ask him about the policy debt and they say there capitalism you won't want to miss that and finally in today's big deal i'm joined by bull by the favorite rachel percy as well talk about a new book that's making the ways in the financial industry little prats beware saw from an up in all starts right now. mr crabtree news this is my choose to the count is it comes. maggie smith what a wonderful age that was downton abbey and i truly do love that show now downton depicts the lives in a room of in a risk to credit family and their servants and post a warning in error england and before i get started i want to make it very very

clear that this is a fictional television show about the lives of upper class crawley family and the british social hierarchy that surrounds them now just yesterday former treasury secretary larry summers wrote an editorial in the financial times a british publication just warning that the us is headed the way of downton abbey with the economy and social inequalities to match now some are says the solution to avoid this must involve raising incomes of the middle class and the poor and reforming tax codes tax codes that let a big share of the wealthy income escape taxation now summers writes quote a current tax code the current tax code is so badly designed that it is very likely to be having the effect of reducing economic growth and also allows the rich to shield a far greater portion of their income from taxation than the poor for example last year's increase in the stock market represented an increase in wealth of about six trillion dollars of which the lion's share went to the very wealthy now here's the

thing if somebody anybody besides larry summers were to write this editorial it probably would have landed better now summers is the guy who pushed for the repeal of glass steagall who deregulated the derivatives market and who sheila bair wrote quote was part of the deregulatory cobol that got us into the two thousand and eight financial crisis now this is the same financial crisis that increased the gap between the haves and the have nots summers is one of the haves with a fortune estimated to be between seventeen and thirty nine million dollars amassed by consulting for financial firm financial firms like city now summers went on to write that president barack obama is right to be concerned those who condemn him for tearing down the wealthy and engaging in un-american populism are to put it politely lacking in historical perspective. now kind of like the pot calling the kettle black a little bit later i know especially when your historical perspective is based on that of a fictional t.v. show. you try to give me orders with you mean she mistook you for soup but you

don't kill the love of god it was a show. for morrow and the director david stockman joins me now from our new york city studio to discuss yet but us budget deficit fed policy and much much more are now welcome david i want to jump right in and start off by asking you a lot of people that we've talked to recently on our show they're concerned about the destabilizing effects buoyant assets right now is this something that you're concerned with personally. very much but let me observe first that larry summers should know about fiction he's been just a fantasy economics fiction his entire career and is behind the policies of unlimited money printing that are behind this huge windfall that has gone to the

one percent after all when the fed keeps the money market rate at zero for seven years which is its current policy and yellen is reaffirmed that it is essentially creating free money for the carry trades to engage in every kind of speculation known to man all over the world planning dangerous time bombs financial time bombs that one of these days will go off anything that can be traded reposed securitized options the fast money and the hedge fund traders are doing all on the back of the free overnight money that is being dispensed to wall street by the fed and which they're gearing guaranteed to keep in place for several years yet to come this is the cause of the problem we don't need to change taxation we don't need to have

more keynesian type you know middle income oriented manipulations we need to get the fed out of the financial markets its fat off the scale let interest rates clear the market based on true supply and demand let traders and speculators be at risk shut down the fed fueled casino in will solve the problem that he. purports to be addressing so you obviously think that the fed's accommodative monetary policy is a big reason why the asset markets might be so point right now correct yes of course that means the fed is. fueling massive inflation but it's inflation of financial assets not inflation of goods and services and but it's equally damaging in fact it's even more so because this huge inflation of financial assets take one measure the russell two thousand which is the index of the most

speculative and higher beta stocks so-called main street america small mid-cap companies is now trading at eighty five times trailing earnings that is lunatic that is that surge that's what you get at the peak like we did at the dot com peak in two thousand or early two thousand or at the peak of the market in two zero zero seven before the big crash so the handwriting is all over the wall there is really extreme speculation everywhere and you have the new fed chairman testified last week that she can see no signs whatsoever of not only any red flashing lights but orange ones as well and i think that's just a major of the fact that the fed today is being run by academic zealots who do not understand that they have fundamentally crippled in disable the financial

