no i will leave that to the state department comment on your latter point say it is six am a car is on the docket. no more weasel words when you made a direct question be prepared for a chase when you run should be ready for a. pretty. little down the freedom to costs. if.

hello there i'm aaron age this is boom bust and these are some of the stories that we're tracking for you today. first up we're talking foreign exchange markets with mark chandler the chief currency strategist brown brothers harriman is answering both my more basic questions about currency as well as in like you know some more macro currency issues and how they affect the economy today then where is the u.s. economy actually headed and have we officially laid the financial crisis that these markets are about is on the program dancer those questions and in today's big deal edward harrison is back and in studio and today and word and i are talking about financial crisis and present time not to get too.

like many milestones marriage home children however those traditional milestones don't seem to be happening for the millennial generation and the reason is lack of money today yet many many young adults are unable to launch their lives and leave the safety of their homes following college graduation now according to an annual study that polled one thousand young people going through the transition from college to post-graduate the majority of young adults are struggling to achieve financial security in their transition from college to adulthood and the reason for this seems to be directly related to financial well being about half of the services respondents continue to need financial support and it isn't just a problem of on employ. the survey also found that half of those still getting help from their parents have full time jobs pretty shocking stuff now according to the

study twenty eight percent of participants reported that marriage and having children were not repeat not important life goals nineteen percent felt that home ownership was unimportant and sixteen percent rated living on their own as unimportant as well now the problem for recent graduates is also finding a job that's worth their college degree college graduates have to be much more creative when it comes to obtaining a point these days than in times past now according to bloomberg the unemployment rate for college graduates ages twenty two to twenty seven fell to five point six percent in two thousand and thirteen from six point four percent at the recession's peak in two thousand and nine among twenty two year old degree holders who found jobs in the past three years more than half more in roles not requiring a college diploma this is according to the center for economic and policy research in washington and one metric that is rising and sadly rising is the average student

debt now graduates of the class of two thousand and twelve who took loans for their bachelor's degrees owed on average twenty nine thousand four hundred dollars that level of debt represents an average annual increase of six percent incurred by borrowers who graduated in two thousand and eight the bottom line the two thousand recession is still being felt and especially for the next generation of workers so will the millennial generation be this century's lost generation i sure hope not but the outlook definitely needs to improve. now let's admit the foreign exchange market is one of the most exciting marketplaces in the whole wide world and i for one have an endless stream of course . how the f.x. market works and i kind of think no one really knows except maybe mark sanders coming up and why currencies move the way they do and what impact all this has on

the economy and our lives it's a lot of big questions but like i said my absolute favorite xstrata just mark chandler is on the show to break down some of my more basic questions and how the f.x. market operates and so my more macro questions on the economy now mark is the chief currency strategist at brown brothers harriman take a look at what he had to say. mark now your concious strategist right now the pound is that a five year high so can you tell me how you personally are trading based upon this data and basically are you along the pound and if so how do you put a position on in relation to the euro or the dollar share i think that sterling a strong i think because many people expect the u.k. central bank if the bank of england to be the first one of the major countries to raise interest rates so we've seen happening speculators have to chicago futures markets have really been amassing nearly a record large long position and sterling and because the u.k. is like the reason it's been before the u.s. or the e.c.b.

or the japanese people are buying story against a range of currencies not just against the dollar not just against the euro and i think it's problematic though now to chase the market because even though we're sort of consolidating now straddling those who say you want to get above one seventy i think that many people are worried that we could have a little bit of a setback before you have a rally and so my suggestion would be wait be patient and look for a pullback maybe to one sixty nine maybe a little bit below and then the upside you know we haven't really been above this one seventy level very much for several years so it's hard to find that realistic short point in those charts which are important because it tells you what other actors have to respond bet is getting stopped out or stopping to positions we suspect we could go up to one seventy two and a half maybe it's one seventy three and a half but we're looking at another two to three cents to the upside and so i think it's important for. for people who play these currencies to think about the risk reward if you buy it at one seventy how much how much are you willing to lose to

