the fed reserve rather than i see research off on about nine and sixty six and about eighty percent or ninety percent private debt to g.d.p. ratio from that point on you had more and more debt claims on the saudi more and more speculative debt turning up there and you began to get more gambling being the usage of debt rather than productive investment the knowledge in fifty's industrial capitalist america was being wiped out by the knowledge in the sixties seventies growth of financial capital i've suffered realty began in sixty six we had the. bankruptcy at that stage and that actually not in sixty six when you deflate the dow jones the consumer price index you find that was the biggest peak in the stock market products of the two thousand paper so it was downhill from there from sixty six to eighty three it went down then the bubble began in the eighty's framer totally financially driven society so. that pretty fragility has been rising and we now are carrying a level of debt six and seven times what the private sector had back in the fifty's . certainly for three to four times what

former chairman of the fed reserve about the looming fiscal cliff and greenspan a mild recession is athe country's debt problems under control." listen to this. >> i think if we have to have a moderate recession to solve this huge fiscal problem that is in front of us, i think that is a very small price to pay because we're not going to get out of this thing without paying. >> there is much more to hear on that. so, make sure to check out the full interview today at 1:00 p.m. eastern on "your money" with ali velshi. >>> did you know drinking water after a meal could actually jump start your metabolism. mark mcdonald is here to tell us how much and when. [ abdul-rashid ] i've been working since i was about 16. you know, one job or the other. the moment i could access the retirement plan, i just became firm about it -- you know, it's like it just hits you fast. you know, you start thinking about what's really important here. ♪ >>> welcome back, everyone. holiday season is here and extra pounds are right behind those endless parties, meals and drinks. if you're looking to enjoy all the g

. >> we erased positive catalyst in the mark e don't have the fed reserve, the put dissolving, nobody cares they are around anymore or thinks they can do anything else. no longer any hope there maybe some kind of change. if you look at the fiscal cliff, we are all worried about that, we do know that even if there is a comp prom my you are still going to be seeing fiscal tightening. add in what's going on in europe, add in everything else that's what's wrong with the world and you have a day like today. >> what did you make of the action, micah? >> first of all, a lot big per volume than we have been seeing on the options. trading 19 1/2 million contracts we have seen in a month. broadly, every single sector there wasn't a single one of them that saw pullish on balance p the subgroups, the only ones that did were mobile telecom and alternative energy. drilling down into the health care sector, backing up what steve was talking become yesterday, seeing the managed care companies trading up, the hospitals down, today that reversed, obviously only point to the election as an indication of

today is the same size as it was two months ago so the fed a reserve has to put some juice into the system if it wants to get the stock market rising as a really interesting and good point now let's talk about what has returned the most to during the last obama term there is this great chart i'm going to put it up for our viewers and it shows all of these different assets and what they've returned and gold and silver lead the way now we're told by neo classical economists and policymakers that the fed needs to print and we need to spend to get on a good growth track and rebuild a healthy economy but what does it mean that a non dividend yielding asked that two of them actually have performed the best out of all these financial assets. you know it's not really a return on gold it's just the appreciation of gold or to be more precise the depreciation depreciation of the purchasing power of the dollar you know gold buys the same amount of crude oil it did four years ago same thing with silver what's happened is the dollar purchase a lot less because of al

improvement of financial markets is the national financial conditions index, maintained by the fed reserve bank of chicago. this index shows that financial conditions viewed as a whole are now about as accommodative as they were in the spring of 2007. in spite of this brought improvement, the harm inflicted by the financial crisis has yet to be fully repaired important segments of the financial sector. one example is the continued weakness of some categories of bank lending. banks' capital positions and overall asset quality have improved substantially over the past several years, and overtime the balance sheet improvements will position banks to extend certainly more credit to back dependent are worse. indeed, some types of credit, such as commercial and industrial loans, have expanded notably in recent quarters. nonetheless, banks are being a conservative in extending loans to many consumers and some businesses, likely even beyond the restrictions on the supply of mortgage credit i talked about earlier. this caution in lending by banks reflects their continued desire to guard against ris