markets and created a casino that is dangerous and is nearing the end of this bubble inflation and then i have to ask you do you believe destabilizing bubbles are one of the principal problems for the u.s. economy right now. absolutely it's the heart of the problem the fed has become a serial bubble machine look at the record from eighty seven and look at the panic in one thousand nine hundred eighty when they bailed out long-term capital and created the great moral hazard and the speculative final blow off of dot com and then greenspan panicked again put the interest rates down to zero or one percent said we have your back the so-called greenspan put then we got the housing bubble in the credit bubble and the wall street bubble and then the mill down into i was eight and then they imply that they don't they didn't know where it came from but they were going to do even more when bernanke he opened up the monetary spigots and drove the fed's balance sheet as you know from nine hundred billion on the eve of

the breakdown or of the lehman bankruptcy to pushing four and a half trillion before they finish tapering and frankly they're likely to keep on going beyond that so that's the heart of the problem when you have these massive cycles of asset inflation sooner or later they collapse it creates panic go throughout the economy activity freezes up comes to a halt and you start all over again the main street economy since two thousand when this bubble you know pattern really emerged has been growing at the lowest compound rate for thirteen years about you know one point seven percent of any time in the last hundred years that's that's how bad the negative impact is david i think it's fair to say that you think the fed should raise rates then but i want to ask you what should they raise them to know i don't can i can i just jump in there do you

think the fed should raise their rates i think the fed should get out of the market gets them off the scale let the market clear where the supply of savings and demand for credit. intersect and i don't know whether that's eight percent four percent or even you know not that much higher than it is today but i do know what's out there today is totally artificial it's set by the fed they say there's there pig in their rate they're fixing the rate and the entire market is now trading against what the fed is doing may do the word clouds that come out of the fed speakers and not doing its job of price discovery and finding balance of supply and demand throughout the money markets and throughout the debt and equity markets now i want to ask you about this fed chair janet yellen she has said that she is concerned about bubbles

but she how the fed officials have also said that they feel compelled to keep rates low and even to continue asset purchases because unemployment in the u.s. is elevated while consumer price inflation remains low what can the fed best do to support employment given its dual mandate to support employment and price stability . well the dual mandate is just an excuse the pretense there dual mandate was adopted in one thousand seventy seven so-called humphrey hawkins it was in place when volcker basically slammed on the brakes and forced the economy to go through a cleansing and ordered to purge the runaway. inflation of commodities and goods so there is nothing in the statute says the interest rates have to be zero through to fifteen that they need to peg the ten year rate under three percent or whatever they're doing the mandate is so vague elastic and generalized

that it provides scope for the fed to run a sound money that allows the market to discover the correct pricing of money and debt and equity securities in options and all the rest of it rather than trying to dictate it and run what i call a monetary central planning system from the ackles building which is totally impossible look at how wrong they have been in their forecasts going all the way back to sub prime is contained and there is no recession mean and and we're now going to have a booming recovery none of that is happened and it proves that their models are no good they ought to be trashed canned and they ought to get out of the business of trying to drive the economy what i say is we need regime change we need to get the money printers out of the eccles building we need to get people on the fed board who understand that you've gotta let markets work you've got to let. you know

millions of investors and traders and borrowers and lenders determine what financial prices and values ought to be maybe someone like you on the board president david don't have any. we have to take a super fast break and you out there in t.v. land please don't go anywhere either because more with david stockman when i return then in today's big deal i'm joined by madonna kurz the as to talk about plutocrats and drag yeah plutocrats in drag true story but as we head to a quick break here's a look at some new york was a numbers of the bell sticker odds. that. they

are low very hard to take at least. that are back with the target there. please. please please. please. please please please please. please . i'm the president and i think a society that case i think corporation trying to convince to consume consume

consume i think the bankers are trying to get all that all about money and i'm actually sick for a politician writing the laws and regulations to tax bankers. out. there is just too much. of a society. that. back now with more from mr davis stockman now david i'm going to jump right in now ask you do you share ben bernanke and janet yellen deflationary fears. deflationary fears absolutely not that is just a canard that they constantly try it out when all else fails to justify continuing to run burning pres at these crazy rates even sixty five billion

