liz walter now have a great night. millions around the globe struggle with hunger each good. what if someone offers a lifetime food supply no charge. they can the very strong position against g.m.o. and we think that. the genetically modified products are pretty cool. there is no. evidence for this any problem with genetic engineering when you make a deal. or is free cheese always in the most draft i don't believe that the distro for and the free. enterprise money market is profit not my need. for social justice golden rice are cheap.

plus i was a new alert animation scripts scare me a little. there is breaking news tonight and they are continuing to follow the breaking news. alexander's family cry tears of joy at a great thing that has bred dark at the core of what i found alive there's a story made for a movie is playing out in real life. hello

and happy monday i marinate and this is boom bust and here are the stories we're tracking. for you today first up both cullen roche and gonzalo there are join me on today's show to talk hyperinflation or lack thereof pending here you ask and then coming up consequences from the n.s.a. spying program may prove to be pretty different to costly for some american tech companies will tell you which ones coming on up and whatever happened to the c.e.o.'s at the helm of the bank that went bust during the financial collapse of two thousand and eight at harrison and i will tell you where they are now and what they're doing to it all in today's big deal coming up and it all starts. with.

the financial fallout from the revelations about the n.s.a. surveillance program could end up costing american tech companies billions of dollars in lost revenue leaks by former n.s.a. contractor edward snowden have critically cost american businesses particularly the cloud computing industry which is expected to see double digit growth rates over the next three years now according to the information technology and innovation foundation cloud computing revenues are expected to reach close to one hundred fifty billion dollars this year and exceed two hundred billion dollars by two thousand and sixteen and with an eighty five percent market share u.s. companies currently dominate that industry however because of n.s.a. spying revelations this percentage is likely to fall and under its most optimistic scenario the predicts u.s. market shares will drop sixty five percent by two thousand and sixteen tolling twenty one point five billion dollars in lost revenue over three years a lot of money now elsewhere the federal reserve is investigating whether traders

at the world's biggest banks rigged. benchmark currency rates in the foreign exchange market the fed is among authorities from london to washington looking into whether traders shared information which allowed them to manipulate prices in order to maximize profits in the five point three trillion dollar a day foreign exchange market torture bank citigroup barclays and u.b.s. control more than half of all for extruding and at least a dozen banks have been contacted by the authorities and at least twelve currency traders have been suspended or put on leave now the royal bank of scotland and lloyds banking group have announced their own internal review into the matter. and finally bitcoin a.t.m.'s are coming to the big apple thirty year old brooklyn native willard ling is set to introduce the first big client a.t.m. in to new york city and after scouring locations linda has decided to rent has been going a.t.m. so the owners of a bubble tea shop on third out and twelfth street in the east village however state

regulators with the department of financial services are expected to hold hearings later this month to discuss big going and until rules are drawn up as to how they should be regulated wings a.t.m. will sit in his apartment a well there you have it as always we'll be tracking these stories and keeping you posted on all the latest. after the financial crisis and most acute phase following the demise of lehman brothers in october of two thousand and eight two thousand and eight scuse me central banks around the world led by the u.s. fed began a program of quantitative easing now here we are whereby a central bank buys private sector assets with newly printed reserve money is said to have helped overcome the financial crisis now the question is at what cost was this overcome our next guest writer and blogger gonzalo lira believes that the cost

of ultra easy monetary policy is quite high and could be the demise of the us dollar and two thousand and ten he laid out a hyperinflation scenario for the us that was one of the most talked about post on the blog zero hedge i asked him whether this was a base case or outlier scenario. i think it's the devil and the dollar where the reserve a spending problem getting its. quantitative easing and certain that is your interest rate policy now the problem is that they're going to inject you with zero interest rates up until two thousand and fifteen late two thousand and fifteen at the same time quantitative easing is continuous. now all this talk of tapering doesn't mean that she has ended basically it's a something cut back on the amount of bombs that they're buying but what hughie means is that every month the treasury excuse me the federal reserve prints of invents creates out of nothing but air seventy five billion dollars worth of money