improvement of financial markets is the national financial conditions index, maintained by the fed reserve bank of chicago. this index shows that financial conditions viewed as a whole are now about as accommodative as they were in the spring of 2007. in spite of this brought improvement, the harm inflicted by the financial crisis has yet to be fully repaired important segments of the financial sector. one example is the continued weakness of some categories of bank lending. banks' capital positions and overall asset quality have improved substantially over the past several years, and overtime the balance sheet improvements will position banks to extend certainly more credit to back dependent are worse. -- a bank-dependent borrowers. indeed, some types of credit, such as commercial and industrial loans, have expanded notably in recent quarters. nonetheless, banks are being a conservative in extending loans to many consumers and some businesses, likely even beyond the restrictions on the supply of mortgage credit i talked about earlier. this caution in lending by banks reflects their contin

in some sense it validates the more accommodative stance the fed reserve took starting in september., we have also been trying to get a feel for what all of this is going to mean for the fiscal cliff how or what a compromise would look like. we did hear from the president who said he would be working with the other party. but clearly, a win for the president means he has the upper hand in this at this point. what does compromise look like as far as you're concerned? >> well, i think, you know, joe is right in saying, you know, who is going to blink first? i mean, the fiscal cliff is overriding as importance to the market, any extension of the tax cuts i think would be a huge rally in equities. they're very worried about the cliff. my feeling is obama would take a -- he would extend almost all of them, he wants a little bit of an increase on that top rate. i don't even think he would go all the way, he would accept something in between and say i come in compromise, i presented this to the republicans, now the republicans can stand fast and say, no, we're not going for any tax increase

what the fed reserve can and will do is continue its stated policy, which is to do additional asset purchases, take whatever other actions are appropriate to try to ensure that the outlook for labor markets improves in a sustained way and a substantial way. we will continue to do our best to add to the recovery. the point i made, and i want to reiterate this, is that the ability of the fed to offset headwinds is not infinite. we have certain tools, we have obviously used are easiest tools, and we can certainly have a meaningful contribution to supporting recovery, but in particular, in the worst case scenario where the economy goes off the broad fiscal cliff, the largest fiscal cliff, which according to our own analysis would throw the economy to the recession -- i do not believe the fed has the tools to offset that. that is why i believe it is important for the congress to address these fiscal issues soon and in a bipartisan way, a way that achieves the necessary long-term sustainability concerns the value of talk about recently, but also takes into -- i know you have talked about recently,

reserve board since 2006. for our interview, he opened up the fed headquarters, rarely seen by the public. it's a monumental building along the national mall. construction started in 1935, in the depths of the great depression. you know, mr. chairman, i think the federal reserve, for most people, is a mystery. >> well, it's an institution that people don't hear so much about, but it's a very important one. it manages monetary policy for the country. it's one of the main tools we have for stabilizing our economy and keeping prices stable. >> when was it founded? >> the fed was created by congress in 1913, and its original purpose was to deal with financial panics, which is what we're doing right now. >> bernanke's crisis started in 2007 with the mortgage meltdown. lenders began to fail. bernanke cut interest rates repeatedly. in 2008 the fed stopped the collapse of bear stearns by arranging a sale to another firm, but then came the end of wall street as we knew it. mortgage giants fannie mae and freddie mac were seized by the government. on september 14th, merrill lynch was sold in distress,

if the fed really wanted to help the economy, it would look more carefully at why the link with borrowing and spending by consumers has broken down. the assets -- the reserves just sitting there, as you said. if the fed really wants to help the economy grow, they need to understand why that monetary base, the fed's balance sheet hasn't been translated into monetary growth. we're growing around 8%, but that size of balance sheet, if they focus more carefully on the problem between lender and borrowers, an the regulatory structure -- >> why is that a problem? is it a credit problem? is it a problem where people just have, you know, hidden their heads in the sand? what's that? this is the first time probably since the '30s, lee, that the central bank has pumped in all this money and it hasn't work. as you say, if it was going to work, it would have worked. it's not been changed by the most dramatic increase probably in our history, and a rad cam change in the center bank. it hasn't worked. why hasn't it worked? >> well, because what they did essentially was pump up their own balance sheet, which you know we call high-powered money. the next step to translate t

