chairman imagine william burroughs a naked lunch at fed reserve chairman injecting heroin into his eyeball and you end up with what ben bernanke in work already doing a daily basis did he really afford them anymore can we support support them anymore . so the article follows this one guy jonathan hankins who bought a freddie mac. foreclosure up in oregon and he has a wife and a little child and only two weeks after moving in to discover that it was actually a major meth lab and he's trying to get freddie mac. to take it back and take some sort of responsibility because it takes the ten thousand dollars to clean your home out of all the chemicals the walls down and start smoking the walls that's what you can do with a methamphetamine former fannie mae jack. and a right freddie mac. won't take any responsibility for misleading us about the safety of our home and attorneys just tell us that we should have read the fine print tell that to my son simply walking away will not only negatively impact our credit but why. enable banks to continue this trend of severe negligence now this idea of just

andrew brimmer, former member of the federal reserve, why gold alarmed the fed. dr. mer, in 1931, foreign investors were pulling their gold out of american banks. reserves were being depleted. what does that do to a bank? what does the reserve do to try to combat it? for the banking system as a whole, if there's a significant reduction in reserves, from whatever source, it has to cut back on loans and the extension of credit unless it can get some relief. only the federal reserve, acting as a central bank, can provide more relief. so, in 1931, as the gold flowed to europe and so on, that was a loss in reserves the central bank had to make it up. the fed would not stand by. it raised its scountate to force banks to increase the rate of inrest paid to depositors. the result--foreign investors earned more interest and left their money in u.s. banks. that ended the gold drain. but raising thdiscount re had other, less fortunate, consequences. if the federal reserve raises the discount rate, that transmits a message to banks and the money market that it wants to be restric

the fed reserve and their beige books came out with a report last week. people are being laid off and decisions are being held off to hire. if the business grows to over 50 employees, they have to start paying large fines. they decide full-time employees for 30 hours a week. more businesses are only hiring at 29 hours or fewer so they are not considered as full-time. even the fed reserve says the president's health care law is hurting the economy. we are dealing with a budget when there is no better time to repeal the president's health care lots of people can get what they want, which is care they need from a doctor they choose at lower costs. >> on the budget, four years is a long time not to show up for work. it is a long time not to do your job. it is hard to imagine. this must be a budgetary masterpiece if it has taken or years to put budget on paper. we will look for to seeing that budget and hearing a debate on it and finding out how much is fact and how much is fiction. there is a big gap to fill. >> all of the democrats can come up for a budget i

i think it's also artificially created in large part by fed reserve action. so if you feel like there's any chance that they take their foot off the gas pedal, that could create an increase in rates, cause the spread to narrow significantly. it makes reits very risky if that's your belief. i just don't see any reason to continue with that. >> mike has a bearish view. he's buying a put tonight. here's how it works. when you buy a put, you want your stock to go lower, and specifically fall below the strike of the put that you bought by more than the cost of the trade. but above that level, you will see losses. it is a very simple trade. mike, walk us through. >> so much like bonds themselves. reits actually relatively low volatility. i'm not going to play around with complex spreads. i'm just looking to buy the july 155. spend five bucks for those things, about 3% of the price. this is going out in time. we don't have tons and tons of expiries in between, but basically the idea is making a bearish bet is not going to decay quickly. if it turns down, i can look

inflationary pressure demand which drives up by ages tends to increase employment pressure the fed reserves money printing which is going on right now only goes it goes into the. the assets of the banks that probably doesn't go into the bank accounts of individuals that money is not actually going to cause inflation it's an accounting error to think that it's actually even turning up in our own bank accounts to begin with so so so printing money doesn't cause inflation what does well what causes it is why it should men's bargaining pressures and so on which then means that what happens is that the it goes from what happens in the economy back to the banks bravado because the banks. we have we have a reverse thinking about what happens we think reserves are created the banks lend the other way around banks lend reserves a create it's a match them so the banks. kind says old analogy is perfect by thinking it can cause inflation by pumping money into the reserve accounts of the banks are you thinking you can push on a string and you come. what what do you say to those folks in the minute we ha

