record level and this past weekend the indian prime minister attempted to reassure markets saying quote there is no question of india going back to an economic crisis experienced in one thousand nine hundred one as its rupee currency is now linked to the market and foreign exchange reserves are adequate nothing is confirmed until officially denied so earlier i spoke with mike shylock author of mish global economic trend analysis and about the decline in india's rupee. they said well we're not going to have a discount we're going to roles and and these things are looking for alls because

of x. y. and z. and lo and behold they said well what is the number what you were going to limit the amount of money you can take over say oh sorry that's not it you have a number do you can buy gold because we don't we don't want your money going or anything we don't think is as if government can decide what is productive or not and then they would. certainly get it was they want some controls on florida or excuse me on institutions on the amount of purchases that a student but i don't. know her it is not a cow tipping zero eight or so and so what are these how are they are they going to attract money. well what they did was they spoke to market not that the market needed much getting like the current account deficit is rising in india they don't know how to fund it and they're trying to control it with statements

well the market says. show me some action not just giving statements and the problem for me for india is india wants to maintain its six percent rate of growth just like china wants to maintain it's not that anyone believes it hurts in china right so how do you do that well they've been doing it by printing currency they've got any huge property bubble and everything is fine as long as the money is germany and some of the money goes out that's when the problem and we've seen it before in indonesia. we we've seen it at other places and we're seeing it actually in several countries right now well it seems yes there is definitely a trend in emerging markets and it gets to the carry trade i think is involved to here and basically that's where in the u.s. in japan people can borrow at very low interest rates and then they can invest it in these countries and earn seven to ten percent on their bonds but what happens

when you know the currency to clients to destroy the card to carry trade itself oh absolutely it is the indian river is down fifty three point four percent the reality is down sixty two percent and the indonesian it is twenty three point six percent moon so. your six percent or even ten percent return or well whatever you can get. any more are when. you have the percent decline in the currency so money that comes calling out for our all of the us goes whoring out. there is. in the capital markets and we are seeing that now in india we're seeing it in egypt we're seeing it in indonesia risking it in brazil we're seeing currency moves. for different reasons in australia and of course in japan so there's a lot of trouble currencies that are now that's interesting i'd like to follow up

on what you said about australia what are the different factors that are going into their currency problems right now. australia is a big problem it was friends two problems one is the property boatless collapsing and its second big problem is. it was it's been tied for so long to exports to china well china slowing i think substantially more than what's been admitted so far and so the demand for raw commodities. coal in china that would normally come from australia is a bit on the decline so a little that's caused a. plunge in the value of the australian dollar making the australian dollar not look so directly either so. all of these there are a lot of problems elsewhere everyone's been waiting for the us dollar to blow up or

all of these reasons i say the us not to be one of the last to go yeah i'm still second with that rob well let's talk about the us dollar then and bernanke it was jawboning in april and may and that's one of the leading contributors to all these i think you want to call these these global currency movements so when will we see the u.s. dollar finally go and what would be the potential catalyst i know there are many. well actually when i look at it is what currency looks but you know. you really like the wear and the prime minister rabin it is alleging to destroy the currency which you do percent inflation do you really yarrow when things start settled there i think it's still likely that spain greece and cyprus are going to break away from the euro so you know what exactly does that do

to the euro if you really want to be holding dollars now the answer to that question depends on how they break up yes there's germany leave does germany exit the euro which is what i think ought to happen or does it break out piecemeal in a very destructive manner so either way you got some currency issues there and look at history going over it down for the bank of england do you really want to bet on the british so for all of these reasons the u.s. dollar didn't collapse and except i guess in comparison to what they are collapsed against seeing it as gold went through two hundred fifty dollars an ounce in two thousand to over nine hundred dollars an ounce and everyone thinks it's the end of gold because it fell back to twelve hundred. i think it just took a breather just a breather i guess we're definitely still in a cycle or bull market in gold what do you see as