so corsi was former federal reserve chairman the fed is a major regulator of banks of the industry so what do you do about you know the wishful thinking or the conflicts of interest or the ideological biases of someone like a regular. joe you know i think in the greenspan quote i think what's really important there is to think about the long term incentives so i think people in really good and caring about that short of uncertainty it's really hard to think about being so again we're just not good and think about the long term and the stock market is in principle supposed to be about the long term it's not about the short of it. so look i don't think this is an easy system to fix but i think that we have got to a situation where we have. to call blocks for us to right now on this. you know in the same way that i think about medicine so the f.d.a. regulates medication and every time we want to introduce a new medication we have to spend i mean not me but medical companies have to spend a tremendous amount of money is showing that people are better off with this medication when we got t

bank of explains that the reason they hold forty one percent of their gold reserves in new york quote the gold held the new york fed ken in a crisis the pledge with the federal reserve bank as collateral against us dollar denominated liquidity now this kind of expanded ninety stable to congress in which he claimed it was nothing more than a tradition or a trinket to hold goldmember gold was something that indians accumulate on wedding day as as a trunk it but he doesn't give it any monetary or value whatsoever here in germany clearly ringing the alarm bell what about this book. all the held in new york some would argue including james records who's a respected author and guest on the show that the u.s. will will not allow germany to take back their gold as the paper money apocalypse occurs you have a debasement around the world and gold is king once again your thoughts if you look at history gold has been used not only as a medium of exchange and money it's also been used as an instrument of national economic policy and indeed that borders on national security at certain times it is entirely conceivable that not ju

minutes just ran a headline by john hiltonraff ho is an insider when it comes to federal reserve reports, the fedill announce q e 4, large-scale asset purchase of some sort adding liquidity to the system at their next fomc meeting which is december 12th, a two day meeting making the announcement the 12, indicating that the fed's monthly asset purchase of $85 billion will be unsterilized and generate much more money but in regular speak, the fed will be printing money and buying bondss according to wall street journal, it was up 101 points. charlie: the market is immune to the fed printing money. this is not a good move. i have my own story to do but the fed is doing duty for, printing more money, you buy securities of the balance sheet, this is very bad for the economy. pushing on a string now. liz: let's get to the sec story. charlie: could you read this? the securities and exchange poised to follow -- [talking over each other] charlie: new questions emerging not just about where executives use inside information or profit on trades, but dino to police bad behavior. liz claman has latest headach

reserve. maybe the fed is too powerful and they print too much money. and they can do too much unsupervised.es, i think they will. but i think it won't come quickly. that is why i am so delighted to go to college campuses because the young people seem to have an open mind. i think it usually takes a wild to change the course of the country. they are not going to be doing that. after the recession had come in a major crisis of five years ago,. charles: a lot of people say you predicted this. i do have to ask about expressing interest in running. would he make of it? you are very popular among young people. a fresh voice a lot of people are looking at come in. are you excited about the prospects? >> it certainly would be excited. it seems like four years is a long way off. the election is over. charles: the election cycle never stops these days. ron paul, i have to tell you that i have learned a lot rom you over the last several years. there is a reason you are a legend. i thank you for taking the time. >> thank you for having me on, charles the one with the economy looking like an ugly doll,

right now, fed reserve policy basically has insulated us from one of the major consequences of fiscalrresponsibility. when interest rates begin to rise, people in the housing industry, people selling durable consumer goods, stuff on credit, they immediately begin to howl. now we have none of that -- really, for the average american out in dim one or wherever -- des moines or wherever, the consequences of our fiscal irresponsibility are not great. you can feel badly that the country has huge deficits and is unwilling to live in its means, but in your day to day life what you are worried about more is do i have a job. you are not worried about inflation because it is very low. one of the great devices that gets the people behind the leaders in trying to tighten our belts is missing. as many people have said, the attention that thof the nation was not on this topic particularly after august's 2, when iraq had invaded kuwait. by august 10 we had deployed naval assets to that area as well as air assets in september and october. the president was getting together a coalition to invade iraq.

