the pledge was terrible they are legendary hard to take on to let once again let along here is a plot that never had sex with her make their lives let's have a little. glimpse of the i'm . melissa block.

and heat is off today our lead story today the world cup as world cup begins the brazilian economy is in need of a boost growth has been for a couple of years now while the economy was growing at seven point five percent in two thousand and ten growth was down to a meager two point three percent last year so the brazilian government has high hopes for these games and expects three hundred eighty thousand jobs to come from

the event with eleven billion dollars in additional spending alone coming from an expected six hundred thousand tourists not everyone in brazil shares this favorable view many believe critical investment has been diverted to the games and protests and strikes are expected to mar the world cup proceedings as a result are two corresponded nicholas donovan is in brazil with a report on how things are progressing. obviously there has been. tension a lot of tension here in brazil in the build in the build up. well i think strikes in some cities here in sao paulo and just well in rio de janeiro actually today as we speak. because of the. on strike and that will obviously i think the. truest. that will be coming here to brazil to see the world cup but we had the opportunity to speak to some of those

the cheeriest to speak to some of those football enthusiastic and they actually said that here in sao paulo they had no problems and that the brazilians were perfect posts i like it here really the people are very friendly and open minded and i didn't see the things we read in the newspapers so everything is good here the resilience are very kind very warm and great post so obviously there is some sectors her the population here in brazil that a not happy with the world cup with. with the whole hosting of the event but there are many others that think that this is just a miracle for the country for instance the hotel industry the restaurants and the truth is that there's going to be over half a million tourists more than even six hundred thousand foreigners coming here and obviously spending their money nearly three thousand dollars per cheeriest that those are the estimates so obviously that's going to be a boost for the brazilian economy and the truth is that we have seen those tensions

in the last few days but today it's all about football it's all about brazil and teresa and after that three weeks of passion and football that will end up in rio de janeiro. thanks nicholas and coming up a little later many of us up our go producer for breaking the set is here on r t with me to talk about the impact of the world cup in brazil the good the bad and the ugly. with us macro economic indicators improving the biggest question on the horizon is when the federal reserve will hike rates many analysts believe that the rate hikes will come in two thousand and fifteen and that they may hurt an already slow recovery peter schiff on the other hand takes

a completely different view schiff is the c.e.o. of europe is if it capital and a frequent commentator on the us market federal reserve policy and precious metals he's also a bear on the u.s. economy bullish on gold and other metals aaron first ask them if the economy is looking good or if it's looking weak here's what he had to say. it's looking weak you know the reason that consumers are spending more is because prices are going up it costs more to eat it costs more to heat your house or drive your car insurance costs more health care costs more mean everything is more expensive than it used to be so that's why spending is up and unfortunately savings are down because americans are still have savings are having to dip into their savings to afford the higher cost of living and get is up credit card debt is up because a lot of americans are having to borrow to pay the higher prices that are falling incomes really can't support. the weaker industrial production numbers they don't point to lots of business investment coming on line so where do you think the u.s.

can get growth. we're not going to get growth not as long as the fed is stimulating the economy what the fed is doing is inhibiting legitimate economic growth we're both blowing up all these bubbles and in order to do that we have to divert assets divert capital away from legitimate savings and investment that would create really konami growth we have to divert that to maintaining bubbles in stocks and real estate and we also have to divert the money to financing the national debt so we're getting all this government spending instead of economic growth. now the russell two thousand has lost nine to ten percent of late so are you concerned that the stocks are overvalued. well they are overvalued i mean that precisely the consequence of the cheap money i mean a lot of the corporations have been buying back their own stock with borrowed money and it's all possible because rates are so low and yes you know the market is weakening beneath the surface if you just look at the dow jones or the me even the

s. and p. five hundred things look ok but you know you look beneath the surface look at the russell two thousand or look at a lot of individual stocks and you know they're in bear markets are there are close to it and i think if the fed continues on this taper path we will be in bear markets officially in the made in the major averages the reason i'm not as bearish on stocks in the short run is because i expect the fed to blink i expect as the months go by as the economic data continues to disappoint the fed is going to have to start talking more stimulus again they're going to have to admit that the slowdown that we saw in the first quarter of two thousand and fourteen was not about the whether there was something more fundamental going on in the u.s. economy and now the fed is going to have to come to the rescue of course everything the fed is doing to rescue the economy is going to make it worse but that's not going to stop them from doing so what segments of the market are showing the most