make you want seventy two one seventy three so we usually like to look for a three to one risk reward i think it would be better if we buy it at a dip rather chase the market higher now mark a lot of people are looking at the recent hawkers comments by bank of england governor mark carney and thinking it also has implications for the fed do you think carney's talk of raising rates quickly is significant. i do think that carney and i t's my wife and i think i'm the luckiest man in the world but between really i really think it's mark carney he left the bank of canada and just as the canadian economy was weakening housing market bubble came to the fore he goes to the u.k. stance of the east policy but he finds out the british economy was already on the mend before he got there and so i think carney had given the market some forward guidance suggesting that the u.k. was not going to be in a hurry to raise interest rates and most recently it looks like he changed tone but it came not just back because of carney but several other members of the monetary policy committee at the bank of england also seem to be becoming more hawkish and

so i think that carney carney's comments were important and i think they would this is what helped lift us to these levels but i think again it's part of part and parcel of a more of a hawkish bent of the whole the whole basis of england and i think that what this means i think is that we should be looking for a rate hike i thought that carney wanted to hold off until the next election which is not until may of next year in the u.k. and i think we're pricing in for the first quarter of next year that's been our expectation for quite some time and i think that some people the market again more aggressive think they could go before the end of this year. markel what's your take on the last f o m c meeting. yeah i mean i think that the idea that the us has would follow the bank of england i think was never really a good a good beginning in the first place i mean a lot of people did think that well that carney did the movie carney did you know sooner than later could be duplicated by the federal reserve i would say that the

takeaway message from the f.m.c. meeting was that the federal reserve is not the bank of england that is preferred binoculars the federal reserve he put the fed on a path and that path is a high bar exiting that path and the federal reserve is still out that path and that path is to first taper at a measured pace which means ten billion dollars in one meeting. most likely and then sometime after that and that's where they say the nuance comes in a considerable period after if they get started tapering raise interest rates we have a first rate hike priced in in our forecasts for q three of next year that is probably about this time next year or next over in the u.s. the federal reserve raises interest rates i don't think that the federal reserve meeting was surprising in anything that the fed did they upgraded the outlook for employment and that is they lower the target for unemployment they tweaked up the

forecast for inflation and they had to recognize that q one growth in the u.s. was just miserable and want to find out later this week when we get this final revision to first quarter g.d.p. but it turns out that because consumers in the u.s. spent less money on health care g.d.p. may have contracted as much as two percent in an annualized rate so the fed had to recognize that and they lowered their forecasts for this year and i think that in general that's what more or less the market was expecting now where do you think the u.s. economy is headed and what impact will this have on inflation expectations policy and exchange rates. and sure so where is the u.s. economy headed i think that after the. horrible first quarter i think we're looking at something closer to three percent this quarter q two as well as in q three i think the fiscal drag has become less so i think american consumption has been pretty steady and it's been being done up until now with very little use to credit cards so i think that this is a healthy sign but i think it means that the u.s. economy i don't think we should be expecting several quarters of above three

percent growth which the federal reserve is for the coming years and i think we should be looking for something with relatively low labor force growth and ultimately low productivity i think we should be looking for girls to be about two and a half percent on average for the next the next year so i don't think there's much impact for fed policy in terms of inflation expectations i think that the federal reserve so the u.k. is saying look inflation may be falling but we're getting close to our capacity in the economy that is more of a european and the u.k. attitude i think the usa attitude is sort of like for the people from missouri the show me state why should the federal reserve be raising interest rates when inflation is still well below their target and unemployment is still too high and so i think the federal reserve is going to let this little experiment go on provided that there's no major financial instability and provide that is inflation expectations you mean what they say is incurred and so i think that what this means for the dollar is that the federal reserve can be the first one of the g seven to