we are going to see inflation become a problem at the time when the fed is looking at literally trillions of dollars of excess reserveshat the commercial banks have at the fed. it will be a very delicate job for the federal reserve and its new chairman to unwind that without letting inflation get out of control. >> so the type of person who needs to be in that role -- >> it has to be somebody who understands that and is committed to not letting inflation rates rise. >> thank you very much for joining us tonight. >> good being with you. >>> coming up democracy is sweeping over rockefeller center. move over tourists. nbc news is taking over the plaza to bring you election results like no one else can. we'll take you there next. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. >>> this is a special election day presentation of "squawk box," your money,

reported that in one thousand sixty eight memo sent by the bank of england to the federal reserve reveal that the fed had sent at least one hundred seventy two bad delivery gold bars to london in the late sixty's for safe keeping for the german bund as bank as repayment for swaps another intriguing story earlier historian as well as a market guru here thought yeah you know i read that story with a lot of interest basically they're pulling the wool over the germans eyes but you have to remember back in the fifty's and sixty's germany was largely controlled by the british the americans and the french you know the occupied berlin based. glee set the stage in west germany for the rebuilding of the german economy and so they had a strong hand in german politics but you know here we are you know fifty years later sixty years later we should be thinking differently you know germany has been unified it's a major power major political force within the euro so it's sort of logical that they would want to bring their gold back and i think they should since we've been talking now going back to the ancient theory

was set up to do was to make monetary policy independent of the federal reserve so the concept, brian, of limits on fed purchases really is a dangerous game we have not really seen a fed official ever play before. >> the meantime, there's been bernanke putting it out there and saying fix the problem, washington, we are not going to bail you out anymore. >> ben berman kirk at a speech today before the economic club of no he warned there could be recession and no matter what happens, even if you solve the fiscal cliff problem, we are going to have some fiscal drag, not necessarily recession, but there will be fiscal drag next year. also arguing that economic potential could be lower. since street signs i is the home of hopium, i wanted to gift other side of what ben bernanke said, not the threat part >> accumulating evidence reducing the potential growth rate our economy somewhat, at least, during the past few years. in particular, slower growth and potential output would explain why the unemployment rate has declined in the face of the relatively modest output gains we have seen during the recovery. >>

i think what's far more important is the advent of continued expansion of the reserves by the fed. by the ecb. and, perhaps most importantly of all now with the upcoming election in japan where the likely successor to the prime minister, mr. abe, has made it abundantly clear he expects the next governor of the bank of japan to expand supply of japanese yen in an unlimited fashion. those are the things that are driving gold prices higher. i'm bullish of gold in yen terms. it's been working quite well. the second question, what happened yesterday, still open for debate. what was interesting was on friday, you had a huge expansion of open interest. yesterday you had an actual -- almost a perfect decline by the same amount in open interest. it looks like somebody took a long position -- two things either happened. either a very large hedge fund took a large position and puked on it yesterday. or trying to game the system because of the amount of puts that were put in. there are a lot of people thinking it was a fat finger trade. i thought it was for a while. it doesn't appear to have b

