the market is more powerful than the fed. i complained about the fed. think about how we try to prop up the dollar in the sick -- in the 1960's and early 1970's. the market was overwhelmed. they did not come to their senses. we get tremendous benefits and nobody wants to really talk about it because they know it. until now, they have started to recognize that people are getting skittish about the dollar. now the response to our easing is not giving us the same result. with this newly announced easing, interest rates have gone up. they have not gone down. you are limited as to what the fed can do. they are supposed to be in charge of unemployment. they give us an unemployment rate according to the treasury. according to free-market economists it is over 22%. there -- their methods are failing. >> we will have sharper ups and sharper down without a central bank. what would a world and an economy run by congressman ron paul look like? how would that play out in terms of being able to access credit in an economy we have now? >> we would have a reasonably st

i complain about the fed.ink of how we tried to prop up the dollar in the 1960's and early 1970's. we said the dollar is good as gold until the market overwhelmed. they didn't come to their senses and do this. so yes, we get tremendous benefits and nobody wants to really talk about it. they are starting to recognize the people around the world are getting skittish about the dollar. now the response to our easing isn't giving us the same results. with this newly-nonced easing. there's a limit to what the fed can do. they wonder whether they should have that mandate. the treasurer is over 17%. so their policies are failing, and that's becoming more evident every day. >> congressman, when you and i have talked in the past. you said the fed has monitored the cycles we would have sharper up and downs in the economy. i wanted to get at that a little mor. what would the world and economy run by ron paul look like? and how would that play out to real people in accessing credit and functioning in an economy like now? >

how does the fed get out of this? one of your colleagues have suggested that this new policy will complicate the fed's exit strategy from its record balance sheet. >> president plosser is right to emphasize that we have complicated our exit strategy. i think the policy will outweigh the risk. we have got a lot about at its over the last two years. we do have ideas about how to do it. one is that we have a new tool that we have not exported plea had, which is the ability to pay -- we have not historically had, which is the ability to pay interest on reserves. we also have a term deposit system to soak up reserves. if nothing else, we can also sell into the market. we can sell our portfolio of treasury securities in an orderly way and in a measured way that does not disturb the market. we can get the balance sheet down that way. there are many ways we can approach exits. plosser is right to emphasize that is a risk for us. >> this week, congress mandated a bunch of records to be released. we spent a good part of the wee

feds dead, baby. >> the fed's independence is critical. the central bank needs to be able to make policy without short-term political concerns. >> the fed's independence critical? yes. the fed's conditiocritical? maybe. the federal reserve bank is almost 100 years old. it was created as the u.s. national bank. the fed has three main duties. one, manage u.s. money and u.s. credit. two, service the en credit. two, serviand financial system. three, manage the 12 regional fed banks. because the fed oversees the most powerful economy tin world, it bears the responsibility of being the most powerful bank in the world. the fed is also the most powerful because it is totally autonomous. it answers to nobody. it reports quadrennially to congress, but it is not subject to its purse strings. the fefespends on itself what it says it needs. the fed's chairman defends his unique autonomy. >> in order to do what's best for the economy, we do all of our analysis, we do all of our policy decisions based on what we think the economy needs, not based on when

defenders of the fed will say that we don't want to go back to the system that existed before the fed. it is true that there were three major financial panics. over its history, the fed has not made panics less frequent. we have had five banking panics in short order between 1930- 1933. those were worse than any panic's under the pre-fed. . it led to the terrible collapse known as the great depression and more recently we have had the financial panic of 2007, the worst since the great depression by some measures. that ushered in today's economic woes. defenders of the fed no longer say it has abolished financial panics. they used to say that before 2007. they say let's not just a fad on one mistake. how many times will they have to say that? as the fed lowered unemployment or increased real growth or lower real interest rates in the economy? no, but we should not expected the fed to do those things. the fed should focus on one objective which is using its control of the stock of money to maintain the purchasing power of money. using that leverage, the fed cannot improve real economic