and use that money to go out into the markets and prop up treasury bonds now without this propping up of seventy five billion dollars a month which is approximately nine hundred billion dollars a year without this propping up for your bonds would collapse and balance and interest rates would start a rock remember prices of bonds are inversely correlated to their heels now if you have the situation of escalating meal's of interest rates going up the dollar would simply begin to collapse under its own weight and we would have a serious run on the dollar and on treasury bonds so as the federal reserve is kicking the can down the road and trying to shore up treasury bonds in the wider u.s. economy and propping up the equities markets because let's keep in mind these record prices that we're seeing in the equities markets and so far as the dow jones the nasdaq and the s. and p. five hundred these are all the products of the federal reserve essentially printing

money to inflate these bottles it's it's classic pump and dump this is the same thing that those those. you know are fly by night equities brokers out new jersey to do with any stocks of pumping and dumping this is what the federal reserve is doing by printing up this money and propping up the dow jones and all these blue chip companies but there is no inherent value behind it because the problems of two thousand and eight where never solved and so the federal reserve has been very very good at keeping the problems down the road here we are in two thousand and fourteen but the problem is we're never solved and they have become worse to the degree. the federal reserve has been printing money and creating the conditions whereby eventually there will be a run on treasury bonds now i think that's why bush i just want to clarify this does that money. go to treasury bonds on the other have got a mortgage bond so. you know they do but. at this time i do believe that after this

tape right to believe that the british it was forty billion to try to reason five billion to mortgage backed securities now the reason that those that they're going out to those in order to prop up the mortgage. the mortgage bond market basically because of the banks this is a way to shore up the banks and prop them up and keep them solvent because if they were if the federal reserve were not making these purchases and if they were implementing all the accounting rules necessary the american banking system would be insolvent at this time because the problem is two thousand and eight were never solved they were simply glossed over with a lot of money. now you talk about inflation and hyperinflation being two entirely different beasts altogether can you explain what you mean by this though certainly . in layman's terms in the simplest terms possible inflation usually occurs when an economy is overheating when it's simply growing too quickly and you have producers

who begin buying commodities and now there are inputs for their factories or businesses what have you and including labor of course which is one of the inputs in any successful business and they start buying up driving up the cost of these hidden puts because their growth and that that usually you see you know a healthy five to seven to even ten percent inflation in emerging markets and very quickly developing economies now hyperinflation on the other hand is when there is a loss of confidence in the currency ok so these are two very different things you can have you can perfectly well have high inflation. you know even double did you can pledge that it's not hyperinflation but rather is the product of an overheating economy and that's what's of the easy do to cool down which is simply by raising interest rates but the hyper inflationary problem which you would see for instance classically in zimbabwe but also it most likely markets. countries during the

seventies eighties and nineties that went through that one point or another whereby you have a loss of confidence in the currency and a drive by the people who are old enough currency to go into other mediums of exchange and just get rid of that currency whatsoever it may be so easy the difference ok then oh well explain and thank you for breaking it down in layman's terms because there is a clear distinction but if americans and foreigners lose faith in the u.s. dollar why wouldn't they lose faith in other fee currencies as well. well because they're better managed and it's as simple as that i mean that at this point in time all currencies are few pounds. so we're not really talking about. it it's mohammed ali. has a very very good metaphor is the head of the largest bond trading company world and he has a very very good metaphor he says that you know many times when you have own security currencies you pick the though the cleanest dirty shirt he calls and you take the

one that looks the least bad and if the dollar starts to crater and we will see that by a very simple thing we'll see the yield curve on treasuries after some sort of panic it'll be inverted just like in all panics whereby a longer dated treasury bonds are at lower prices and shorter notes are at a higher yields rather he hired longer ones at lower yields newer ones at higher yields an inverted yield curve where you'll see the entire curve start to creep up ok as you see a run on treasury bonds now if that were to happen that's when you'd start to realize the dollars in value everybody says oh you should look at gold or silver my vision isn't so much that he she can change into the bond markets because ultimately any kind of hyperinflation that would happen to the dollar would be as an effect of a run on treasury bonds that many people sort of like misunderstand my point i'm not saying that hyperinflation is going to happen and the blue ok what i'm saying

