the fed does that. what they're trying to do, and we'll see if the theory works in reality, that is to set market expectations, they're learning from japan, they're learning from the great depression, that if you say we're willing to reflight the economy, we think inflation is too low, unemployment is too high and we're willing to stimulate the economy to move it back in a correction that's more healthy, that if you do that and say that and commit to it over time that actually gets people to get off the sidelines of holding cash and get into making more productive investments in the future, riskier more productive investments, and that's exactly what we saw in the stock market today, moving out of cash and moving into things like equitys, think is a big plus. they want to see the long-term investments pick up. >> susie: let's talk under about the markets, david, because it seemed like the market reaction was not that enthusiastic. i don't know what your take on it is. what do you think the message of th

in the fed is going right back to the fed and they're getting interest on excess reserves that small amount of interest is still better than what they're they're willing to go up by taking risks my question is what can the fed do at this point hypothetically if it really wanted to inflate would have to go out and really buy indices i mean what could it do theoretically if it wanted to inflate this economy . i don't think the fed can i think it's in fact even admitted that it was quite surprising actually but you know bernanke you had a realization moment i think it was last october when he when he came flat out and he said something that effect you know we're at the end of what the fed can do and he was and so you what you're seeing now is the fed getting into congressional territory even though the fed got very very upset when congress started questioning what the fed was going to do so i guess the rules of the game are one where you're in favor of the fed of course but so you're saying you don't burn out you saying things like well you know we. need to get deficit spending under co

even though the fed got very very upset when congress started questioning what the fed was going to do so i guess the rules of the game are one way here in favor of the fed of course but so you're saying you don't burn out you saying things like well you know we need to get deficit spending under control but not right now course no one ever wants to do anything right now so i think we are at the limits of fed policy certainly they could try some very very risky thanks but i don't think they will you know because risky things can blow up you know people have talked about you know the fed having a a negative interest rate to force banks to lend but i don't think that would work i think that might push them into a situation where if they did start running or the losses would be enormous i don't think the fed will do that i think it would be very very destabilizing so i think all the people that said well the feds really in control here well if the fed was in control here we would have had this credit collapse in two thousand and two thousand and nine and you think that that really control

the fed is really in control here well if the fed was in control here we wouldn't have had this credit collapse in two thousand and eight two thousand and nine and you think that that really control here banks would be lending so they're not and i don't think they very much they will be going on the string analogy comes back it sounds like you think the fed that abolished mesh let's switch gears to so bad though because you're a financial blogger you also used to work in tax but as it pertains to your blog what do you think the impact of this bill could be. well they always start these things out small an innocuous laurie you know then then they go on from here i mean you know who the patriot act for example is supposed to be temporary you know every president wants it now because it gives them more control over things in europe we've seen governments actually take over the internet impose fines i can't read what country there was very i mean this for anyone visiting a prohibited site you've got rules and regulations in these piracy acts this is the government or someone can come down

a normal market outcome mood would have it the fed is intervene in b.s. which lowers the rates on m.b.'s and mortgages road through to other things these are things that normal times the fed doesn't want to do. and they will eventually be unwound the problem for the fed was this came to be a fateful day in december two thousand and eight when it basically put the federal funds rate to essentially zero that's what it had always used as this instrument before that it's now use that instrument up. and it it came to what is proverbial forks in the road so either we're going to just fold up the tent and say there's nothing more we can do the economy is on it's own or we leave it to congress good luck or you could start doing more creative things so we went for the more creative things and they do have these because these dislocations this impact on resource allocation and a whole variety of other things but to me as to been bernanke and his colleagues the other fork in the road would have been much worse. but then let me ask you this because the fed an obvious

and they get you home but the way that the fed is approaching this it just kind of seems like this is prepared to zero interest rate policies for the different future is essentially like being on a drip or for an indefinite period of time how do you think the fed is going to eventually try to take their hands off and can't even take it's actually worse just like we're in intensive care and what the fed is doing is simply garrett.

twenty fourteen but how low will the bond market if you submit to the whims of policymakers and the fed's policy is just moving us from zombie banks to his zombie economy let's get today's capital count. angela merkel kicked off davos today by taking on the bond market and promising more europe as a solution to our problems and what we've heard public concerns over the ills of current capitalism don't you worry that was found just the man to defend it here to tell us about this and other palace intrigue from that snowy hamlet atop the swiss mountains is our own lauren lyster. so lauren look i do mean bundled up there is a cold. yeah. all right this is no it wintry resort all right so i don't want to waste your time lauren i heard the news a genocide will be broadcasting on the same network as us what do you think of as you think the let him down in davos there with you and cover some of the facts in the snow. as the million dollar question right or maybe the billion dollar question so that's exciting new is that julian assange is joining our t.v. that's very exciting i mean he's been such