the fed is also very worried about -- the market is very worried about the fed creating inflation thatwill also push up interest rates. that means higher mortgage rates. some people won't like it, but we've worked at much higher interest rates than we have now in the past. i think the economy will do very well in 2011. >> susie: all right. we're going to have to wrap it up there. thanks a lot, brian. >> thanks, sues sigh. >> susie: we've been speaking with >> tom: for an investment perspective on today's statement from the fed, we're joined by rob stein. he is the global head of astor asset management and he joins us from the c.m.e. group in chicago. >> tom: rob, welcome to "nightly business report." do you agree with brian's assessment about 2011 growth, despite the disappointing language used in the fed's statement? >> i do. i think in 2011, the economy will surprise on the up side. it is interesting that the fed's statement was so dire and so glum because as brian pointed out. the g.d.p. in the fourth quarter will probably be 4% or better, and the third quarter will be revised to cl

so happy with the federal reserve they either want it structured changed or sixteen percent want the fed abolished altogether but is this just a temporary reaction thanks to our terrible economy or as a really sign of change or ask mark calabria of the cato institute next several states across the country believe that sure real law is creeping into our justice system and they're trying to stop it more than seven state legislators are drawing up measures to ban shari'a law but is this really a necessary move or just a sign of islamophobia we're going to host a debate on the issue then in light of all the attention surrounding we can leaks and hackers we can't help but wonder if we might be witnessing a have to fist revolution are they didn't pranks and becoming a real political force or did we just start paying attention to them peter ludlow will join me with his thoughts on the rise of hackers in our society and what if i told you that teens are getting pregnant all for the sake of landing a spot on a reality t.v. show i find it disturbing but perhaps this is what we should come to expec

even if we put aside sthrule objections to the fed, the fed is failure on pragmatic terms.ecessions haven't been less frequent, shorter, or less severe on the fed's watch. now, defenders of the fed will say, but, surely we don't want to go back to the system that existed before the fed, and it's true in the half century before the fed there were three major financial panics. over its history the fed has not made panics less frequent. under the fed's watch we had according to most authoritative count five banking panics, in short order, between 1930 and 19 33, those were worse than any of the panics under the pre-fed period. led of course to the terrible collapse and output known as the great depression and more recently we had the financial panic of 2007, the worst since the great depression by some measures. which ushered in today's economic woes. defenders of the fed no longer say that it has abolished financial panics. they used to say that before 2007. now they say, let's not judge the fed on one mistake because after all the fed is learning, but how many times will the

in the panic of '08, the fed put up $3.3 trillion, and just this past week, the fed revealed who got emergency help. turns out, 21,000 transactions-- to financial firms, including citigroup, morgan stanley, goldman sachs; to major industrials companies, including g.e.; and even to foreign banks, including the bank of england. most all of the loans have been paid back. but it was a historic transfusion of cash in a global system that was bleeding to death. we asked bernanke what would have happened if the fed hadn't acted. what would unemployment be today? >> bernanke: unemployment would be much, much higher. it might be something like it was in the depression-- 25%. we saw what happened when one or two large financial firms came close to failure or to failure. imagine if ten or 12 or 15 firms had... had failed, which is where we almost were in the fall of 2008. it would have brought down the entire global financial system, and it would have had enormous implications, very long-lasting implications for the global economy, not just the u.s. economy. >> pelley: but it's also true that t

the main reason that the fed is at risk of being insolvent on a market-value basis, is that the fed has a large amount of interest rate risk embedded in its portfolio. that is, its holding of long term assets compared to its short-term liabilities. based on rough knowledge which is what is available of the composition of the fed's balance sheet, prior to the qe2 purchases of medium and longer term instruments, about a 50-basis point parallel increase in interest rates of all maturities would probably result in a market value insolvency of the fed. that is a half percentage point increase. after qe2, with an increase in the maturity of assets on the fed's balance sheet, it might be about half that amount. so you can see the insolvency of the federal reserve on a market value basis is not a low probability event. interest rates just over the last few weeks have gone up many basis points, so that an increase prospectively of 30 or 40 basis points is definitely in the realm of possibility. now the fed is not required to do its accounting on a market value basis of the its existing portfolio

in other words, instead of just giving men t to the fed, infed - money to the fed, instead of the fed giving this money to the financial institutions, we should have said we provide you this money to get it into the economy, start providing loans to small businesses. mr. president, at a tile when large corporations are more -- mr. president, at a time when large corporations are more profitable than ever, the fed did not demand that corporations that received this backdoor bailout create jobs and expand the economy once they return to profitability. what's going on in america, unemployment unofficially at 9.8 -- unofficially probably at 15% or 16% -- wall street is doing fine. a few years ago, wall street earned some 40% of all profits in america. they're doing great. but what the fed should have done and should do now is to tell watt street, -- tell wall street, you're part of the economy, you're not just an isolated area just living for yourselves, you've got to be part of the productive economy, you've got to lend out money to small businesses to start creating jobs. mr. president,