a future for gold and how does this i'd like to link this back to our original discussion of india how does the demand for gold in india factor into the future price of gold. this overplayed actually really however it's a sentiment you know what does the average indian want all i don't want to hold repays i don't want all the u.s. dollars i don't want all. your so what i want to hold they want to hold gold so as the price point. the demand went up but the overall demand for gold is amounts to just a very trivial mauer the actual overall goals but every piece of gold that's ever been mine pretty much is still in existence so. the smaller one puts an output fluctuations and. how much gold is. actually just plays a minor role of the gold is produced someone has to hold it and someone has to

decide whether they were all that versus something else well do or earn actually came out are not when it is you talked about tapering. that it caused a sell off of sorts in all but when you start opening look at it you really believe they're going to taper and if they did how does it mean you're going to start growing i don't think so it's turning to start hurting i don't think so great britain going to start burning china so what do you want to hold and that's what it boils down to and. there was a plunge and. i think it worked out some weekends and some people bailed on. george soros is funding and he will build on also i think to build up the run time and i view that as a contrary sign of an indicator that all these people are pulling out of this well

to buy us equities now long after this rise well i've got to admit that i've been saying that i that the us stocks have been overvalued for two years but i guess bubbles can always get better and they get well it will see we'll see what happens now one more point where with us treasury yields soaring. we'll see what does the housing and the desire to hold you have stuxnet. well it's the older dodge the other markets can stay they can go up a lot longer than you or i can stay solvent so let's talk about a property bubble in the us are we in when are we in a repeat of two thousand and eight. i don't we're not in a repeat of there but certainly there's been an ethical problem in prices have not recovered all the way. in but. certainly the bad has acted to strengthen the. property by what they want

a property prices to rise and a funny thing about a new u.s. government prices to rise the finding about all of this is everyone. yet for two thousand to do thousand five doctors out affordable housing they want more affordable housing prices collapsed yes no one wanted affordable housing anywhere up. there one prices back up what i now want to bail out the banks so that's what they do it don't but they own the property bubble to an extent certainly much more than i expected but the big bubble that surprised me even more was the explosion very blue the stock market probably blew an even bigger bubble than the other market so you know is that is that you get no blown i mean are we have we seen the top in bonds. i think it's possible bill gross seems to think so

yes but it depends on. how big the next collapse is. that was my interview with mike shad luck investment advisor for some pacific capital and author of mischa's global economic analysis blog coming up carryin breakstone inflation there's more to it than meets the c.p.i. which by the way has been changed twenty times over the last three decades then i doall sound sacks over public private partnerships and the so-called privatization of president. obama. he.

looks pretty tough in the field but he won't find it here if you're looking for relevant stories unique perspectives on top my scans.

have your look at yourself in the mirror and notice that your aging wrinkles and crow's feet don't just pop up overnight they creep their way into your skin slowly so it's hard to recognize the looking in the mirror day to day but if you were to look at yourself a picture of yourself from five years ago you probably would notice that you each some one function works kind of the same way in very incremental changes that are difficult to notice on a day to day consider basis but once a spirals out of control how do you put the toothpaste back in the tube as we were discussing in the earlier interview many emerging markets including and indonesia and brazil are starting to really notice inflation and a lot of this inflation is showing up back in the u.s. so what exactly is it well according to invest a pedia monetary inflation is the encrease in the price of goods and services

caused by increases in the money supply in the us the federal reserve controls the money supply or my sorry policy and currently that the fed is engaged in quantitative easing which is an increase in the monetary base by eighty five billion dollars each month one of the effects of encreasing the amount of money in circulation is inflation and rising prices and the obama administration has been talking about inflation recently because the president will probably nominee and new chairman to the fed very soon. critical part of the job is making sure that we keep inflation in check that our monetary policy is sound but the dollars sound those are all critical components of the job and we've seen what happens when the fed's not paying attention. you know we saw prior to paul volcker coming into place inflation shooting up. in ways that really damage the real economy.