raise interest rates but because it will raise interest rates before the e.c.b. you still may have to ease further ahead of the bank of japan which now is buying twice as much assets as the federal reserve is on a monthly basis i think the dollar will strengthen over time. ok now i want to ask you what's the future for the u.s. dollar are you going for barest in the medium term medium term here. yes the medium term i think that the dollars demise is greatly exaggerated i think many of my friends are worried about the rise of china and i just don't see that as a real protest a potential threat to the u.s. either in the near term medium term even the longer term say over the next several years i think that the u.s. dollar is shown itself to be a still a safe haven what do people do when the world looks like a mess they buy us t. bills and i think that a lot of the u.s. macro situation is improving the deficit has fallen from over ten percent of g.d.p. to less than three percent of g.d.p. the u.s. current account deficit which is another knock on the u.s. has far of as well it's roughly half of what it was it's at its worst maybe even

a third of the size it was so i think the u.s. economy a relative to other countries that's what the foreign exchange market measures it's relative terms i think the dollars over the world economy remains really undeterred by the rise of china and blemished i think by the financial crisis the dollar still makes up about eighty five percent of the world trade it's one part of about ninety percent of all trades that take place in the foreign exchange market which is five point two trillion dollars a day so i think that despite the problems that we have here in the u.s. it's a relative sense that there's no substitute for the dollar yet that was market chandler cheap currency strategist at brown brothers harriman. time now for a very quick break but stick around because when we return marshall robock is on the program he's sitting down with me to talk us economy and hyman minsky and in today's big deal edward harrison and i are continuing with the minsky theme and

remember you can see all balls segments featured in today's show on you tube you tube dot com slash boom bust r.c. and also on hulu we love hulu out really dot com slash boom dash but now we're go here our look at summer closing numbers of the bell come on dr. it was a. very hard to take a. long. long time that back with the earthquake there are no. please.

please. please. please. for the the for. a blast a russian train in eastern ukraine while footage emerges of kiev troops shelling at the russian border are now heavy artillery fire militants killed up to seventy in an attack on the iraqi police convoy we report from the collapsing state for now israeli soldiers ransacked artie's west bank bureau put their difference doesn't know. what other media turns a blind eye to you get on r.t. .

welcome back to the show now that the u.s. economy seems like it's on sound footing with each new piece of data seeming to point to accelerating growth but where is the u.s. economy actually headed and how do we put slayed the financial crisis these well

marshall are a back of the institute for new economic thinking will answer these questions for us now marshall is a former fund manager and a devoted of celebrated heterodox economist minsky and we intend to get his minsky i take on booms and busts here's what he had to say. ok marshall so all of the data coming out of the u.s. seems to show a recovery that's gathering pace now the flash manufacturing purchasing managers index this morning was the best since may of two thousand and ten and all of the employment figures show gains so what's your take on the job. i think you described it perfectly that we are getting some traction it's always there's always going to be the element of stop start because you still have very high prevailing debt levels private debt levels and you also have this issue of higher oil prices which do act functionally like a. increase if the especially if you get

a major conflagration in the middle east result what's happening in iraq but generally it looks like you are getting you know some slow steady recovery it's nothing brilliant i mean at this stage we should be having much much tighter labor markets but it's certainly better than where we were a few years ago now i want to throw up a chart here this is a great chart from the university of missouri kansas city econ share there stephanie kelton posted this on twitter today stephanie yes seventy now its share is that deficits and unemployment with a strong positive correlation now dr cullen says quote budget outcomes are mostly in dodge and so first of all do you agree and second what is she actually saying here. well i'm reluctant to speak for the great doctor but know well what she's saying is look that and i've said this as well that budget deficits are not something that can be determined by government in other words you can't say we're going to cut and get a deficit of say three percent next year that's that's been the problem in the eurozone because what happens is that you know the lack of government spending