at a time when big banks are nearly $1 trillion in excess reserves parked at the fed, the fed has notrequired these institutions to increase lending to small and medium-size businesses as a condition of the bailout. in other words, instead of just giving money to the feds -- instead of the fed just giving money to these financial institutions, the fed should have said, we're giving you this money in order to get into it the economy. start providing affordable loans to small businesses. mr. president, at a time when large corporations are more profitable than ever, the fed did not demand that corporations that received this bailout create jobs and expand the economy once they return to profitability. what's going on in america, unemployment officially at 9.8, in real since -- sense probably 15-16%. wall street earned 40% of all profits in america. they're doing great. but what the fed should have done and should do now is to tell wall street, you're part of the economy. you're not an isolated area living for yourself. you have to be part of the productive economy. you got to lend out m

the main reason that the fed is at risk of being insolvent on a market-value basis, is that the fed has a large amount of interest rate risk embedded in its portfolio. that is, its holding of long term assets compared to its short-term liabilities. based on rough knowledge which is what is available of the composition of the fed's balance sheet, prior to the qe2 purchases of medium and longer term instruments, about a 50-basis point parallel increase in interest rates of all maturities would probably result in a market value insolvency of the fed. that is a half percentage point increase. after qe2, with an increase in the maturity of assets on the fed's balance sheet, it might be about half that amount. so you can see the insolvency of the federal reserve on a market value basis is not a low probability event. interest rates just over the last few weeks have gone up many basis points, so that an increase prospectively of 30 or 40 basis points is definitely in the realm of possibility. now the fed is not required to do its accounting on a market value basis of the its existing portfolio

former fed economist roberto perli says the central bank's plan to buy $600 billion in bonds in order to keep interest rates low and boost the economy will have some new critics in a more republican congress. >> there are some concerns in congress that the fed could be creating inflation, could be blurring the lines, once again, between monetary and fiscal policy and certainly congress does not like that. >> reporter: and when congress is not happy, investors take note. some analysts argue political pressure will make it harder for the federal reserve to continue buying bonds and pushing down interest rates, which may explain why mortgage rates and bond yields have climbed back to early summer levels. but former senior fed adviser vince reinhart says ben bernanke and his colleagues aren't turning back. >> it's difficult for them to stop that program, because it would look like they were bowing to the political pressure. it's difficult for them to add to that program right now, because they'll be a lightning rod of attention. >> reporter: as much as the fed might want to step out of th

the fed is seto ctie expanding its holdings of securities as announced in november.chase $600 billion of longer-term treasuries. at the same time theedil maintain its target range for the federal funds rate at 0 to 0.25%. its record monetary stilu h triggered inflation concerns. skeptics have also questioned its effectiveness. kansas city fed president thomas hoenig voted against the decisaying continuing the policy amid the recovery may destabilize the economy. >>> that concludes this edition of "newsline." i'm gene otani intokyo. we'll be back in half an hour with the latest news and weather.

the fed created this program to support the commercial paper market. that's the short term i.o.u.s the companies use to pay for inventory and their payrolls. >> brown: the basic stuff. to pay their employees. >> exactly. so you see names on that list that are household name companies, general electric, harley-davidson, toyota, verizon. there's a good chance they accessed one or more of these facilities. >> brown: then there's the foreign banks, foreign institutions. >> a lot of the big global banks have u.s. subsidiaries and affiliates that were able to access this money. that's controversial. if you see u.b.s. the swiss bank or barclay's, the british bank, taking advantage of u.s. taxpayer resources that's controversial but there was a lot of that borrowing by european and asian banks. >> brown: a lot of it controversial, you say, but not known at the time. >> yeah, i think it was noted they were eligible but the extent of that lending and the degree to which major european banks were depending on the federal reserve in the fall of 2008, that's a surp