is there is going to be a run on treasury bonds whereby foreign bomb pour over foreign holders and he wants pressure bombs start to lose faith as to whether those bombs will be paid because ultimately treasury bonds are a store of value and when those bond holders start to fade and remember outside the united states approximately eight trillion dollars worth of bonds are held at this time now when those holders of those treasury notes and bonds start losing trade and starts. selling those bombs and going into other currencies that's when you're going to start seeing loss of value because ultimately what hyperinflation what i perceive as hyperinflation of the dollar will be it's a run on the bank as it were and escapes treasury bonds are that that the effect of easy purchasing power with all of these you purchasing power will be as an after effect of that run on treasure box you see what i mean right but are you telling me that pounds in euro's are better than u.s. dollars probably cry and say oh right yeah. that was

going to follow the american novelist filmmaker and economic blogger. coming up after the break money manager cullen a roast joins me live to bust some of the biggest myths in economics then ed harrison joins me in today's big deal and we'll tell you where the former top dog c.e.o.'s of the financial world are hiding and hint it's not in prison no it's not you won't want to miss that but before we head to a quick break here's a look at some of today's closing numbers there but. i've got a quote for you. it's pretty tough. if they were it's a story. it's just this guy like me are about guns that are working for the people

most missions the beach were for drug bridegrooms vision. of the world. not long ago western media and politicians told this al qaeda was defeated or at the very least on its last legs the same media and politicians today tell us a very different story indeed across many countries of the middle east al qaeda is betrayed as a deadly minutes we ask what is al qaeda today who supports it and who benefits from it. welcome back now our next guest is the founding president of or cam financial group the brains behind noted financial blog pragmatic capitalism as well he is also a co-founder of a new school of economics called monetary realism colin roche has made it his

mission to do. mystify the modern of monetary system and deliver it to the public in layman's terms now in a recent blog post he wrote about what he calls the biggest myth in economics and we're speaking with him today about just that now welcome to the show con thank you so much for being here and sadly we won't be able to go down the full list of economic missed but i do have some pointed questions about several of these so called missed so let's dive right in i want to start off by asking you you know bank reserves let's talk about that do banks lend reserves question mark and what do you think right so this is the big myth of the money multiplier i mean if you take a basic course in economics you'll learn that banks need a certain amount of reserves before they can lend and that's not really the reality of how banks actually operate the reality is that banks actually lend first and they find reserves later so you don't have this big pool of reserves or so-called you know money sitting around in

a pile that economists call this the loanable funds the that you have to go to this market so-called of funds that you then will be able to lend out and that's not really how banks work banks actually expand their balance sheet and dodge mislead so they do it without necessarily having the funds to actually be able to lend so it's more of an accounting trick really it's they're literally creating money out of thin air and they're expanding their balance sheet and just creating literally an accounting records for what the loan is that creates the deposits now is the u.s. government running out of money you hear that a lot is that true or false. well so what i like to refer to the u.s. government as a contingent currency issuer so that means that technically the actual government doesn't create most of the money the banks create most of the money through the lending process banks create deposits by making loans so the majority of our money supply is created by the banking system but the government has the potential option

to always treat currency if it wants to so the government is sort of like the entity that's sitting on the you know the button there they have this potential mechanics where they can potentially create the money supply if they need to so you know i always like to point out that the u.s. government can't really run out of money as we all know the government has a printing press technically so you know the people who worry about the government potentially running out of money i think they're they're also forgetting that the government has a printing press so you know we all had a printing press in our basements we wouldn't worry about being able to repay our debt so i think it's an unfounded concern now let's talk about you know long term u.s. budget constraints does the u.s. government have to pay back its national debt. yes so this is a really popular fallacy of composition that people tend to think of when they think of debt they think of debt at a very personal level and at a personal level we all have to pay back our personal debts but in the aggregate