interacts with other passages of the economy so if the economy starts to slow down as a result of government spending cuts then people will get thrown out of work demand will slow down tax revenues will slow will dissipate will have higher social welfare payments so as a result the deficit expand in other words there's nondiscretionary or or and dodging is and by the same token if you have an improving economy than the deficits do start to come down which is why all the fiscal deficit hysteria that we had a few years ago was absolutely insane because it was it was a very deficit which helped to create a floor on demand and actually help the u.s. economy to recover today now if budget deficits are mostly indulgent us like you say what implication does this have for economic policy. well it tells me first of all that we rely far too much on monetary policy. we asked the central bank federal reserve to do too much in this country that we should be looking much

more towards deploying fiscal policy in a creative way to sustain employment and it also means we shouldn't be worrying about deficits per se you know abba lerner who was a great economist in the postwar period used to talk about functional finance and his view was that you don't worry about a particular number you worry about the ultimate impact and the impact being on an overall economic activity obviously if the government is still spending very very aggressively and you've got real resource constraints inflation can result so that's that's a problem that we all acknowledge but you're still in a situation where you have a lot of slack in the labor market incomes are not really going anywhere they're stagnant so this whole notion that we should just continue to cut government spending is nonsensical we might get more of that unfortunately if we get a republican dominated congress after the next elections. i'm not sure i want to get a ski i view how to look at this improvement in data basically i mean it's the famously

contended that stability leads to instability meaning the more stable an economy seems the more risk people take leading to instability so can you talk to this in the context of the u.s. recovery. yes and i think he also points out that this is just inherent in the very nature of the capitalist system that as you get a calmer state of affairs people naturally animal spirits get incited adaptive expectations take over and you start to get a much more risky form of financing structures in place and we are actually beginning to see signs of that in the u.s. today and if you look at the amount of junk debt issuance which is occurring it's really increasing quite substantially and you are starting to see signs of private dead starting to increase again household deficits household spending going up by deficit spending in the household sector so there are. as people are becoming more

confident they are finding themselves in less and less stable ways which obviously creates the seeds for the next four days of instability later on. now what's best thing policymakers can do to deal with the fact that financial stability leads to risk taking that leads to financial instability. well you know there's only so much government. can do but i will say this that the one of the problems we have is not only in this country but i think in most places in the world is that we have over the financial eyes economies and i think that one of the major sources for instability economic instability is that you have an overgrown financial sector so i think the best thing that government could do is actually rein in the financial sector in other words the paradox is that if you want to have proper functioning free markets you've got to have a tightly regulated financial sector and you've got to really stay on it they're like zombies they come back from the dead as we've seen from two thousand and eight and so if you continue to build in incentives which encourage irresponsible

economic behavior then you do create the seeds for new crises i mean we had we had at least thirty years of very very the so-called golden age of capitalist prosperity in the post world war two period and one of the reasons we had that was because we had a fairly tight regulatory structure which was put in place by f.d.r. under the new deal now i want to play devil's advocate here isn't regulation designed to fail given that the complacency born of stability effects later says well yes to some extent that's right that's right and the other problem of course is that as our system becomes increasingly complex you know you the regulations also tend to become more complex and the holding of the bank of being has talked about this very eloquently so what i think you are in an ideal world of course i don't think it's going to happen here but in an ideal world you want to restrict the range of activities for example the banks too which give rise to the instabilities in the first place so in other words you don't say well we want you to. higher capital buffer ratios and we want you to have derivatives on all listed

on all these exchanges and increasingly complex rules governing their balance sheets but you actually would like to have is it's a much more narrow banking model whereby certain activities are absolutely prohibited and that becomes much more a much more effective means of regulating something it's like preventative medicine if you want someone to have a good diet so they don't actually get a heart attack and you know you don't want to have this complex treatment injected because the person had a terrible diet now is high cholesterol or other forms of heart disease. that was a marshal are back from the institute for new economic thinking time now for today's big deal. big deal time and one of my favorite people in the whole wide world is back to partake mr everett harrison yes good to be now today i've heard and i are