now they say let's not judge the fed on one mistake because the fed is learning. but how many times will have to say that? has it lowered unemployment or has it increased growth? nell. -- no. but we should not expect the fed to do those things. it should focus on one objective, and maintaining purchasing power of money. the fed cannot improve the economic growth in any sustainable way. there isn't any rationale to have a dual mandate or a bible a mandate. -- of bipolar mandate. it has that story as we fail to preserve it. silver and gold standard's kept the dollar values constant over the decades. as the guide emphasizes, the dollar has lost 95% of its purchasing power. a dollar today only buys what a nickel bought in 1914. on the blackboard, perhaps, have not done it in practice. inflation steadier and more predictable under the fed that was under the gold standard? somebody buying a 30-year bond or 100 year bond faces more uncertainty today about the purchasing power of the dollar that investors face of the classical gold standard. the best evidence is that the

formula-fed babies can gain more weight than breast-fed babies and now a new study shows the type of formula makes a difference. nathan is a formula fed baby. >> he was 6 pounds 15 ounces when he was born and he is up to over 12 pounds now. >> reporter: weight gain is a milestone every new parent watches in the first year of life. and now a new study shows the type of formula a parent chooses can have an impact. new research in the journal "pediatrics" looked at about 60 babies and found those with regular cows milk gained weight more quickly than those fed formula with predigested proteins. those are easier for babies to tolerate. babies on this formula ate less. >> one of the theories is that the predigested proteins actually are better at stimulating the brain to understand when the baby is full. >> reporter: experts say when babies gain too much in the beginning, it can have an impact for a lifetime. >> we know that weight gain early in the first year of life actually does have implication for obesity later on. >> reporter: amy and seth know the possibilities of nathan's weight g

was this done out of the new york fed by and large? >> i believe that's the case. >> and that was being run by tim geithner at the time? >> i believe that's the case. >> i don't mean to seem like i'm leading a witness here, but wouldn't we have wanted to know when he was being -- you know, when the vote was being held whether he should be treasury secretary, what he had done and what the conversations were with these banks that the time? >> you're talking to somebody who voted against mr. geithner for secretary of treasury and voted to help lead the opposition against ben bernanke, once again become chairman of the fed, those are the right questions to ask. >> senator, thank you so much for your time. this is going to be a continuing story. i hope we have a chance to continue this conversation. as i said at the top, congratulations. your fortitude in pushing for this disclosure has done a huge, huge, huge public service. >> eliot, thank you very much. >>> coming up, we'll have a full assessment of the damage from the wikileaks dump. >>

were people from all walks of life rich poor young and old who were fed up with both parties and politics as usual they were among the first to call for taking the country back still many folks turned away while the media simply made fun if you pull up articles on you consistently you'll see on occasion but consistently there are a lot of people describe you as a flake i'm impressed that you dare say it's right on call world good for you what it says about who are his fans oh they're crazy then there are just on the internet they show up to see him speak and show up they did. from internet money bombs to declaring a ron paul revolution a movement much stronger than the media message behind it the sure out of the media in the united states can only go so far in denying reality from the american people that reality was harsh so you're saying as a result of this a bigger economic crisis is coming you know i think we're in the midst of one and it was precisely that crisis that finally got the press to pay attention because when talking points no longer fix the problem ron paul's alternative o

morgan is also owned in part by the fed the fed owns j.p. morgan the j.p. morgan is the fed that's part of the u.s. banking cartel if j.p. morgan goes out of business or has a problem they go to the fed for a bailout they give the fed their garbage literally garbage that actually they give jamie diamond gives ben bernanke these dirty underwear and ben bernanke he gives jamie diamond a few billion fresh t. bills. or those dirty diapers from his kids and ben bernanke you will get a few billion dollars in t. bills and if they don't then jamie dimon says we're going to crash the u.s. economy the global economy by not rolling over the junk diaper debt collateralized by baby poop and you're all entire global economy goes into the into the swamp. right so that's what a financial terrorist does they threaten to blow up the economy now why is jamie diamond not in guantanamo bay right now being violated by a black mortars zero never is down there walking on broken glass eating broken glass why was he allowed to roam free why was your double standard why do the people

they said, we are fed up. we are ready to take our country back. americans are obviously fed up with the democratic party that long ago set aside their interest in favor of expanding government, raising taxes, doing the bidding of labor unions and personal injury trial bar, activist judges. americans are fed up with the repeated incursions into their liberty. however, their distain for washington does not just stop at the party line. americans are fed up with democrats and republicans who have embraced bailouts, champion so-called stimulus programs and supported big government to voice. voters understand the true threat posed by in this mountain of debt and are increasingly perplexed by bankrupt federal programs like social security and they are deeply frustrated by federal officials who do nothing to address these serious problems. the american people are fed up with bureaucrats telling them how to live their lives, calling the shots of health care insurance. they say they must buy. what kind of food, what kind of lead balls they use in their home