is not able to connect them so expect the fed to be active but don't expect the fed to be effective when it comes to economic outcomes and speaking of the fed two of the new voting members of the f o m c have recently suggested that they would support more asset purchases more quantitative easing as everyone knows it a little better but officials are reportedly likely to talk about the move at their meeting which is later this month do you think we're nearing another round of q.e. as you're kind of hinting at and you've been quoted saying q e three will not produce outcomes we want so what would it produce then. so i think we are and the reason why is that the fed does not want to be perceived as inactive the fed does not want to be characterized as not responding to america's unemployment crisis and therefore even though the fed knows that it cannot deliver the outcomes it has to engage now in terms of what outcomes are delivered i go back to a wonderful phrase that chairman bernanke introduced back in august of two thousand and ten he said when we look at unconventional policies w

two months ago, the fed projected growth as high as 2.9%. the fed downgraded the projection for 2013, as well, to between 2.8% and 3.2%. however, on the unemployment rate, the fed revised the jobless rate projection for 2012 to between 8.2% and 8.5%. the projection two months ago was over 8.5%. >>> well, u.s. stocks rose following the fed's statement, but shares in tokyo are moving within a narrow range in mixed trading. let's take a look. the nikkei average is now down by .1% at 8,875. but the broader topix is trading at 767. market sources say the fed's decision to extend its near-zero interest policy is encouraging investors to buy stocks. but some are placing sell orders to lock in profits. >>> let's take a look at the currencies now. the fed's announcement is helping to slightly weak not the dollar against the yen and the euro. the euro's currency is now trading between 77.76 to 78 yen. the euro against the yen is at 101.85-90 yen. >>> a look now at the latest long-term interest rates. the yield on the benchmark ten-year japanese govern

but it's a question of magnitudes what the fed did or didn't.

two months ago, the fed projected a growth of 2.5% to 2.9%. for 2013, the fed downgraded the projection of 3% and 3.5% to 2.8% to 3.2%. however, on the unemployment rate, the fed revised the jobless rate projection for 2012. the projection two months ago was 8.5% to 8.7%. the dow jones industrial average rose for the foreseeable future to see how stocks are opening here in tokyo this thursday, let's go to the tokyo stock exchange. how are stocks here reacting this morning? >> good morning, ai. let's look at levels here in tokyo for the nikkei and topix, both are marginally higher. we have seen the nikkei gain on the back of the weaker yen, but we're also going to watch out for products and shares related to apple, such as component makers and mobile phone carriers after apple's shares hit a record all-time high following record earnings the day before, so we'll keep track of those as well. also, we're going to get earnings from key japanese companies such as sony and panasonic, nintendo, and also kddi, which along with soft bank, sells the iph

he had been at the fed in new york in october 2008 bailing out everybody in sight. general electric got bailed out. morgan stanley, goldman sachs, all of the banks got bailed out, and the architect of that bailout then becomes the secretary of the treasury. so it's another signal to the financial markets that nothing ever changes. the cronies of capitalism are in charge of policy. >> you name names in your writing. you identify several people as the embodiment of crony capitalism. tell me about jeffrey immelt. >> he is the poster boy for crony capitalism. here is ge, one of the six aaa companies left in the united sates, a massive, half-trillion dollar company, massive market capitalization. i'm talking about the eve of the crisis now, in september 2008. suddenly, when the commercial paper market starts to destabilize and short-term rates went up. he calls up the treasury secretary with an s.o.s., "i'm in trouble here. i need a lifeline." he had recklessly funded a lot of assets at general electric capital in the overnight commercial paper market. and suddenly neede

and taking the fight straight to the fed. >>> plus jon huntsman is out of the hunt. but another candidate is looking to give romney a run for his money in south carolina. why one super pac is alleged mitt is a serial killer. >>> and we're focusing on giving america the debate we truly deserve. we're in california gearing up for a big 30 million jobs tour. we're on the road again through the winter. driving towards solutions to our unemployment crisis. it all kicks off this wednesday at 4:00 p.m. we hope you'll join us. look! the phillips' lady! we have to thank you for the advice on phillips' caplets. magnesium, right? you bet! phillips' caplets use magnesium. works more naturally than stimulant laxatives... for gentle relief of occasional constipation. can i get an autograph? [ female announcer ] live the regular life. phillips'. whee wheeeeeeeeeeeee!] liwheeeeeeeeeeee!life. whee whee wheeeeeeeeeeee-he-he-heeeeee! whee whee wheeeeeeeeeeee! pure adrenaline. whee whee wheeeeeeeeeeee! everything you love about geico, now mobile. download the new geico app today. whee w

thanks laura and back in washington former fed chairman alan greenspan is out with an article in the financial times today titled meddle with the markets at your peril a direct warning to the world's policymakers and government officials when he was fed chairman many argue that the pedal was already floored to the market metal sounds like a tongue twister don't worry we're a former fed governor alan blinder in studio with us who was under chairman greenspan to help us on tires and why we're busy on time the mystery of the temple men in europe are busy tying the continent closer together billionaire investor george soros had his own op ed in the financial times today where he proposed a plan that would allow the bond market to keep governments on a quote short leash plus they risk losing precious u.c.b. facility access warren with a buzz on this other special interest from davos in a moment so let's say that there is capital account. well it's day two of davos and the eurozone crisis remains a main focus george soros was recently out with an editorial advocating for more europe as a s