value in your opinion oh it for investments i mean clearly the gold sector the gold stocks i think are priced for a collapse in the price of gold and not only do i not expect gold prices to collapse i expect them to skyrocket and so obviously these gold mining stocks are dramatically mispriced based on the expectations that investors have that are wrong they think the u.s. economy is recovering it's not they think the fed is going to tighten it won't and of course in the fed minutes that came out yesterday the fed said they weren't worried at all about inflation despite the fact that the p.p.i. and c.p.i. numbers that came out. last week show year over year c.p.i. at two percent and p.p.i. of two point one percent meanwhile they stay still think we're well below two percent we're already at two percent right now and you know when the fed is not worried about something that's precisely when you need to be worried if you

remember during the peak of the housing bubble they were not worried about housing prices going down you know now they're assuring us that inflation is contained right well right that leaves that really where it's going to subprime market quick question you know you just quoting government figures. yet those are the government inflation figures the real inflation rate is much higher but even the official numbers the official c.p.i. and p.p.i. numbers are now year over year rates of two percent and you know remember it that's the last year the fed is expecting more economic growth in the year ahead than in the year behind us and you know the fed believes mistakenly that economic growth causes inflation in fact they think that inflation is actually necessary for economic growth now neither is true but if the fed actually believes that inflation results from growth how is it that the fed thinks the u.s. economy is going to grow a lot faster in the year ahead yet the inflation rate is going to come down not go up now i know you don't like government bonds but what do you seen in the corporate

bond markets peter. well i wouldn't buy any bonds and it's certainly not in u.s. dollars i think the entire rate structure is too low so eventually rates are going to explode and of course that's negative for bonds but the bigger problem with bonds is that they're denominated in dollars because i think if in the unlikely event that the fed does the right thing eventually and really takes away the stimulus and raises interest rates substantially a lot of bonds are going to go into default and of course you know bond holders will who will take a hit but i think more likely what's going to happen is lots of money printing a lots of inflation and then the bond holders take a bigger hit to their purchasing power so there's really no way to win long term being in being in bonds so i think you want to be in equities if you're in bonds it always should be convertible where their corporate bonds are you have the ability to convert your bonds into stocks in the event that we have runaway inflation because that way you can preserve your passage now peter in april i u.s.

treasury data showed belgium holding three hundred forty one point two billion dollars in u.s. treasuries and that's caused a lot of head scratching i mean who is the ultimate holder of these bonds but i want to get your opinion what's your whole take on the brouhaha over tiny little belgian popping up as a major holder of u.s. treasury bonds and yet this should be raising more than a few eyebrows you know i to me it's too much of a convenient coincidence that jest when the federal reserve started to taper or a brand new buyer emerged out of belgium to pick up the slack you know it makes sense to me i was saying for a while that the fed wasn't going to taper because they knew that if they tapered rates would spike and the economy in the markets would go down and then they would have to and taper and they would lose a lot of their credibility so maybe the fed only tapered because they knew somebody was out there to cover their back to buy all the bonds that they weren't buying to

keep rates from rising so maybe the fed is working with the. c.b. or some other entity and they're part of what's going on but i think there should be some kind of investigation as to who the beneficial owner of this account in belgium is and exactly why they're buying all these treasuries and who else might be involved in this process do you think that will happen. probably not. but you know i do know that the fed probably understands to some degree how dependent the economy is this phony bubble economy they've inflated on their cheap money and so they're going to do everything in their power to keep that cheap money flowing and so it wouldn't surprise me that they didn't orchestrate something because otherwise they might not have even begun the taper because i don't think they would have been willing to take that risk i mean what if the fed had tapered interest rates and spiked it would have again you know the stock market would have crashed real estate market and then they would be forced to reverse the taper and

they would lose all their credibility and the world would understand the box that we're in right now. that was the second part of an interview with peter schiff c.e.o. of euro pacific capital. time now for a quick break but when we return aaron talks to economist lisi hunt who gives us good reason to doubt the effectiveness of the federal reserve's policies he thinks the fact that both real g.d.p. and inflation are slowing at the same time is a big deal then and our big deal we have breaking this that many a graph of all on the show to talk about brazil the world cup and the brazilian economy as we go to break here the closing numbers at the bell.

really. did you know the price is the only industry specifically mentioned in the constitution and. that's because a free and open prices for. well. in fact the single biggest threat facing our nation today is the corporate takeover of our government and our craft seven we've been hijacked by handful of transnational corporations that will profit by destroying what our founding fathers. i'm sorry and on this show we reveal the big picture of what's actually going on in the world we go beyond identifying the problem. rational debate real discussion critical issues facing our. ready to join the movement then welcome to the big picture.