new study published by the national bureau of economic researchers said the fed reserve policy of using ultra low interest rates to encourage lending might be doing the opposite. i read through this some of it, banks are only lending 70% of their deposits. they used to lend 93%. what is going on? >> first the 93% was part of the problem. low interest rates don't encourage banks to lend. they encourage people to borrow. there is a distinction there. if you look at economy that has have low interest rates like japan they are in a permanent recession. it has not done what it needed to do and that is spur the employment out there. while people wanted to borrow, they can't get loans and they can't get loans because there is tremendous regulation and oversight and legislation affecting the banks. banks are afraid to lend. you have millions of people that have given up on their mortgages. they are in default. they can't get any credit. they are completely closed out of the market. whether or not they did it because they had to or whether or not they did it as they could. a foreclosure is blot

you mix them all up together and you get the absolute perfect environment for the fed reserve to stay stock market friendly. that's exactly what happened today. ben bernanke allowed the averages to power higher. dow gained 56 points. the s&p rising today, nasdaq jumping .78%. it's not sleight of hand or alchemy at work here, despite what critics say when they constantly slam the fed. >> boo! >> bernanke is not playing a game of move the stock market higher by simply continuing to keep the competition from bonds incredibly weak. he's got a real good reason for doing what he's doing, which is staying the course, keeping rates low. that reason? 1937. see, ben bernanke is a rigorous guy. he's a professor and a genuine scholar of american financial history. it's what he does best. he knows that in 1937 after three years of 12% economic growth that took unemployment from 25% down to 14%, the fed, the president, congress, declared victory over the great depression. ♪ hallelujah >> washington raised income taxes on the wealthy. >> boo! >> took the top marginal rate to the astounding 75% and i

what could new fed chairman alan greenspan do to revive the patient? during the 1970s and '80s, the federal reservepted long-term policies to halt inflation and ease unemployment. but what would the fed do in an economic emergency? monetary policy -- how well does it work? that's the question economic analyst richard gill and i will investigate on this edition of "economics usa." i'm david schoumacher. the federal reserve board is responsible for deciding how much money the economy needs to grow. in the early 1970s, the fed held to a policy of using the money supply to try to keep the economy on course. in times of inflation, the fed tightened the money supply to squeeze excess dollars out of the economy. in times of recession, it increased the money supply to stimulate growth. but in 1975, the fed, under the chairmanship of arthur burns, faced a new and troubling dilemma -- caught between persistent inflation and a growing recession, how did chairman burns keep the economy on course? by late 1974, inflation had become a serious economic problem. under pressure from rising fuel prices, inflation ro

reserve released second round of stress test on america's largest banks this week. banks are asking to return capital to shareholders in the form of dividends and share repurchases which the fed must approve. federal reserve accepted the plan of citigroup, bank of america, wells forego. jpmorgan and conditionally accepted they have to revise and go back. aly and bb & t rejected. those banks did not have enough of a cushion in reserves should there be a severe economic downturn. former chairman sheila bair telling me it's not perfect. >> one of the positive things we're getting more information about what's on their balance sheet and what the impact of the losses could be and stress scenarios. it's an imperfect process and one that's evolving. we're in much better shape. we still have a ways to go. we're in much better shape to go than europe. i'll take our banking system over europe. >> meanwhile starting to sound the same but in a good way. by thursday of last week, the dow notched a ten-day winning streak, the longest streak since 1996. each day up set an all-time high. treasury secretary said he doesn't think the markets are in a bubble right now and that the economy is re

breaking news, fed reserve chairman ben bernanke now taking questions at an event at the school of economics as much as it is an institutional problem having the range of the skills and they are talking to each other so the federal reserve we have a lot more disciplinary work fo where they talk to supervisors and financial people and etc., having the right skill set having talked each other is just as important as having the right people at the top. >> i could add i guess what ben said is absolutely right. when you go for the outset and the quality of work throughout all the divisions is certainly something very surprising, these are well-run, well oiled machines and so being the governor at the top of institutions like that, you become very humbled at the start because people are very aware of what they are doing. i would still maintain that you there's no conflict between what that indicated being a central bank and a regulator because getting regulations right there is some conflict. the typical reflex it is a financial crisis is claimed to supervisors in charge when it went wrong. so wha

but if that were to happen it would throw federal reserve policy into chaos because the fed is relyingying interest to be able to neutralize bank reserves in the future. it is an issue that must be discussed in the market. cheryl: you're right. that is not something that has been discussed thoroughly. you're doing it now. i'm actually glad you are. i think the other thing that i kind of perked up about one was listening. talking about the labor market. that dual mandate day after monetary policy in the employment picture. we're still kind of sitting in this environment or even the fed chairman himself in front of a television camera is talking about the fact that the demographics are shifting into have a lack of labour participation. and the markets. do you think they are doing enough right now to support the employment situation in? he seemed himself a bit frustrated, frankly. >> the problem with the economy today has nothing to do with monetary policy or with financial conditions. the problem is that the economy has been held back by a slew of regulatory uncertainty and tax uncertain