a month after all we're in the fifth year of this so-called recovery look at the last twelve thirteen years the c.p.i. is average two point four percent if you take the one they prefer you know the p.c. eat deflator less food energy assuming no one has had the eat their home or eat for twelve years but even then it's one point eight percent. the rates do bob all up and down a little bit by a month or quarter depending on what's going on in the world economy commodities oil a lot of other things but on trend there is absolutely no whiff of the flashing in the air and besides that where was that ever written that if you don't make two percent inflation you're failing to help the economy i mean inflation is all for debtors and is a huge negative and harm to savers and the fed has decided to weigh in on the

people that want to borrow build up the debt and it's just a doctor and that is erroneous and leads them to what i think are really very dangerous policies they ought to get out of the way let the market work its will there is so much capacity in the world today that inflation isn't a risk in my judgment nor is deflation and we've got to somehow liberate the financial system from the domination of this monetary politburo is trying to run the show in the eccles building in washington now in a previous interview with r t you said that in your experience in private equity it really convinced you that debt and leverage were big problems for the u.s. economy can you explain how you came to this conclusion. yeah i mean all you have to do is look all around you the companies in america today are not really

investing in the future in it to any great extent in terms of new technologies plant and equipment and tangible assets they're essentially borrowing money that is really cheap because the fed is repressing interest rates and using their borrowings to buy in stock in an effort to pump up stock prices and therefore the value of management options but this is sensually accomplishes nothing for the real economy it's just financial engineering all of it is being fueled by the fed the same is true with all the l.b.o.'s and the leverage recaps and so forth that are going on it is tilting the balance towards massively leveraging up the entire business system now they tell you that there's all kinds of cash on the

sidelines and the corporations are unusually liquid well that may be true for the top ten or fifty or one hundred big cap international companies that have a lot of cash abroad that they can even use but if you look at the business sector as a whole there is thirteen trillion of debt on incorporated an unincorporated business in america that compares to less than levan trillion at the time of the crisis so business hasn't dida levered business is actually increased by nearly twenty percent or two trillion dollars the amount of debt they're carrying around and the debt is not been used to acquire tangible assets and to invest in productivity and growth and jobs for the long run but simply to fund financial engineering like m n a. deals based on cash and stock buybacks and onetime

special dividends and all the rest again that's part of the negative consequence of what the fed's doing when you couple that with the fact that debt is tax deductible business and equity capital isn't you so tilt the playing field that we're turning as i have said the entire us economy into some kind of collective leverage buyout and it's dangerous and it's one of the reasons why we have huge problems that we're facing today now i don't know if it's a draw for you but or he weren't concerned with public debt or with private debt. well i'm concerned with both and that's why when we look at the balance sheet you should. measure something the fed itself publishes which is called credit market debt outstanding that includes household debt mortgage and consumer business debt of all kinds short term long term financial institution debt and public sector debt

and when you add it all up today it's a startling number fifty eight trillion it is three and a half times our national income that is near in all time high and is dramatically above what it was prior to one nine hundred eighty when the ratio of total credit market to national income was more like one point five times so that's the nature of the problem we have and it's spread into all sectors of the economy mainly under the doctrines of larry summers in the paul krugman as of the world who insist you can have enough debt whether you're a household or a government and i submit you have so much debt today that it's a clear and present danger to our capitalist economy now we only have about one minute left i want to ask you superfast we spoke with your former graveyard reagan

administration colleague paul craig roberts last week and although he didn't discuss it during the interview i know he wrote a book on what he calls the failure of laissez faire capitalism now his view is that we have a sort of crony capitalism in play dominated by vested interests and large corporations rather than a real capitalism that can spur growth what is your view we have thirty seconds i'm so sorry there's a long way to you know i agree with that i agree with that i think the problem is overwhelmingly crony capitalism that's what the bailout of all the big banks and wall street of goldman sachs and morgan stanley and a i.g. and all the rest of wasn't two to zero eight in my book the great deformation which i put out. recently i refuted all of the urban legends on which that was based but if you look at washington today it's a money machine where the interest groups come in and try to get their hands on the tax scene or subsidy or regulatory power of the government to get all comes in the economy that they wouldn't. market like you know like the u.a.w. bailing out g.m.