so the government measures inflation by the consumer price index and the bureau of labor statistics measures the c.p.i. by tracking changes in a basket of goods or the fed does not pay much attention to food or energy prices so for those who don't eat food or use air conditioning the government measure of inflation came in at exactly two percent last month but the u.s. department of agriculture forecasts food prices to rise more than two percent this year. solution for the beef category may be small in percentage terms but it's not as if consumers are seeing any relief here among those that will still see how inflation bowlby says poultry will be going up three to four percent will be going up to three percent if not more. so why don't we look at a few private measures of inflation mit tracks price and price inflation for online retailers here we can see the green line is mit's measurements and the orange line is the government c.p.i.

and we can see the discrepancies between the two right now the number show the official c.p.i. is a full percentage point below in my teeth now the next graph we have shows the c.p.i. index today compared to how we measured it in one nine hundred ninety this is by shadow statistics if we did inflation by nine hundred ninety it would be at over five and a half percent but the government only claims it's two percent the government has changed the way we measure inflation twenty times since one thousand nine hundred eighty and we were to measure inflation how we did then it would be at over eight percent now some say these changes depress the c.p.i. it moves it away from being a true measure of the cost of living but how does inflation affect consumers we have to pay really close attention because inflation can only be noted on incremental changes for example the people history is tracking their own basket of goods and they're showing that from two thousand and eleven to two thousand and twelve gas rose from three eighty nine to three ninety one. not a big change but enough to notice they can change from three to four forty eight

eggs change from one twenty five to one fifty four in electricity rose from twelve dollars thirty five cents to thirteen dollars and thirty cents again these are small changes that are hard to identify year to year but they're a basket of goods rose forty five percent from two thousand and eight to two thousand and twelve we can also see how businesses are responding to inflation in the u.s. for example bronnie recently changed the dimensions of their paper towels according to their website they change the thickness of a full sheet of paper towels by negative one tenth of an inch again as very angry mental but the consumer as it did notice the changes he wrote i compare the dimensions listed on the package to those listed to the previous package of bronnie paper towels on the previous package it says each roll has one hundred ten towels on the new package it says that they only have eighty five towels so the price went up six percent while the number in area of the paper towels on each roll decreased

by twenty percent another consumer said were not for the fact of the company insulted our intelligence by renaming it big role we now use another brand of paper towels so while businesses have ways of disguising inflation there are many people that say inflation is a non issue because the c.p.i. is at only two percent however the c.p.i. has been changed many times and it may not represent the rising cost to maintain the same standard of living so much like looking at yourself in the mirror day to day it can be hard to spot inflation but if you look closely i'm sure you will notice rising prices in your day to day shopping if you are noticing rising prices to eat to me your inflation blues perry and d.c. hash tag inflation please.

joining me is political commentator sam sacks welcome to viewer feedback with same sex well we change the segment now this is going to be daily i would love to talk to your audience i just i actually did last time because you i brought up the coins and you had something a little bit snarky to say i think that would be always the biggest with ways to five minutes i got trolled by your pick point certainly did we'll see if it happens again i can i hope i can i but we're actually going to talk about the prison industry today today a judge approved the force feeding of inmates in california prisons more than thirty thousand permits resident is in california have participated in a hunger strike and they're protesting prison conditions in overcrowding now california is attempting to increase its use of private prisons by the way of private prisons and so this is a three billion dollar industry what's up with this this is a major problem and the private prison industry is the poster child for why. making

things based on the profit motive when it should be in the common good is a major problem we have a privatized prison industry you have you have a profit incentive to lock as many people up as you can and you see that these. numbers what fake numbers well basically i think there's one statistic that says the guards that were supposed to be watching the rates actually were not right so yeah if you're going to hire you need to hire staff of guards if you're running to make a profit then guess what you cut back on your guards because you don't want to be paying people that cuts in your profit margin and that's what these private prisons are doing if you look at studies you see that there's more violence in private prisons you see that the conditions of the prisoners there aren't any better than in state run prisons you see that it costs more money to operate private prisons than state run prisons this is all around a major problem but it keeps perpetuating itself because there's wealthy people who are making a lot of money and they're pressuring well there are certainly rational people making a lot of money off of this but how did they get those contracts in the first. in

