fed. federal reserve chairman ben bernanke is to set to testify about the economy on capitol hill tomorrow and thursday. it's not detering the stock market. monday the dow and s&p rallied to record highs.the nasdaq lifted 7 points higher.while gold gained 6 dollars and oil added on 50 cents. the mercedez benz c class sedan is under investigation for potential risk of an electrical fire.200-thousand cars built between 2008-2009 are being checked.21 owners reported issues.and, executive search firm heidrick and struggles.. is losing its ceo.kevin kelly steps down. we hare checking on the bond market this morning with tom boylan of performance trust. tom, good to have you back on the show. the fed is back in focus with testimony happening on the hill this week. how is the bond market likely to react? > >for the last couple of weeks since the unemployment report came out a week ago friday the ten year treasury traded off to a 275 on a stronger than expected number from non farm payroll. subsequently we've rallied about 20 basis points so 275 was the cheapest we've been this year, cheapest in 2

numbers which conceals the amount of subsidies the primary dealers are getting from the fed when the federal reserve chairman bernanke he was asked by congress why so secret you've said that the fed needs an dependence from congress to keep political and fluence out of their. policy making process the nightmare scenario that he envisions would be a lawmaker selling the process by asking the g.a.o. to evaluate a decision before implementing it he thinks lawmakers could have a chilling effect on the system and decrease its ability to guide the economy congressman ron paul was a very close to getting his audit the fed bill passed into law last year the bill passed the house with bipartisan support and had a good chance of passing the senate two however the senate majority leader would not bring the bill to the senate floor for a vote just simply enough that senator harry reid had a history of supporting. sponsored legislation that would call for an auto the federal reserve system. for that amendment. every year every year the legislation that's nowhere. i think it would be interesting to know. about th

understands that the that the stock market increases are directly tied to quantitative easing to fed federal reserve policy not to any kind of economic recovery and certainly not to any kind of naturally occurring free market principles this is the. president of iran research ok austin in washington you know i want to talk i want to say that we agree here eric because i think the issue here is you're talking about the federal reserve policies and one of the things that has declined since the one nine hundred seventy s. is the value of the dollar with the federal reserve quantitative easing policies they are destroying the purchasing value of people who do need to go out there and buy goods and services and the people who are harmed the most are the poor and the middle class by the inflationary policies of the federal reserve because what is happening is people who are on fixed incomes are losing value and their ability to purchase things like gasoline and food so the real problem in this country is not the devaluation of real wages that is the devaluation of the currents that the currency that they

as i mentioned, the federal reserve pursued this policy approach in the context of the gold standard. federal reserve notes were redeemable in gold on demand, and the fed was required to maintain a gold reserve equal to 40% of its outstanding notes. however, contrary to the principles of an idealized gold standard, the federal reserve often took action to prevent inflows and outflows of gold from being fully translated into changes in the domestic money supply. this practice, together with the size of the u.s. economy, gave the federal reserve considerable autonomy in monetary policy and in particular about the fed to conduct policy according to the real bills doctrine without much interest. the policy framework of the fed's early years has been much criticized in retrospect. although the gold standard not appear to grade retention u.s. monetary policy in the years after the fed's founding, subject -- subsequent research has highlighted the extent to which the international gold standard served to destabilize the global economy in the late 19th was an early 1930s. likewise, economic historians have pointed out that under the real bills doctrine the fed

research for the truth in the county now following up on our discussion about federal reserve cash flows as we all know take a look at fedpayments on excess reserves that's the digital money that the fed has printed that banks decide to just leave out the earn a little interest for more on this we turn to prime interest producer justin underhill justin can you give us an update on the trends we're seeing and where this fed money printing is going well as we've talked about before banks that are members of the federal reserve are required to keep a certain amount of cash on hand and on reserve to ensure solvency in two thousand and eight during the crisis the federal reserve started paying interest on these bankers serves in order to encourage banks to keep cash parked at the fed and of this incentive work to banks started keeping reserves well above the minimum amount required called access through service and this graph goes from two thousand to today and we have serves in the billions of dollars ranging from zero to two trillion and here we have two thousand and eight when the fed started its interest payments and you

