and ada has the day to day's headlines student debt the average two thousand and fourteen graduate student loans thirty three thousand dollars according to an analyst an analysis of government data by advisers that makes today's graduates the most indebted ever as this graph shows you double the amount just twenty years ago even after adjusting for inflation in aggregate the student debt load in the united states is now about one trillion dollars but help is on the way just yesterday

president obama signed an executive order capping payments at ten percent of monthly income for millions of borrowers here's what president obama said on the issue. we are here today because we believe that in america no hardworking young person should be priced out of a higher education. the president also voiced support for massachusetts senator warner's bill to cap interest rates on student loans but here's what the president isn't doing he isn't reducing debt principal payments he isn't allowing debtors to discharge student loan debt in bankruptcy and he isn't preventing student debt servicing abuses basically what we see with student loans is what we saw with housing a big increase in house household debt and a host of loan servicing abuses huffington post syrup or has reported over the last year that student loan services like sallie mae illegally blocked payments from

accruing to loan loans with the highest interest rates prevent borrowers from learning of cheaper repayment options over charge active duty members of the military violate discriminatory lending practices pushed into plans that increase their burden and harass borrowers if all this sounds familiar it's because it's good because these are exactly the types of abuses that we saw in the mortgage market rather than crack down on these abuses the obama administration rewarded servicers for loan modifications under the now notorious program and that's exactly what the obama administration plans to do here to the administration fact sheet on quote making student loans more affordable says quote today the department announced that it will read negotiate its contracts with federal loan services to strengthen financial incentives to help borrowers repay their loans on top of lower payments for service was when loans into delinquency or default and increased the

value of borrowers customer satisfaction with allowing new loan volume it sounds good on paper but so did the mortgage modification programs. monetary policy seems to be the only tool in the central bank toolkit and so how central bankers conduct monetary policy will have major implications for our economy our next guest is dr steve hanke who is a professor of applied economics at the johns hopkins university in baltimore and senior fellow at the cato institute he spoke to aaron earlier about venezuela and hyper inflation currency wars and federal reserve policy hey he believes that janet yellen the monetary policy schizo phrenic and first thank you to explain why here's

what he had to say. this comes from. the separation between bank money and state money and of course has been no one but it for a long time and and particularly in one nine hundred thirty eight john maynard keynes wrote the treatise his treatise on money which milton friedman thought was the best book and i agree and he had this separation between state money state money is produced by a central bank and we call it high powered money or monetary base surf you're looking at ams it's m. sub zero that state money and that accounts for about twenty percent of the money supply total money supply broadly measured in the united states the other trunk the they all of the room is bank money that's eighty percent in the united states and that's produced by banks commercial banks produce this element of the total money supply and i'm talking about m.

so for as measured by the center for financial stability in new york that's that's a big broad measure of money and so or so there so the reason that the reason i said that schizophrenia is most people say oh the monetary policy has been very loose in a sense lehmann collapsed in two thousand and eight the federal reserves increased the state money by about three hundred percent. and so it's loose it is loose but it's a small portion of the total bank money perk has actually declined by about fourteen percent since lehman collapsed and the reason that it's declined is that we have all these new bank regulations all these new capital requirements coming out of basel in switzerland these are international regulations and leverage ratios and liquidity ratio is and right up at all ratios you know you name the

ratio it's getting tighter and tighter is the noose around banks and so banks haven't been lending much money they haven't been expanding they the money supply they've been they've been reducing it right but it doesn't mean they haven't been doing well themselves which is kind of an interesting point now for going boom bust guess jim rickards says that the currency wars they were wrapped in and were guarding the fed his view is that the fed pushes interest rates to artificially low levels causing investors to seek you another currency areas which then strengthens local currencies as hot money flows in now with the fed tapering the reverse that actually the reverse seems to be happening so do you think the so-called currency wars a real. well i. the phenomenon that you just described ricketts described is has happened i wouldn't call it a war but i think it's does modeled on misguided thinking on the part of the

federal reserve the bank of japan and the european central bank all the central banks have pushed their interest rates down to virtually zero and so what happens ever everyone who wants to get a yield wants to get a return and so the hot money flows out of the united states senate because in the countries where they can get a higher nominal interest rate like turkey for example and the total amount of money that that's flowed out of the so-called carry trade they call it the carry trade you borrow it at almost nothing and invest it some more attractive interest rate this carry trade it amounts to about two trillion dollars it's enormous it has . like what you said there and it hasn't stopped because it will stop only when u.s. interest rates go up that's the that's the part of the tapering conversation that is key for the carry trade as long as interest rates stay near zero or very low in