it got a bid off of the fed-ex outlook. u.p.s. stock actually saw a bigger rally than fed-ex. this 2% jump today takes u.p.s. to its highest price since the spring of 2008. earlier, susie reported on the federal reserve's idea to cut the fee banks can charge retailers for accepting debit cards. this is the so-called interchange fee that is collected from retailers by visa and mastercard and passed on to banks. both stocks were hit with stiff sell-offs today. visa fell almost 13%, down to a four-month low. mastercard dropped 10% to a three-month low. meantime, discover financial services, which runs a different type of card network, fell 3%. quarterly profits improved, but its loan balance fell, pushing down revenues. as you're checking your list twice, check out energizer holdings, the battery maker. shares saw a pop in price and volume-- a 6% rally on twice its average pace. back in october is when the stock was at its most recent 52- week high. on the merger front, one company is taking its name out of consideration for a buyout-- hair salon chain regis. shares fell 12%, bac

the fed itself has it on line. if your interested in digging through more about the programs, you are certainly welcome to do that. gerald duracool has a piece asking why we have a central bank. back to telephone calls. good morning, randy, democrat, you are on the air. caller: i read a book about 20 years ago from pat robertson about the new world order and the federal reserve and stuff. i started investigating myself and stuff and i think they have too much power that they throw around. that is all i have to say. host: thank you. new york city, john, republican line. caller: this should be an issue of national security, seeing as how the federal reserve is taking and dumping it in. they have been put in these positions, elected by the people and for the people and they are not doing anything to help the people. somebody should blow a whistle on these guys and say, hey, do your job. you are a united states congressman, not a rich guy congressman, you know? host: next call from jeff. caller: i will be 28 in februar

you could say that under alan greenspan the fed was on pot, under bernanke it is on crack.t's very hard to undo this. how do you undo it? basically, q.e. 2 is going to lead to q.e. 3, and unless that very hopeful scenario that you talked about, which is robust economic growth for many years -- and i'm kind of with jim and i believe the economy is getting better -- >> charlie: right. >> but sustainable, five years of, say, 3 or 4% growth it's very hard to see how we're going to get away from thisspendency on paper printing. >> charlie: you think the global economy is getting better? >> it got so bad, it's rebounding and slowly but surely the private sector is creating jobs. >> charlie: why don't they create more? why are they sitting on all that money? >> i defer to other economists on that, but basic basically there are leadership issues in washington, rules that aren't known, tax policy -- some of these things will get resolved in time but basically as peter was saying, once you have been through this scare that we had in 2008, you don't bounce back right away. people have

he has written a famous book called "end the fed" and that is meant to end the fed and go back to thefrightening prospect. >>er in the book, paul writes that the federal reserve system must be challenge and ultimately, it needs to be eliminated the government cannot and should not be trusted with a monopoly on money. paul says that the criticism of the fed gained credibility after the financial crisis and skepticism has spread after the federal reserve's move to purchase $600 million of treasury bond in an attempt to boost the economy. answering that, ben bernanke did a rare interview with "60 minutes" to defend himself and the federal reserve. >> it is critical. >> reporter: as scrutiny is expected to mount, there are others who worry about politics into policy. >> there is zero fear that the politicians will do a good job, so if you put that what the fed did prefer or didn't prefer, you are looking at a dangerous group. >> reporter: the question is how much support will ron paul have and will other republicans be on the same page when it comes to the federal reserve? some economists

it's the fed.ically created this money and pumped it into the system, giving these emergency loans, very, very low-interest loans to the big american banks but also this was a big surprise, to a couple of european banks who actually topped the list of recipients and that has all been paid back at very low interest. it has been paid back. the whole idea here was to get the juice going in the system. the surprise here, tony, is the extent of the loans. i mean, $9 trillion is a breathtaking amount of money. how do we know this? because the fed has released documents. you're seeing some companies there. the fed has release ed document that show there were american companies that benefited from emergency loans as well, the months leading up to the crisis and after to keep the engine of the american economy running. we have 21,000 transactions we can now scrutinize. the fed, by law, was required to release to the public and now we're all going over it trying to see what was happening behind closed doors