of the. federal reserve has enormous power to influence the market through its control of the federal funds rate and it has also proved able to use unorthodox tools like quantitative easing to amplify it but what if the federal reserve in its belief in monetary policy is consistently wrong spoke with an economist and executive vice president of poison investment management company who is skeptical about the direction of the u.s. economy and the effectiveness of the federal reserve's policies because nominal

g.d.p. growth is slowing because real g.d.p. growth and inflation are slowing at the same time. if there is an interconnection between the slowing of one and the slowing of the other given the high levels of debt that still exist in our economy take a look. i absolutely do i think that. the reason basically won terry policies and the tenant is that we've acquired too much and we've kept acquiring too much of the wrong type of dead at that's not going to generate an income stream to repay principal and interest and in that environment the velocity of money is going to decline and it's been declining or regularly since nine hundred ninety seven and about a three percent annual rate. into growth is six percent that's essentially where it was before the financial crisis two thousand and seven two thousand and eight so

money growth is six the last is declining and three that suggests that fundamentally a year trend rate of growth in nominal g.d.p. should be only three percent which of course you've got that split that between inflation and real growth monetary policy is just not affective in a highly over leveraged economy and we're seeing the the end result of that type of situation plays that the fed has shown time and time again that they can stop an economy from overheating but we're in a situation a new situation where do words are just a bell and we have debt disinflation deflation and debt deflation those are all watchword so do you think monetary policy can be effective here. no i don't not to tary policy works through a variety of different channels first of all their price affects their quantity of face and then there is possibly the wealth effect. and the price effects really are not operative because during the quantitative easing one two and three

the ten and thirty year yields actually rose they didn't apply. makes it very difficult for monetary policy not to work when when when price affects are not cooperate in. the quantity of facts there are two of them one yeah involves the money multiplier the other the velocity of money and the fed controls neither one of them the money multiplier links the fed's balance sheet or the monetary base to two into and prior to the financial crisis for every dollar increase in the base we've got about a dollar increase and into today it's less than three dollars it's an all time low and that's why even though they've expanded their balance sheet money supply growth is not accelerating. my supply growth is hell relatively stable there have been times when they have. accelerated but those were very brave and

the thing that they cannot control is the velocity of money and it's still climbing . at a very persistent rate so the net result is that monetary policy for all intents and purposes is out of the game now there is one other fact that's which the fed talks about a lot that's the so-called wealth factor which. is when well goes up and then there's a corresponding increase in consumer spending it chairman bernanke he talked in terms of a virtuous circle the fed does quantitative easing and less asset prices people spend more. please to better profits and employment and so forth unfortunately. we can not identify any significant wealth effect in the fed's model the indicates that a one dollar increase in wealth will increase consumer spending between five and ten cents the academic studies which can find it most of them

cannot find it. first of all and then in addition to that when they do find it it's only maybe one center a half percent or something insignificant so there is no wealth effect there is no virtuous circle and the stock market is not a major player in economic activity the fed is basically out of the game they they make these pronouncements their forecasts over the last four years have been extremely optimistic but if you compare their initial forecast for each of the last four years compared with the actual results they have a cumulative mess of over a trillion dollars and so that tells you that basically the fed the fed is models are not working correctly and their approach is basically highly flawed now stock prices and housing prices have been rising in the us but yields actually increased

during q one q two and q three so can we really discern what impact q.e. is had on bond yields. the the ironic thing about it is that you're absolutely correct the the ten and thirty year yields rose during q e one two and three what if it is essentially did is that it raised the specter of the fear of inflation and incited inflationary expectations which caused the rates to rise at a time when the inflation rate was actually falling and so the very essence of quantitative easing was there for quite a counter productive. there were three papers that were presented to the fed at the monetary conference in jackson hole last august all very distinguished economist using different techniques and they all found that the quantitative easing program of the fed of the so-called large scale as adverse were not macro stimulus and in fact they did more harm than good. now the fed seems to be optimistic that it's

medicine will work and that's why it's tapering siri and why the fed is projecting rate increases for twenty fifteen so do you think the fed has been overly optimistic air. believe it consistently over optimistic their forecasters been while wide of the mark and each of the last four years they're projecting three percent real growth for twenty fourteen we're not going to get that. the first quarter we had a decline and yes there will be a rebound in the second quarter but the rate of growth in the first half of this year every gene first and second quarter together is going to be less than one and a half percent and that that's it's not going to be any better in the second half of the year there's just no fundamental reason to expect it to be so in addition think one of the things that that is not properly weighed into their consideration

is that we had a massive tax increase in two thousand and thirteen. when taxes are changed very radically people do not make adjustments immediately they have to recognize their impact. so there's a recognition like a lot of folks have seasonal work they have a bonus and they don't really know where they stand until after they pay their income taxes and and so the scholarly studies have indicated that when you have a major tax increase it's a drag not just for one year but it's a drag for three years and so last year's tax increase is another impediment another one that was lazy han economist and executive vice president pointing to investment management company time now for today's big deal.