reserve and j.p. morgan in managing this economy how does that work well you know i think definitional leave the fed the federal reserve especially the district banks federal reserve bank of new york has a vested interest in making sure that this institution grows that it it remains unquestioned unquestionable jamie's on the board of directors a new york fed was to say or his term has expired now but yes after we left fire but now he's up it all conflict it was a conflict there's a conflict well we have to remember yes he a public official or see a private banker the federal reserve district banks or private institutions they're not even part of the federal reserve board their bank owned corporations where at the end of the year most of the money they make goes to treasury but there's a dividend paid out to those banks that own them or the london whale situation they claim that it wasn't it was an accident they're not doing proprietary trading anymore that they're supposed to not be doing proprietary trading but it was a glimpse into the use you call reckless endangerment is that a perfect example of ho

new york federal reserve bank of new york absolve the whole case and walked away from billions in restitution that would have been in the pockets of taxpayers because the new york fed remember timothy geithner's old bank is part of the federal reserve banking system and there are the banks to give these terrorists on wall street as i call them in the city of london in new york the loans at zero percent interest rate to sue all their incredibly risky schemes that blow up and as you point out when they do when they do blow up there are the risks and the costs are distributed to the taxpayer to the vast population but when things go right when the gambles pay off they keep the profits it's a two tier justice system and i'm shocked that eric holder is under his desk hiding saying oh no jamie diamond the job i'm not here please notify the hiding from you please i'm afraid of jamie dugan when they tell you know a lot of guy in america is cowering under his desk frightened of the banks. when there's sheer terror that jamie diamond might call him up that's a problem barack obama needs to put somebody into tony general's office who's going to complete would that would be a

federal reserve will keep printing money, continuing its bond-buying program until the job market improves but do these low interest rates really stimulate the economy? david: now we have a feder's reaction to today's decision and ben bernanke's press conference after. here in a fox business exclusive, is wayne angell, former governor of the federal reserve. wayne, great to see you. thanks so much for coming on. one thing interesting about the question and answer period after the fed decision, ben bernanke says he will not give what he calls quantitative thresholds for stopping the bond purchases. measures at which point you say that's it, that is the point we slow. he will for raising interest rates but not for bond purchases. i'm just wondering if the money printing program, printing money to buy more government bonds is something he is stuck in? he doesn't know when to get out of it? >> well, in a way he is is stuck, because this economy of ours has been very severely impacted by the previoos bubble we had in real estate prices. and the bubble breaking and declining real estate prices have subtracted from the wealth of americans and we're having a hard time getting going.

reserve released the stress test. the banks are asking banks to return capital to shareholders which the fed must approve. tigroup, bank of america, morgan stanley and wells fargo, while goldman sachs and jpmorgan's were conditionally accepted, they have to revise their ask and go back for the third quarter. alli and bb & t's plans were rejected saying they did not have of a cushion in reserves should there be a serve economic downturn. sheila bair telling me this week the stress tests are very useful, even if they are not perfect. >> one of the positive things about these stress tests is we are getting more information out about what is on their balance sheet and what the impact of the losses could be in various stress scenarios. but, you know, it's an imperfect process and one that is evolving. we are in much better shape. well still have a ways to go, but we're in much better shape than europe, and i would take our banking system over

even the fed reserve says the president's health care law is hurting the economy. we are dealing with a budget when there is no better time to repeal the president's health care lots of people can get what they want, which is care they need from a doctor they choose at lower costs. >> on the budget, four years is a long time not to show up for work. it is a long time not to do your job. it is hard to imagine. this must be a budgetary masterpiece if it has taken or years to put budget on paper. we will look for to seeing that budget and hearing a debate on it and finding out how much is fact and how much is fiction. there is a big gap to fill. >> all of the democrats can come up for a budget is $1 trillion increase in taxes. we'll find out which members of the united states senate are for balancing budgets, which ones are for continued irresponsibility, which ones want to rein in government spending, and which ones want to increase the deficit. it will make clear which members of the united states senate want to create jobs and which want to continue to rely upon go