how is the fed creating growth?t in front of growth is sustainable growth, and sugar buzzes just e create debt. >> well, this is interesting, because i think that an economist's job is -- well a bunch of jobs that we have, but one of them is to try to discern how much of the growth is fake, and in other words caused by the fed, you know, as artificial, and how much is real, caused by productivity and new technologies, and right now, i think that probably 70% of the growth -- >> well, the fed does not create new technology, that is private sector. >> no, i did not say that the fed created it, but there are real technologies, and part of the growth we are seeing today is driven by apple and linkedin and facebook. >> and private sector and why are you arguing for the fed as a positive, that is where i am losing you. >> i thought i have explained myself, rick. >> i don't think so. >> the fed can be a short-term positive, but i am not saying it is a good thing, but i am saying as an inves to, hey, i want to jump on board

no one i talked to is very interested in the fed very concerned about the fed really talks about the fed when they talk about the economic problems that maybe they're thinking about and to give you an example i did bring this question to a couple of u.s. senators that i did stumble upon bob corker and also chambliss who's a senator as well and i said you know if the economy is proving as improving as timothy geithner says why are interest rates being kept at zero by the fed you know and their to their answer was over the economy's improving as much the fed's trying to help but then when you continue that discussion you know what impactors zero percent interest rates having on congress's inability to rein in the debt and to rein in spending and those issues and bob corker admitted he said you know if interest rates were higher the congress would be forced to take a closer look at debt and spending which is a huge issue for the united states which has fifteen trillion dollars in debt and if really congress coming up with some solutions is all the u.s. has in store which is something th

are in the eighteen percent which are record highs while the fed funds rate is at close to zero percent what are we going to see borrowing for americans be at that same level instead of preferential treatment keeping going to the banks once the banks. aren't completely bankrupt we will see those rates go and actually i don't know if that will ever reality because you know it's the gift that keeps on giving you know the nineteen point nine nine percent a.p.r. is the one that's really where it is that's where the money maker is for the banks in the fees and in the credit cards so those rates really they're not going to come down and as we've seen there have just gotten you know fannie and freddie on the other hand they're basically a huge slush fund the great thing for the government is they can say look you know we can run everything through fannie and freddie we could actually bail out the banks by allowing fannie and freddie to buy up all these mortgage backed securities issue more you know basically take over the market it's the sense of what the fed did in two thousand in two thousan

darren gersh reports on the fed's efforts to forecast its own actions. >> reporter: last august, the federal reserve made a promise, telling investors it would keep its key interest rate near zero until the middle of 2013. on wednesday, the federal reserve is going to tell investors how many of the people who gather around this table to make decisions want to keep interest rates near zero through 2014, or even longer. >> so, if the fed says that we're not gonna raise rates anytime soon, then people will be more willing to lend you money at a lower rate, because they know there won't be any alternative, better use later. >> reporter: the fed plans to release the interest rate forecasts for the top 17 policy makers who serve on the interest rate-setting federal open market committee. the forecasts won't have names attached to them, but investors will be able to see how many policy makers want to raise interest rates, when they want to raise interest rates and to what level. analysts expect most will want to keep interest rates near zero well into 2014, which is about as long as anyone

the fed is going to be there. on the other hand, you're going to say things aren't as good as the way the fed says. it opens the door for the fed to help stimulate the economy more. that's the overriding factor. we've rallied 100 points. we were down 50, we're up 60. the market likes that. do i necessarily agree with it? it's another manufactured rally. it's frustrating and confusing for investors. the truth; it's confusing for the market. >>> let's take a look at how those markets are fairing in light of what that trader was saying. while it's confusing, and it's also very difficult, you've go to remember, to figure out how to play a market when you know that interest rates are going to be steady at the historic lows for another three years to come or two years according to ben bernanke's statement. as you can see, these markets mainly positive taking the cues from the rallies that we saw on wall street but these gains aren't particularly substantial. these three markets, with the exception of switzerland, they'r

debt or you can be sure there's a zombie creditor and as zombie central banker feeding the mom the fed is starving economy of interest income so one most layer a former broker manufacturer and co-founder and distinguished research associate of the center for full employment and price stability says the fed is part of the problem rather than part of the answer this is why we have so many zombie debtors he said it would serve public purpose if the fed made it clear that in today's rate environment what's called quantitative easing in fact removes interest income from the private sector thereby functioning much like a tax and a source of what's called fiscal drag as it takes net dollars out of the economy as it reduces the. deficit well you're right if there were not this design be better effect you would have a creation of interest income which would form the basis of the capitalism something called cappy tall. without the capital all there is no capital ows ism is the give them the hood disease of the the capitalism is that you should have taken that conversation today max the whole wor

when the fed speaks, wall street listens. but which fed head moves the market the most?a hint, it's actually not ben bernanke. steve liesman has that answer coming up next. forty years ago, he wasn't looking for financial advice. back then he had something more important to do. he wasn't focused on his future. but fortunately, somebody else was. at usaa we provide retirement planning for our military, veterans and their families. now more than ever, it's important to get financial advice from people who share your military values. for our free usaa retirement guide, call 877-242-usaa. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ >>> all right. it's street talk time. catching you up on some of the day's big headlines. what's bigger than this? breaking news