big deal. in today's big deal on joined by breaking a set producer many of appolo and to discuss the world cup brazil. and what these mega spectacles mean for the host company's host country so many with the beginning of the tournaments the initial games are underway but we've also seen protests against the world cup itself and you tell me something about the issues that we're facing here and why we're seeing these protests yeah absolutely i mean you have to keep in mind that this is the first time that brazil's hosted a world cup in over sixty years is the first time that south americas holder to host the world cup in over thirty years and this is obviously a huge spectacle to really big deal but not everybody is feeling it and it's very evident i mean we could look back at the last three years the way that it's almost been a surge of discontent in brazil just a year ago you had over a million people in sao paolo in my now in rio just protesting against the lavish

spending that brazil's had on this world cup people over seventy two percent of the population recently polled are unhappy with with the way that you know the preparations for this world cup is has been ongoing just the amount of spending the level of corruption associated with a government instead of spending on transportation on education on health care these are the biggest concerns people had and even today we're looking at the images these are very recent images that we're looking at right now in sao paulo there were protests those heavily militarized police dispersing protesters with tear gas with rubber bullets i mean not just protesters this is the welcome wagon for visitors and journalists this is this is what they're seeing right now and it's all stems from this discontent with the way this is all being handled by the government this isn't this isn't an anti world cup sort of mentality it's an anti-establishment mentality in the world cup and so that's what these protests are rooted in and we're going to continue to see them the question is whether or not it's going to be overshadowed by the event itself road would say that we spoke to

sports economist victor matheson about these mega event earlier and he brought up the case of the winter olympics in utah and here's what he had to say. the salt lake city case we did in fact find that salt lake city had a market increase in. the employment during two thousand and two that employment dissipated after a year and we found that in fact the olympics created about seventy thousand jobs and that's great fortunately the winter olympic committee in salt lake city had predicted it was going to produce thirty five thousand new jobs so what we found was a positive effect of the olympics but about one fifth of what the organizers claimed and we see that's an interesting number i said at the top of the show these guys are talking three hundred eighty thousand jobs associated with the world cup so if you're using those numbers that ratio what do you think i mean so i agree and disagree with with what he was saying mainly because. i do think that it's

a tremendous strain because examples abound about any country that's hosting a major sporting event usually is going to spend a lot more money that they expect in the case of brazil to an eleven billion dollars an astonishing amount and it almost doesn't where i disagree is that it doesn't matter to me how many jobs that they're forecasting whether they're forecasting three hundred thousand six hundred thousand and they get one hundred thousand jobs what kind of jobs are we talking about most of these are construction jobs these are jobs that sure you know you have a giant stadium but you know how many of these jobs are actually going to be there when the when the construction is over now is this good for the economy i think overall it's we've we've seen time and time again with the lympics with with previous world cups of the countries and of spending more but you know the industries that do benefit you have entertainment you have the travel you have hospitality this is where the boom is aside from that i really don't see this is being one of those big boosters to the economy like it like it's like it's portrayed but it's certainly a good thing for national unification for example you know we only have about forty five seconds but i notice the georgia bag which is

a german said they think england is going to win the world cup what do you think about that oh well i don't know if viewers watch bring the south you know that i'm from honduras i'm rooting for hundreds and hundreds just tied in glynn zero zero with a man down i'm wearing brazil colors today based off that own goal that they scored earlier i'm not feeling it too much but i wouldn't put my money down on england so you're going to you know it all the way. i hope the best for hundreds if they score a goal in the world cup i would be happy but i think brazil has it this year the from us here at boom bust thank you for watching and we'll see you next thanks.

your friend posts a photo from a vacation you can't afford. a different. the boss repeats the same old joke of course. your ex-girlfriend still poetry keep. ignoring it. really matters. to your facebook news feed. i suspect. we're going to go to the price is the only industry specifically mentioned in the constitution and. that's because a free and open process is critical to our democracy shred. rule. in fact the single biggest threat facing our nation today is the corporate takeover of our government and across several we've been a hydrogen client handful of transnational corporations that will profit by

destroying what our founding fathers once told us about my job market and on this show we reveal the big picture of what's actually going on in the world so we go beyond identifying the problem trucks and rational debate and a real discussion of critical issues facing america by ever feel ready to join the movement then walk a little bit harder. how

to be. a vehicle explosion is thought to have killed so you people in these do you cry in the suspected assassination attempt against a key leader in didn't yet skin. gets his final deadline to sort out his gassing dream with russia with the price still stored in the toll. and washington the most drones and strikes in iraq where radical islamists have seized control of the north and now have the capital in their sides. but.