the aggregate economy really doesn't pay back its debts ever and that doesn't mean that debt is always good or that you can't have big booms and busts through the debt cycle but it means that in the aggregate over the long term debt will actually tend to expand the size of the government will tend to expand due to you know the growing needs of the growing population the the private sector's debt will grow over time because the private sector will grow and expand and people will take out more loans to you know utilize the deposits to make investments and to you know pay their credit cards and what's you know so over the long term the debts grow the debts don't get paid back in this is a private sector and a public sector thing the debts never get paid back over the long term in fact if in a healthy situation the debts will basically always perpetually grow now does the u.s. government at the very least need to reduce the national debt so that it does not burden you know our children and ruin our children's future is if you will yeah so

i mean this is a really it depends type of question i mean the the problem of the government's debt is not necessarily whether it can afford the debt or whether it can afford to spend the money the question is really is the government spending the money wisely i mean if the government were to borrow you know trillions and trillions of dollars to pay us all to stop working and do nothing the u.s. economy would probably collapse but you know the this really gets into a question of how we fish and the government spending is and that is just a political debate i mean we have to get away from the discussion of whether the government can afford to spend money i'm really we have to get more towards the question of how efficiently does the government spending what do. going to utilise the funds for in the future and that's how we impact the future living standards of our children by hopefully spending efficiently in a manner that will help generate better living standards for our kids in the future now let's talk about here we are we debt monetization that's effectively money

printing that will lead to inflation or even hyperinflation. yes so i i like to be you know careful with the terminology here when people talk about quantitative easing they tend to refer to it as money printing or debt monetization and i prefer to use the term asset swapping what the fed is really doing when they implement quantitative easing is they are there technical creating a reserve balance out of thin air and they are buying treasury bonds so you could technically say they're printing money but really you have to look at both sides of the balance sheet and you have to also point out that the fed is un printing a t. so the best way to think about this is to think of it it's sort of like swapping a savings account for a checking account and nobody would say that they have more money after they swap a checking account with a savings account it's just it's completely illogical but that's exactly what the fed has done and i think there is this implication through the use of the money

printing terminology that the fed is somehow you know firing dollar bills out the door and everyone's pockets or expanding the the net financial assets of the private sector and that's not really what's going on the private sector is net worth is actually staying exactly the same but the you know there is they're swapping assets with the private sector rather than actually printing money so i prefer to think of it as their own printing a t. bond in their printing a deposit balance or a reserve balance and that way you arrive at a net zero gain a natural financial asset so there's really no reason to assume that this will necessarily create hyperinflation or even high inflation and i think that that's part of the reason why we've seen a continually low inflationary environment over the last five years i mean q e has shown no evidence of causing high inflation and i think that the basic accounting behind that the operations prove that that's the realistic outcome now why won't the extreme measures the federal reserve is taking like q.e.

you know what some obviously call money printing simply lead to a sort revoke of currency. that ends in hyperinflation and you don't see that being a possibility. well i don't see why it would i mean there is there's no real logic behind the idea that q.e. will cause a fundamental collapse in the currency or anything because at the end of the day it's just this basic asset swap i mean i think that you know i heard the interview with gonzalo and i think that he makes a somewhat coherent point about the potential for asset price disequilibrium i mean i think that there's so much misinterpretation of q.e. that you could have an environment where people misinterpret it and they bid up for instance the stock market prices to just astronomically crazy levels where this potentially creates the you know the potential for a boom bust cycle in the stock market which can which could have really negative impacts on the on the overall economy because because stocks are such a huge component of people's networks but you know at