the united states to carry trade will will remain but once interest rates start going up in the carry trade on the lines that it's going to be very destabilizing in some of these emerging markets particularly places like turkey that they probably a can relate to i think at least three hundred fifty billion dollars and carry trade money and in turkey do you think the recent emerging markets crisis was a result of currency volatility or are there other more important factors at work here well i think the. currency volatility starting in june of last year one one fed chairman bernanke at the time mentioned tape. the word taper it really shook the markets by i think they were caught wrong footed then and they were wrong because i don't think the fed's going to increase interest rates very very soon and the reason why we're still in the middle of the great

recession that the aggregate demand not measured nominal terms in the united states is only growing at about two point eight percent and the trend rate of growth since one thousand eighty seven in that egg or get demand for final sales to domestic purchasers is it is five percent so so we really never of come out of the recession that's that's why we're we're growing very slowly and the money supply the total money supply now is only growing given this center for natural stability am for divisible major by only about two point six percent very slow money growth very slow aggregate demand growth and and this whole idea that the fed is going to be tapering any time soon and i think it's just wrong the economy is this week now i want to turn to latin america first second and then as well as the highest inflation in the world but it still is

a long way to go before it reaches hyper inflation now what would help him avoid this kind of fate and also can you can you quickly describe what causes hyperinflation if it's not hyperinflation a what will it be well the number one hyperinflation just to be very clear is. a rate that's over fifty percent per month so venezuela isn't even close my most recent estimate of the implied inflation rate in venezuela is about one hundred seventy five percent the official number is about fifty seven percent so again you have lying statistic this like you do in argentina but so so hundred seventy five percent a year is a long long way from fifty percent perm. month which we'd need for hyperinflation so that that's one point now the second point is what causes hyperinflation there been fifty six hyperinflation is in world history and the hyperinflation has caused because the government is spending

a lot of money and they're not collecting any taxes and they're not in the bond market they can't borrow from anyone and so what do they do they go to the central bank and hold a gun at the head of the central banker and say print money fiat finance a government. that was dr steve hanke a professor of applied economics at johns hopkins university. time now for a quick break but stick around because when we return we'll bring you more on monetary policy with professor scott sumner one of the most vocal proponents of market monetarism and nominal g.d.p. targeting and in today's big deal i'm sitting down with the league the host of redacted tonight we're talking about the increasing divide between the rich and the poor so stay turned and here before the break of the closing numbers at the bell.

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today for the few i don't know why he loved his life but i still don't know why genetic improvement through forced sterilization the basis for nazi ideology don't stop at just sterilizing yet not going to now go to the point of death. for years rarely. discussed. until now i'd really rather not talk about that right. there's a medium leave though so we need to be part of the scene potions to cure in the. your party there's a. push use that no one is asking with the guests that you deserve answers from it's all on politicking only on r t.

the policymakers predict bubbles can they take steps to pop them what role should monetary policy have in markets now continuing our exploration into all things monetary we explore a market monetarism with scott an economics professor at bentley university and a vocal proponent of market monetarism aaron spoke with some earlier and first asked him to explain what the fed should have done after the first oil shock after a deep recession the economy was going gangbusters by early one nine hundred seventy five so she wanted to know what would market monetarism prescribe here's what he had to say. there's really two problems that existed at that time first of all the trend rate of inflation and nominal g.d.p. growth was simply too high during the one nine hundred seventy s. so we should have had a slower growth in the money supply a slower rate of inflation slower trend in nominal g.d.p. the second thing though is the actual shocks to oil prices and with nominal g.d.p.

targeting you do allow a temporary spike in inflation when there is a severe oil shock because that sort of cushions the blow on unemployment now i know that sounds bad for people worried about inflation but remember if we're targeting nominal g.d.p. growth at five percent on average we're only going to have about two percent inflation on average so the years where inflation is higher than it's normal like during an oil shock will be offset by years when it's lower than normal but again i reiterate the big problem in the late sixty's all through the seventy's was not just oil shocks but we let the trend rate of inflation get way too high so instead of going from two percent to four percent inflation we sometimes went from ten to during the oil shock years when we had a severe recession without the two thousand and eight financial crisis in europe and in. yes we could of in fact we've had have had severe recessions in the past without oil crises i'm sorry financial crises. but what i