research for the truth in accounting now following up on our discussion about federal reserve cash flows as we all know take a look at fedpayments on excess reserves that's the digital money that the fed has printed that banks decide to just leave at the fed and earn a little interest for more on this we turn to prime interest producer justin underhill justin can you give us an update on the trends we're seeing and where this fed money printing is going well as we've talked about before banks that are members of the federal reserve are required to keep a certain amount of cash on hand and on reserve to ensure solvency in two thousand and eight during the crisis the federal reserve started paying interest on these bankers or in order to encourage banks to keep cash parked at the fed and this incentive works banks started keeping reserves well above the minimum amount required called access through service and this graph goes from two thousand to today and we have excess reserves in the billions of dollars ranging from zero to two trillion and here we have two thousand and eight when the fed started its interest payments a

fed insiders. these two gentlemen know exactly what has gone on inside the federafederal reserve in the pad they have a pretty good sense of the fed peace that came out in a statement. a former federalerve vice president from the new york fed. david jones, former fed economist. i wouldn't exactly say this was an innocuous announcement. they are not making any moves on the bond buying program. what is your best guess about why they said that? are they worried about derailing the stock market we have seen? >> after what happened last time with the chairman's press conference that this was going to be boring, they should have stayed home. you can hold up this week's announcement and today's announcement, the other announcement and see tiny differences. the day is coming when the fed will have to do something. but it is not now. there was no discussion really, in terms of the board, did not issue a comment, so we need to wait and see. liz: david, next meeting is september 17, 18th the announcement, is that your best guess as to when we will start to see some sort of indication? we have decent gdp data today, what do you think? >> i think it is data dependent, but my best guess is we wil

given the washington today, if the federal reserve act had to be enacted and how would it differ from the fed original legislation and how would it be passed? >> there would be more than one federal reserve bank than one in the western united states. that is my answer. >> on that note, my last question is a legacy question. at some point, and i'm not going to ask you when you think this might be, your time as chair of the federal reserve will conclude. now i happen to know and some people here probably do you already have a legacy that i believe no other federal reserve chairman has which is that there is an interchange on i-95 in dylan, south carolina, which is named the bernanke interchange. i will challenge anyone, even in the economic history group to find another interchange on the interstate highway system named after a federal reserve governor. but all seriously, as you think about the legacy that you will have as a chairman of the fed, what would you hope the high points of that would be and where would you like to see people focusing on the contributions? >> well, of course that's go

as i mentioned, the federal reserve pursued this policy approach in the policy of the the fed wasd in required to maintain a gold reserve equal to 40% of its outstanding notes. however, the federal reserve often took actions to prevent inflows and outflows of gold from being fully translated in changes in the domestic money supply. this practice, together with the size of the u.s. economy, gave the federal reserve considerable autonomy in monetary policy and in particular allowed the fed to conduct policy without much interest. the policy framework in the early years has been much criticized on retrospect. although the gold standard not appear to greatly constrain u.s. monetary policy in the years after the dead's founding, -- ther the fed's founding, gold standard served to destabilize the global economy in the late 1920s in the early 1930s. the fed increased the money supply precisely at those times at which business activity and upward pressures on prices were the strongest. that is monetary policy was pro- super bowl and -- was was prociprical. addition tomportant policy tools. th

>>> tonight money matters the stock market surged to a new high today thanks to the fed chairman the federal reserve would continue to support the economy. google gained $14 a share, amazon's stock hit an all-time high today after reporting a 30% year to year increase last month. ama conskon is reaping benefits of apple conviction in an antitrust ruling. and microsoft hoping to trance form it's stofl software giant to a device asks services business. windows now developed separately will be folded in a single unit. >> the movie based on the fatal shooting of oscar grant opens tomorrow showing the last 24 hours of grant's life leading up to the 2009 shooting by former bart officer mez mez. -- m -- the police chief sat down with the film maker he in his depiction to let people know there was more to oscar grant. >> anything that he could do, anything we can do, to help in this healing process in the bay area for the family i think we all owe to the grant family and ourselves to learn from what happened to prevent something like that from happening again. >> the chief says the department has taken huge

. >> federal reserve chairman ben bernanke signaled today that the fed will not rollback its economic stimulus program as early as wall street had feared. well, the market liked that. the dow was up 169 points to close at 15,460. and that is another all-time high. as things are improving here, china's economy, the second largest on earth is slowing down. and that is trouble for a record number of new college graduates. seth doane is our man in beijing. >> 21-year-old thought finding a job would be the toughest thing about moving to beijing. he was wrong. >> this is your room. >> yes. >> reporter: wow, it's tight, his $1600 monthly salary left him $150 for rent. not enough to afford a winnow. >> you cannot tell if it's