a really fundamental level there doesn't seem to be any reason for q.e. to cause a currency collapse in terms of raise some sort of money i'm so sorry to cut you off and come back and talk with us more i we have to wrap it up there but thank you so much for your time here and say that as you call it rushing around or a prag have that time now for today's big deal. teddy bears and the one the only he joins me now to talk about the lifestyles of the rich and be disgraced. now after a very stern collapsed in march of two thousand and eight and lehman brothers six months later of global financial crisis was all but inevitable however the u.s. government they stepped in pumping seven hundred billion billion with a b. and bailout funds into the market in order to prevent such

a catastrophe today many of the top wall street bankers who were largely responsible for the disaster and whose companies either collapse or. billions in government bailouts are unemployed and it seems fair but they are certainly not not living the hard life let alone doing any hard time now richard fuld dick fuld of lehman brothers he was one of the bad guys along with jimmy prince then we had stanley o'neal of merrill lynch ken lewis a bank but bank of america and since walking away from their former allies as top dogs at lehman brothers like all i mentioned all those big guys before these five former wall street kingpins are now juggling their free time between mansions golf skiing in tennis tough life i turn to you how can this happen how could this possibly happen how did these c.e.o.'s get away with so many millions of dollars and no repercussions good question goes back to a good liberal was talking about the part that we didn't show earlier today which is that. the government's been co-opted vogel show later. yes but you're absolutely

right and he says that you know if we want to use his words and let him say you know there's some scary stuff coming up but i want to take a look at the current life of dick fuld former here's a picture of him coming up this is greenwich connecticut mansion. which he still lives in today sadly though sadly had to let go of his part of apartment for twenty five million but don't worry he was able to hold onto his forty plus acre ranch in sun valley idaho. now jimmy cayne former bear stearns c.e.o. he has managed to scrape by on roughly three hundred seventy six million dollars yet following his two thousand a retirement he now spends his time playing online bridge tournaments i am not joking out of his homes in new york city's plaza hotel in boca raton florida and after losing a loved one billion in sub prime mortgages former citigroup c.e.o. chuck prince resigned into south two thousand and seven he now lives out his days in nantucket and palm beach on a poultry ninety three point two zero. stanley o'neal he was fired as c.e.o.

of merrill in two thousand and seven after merrill lost a billion in mortgage backed securities but mr o'neill was given. a one point six million dollar golden parachute now hangs out of this homes on park avenue in martha's vineyard finally former bopha c.e.o. ken lewis to come over two point two two hundred twenty one while the numbers are so big two hundred twenty one million dollars line is two thousand retirement and hangs out and maples. i turn to you again at how on earth are none of these guys facing jail time i know that we've said this a lot but i really need to know what do you think basically goes back to. the criminologist bill black talks about and basically says that at the end of the s. and l. crisis you know there were thousands of convictions not of little you know what i'm talking my fabulous who was a mid-level guy goldman sachs but the big shows of these these these these beggs thousands of convictions of criminals in their criminal activity and this was

a smaller crisis and one that we've dealt with so do you think more of the blame should be on the government then then the actual for their lack of oversight then the actual financier is and banks that were basically doing what they were doing kind of legally what do you think i think you know we have to be asking the question you as a person in the private sector obvious you want the government to do what you want the government to do with their special rule but you know the government is the one who sets the rules they set the ground rules and they're the ones who are supposed to be making the call and if if we can't get our government to actually make the call and give in to special interest democracy we live in not what. is the reality that's all the time we have for now but you can see all segments featured in today's show on you tube at you tube dot com slash boom bust r.t. we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust our t. and you can tweet me at aaron aid or tweet at ed n.h. from all of us here of whom bus thanks for watching we'll see you next time.

well. i mean it's technology innovations all the latest developments from around russia we've gone to the future and covered.

one of the most celebrated investigative journalist of our time bob woodward of the washington post he's a reporter on every president since nixon and he's the author or co-author of a dozen number one best selling nonfiction book. considering what he's covered over the years it's appropriate that he joins me at the historic a adams otel overlooking the white house all next on politics. it's always great to go back to washington especially on a lovely day like today and especially to be with an old friend like bob woodward the pulitzer prize winning journalist work for the washington post since one thousand nine hundred.