so yes capitalism capitalism is being corrupted we don't have on as capitalism we have crony capitalism the fed and keynesian philosophy are the primary source of that tremendous damage that is being done david thank you so much for your time in your insight come back anytime that was david stockman author of the great defamation time now for today's big deal. and today's big deal rachel is back madame curtis and we're here to talk about wall street secret for two hundred a true story a secret fraternity now many of the barons of wall street they come from ivy league fraternities and secret secret societies skull and bones being the most well known among them but journalist kevin roose found his way into an annual black tie

induction ceremony for cap of beta now a frat with a decidedly older age group than most dartmouth greenhouses now he details his experience in an article one percent jokes and dr what i saw when i crushed a wall street secret society. some wall street's most powerful wearing hard and gold sequined skirts and costing way example trying to get that image out of your head sorry it's going to be hard so tell me more about the beta five what's the group's history what's the deal with them yes so it's essentially switched the name of five beta kappa which is the name normally for honor groups in the there used to be a ton of the. societies now there's just one left it's wall street and it's it's essentially like a friars club they make jokes at one another's expense and sometimes at the expense of politicians and regular old schmoes who are some of the famous members of yes wilbur ross was what was called the grand swipe. somebody who is kind of the master

of ceremonies but there are others like michael bloomberg who wasn't intended it's when kevin roose went but he's a member john corazon hasn't been back since he kind of embarrassed himself but. greenberg. larry fink these are just a few of the many many members who've been around i mean this organization has been around since the great depression it's incredible to me all those names you know you ask the question does going to get it wrong to find out thinking right out of it if i do they have any sway over the global financial markets right so not is not as a group because they're essentially together to have a good time essentially through petite forwards apple and others are actually something that they do but roost makes the point that if there had been something that had happened at the st regis where this event taken place global financial markets as we know them would have totally melted down because all of the people who comprise women are making these major decisions would then be gone the group has all the powerful people but they're not making decisions there except the one

thing would be it's kind of a sign of your success to be inducted into this group who's who of wall street and then of what they call. spring street which are kind of the offshoots are that financial centers street is seeing francisco's the wall street of the west and. that is a jeopardy factory to. run i have to ask you what were some of the skits that. roost watch all the members who get inducted have to do a lot of musical skits in particular some of them were doing kind of jokes from the book of mormon but it was kind of a parody skit a lot of them were doing jokes. often at the expense of people like hillary clinton and barney frank barney frank in particular someone who they saw as pushing for financial regulation for a lot of jokes no this was from january two thousand and twelve when he went so there were a lot of jokes at the expense of occupy wall street which was still kind of right occupying physical space at that close to wall street now what was russa's

conclusion after these proceedings what do you think what will he said that this was kind of an indication to him that these financial titans were very disconnected from the world they surrounded themselves and he made particular mention of the fact that they were making fun of a lot of people when they got a bailout for instance and mainstream america did not so he said quote the upper ranks of finance are composed of people who have completely divorced themselves from reality he got busted trying to leave and they offered him essentially if you keep your mouth shut we will give you inside scoops on a lot of information he decided to publish the story i think we're all better for it now and i'm excited to read the book and hear more rachel as always your fantastic thank you for joining us yeah thanks for having me that's all for now but you can see all segments future today show on you tube at you tube dot com slash boom bust our t.v. we also love hearing from you so please check out our facebook page at facebook dot com boom bust our teeth you can also tweet us at. edward n.h.

is not nearby and at curious underscore kurt there you go from all of us here boom bust thank you for watching see you next time shall. live. live. live. live. live

. live. cross-talk rules in effect that means you can jump in anytime you want. i've got a quote for you. it's pretty tough. they wait substory. let's get this guy like you would smear that guy stead of working for the people in the mainstream media working for each other right right. as a fellow when i close my eyes i see people in mosques who so. you know sometimes i

think that itself is a face covered by. the people in both sides of the barricades with your mom. and you know sometimes just it feels as if all of ukraine is no.

scenes of chaos in kiev the number of dead is rising with over twenty people were killed as riot has clashed with police on the streets of the ukrainian capital. and videos and pictures now emerging of protesters attacking security forces with live ammunition explosives. in the meantime western officials are lining up to condemn the violence threatening sanctions but against the ukrainian government.