>>> tonight money matters the stock market surged to a new high today thanks to the fed chairman the federal reserveld continue to support the economy. google gained $14 a share, amazon's stock hit an all-time high today after reporting a 30% year to year increase last month. ama conskon is reaping benefits of apple conviction in an antitrust ruling. and microsoft hoping to trance form it's stofl software giant to a device asks services business. windows now developed separately will be folded in a single unit. >> the movie based on the fatal shooting of oscar grant opens tomorrow showing the last 24 hours of grant's life leading up to the 2009 shooting by former bart officer mez mez. -- m -- the police chief sat down with the film maker he in his depiction to let people know there was more to oscar grant. >> anything that he could do, anything we can do, to help in this healing process in the bay area for the family i think we all owe to the grant family and ourselves to learn from what happened to prevent something like that from happening again. >> the chief says the department has taken huge ste

as i mentioned the federal reserve pursued this policy a proach in the con thoveks gold standard. federal reserve notes were redeemable in gold on demand and the fed was required to maintain a gold reserve equal to 40% of its outstanding notes. however, contrary to the principles of an idealized gold standard, the federal reserve often took actions to prevent inflows and outflows of gold from being fully translated into changes in the domestic money supply. this practice, together with the size the u.s. economy, gave the federal se serve -- reserve considerable autonomy in monetary policy and in particular athroid fed to conduct policy according to the real bills doctrine without much hindrance. the policy framework of the feds' early years has been much criticized in retrospect. although the gold standard did not appear to have greatly constrained u.s. monetary policy in the years after the feds' founding, subsequent research highlighted the extent to which the gold standard served to stabilize the economy in the late 1920's and early 1930's. likewise, economic historians pointed out that under the real bills doctrine, the fed increased the money

the first is over the first 100 years of the federal reserve do you believe that on balance the fed has given too little weight to the issues of regulation and financial stability relative to other objectives. the second part of the question is that in looking at the lessons over this period are there -- there tends to be a focus on issues associated with the great depression in looking at the early years of the fed do you think there are other important periods in say the first 50 years of the fed that can convey important lessons for thinking about current policy? >> sure. there are many interesting episodes. on the financial stability, the fed of course was founded, as i mentioned, was founded for the purpose of preserving financial stability. it had some success early on. then, of course, the great depression came and for various reasons stigma was mentioned earlier but i think there were other reasons as well including lack of sufficiently aggressive policy on the part of the federal reserve. the fed didn't meet its financial stability mandate during the 30s. obviously that was the

traders are in a waiting game with the federal reserve. the two-day fed meeting kicks off tomorrow and curiousity continues as to when the fed might pull the plug on its bond-buying program. meanwhile, reports say president obama will announce a replacement for outgoing fed chair ben bernanke in september. rumors are circulating democrats are pushing for current fed vice chairman janet yellen to take over the post. jp morgan may be moving toward a break-up. friday, reports surfaced that jp morgan chase is pursuing strategic alternatives for its physical commodities business. it follows a recent new york times report the bank has warehouses filled with commodities such as gold and aluminum and may be inflating prices. the federal reserve said last week it's re- visiting a 2003 decision allowing banks to trade commodities. "for people who cover the fed, this was a one-sentence statement on the one hand, but on the other hand, it really showed how this surge of media attention surrounding this was creating political pressure. up until now, the fed wouldn't r

like everybody has to make their payola in order to protect themselves from the fed but getting back to the federal reserve itself it looks like bernanke he's leaving town is it possible that the fed itself is set up for some kind of reorganization hyperinflation is just very. very bad for the government is it possible they plan for another solution maybe the fed being nationalized under control of congress of although i don't think they're going to certainly it's not going to be in it's not in their interest to fund the government's interest to have hyperinflation it's very destabilizing certainly not in our interest the rest of the people of america not in our interest to have the dollar go through weimar like zimbabwe like experience i don't believe they will let it happen i don't think we face that on the other hand we face you know currency controls and price and wage controls and capital controls them and all that sort of thing you know a bet that that may happen where we have a just a couple of minutes left here and we've done a lot of doom and gloom talk let's talk about something positive that mea