discussing financial crisis small tiny little topic ok so let's make this a slightly different big deal we're going to dive right in now we just spoke with our back about minsky so i kind of want to use this big deal to get a little more insight into what minsky said and did here so first and foremost who is minsky and why should we care. you were calling the heterodox economist and that means basically it wasn't mainstream in the mainstream that we have today is basically neoclassical economics which is a sense this is traditional classical economics and keynesian economics as depicted or as brought together by paul samuelson and for the most part from sixty five to ninety was at washington university in st louis and he had this idea of financial markets as being inherently unstable over time as a result of people taking on more risk and i think that we should care about that because we've just seen a huge financial crisis and we think ok we've done

a whole lot to fix that but have we really or is it the fact that we're going to see another crisis down the line and the question then becomes what's the reaction to that crisis you know it all this is sounds like minsky was pretty spot on he knew what he was talking about but why didn't he went a nobel prize that he's so important well you know going back to the whole heterodox thing it's exactly that because you know i was talking to our producer earlier and he was saying i couldn't find any pictures of. an a.p. wire in that area because basically you know no one knows who. because the he's been marginalized by traditional neal classical economics where basically we had this huge crisis and even though there are people talking about the minsky moment and everyone thought about minsky minsky here and there by and large none of the things that he's been talking about or is taught have been institutionalized in terms of the economic framework in terms of policy prescriptions or anything like that however i got to ask you out of all that means he said all that he did what do

you take away is the most important point he says i think what i take away is that it's in dodge's to the system the sense that there's this instability i look at it is in terms of you know cars if you make cars more you know more stable more risk free in terms of you know being able to get to a crash better rate we're going to drive faster if you give people safety belts they're going to drive faster etc because that's inherently how we function as beans if you make the system more stable people take on more risk and eventually that instability is going to come and so with regard to the financial system in particular it doesn't mean that the crises are going to go away you might be able to lessen them through some sort of macro prudential regulation but the crisis is still going to be there it's kalak we were discussing this earlier you know in two thousand when you were killed by us to go into all this stuff everything was going pretty well i think you know if you can't exactly that's why they got out of it exactly because everything's great so we feel like let's make

a little bit riskier let's see how much further we can push this but you know that is a need to humans and that's more of a philosophy i guess you could say are the economics but do we know enough now to know better or does that never going to work are we just going to keep doing what we're going to do because we're animals. you know one of the theories is that these cycles happen because we forget what happened before you know the people who lived during the great depression wonder around by and large to be able to tell us wait a minute to get the exact things that you're doing right now we saw already. leading up to the great depression and you're really doing the exact same thing so we all have to a certain degree have to relive that cycle i know which is a scary thing so i'm going to ask you point blank when is the next crisis little question i get when i add. you know i would have thought we could have already had a nother crisis but you personally i think you have to give credit to the policy makers to be able to the crisis from happening right from keeping keeping the whole

thing at bay the real question is have they kept it at bay by making. the potential for another crisis larger is the next west going to be even larger and i think it may well be that we still are not over i would give the next crisis within the next four to five next four to five years whew and as always i can be more happy to have you back it's also hearing from you thank you we love hearing from you out there as well so please check out our facebook page facebook dot com slash from the star to please tweet us at aaron aid at edward at it from all of us here thank you for watching us to morrow but i. try to. keep pulling out of.

your. every minute. some time. now with. my. sometimes for nothing. this is. just so. you'll be shocked if you see the state tape to keep tabs. on the selling. she could laboratory curbeam was able to build the its most sophisticated robot

which on fortunately doesn't give a darn about anything tim's mission to teach creation why it should care about human to end. this is why you should care watch only on the dog. bone welcome to our tease newsroom i am i need to now it's my president putin moves to withdraw all rights to use russia's military in ukraine and parliament as a tender truce between kiev and fighters in the east braised in the balance and we look at why the u.s. won't admit iran is one of the most stable countries in the middle east plus amid accusations of human rights violations in american prisons we find russian jails are far from just your in the now. please. look.