the first place because it seems that there is simply the government that's doling these contracts to favored insiders so we have what i've said before on here the worst aspects of the public system the worst aspects of the private system and in collusion you end up with this very faulty system right it's straight of cronyism and you're right when we have these sort of private public partnerships it basically tends to privatized the profits and socialize the losses rightly and in this case the losses are the people who are being locked up for the rest of their life or for really egregious amount of time simple drug offenses but it's headed in a bed and that brings in money for these private prisons well i have some statistics there are companies including starbucks victoria's secret u.s. military they're paying between ninety three cents and ninety four cents for minimum wage is this a living wage in prison you know in this is another problem look i guess some people would say if you go to prison you lose all your rights and you can become a slave labor basically and i have

a problem with that i don't i don't think that's that's a good thing and there's plenty of people who need jobs right now well we could be farming those out what what's the minimum wage that you would assign that's the ideal minimum wage for a prison labor he's i have no idea. ok just a dollars fifteen dollars should whatever i mean. you have no use i guess for huge amounts of money while you're in prison but if you're doing hard work you should get paid well here's something in the legal world most of the transactions especially international judiciary transactions are conducted privately through a system that's called arbitration and arbitration is a private court system that works some of the largest insurance you wouldn't use it in the world so there is potential for a private judiciary system and there is precedent for it and there is no precedent for it there's no real world yeah there's a while it's what i do ok the wild west that's your example is the wild west ok this sounds crazy and it requires a lot of background explanation but yes when people move to the wild west they used a basic they had raw. judges and they would come in and they would provide judicial

services people would pick the judge and even in the medieval area you had the same system where people could pick their judges so like we're going to use the example of the dark ages in the wild wild west as justification as how we're going to build build our criminal justice and private system prison system moving forward really private prisons is just an example of how the profit motive distorts the common good it's forcing one of the worst but it also exists in the health care industry look when you have a profit for profit health care system you have a disincentive to provide people help it it's the same problem because the public health care system is crowding out people and since the one nine hundred fifty s. based on the tax structure that's how we ended up with this dysfunctional tax healthcare system that had to be fixed in the first place how is that how is the public health care system which we only have it's a very poor people and very old people and disabled people crowding out anything ok there is a parallel to the income tax people do not know how much they pay in income tax really because it's to ducted on an annual basis every chick paycheck we also have

health care which is a deducted on every paycheck so people without realizing their own health care costs have been in this incentive to negotiate. or i did money taken out of my paycheck for medicare when are medicaid what i'm going to how much is that what i'm going to use or how much is it i don't know how exactly that's a problem if i didn't have a job that was giving me health care i would be paying huge premiums every month on top of that stuff because none of these government programs that year that you talk about affect me as a twenty eight year old somewhat healthy person. i'm going to say goodbye to this healthy person right here if you want to weigh in on today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow sam and sam sachs and you can follow me at english thank you for joining me again on the daily deal my on our blog. i.

and it was a day of unintended consequences on prime interest which we enjoy pointing out five years of the federal reserve keeping near is zero interest rates is seesawing the global markets once again thanks to my trouble for pointing this out and ben bernanke even benjamin took a world tour from new york to india last may get the ball but he says when it comes to detroit it's now all about the unintended unfunded liabilities and don't forget to put on your party someplace in goggles and tweet at hash tag and place in blue where you see right wing prices thanks for tuning in to what than your prime interest and carry on boring have a very. wealthy

british style. from time to time in the. markets why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to conjure reports . you know sometimes you see a story and it seems so poorly you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm charging. welcome to the big picture.

welcome to. science technology innovation all the latest developments from around russia we've. covered. i would rather as questions for people in positions of power instead of speak on their behalf and that's why you can find large show larry king now right here on our t.v. question more. coming

up on r t in less than twenty four hours bradley manning will know his fate the army will blow or could face up to ninety years in prison for leaking government documents an update from fort meade just ahead the n.s.a. surveillance scandal takes a new twist overseas the guardian's editor revealed that the british government forced the news publisher to destroy data it gained from it or snowden more on the government intimidation of the press i mean up. and in egypt the government crackdown of pro morsi protesters continues the death toll from clashes has reached at least one thousand while accumulator of the muslim brotherhood was also arrested last night more on the developments later in today's show.