financial panic i would say what the federal reserve does it's simply institutionalize moral hazard in fractional reserve which already existed certainly that i think the fed reserve has done a lot of that on the greenspan right now it's gone astronomical on on the institutional moral hazard the moral hazard always just in banking because banks profit by creating debt and that can persuade us to borrow borrow money by. buying into the mississippi scheme or anything like that long before you can talk about clearing houses for banks right i'll do it and that's what the naive view is of people you know the austrians at one extreme you yeah that the other side it's all the fault of the government sector without the government everybody gets that naso in the section of supply and demand and nothing goes wrong with that that works with that vision it's got some sort of sense not a lot but some sense in a production world banks that have surprised constraints of supply and demand banks create money by double entry bookkeeping so when they double book and keeping. double the books. ok let's move on to another topic and i have ok you're talking about the jubilee ca

thursday after federal reserve federal chairman ben bernanke said the fed will keep its easy money policye foreseeable future. >>> a new jersey girl knew what to do when her mom had an emergency. 5-year-old chloe olson's mother was choking on a potato chip thursday. she decided to call 911. she did that thinking it was her dad. >> hello? >> yes. >> hello. >> daddy, mommy's choking. >> she's choking? >> yeah. she can't talk right now. >> okay. she can't talk? >> no. >> okay. can you open the front door and i'll get help over to you. >> okay. >> open the front door. >> love you. bye. >> how cute is that. firefighters arrived just minutes later. fortunately chloe's mom managed to free the potato chip herself. >>> and the secretary of state john kerry's wife is improving. she's now in a rehab facility in doctors upgraded teresa heinz kerry's condition from fair to good. the 74-year-old suffered a seizure in nantucket over the weekend. >>> and san diego mayor bob filner is apologizing amid sexual harassment allegations. in a statement yesterday filner said he had failed to respect women who wo

fed's bond purchases. fox business correspondent has details. >> reporter: it is a top concern among investors. when will the federal reservepumping billions into the economy. this morning, fed chairman ben bernanke gave them what they were looking for. >> with unemployment still high and declining only gradually, with inflation running below the committee's longer run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future. >> reporter: in other words, the economic recovery is still too weak for the federal reserve to pull back. they buy $85 billion of bonds a month in quantitative easing. the goal to push down interest rates on mortgages, auto loans, business lending so consumers and companies will borrow, spend it, helping the economy and boosting job growth. it has been working. in may, he suggested the fed may cut back on this program. that tanked markets, increased mortgage rates. in less than two months, mortgage rates spiked from 3.5% to more than 4.5%. he says as the economy improves, the fed will spend less on bonds and eventually stop buying them. it depends how the ec

fed's history. the transcript of the federal reserve governors' meeting last month revealed that they want more reassurance that the labor market was improving before scaling back stimulus measures. "the immediate reaction was stocks spiked and the dollar fell, because no one knows when interest rates will go up." "this is a data-driven fed..." then, fed chairman ben bernanke, speaking at an event commemorating the 100th anniversary of the fed, said the fed will adopt a "highly accomodative monetary policy." many investors read that to mean that tapering of the fed's bond-buying program that some speculated may begin in september may be pushed back. "unless the economic data picks up, i don't think we'll see tapering this year." bernanke says he will skip the fed's annual monetary policy symposium next month in wyoming, leading some to speculate that he is clearing the way for his successor. a short list of at least five people includes only one current member of the fed's board of governors, vice chair janet yellen. "my vote would be with janet yellen - extensive experience and history, already an active

federal reserve system. as someone who is more concerned with unemployment than inflation she is considered to be a dove at the fed and therefore more prone to support an expansionist monetary policy the federal reserve operates under a dual mandate of maximum employment and stable prices today the fed has a two percent inflation target rate to achieve what it considers stable price is now when yellen was serving on the. of governors the doves and hawks debated over whether there are having a two or is zero percent inflation target rate yellen took the two percent side and was quoted saying i believe that heading toward two percent inflation would be a good idea and that we should do so at a slow fashion looking out happens along the way and see deflation as more of a threat than inflation because deflation could cause the cost of credit to increase on the other side of the argument hawkster for price deflation over price inflation because deflation and creases purchasing powers for consumers it's also important to note that the term hawk is a relative term when used to describe personnel of all fed reserve govern

federal reserve system. as someone who is more concerned with unemployment than inflation she is considered to be a dove at the fed and therefore more prone to support an expansionist monetary policy the federal reserve operates under a dual mandate of maximum employment and stable prices today the fed has a two percent inflation target rate to achieve what i consider stable prices now when yellen was serving on the board of governors the doves and hawks debated over whether there are having a two or is zero percent inflation target rate yellen took the two percent side and was quoted saying i believe that heading toward two percent inflation would be a good idea and that we should do so at a slow fashion looking at what happens along the way see deflation as more of a threat and the place then because deflation could cause the cost of credit to increase on the other side of the argument hawks prefer price deflation over price inflation because deflation and creases purchasing powers for consumers it's also important to note that the term hawk is a relative term when used to describe personnel all reserve governor