. >> everything has changed in just two years with the federal reserve. is the fed the white house and congress with all this free money and stimulus? qe-1, 2, 3, and possibly 4 now. >> i think we ought to change that to p.m. 1, which is print money number one. that's all this is. >> bottom line, if we do not get our house in order, what happens to america? >> i think that if we do get our house in order, the future of america is really bright, and we can compete with the best and brightest. if we don't, we're well on our way to becoming a second-rate power. >> could the u.s. go bankrupt? >> absolutely. absolutely we could go bankrupt. you know, you can't go on with $1 trillion of deficit year after year after year. don't forget, we only take in $1.3 trillion in tax income. we could be spending $1 trillion on interest alone by the year 2020. we can't go on like this. >> we borrow $3,600,000 a day. every buck we spend we borrow. the big bang theory of the universe was 13,600,000,000 years ago. >> unbelievable. very quickly, we going to go over the fiscal cliff? what

fed vice chair janet yellen saying that the federal reserve shows optimal policy could dictate lower rough 2016. also saying the fed could eliminate calendar date guidance entirely and replace it with economic targets. that's been discussed among others. charlie evans says she's strongly supportive of using these economic targets and they would promote automatic stabilizers, allowing the market to adjust automatically to incoming data. it would also help the public understand fed policy. also says the fed is considering forecasting optimal policy pass by individual members. so by the way, janet yellen chairs the subcommittee on communications. these are important words from an important person. on the fed and inflation, she's remiebdsing us a 2% inflation target is the central tendency, not the ceiling. if the 2% is a ceiling, what would happen is all the deviations would be below 2%. she's reiterating what the fed has said. it's symmetrical. so maria, at the end of the day, these are important comments from janet yellen, who's the vice chair but also heads the fed's subcommittee on c

one of the fed presidents, one of the presidents on the federal reserve says that congress should stepd stop the fed from printing up a ton of money. peter barnes has the story, this is breaking right now. and now, i just encapsuled it there with a brief couple of sentences, have i got it right? >> you do, stuart. jeffrey lacker, and a voting member of the fmc, highly political of the loose money policy by the fed, qe3 and everything else, he's worried that unconstrained policy will create thorny problems for the economy down the road and the feds should check at its lending policy and if not, quote, one could imagine legislation that limits the fed to narrowly defined set of lending activity. very short sof vents banks and rates above market rates. if the fed cannot limit n autit its own. stuart: sounds like ron paul. stuart: they eventualfore breaking that. back to ed. you're saying that private equity doesn't make sense for a regular private equity company to walk in and buy the brands because they don't have a bakery and the distribution service to do it, but what about an establis

reserve bank of new york. if stock markets fall and say the market goes into december down 1,000 points, down 15 hundred poin 00 points, do you think the fed will step in with a safety net and buy up more reserves? >> i think that might add to the wrong kind of volatility but they do have the meeting before we're likely to settle the fiscal cliff in mid-december and that puts the fed in a difficult spot. they will have to decide whether they are announcing the end of operation twist they are selling the short end and buying the long end which is supposed to expire at the end of the year. now, i think the original plan back in september was to sort of wait and come back in the first quarter and see whether they will do more, but they may have to hint at something at their meeting upcoming which makes me a little nervous. >> december 15, 16. >> yeah. >> they are not going to stop operations. they are going to keep buying bonds. >> if they stop buying bonds the market will look at that and go oh, my god, they see the worst of it and have inside information. >> so i think they will probably just do steady as she goes. i think they might not wa

>reporter: you can count on the federal reserve to thoroughly dissect the nuers in this employment report. fed chairman ben bernanke e s made stronger job growth a top priority. but whilemployment is movinghi in the right direction, the october reading may not satisfy the fed.y >> certainly slower than they would like and i think even this report and the one prior to this one will be viewed as not a substantial change from the modest improvement that they've been seeing. so look for the fed to make more moves soon to keep this jobs recovery on track. tom? >> tom: of course, attorney, today's numbers come just ahead of the election. what are the optices, the political optics. how do the campaigns greet this report? >> reporter: tom, i'm sure you're going to be shocked to learn and surprised to elshere that the romney campaign did noe greet esewsew well. they said i shows the eidnomy is virtually at a standstill because basically the unemployment rate is where it was when obama was sworn in. now the obama administration is pointing out they created more than five million jobs since the president