think happened there was the financial crisis was sort of the trigger but the deeper cause was a failure of monetary policy that is monetary policy didn't sufficiently boost expectations for nominal g.d.p. growth it wasn't stimulative enough so we sort of it's like a cold turning into the pneumonia of the financial shock was the cold and what happened is it spiraled into what's called the secondary deflation that is once nominal g.d.p. started falling than the original shock got much worse than it needed to be so probably a mild recession was almost inevitable in two thousand and eight but it became much more severe than it needed to be because of this failure of monetary policy. in the wake of the two thousand and eight financial crisis the fed's jeremy stein has basically led the charge on making financial stability a key goal of the fed and fed policy what do you make of these efforts. yeah i

think that's really misguided because we simply don't know how to use monetary policy to promote financial instability i mean one thing we do know is that an unstable nominal g.d.p. will tend to create financial instability throughout history whenever nominal g.d.p. has fallen sharply you tend to get a debt crisis now when we've tinkered around with trying to do things like popping asset price bubbles it generally hasn't worked for a while we're not very good at figuring out when to do that they actually tried to pop a stock market bubble in one nine hundred twenty nine and what's kind of odd about that is they succeeded in popping the stock market bubble but the ricochet effects on the economy were devastating and we went into a depression due to a tight money policy basically in one thousand twenty nine so we really need to be careful i think if the fed focuses on the macroeconomic goal of stable nominal g.d.p. growth which should provide for relatively low inflation and a good path of real g.d.p.

then what you do is you look at the financial system and if there is flaws in it you deal with those through regulation not trying to use monetary policy to sort of fine tune the financial sector is simply not very good at doing that it's got i understand that you don't believe financial bubbles exist can you explain whether high asset prices signal a bubble. ok that's a tough one to explain because i know there are a lot of events that look like bubbles to most people but what i believe is it's very difficult to sort of second guess the market in real time so if you look at the track record of. people that sort of put forward the bubble hypothesis like robert shiller even they tend to have difficulty pinning down when stocks are overvalued or undervalued and so i think what happens is when there's a big run up in prices let's say housing prices in america up to two thousand and six and then they collapse people retrospectively say it was obviously

a bubble but you know there was also a big run up in house prices in canada britain australia new zealand and so on during the same period as america and they didn't collapse in any of those four countries so we had no way of knowing in two thousand and six that america would be the one of those five countries where prices would fall sharply so i think it's misleading to try to sort of time bubbles or gas when bubbles are occurring especially if you're public policy makers like the fed is sort of fun to do as an investor of course but i'm a little skeptical that policymakers can do anything useful with bubbles as an idea but scott didn't wasn't there a problem in the u.k. and housing market we saw that during that time now. there was some problem but the housing prices in the u.k. basically went sideways after two thousand and six and they took a little dip and then came back up but the u.s. was really different we fell about thirty percent or a little more after two thousand and six the other four countries i named either

went sideways or even a little bit higher in the case of australia for instance so if you look if you just plot the graph of those five countries the us is really the outlier. we think that the british crisis was bad because the banks suffer there quite a bit but the housing prices actually are comparable today or even a little higher i believe in britain than they were back in two thousand and six so they did not have the house price collapse that we did although they did have severe banking problems. of monetary policy as a whole as a first port of call in terms of financial stability or a second best option. you know i think monetary policy is something that you're going to have so it's not a question of do you use it or not use it you try to come up with a policy that does the least amount of harm obviously the fundamentals of the economy are what's important in the long run in printing money can't address fundamental problems so you want to have stable monetary policy that doesn't make things worse so rather than think about solving problems with monetary policy i

think in terms of a rule that will have stable growth a nominal g.d.p. and will avoid creating problems of the two big problems you don't want to create are highly unstable labor market with swings in unemployment and you don't want to create a very unstable financial system which you get with a crash in the nominal g.d.p. leading to debts being defaulted on so you want to avoid problems more than sort of solve them with monetary policy scott we only have one minute left but i want to ask you something very quick now i want to read you a quote very quickly inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output now that's a quote from the late milton freeman the nobel prize winning father of modern monetarism now tell me about the ideas from milton freeman that you find most captivating and i'm sorry we only have sixty seconds but i'd love to hear a real quick. yeah well i believe inflation is always a monetary phenomenon but i think he defined it monetary

a little too narrowly so he looked only at the supply of money and how increases in supply of money can lead to inflation but changes in the demand for money are what some people call velocity the speed at which it's spent can also lead to inflation and so what market monetarist tried to do is not just have the money supply growth a stable rate but have the money supply times velocity which equals nominal g.d.p. have that grown a stable rate in other words when there is more demand for money like during a financial crisis the fed should supply more but just enough to keep total spending in the economy grow at a stable rate right i think you have the basic idea right but needed to fine tune it a little bit. that was scott sumner economics professor at bentley university now time for today's big deal.