fed speak with someone behind the scenes. if you have ever seen jerry o'driscoll, you don't want to miss him. former federal reserve governor, dallas vice president. he knows all with regard to the fed. he will be here next. >>> plus as facebook stock climbs back to just about its ipo price reports say the company is planning a new salt on the advertising world and some say it could be a tv killer. that story is next. >>> also we're heading back to our own liz claman for an exclusive american icon series at dow chemical's newest facility. what's happening, liz? >> david, look at the chemists and scientists behind us. they're coming up with real solutions globally. water, there is not enough c water to drink for all of the people in the world. coming up we'll go back in the lab. i've got my lab glasses on. we'll show you the way dow chemical, take dirty water, put their solution in it and i will drink the clean product. stay tuned. we're going to junior science. ♪ [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcncer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's sclose to t

interest rates edge back up because what's floating around now, more than just a rumor, is the fed, the federal reserveg it's going to scale back its stimulus and that's causing interest rates to creep back up, so as much as the housing recovery really is taking charge of the overall recovery here for the u.s., we are seeing the housing market take a few hits. one example pending home sales fell yesterday. those are the number of contracts, number of homes under contract. that number actually declined because of the rising interest rates and the pending home sales are a good indicator of what's to come. you're seeing the housing market take charge of this recovery in fits and starts, but the fact housing prices are up this much is a good sign. just to give you an idea, we're seeing in the southwest and the west, these home prices really jumped. interestingly enough, washington, d.c. is no longer the stands-out leader and the eastern sunbelt states like miami and tampa are lagging behind their western counterparts. we also saw a weakness in housing prices in detroit. carol? >> that, perhaps, is expected

investors are anxiously awaiting for the fed's next statement on the economy. the federal reserveegins a two-day meeting today and on wednesday. they will announce any policy changes. investors will look for any hints on when the fed could end its massive stimulus programs. >>> on wall street, stocks fell. ahead of the fed's big meeting. on monday the dow tumbled 36 points to close at 15,521. the nasdaq dropped 14 points. >>> asian stocks are mostly higher led by gains in china's shares. tokyo nikkei rose more than 1.5%. while hong kong's hang seng rose 0.5%. >>> the battle between cbs and time warner is heating up. the two companies are fighting over retransmission fees. late last night, time warner threatened to drop the network in new york, los angeles and dallas but backed off after being contacted by cbs. the two sides say they will continue to negotiate. >>> hundreds of fast food workers across the country walked off the job monday. the one-day protest was held in major cities like new york and st. louis. the protesters are demanding the right to unionize, and calling for a

financial panic i would say what the federal reserve does it's simply institutionalize moral hazard in fractional reserve which already existed certainly that i think the fed reserve has done a lot of that not to greenspan when it's gone astronomical on on the institutional moral hazard the moral hazard it was just in banking because banks profit by creating debt and if i can persuade us to borrow borrow money by. buying into the mississippi scheme or anything like that long before you can talk about clearing houses for banks right i'll do it and that's what the naive view is of people you know the austrians at one extreme you yeah that the other side it's all the fault of the government sector without the government everybody gets that and also in the section of supply and demand and nothing goes wrong with that that works with that vision it's got some sort of sense not a lot but some sense in a production world banks and have surprise constraints of supply and demand banks create money by double entry bookkeeping so when they double book and keeping. double the books. ok. move on to another topic yeah i have ok you're talking about the jubilee can you e

financial panic i would say what the federal reserve does it's simply institutionalize moral hazard in fractional reserve which already existed certainly that i think the fed reserve has done a lot of that not to greenspan right now it's gone astronomical on on the institutional moral hazard the moral hazard it was just in banking because banks profit by creating debt and that can persuade us to borrow borrow money. buying into the mississippi scheme or anything like that long before you can talk about clearing houses for banks right i'll do it and that's what the naive view is of people you know the austrians at one extreme you yeah that the other side it's all the fault of the government sector without the government everybody gets that nostalgia section of supply and demand and nothing goes wrong with that that works with that vision it's got some sort of sense not a lot but some sense in a production world banks and have surprise constraints of supply and demand banks create money by double entry bookkeeping so when they double book and keeping. double the books. ok let's move on to another topic and i have ok you're talking about the jubilee can you e