reserve pipeline? they didn't have an open window to the fed, that was reserved for the commercial banks, the one thatd steady loans and deposits. that window was open during this crisis through tarp, should that window be closed? >> yes, that should be scaled back as well and wish you get back to the tradition of having fdic insurance for what it was intended for, protect deposits. david: two other democrats agree with you on that? >> i david: the reason they were together, talk about federal reserve policy and banking regulations, what do you think about the federal reserve and its policies in terms of trying to dissuade them. it is working or not? >> in terms of the policy, i think that ratio of benefit to risk his way out of whack, have thought that for quite a while. in terms of too big to fail, the fed has a lot of tools at its disposal under dodd-frank with higher capital requirements that it has chosen not to do that. david: dodd-frank itself, clearly as it is going in the opposite direction, is dodd-frank a failure? >> too big to fail is not only growing in spite of dodd-frank, it is growing

reserves, j.p. morgan chase, citi, wells fargo, will do more when feds pay on the reserves. >> another one which you be more important, what is the distinction between the two? >> hard it figure it out but the one yesterday is under had todo. this will include plans banks have for payouts. if we find the banks don't have enough capital, the feds could put a kibosh on their payouts. >> you say in some of the number that came out yesterday, you were surprised by how good they are and it might loosen up their ability to pay. >> bank of america had more capital than the feds said they would require. citigroup did well. surprisingly, some of the banks people talk about as being strong were very close to the edge. goldman sachs, j.p. morgan, a very stressed scenario. they come close to the limit where the fed will cut them o off. >> it was about a year ago this time last year guys where the london whale was swimming around, bringing up big losses. jamie dimon will be there next week, what will he say, and is he likely to get a whoopin? >> well, politicses love to be in front of the camera -- >> you think?

the fed is rescuing the markets and investors. federal reserveanke are saying interest rates will stay low. inflation is not an issue and he is not concerned about eventually raising those rates. the markets were thrilled by the news of having a best two-day streak in the year. dow and federal reserve president richard fisher told me the fed is very aware of what the stock market and the economy are doing. >> we have been the source of fuel for whatever recovery we've had. but i think there are limits and there's also a danger of our becoming defendant, i call it monetary ritalin. it served a purpose and it is a delivered effort to raise the markets so that we have a wealth effect the thing goes down to the people. but we haven't seen employment expand and that's part of our mandate given to us by congress. so i think it's time to really

richer existed reservation with the fed. issues of interest i would say unofficial.but not at the level of the. sponsors for individual business and i felt that we were missing. and so we decided to set up a group of industrious rich better be guaranteed yesterday so as to have the capacity to listen to the c.e.o.'s. there were the and yelling who run fia in italy two three said decker who rammed phillips and another one. was paid guillen how to run a volvo in sweden people from siemens and the big german chemical companies the french spaniards then the british. small number of people who ran. the biggest companies in europe were ready to talk about big policy issues with those people who were in charge of the european government. and then when they meet. a visionary president of the commission by the lol they find dillo is thinking in entirely the same terms so why don't they get together and pool their ideas that's a breakthrough read. under fastly tate that's probably a good a good way to put me as a description not being is a little is. understood as a bit of a d

the fed is rescuing the markets and investors. federal reservere saying interest rates will stay low. inflation is not an issue and he is not concerned about eventually raising those rates. the markets were thrilled by the news of having a best two-day streak in the year. dow and federal reserve president richard fisher told me the fed is very aware of what the stock market and the economy are doing. >> we have been the source of fuel for whatever recovery we've had. but i think there are limits and there's also a danger of our becoming defendant, i call it monetary ritalin. it served a purpose and it is a delivered effort to raise the markets so that we have a wealth effect the thing goes down to the people. but we haven't seen employment expand and that's part of our mandate given to us by congress. so i think it's time to really

the federal reserve leaves interest rates where they are and stocks move higher. >> coming up, oracle and fed-ex, two corporates report disappointing earnings. >> and hot houses. more good news on housing sends home building stocks higher. we'll look at whether or not there's a thaw in the mortgage market as we continue our stream guide. all of that and more ahead. >> so, tyler, all about the federal reserve and the economy. >> and cyprus in there for good measure. it was a very busy news day. we're here to tell you all about it. the federal reserve did it again. says it's going to keep ierest rates where they are, near 0%. and it also says it's going to keep up its bond-buying program. the markets like what they heard from the fed along with a pledge from the new head of japan central bank about its own bold, easing measures to be unvailed on thursday. as a result, stocks moved higher here about. the dow touching an all-time intraday high. the blue chips did close 56 higher. nasdaq up by 25 and the s&p 500 se f the rst time in four sessions adding 10 points and taking us to within a few of a