big deal. in today's big deal i'm joined by the host of redacted tonight here on our to do so there seems to be a modern tale of two cities in our modern globalized world and our first story has to do with the increasing tone deafness society uses with the have not apparently luxury flats in london have installed the homeless spikes outside their door in order to prevent homeless people from sleeping there one man named peter is quoted in the telegraph saying but would you want homeless people outside your door charming so he do you think this is an anomaly or is this just the sort of reaction that we get in the kind of world that we're living in today yeah i think sadly it is not an anomaly and furthermore all we you know now we're treating the homeless like pigeons why stop there why not go to cockroaches you know maybe just leave jars outside with bedding inside once they get a new screw on the top i mean it's preposterous it's

a terrible way to treat your big you know and this is this is the egregiously wealthy like the most wealthy and they can't just stop at knocking people down they don't have to make sure and kick them while they're down so that's what these spikes do they're they're the kicking you got to make sure it's a key ingredient to kick in while you're down you know what i read the story i was thinking you know if i were if maybe if i could get like a big match with spikes wouldn't bother by sleeping there but it's amazing that people had the reaction that the individual did peter let me give you another story actually that's that's on the similar thing. that you're taking that it's slightly different but it has to do with tone deafness and a disregard for the voices now. apparently the los angeles city council approved a resolution a few months ago to push for legislative board ministry of action to halt the transpacific partnership fast track process and congress so my question to you is now of course part of that negotiation in the first place so it's unclear what kind

of government action that they could take as a local government to prevent trade deals from going through but what's your take on what's happening there you have los angeles is not part of the negotiations you know who else isn't part of the negotiations the american people no one even our congresspeople aren't part of the negotiation this is the largest trade deal mankind has ever seen and it's being decided by six hundred corporate lobbyists like in order for a congressperson to go see the bill they have to make an appointment they get like an hour they're not allowed to bring anyone not allowed to bring a trade specialist not a law to bring a pan or paper cellphone nothing and they have to go through what a fourteen hundred page document most of what we know about it is from wiki leaks i mean it's atrocious and it basically alan grayson did go to see it congressman alan grayson and said it cedes our sovereignty to corporations so that you know the right wing loves to call obama anti-american there's nothing more anti-american than giving away sovereignty to corporations i agree one hundred percent. these

trade deals have been relatively secretive haven't the yeah incredibly secretive i mean it is six hundred corporal obvious and what's funny is obama actually there's clips of him speaking in two thousand and eight saying you know the problem with nafta the problem with our last big free trade agreement it was decided by corporate lobbyists and here they are doing it all over again well you know we're in a time here but i want to know do you have a comedy show that you're working on are these the kind that you're talking about you're going to discuss and will kind of comedy are we looking at yeah the show is just two weeks old it's in its infancy redacted tonight it's a it's a great new show once a week but yeah we're covering those issues work. some some interesting issues on fracking and and we just covered last week there was an amazing video general petraeus being introduced as fighting wars for oil they didn't know they were introducing him in the wrong way you're not supposed to say that right that's a secret and he just accepts the applause and that was our last episode it's all

online but yeah we're aware a hard hitting comedy show well that's good is it every week when friday at eight o'clock is it friday at eight reruns at eleven thirty and it's all at youtube dot com slash r t america or hulu can you give us a sneak peek of what's coming up yeah we're covering all those stories i mentioned and then let's say we're covering the robot wars you know a bunch of peace prize winners former nobel peace prize winners have come together and said we need to stop autonomous robot killing machines before they start because we're headed there right with the drones and everything we are getting closer and closer to terminator two will and literally these peace prize recipients came forward and said let's put a ban on these things before they get going and you know i think it's crucial that's i will be heading on that as you can imagine there's some comedy in there good good good looking forward to it that's all for us for right now boom bust thanks for watching and we'll see it's.

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the resale value of j.p. morgan is zero. zero george your bank is the biggest fraud in the world it's worth nothing. his group in iraq reportedly captures the best u.s. military hardware left behind after the invasion sweeping across the country's north in a successful offensive and with baghdad now in its sides. ukrainian army reportedly drops band incendiary bombs on the dissenting east of the country denies those claims while moscow plans to appeal to the un security council to end the violence. and there resoundingly no g.m.o. is heard across the e.u. where member states could soon get the right to decide for themselves whether to allow farming that's despite u.s. pressure on brussels to ramp up global trade.