report to inflation is below what the fed is targeting so does the fed have enough ammunition to act. well there's a whole bunch of other data that suggests that everything is already starting to shrink and so they don't really announce that data but it means that they are on the verge of some sort of action like a q e three q e four q e five and it will continue they're backed in a corner and they really can't do anything else except you know tell us that gold is money that they have been wrong for the past thirty years that gold standards are hocus pocus fictitious gold and that we should be using real gold and then quit and close up shop quit close up shop go home nothing to look at here folks why is this the solution in your view. they should stop messing around with the economy and stealing it one direction or another creating all these bubbles create a wealth transfer creating a disparity between the middle class and the rich that is and norman this. under i believe that if we had used gold like we used to before world war one not hocus pocus gold standards with reserve ratios a

the fed is forcing people into them. >> if the fed is going make these loans and you don't see positiveion, that is what you have got pay attention to. >> all right. thank you so much. we w be watching peter and gary. so many times. >> thank you very much. you want to come with the proper impact of apple. the power chair. the nasdaq 100. the biggest waiting about 18% is now 1.5%. a huge etf and obviously that's all apple in the qqq after hours. back to you. >> triple qs getting the impact. we will take you to a break and apple earnings maybe disappointing but the company's long term future still looks very strong. stay with us. [ male announcer ] when a major hospital wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] [ male announcer ] ...forbusiness.com. this is new york state. we built the first railway, the first trade route to the west, the greatest

audit the fed, you bet we should audit the fed. it's time that congress stood for its constitutional role. article 1, section 8, power to create money. it's time we stood up for america's 99%. it's time that we stood up to the federal reserve that right now acts like it's some kind of high exalted priesthood, unaccountable in a democracy. let's change that by voting for >> live coverage of the house at 12:00 noon. >> mitt romney speak to the veterans of foreign wars convention. house debate on a bill sponsored by representative ron paul to acquire an audit of the federal reserve. >> wednesday on washington journal, a congressman will discussed u.s. relations with the mexican president. then a, grossmaa fight over thes and defense cuts is talked about. the editor in chief of reason.com will take your calls. washington journal is live starting at 7:00 a.m. eastern on c-span. >> the brookings institution. see it live starting at 2:00 p.m. eastern on c-span 3. >> this weekend. >> let me open up the discussion by asking what the nature

the fed involves itself across the economy. you fix the fed funds rate, you monopoly of the yield curve in operation twist, you monetize our national debt, you manipulate the mortgage market along with every other part of the credit market, use quantitative easing, attempt to manipulate the stock market and the prices through the portfolio balance channel, you involve yourself in every aspect of the economy and there's not a price in the marketplace that is not subsidized in one sense or another by the fed. yesterday, i listened to the hearing and you said you have more bullets that you can use. he said there is a range of possibility -- buying treasuries, using the discount window, employee communication tools, holding rates for 2015 and beyond, cutting the rate the fed pays excess reserves. these are additional bullets that continue to push into uncharted territory. is the fed being as transparent in all these things in going forward on the downside of all these -- of accommodation particularly the failed accommodation? how d

the fed reserve can only buy treasuries agencies. and it isn't just the current fed chairman expressing concerns about the limits of monetary policy prominent former chairman of the federal reserve paul volcker has had this to say. mr bernanke he can talk i'm sure he's warning people about that but he hasn't as i say you're going to a magic bullet to solve all these real problems. so what should we make of this is this a come to jesus moment for the fed chairman has he actually been humbled by reality or is he just holding his best hand from last that's the big question and here to answer it is our guest lou rockwell the or excuse me according to our guest i should mention a little bit about it lou rockwell the monetary control act of one thousand nine hundred eighty gives the fed the authority to buy much more than just treasuries and agency debt so that's a key point and he joins us now to discuss the chairman's latest statements as well as the usual brew of financial to cannery lou rockwell chairman of the ludwig von mises institu

my wife breast fed.er early on because we had two guys we needed extra formula to supplement what was going on. >> by the way, you've gone through an incredibly difficult process no matter how you gave birth. it's incredibly difficult and at the beginning you don't know what's happening. sure, look, it's a better path that's what doctors will tell you. that isscience changes that eve five years. it's not easy for everybody and it's a stupid judgment to make on people. mothers face so many difficult horrible decisions that they have to make all the time and they feel guilty no matter what. you don't need to pile on. >> hopefully mr. bloomberg was watching. >> probably doesn't care what i think. sfee mig >> he might. >> we've been watching stocks rallying over the last week. joining us right now is bob doll, senior advisor of blackrock. bob, it's great time to have you here because the markets right now seem convinced that things are looking a little bit better. back above 13,000 for the dow. do you think

also saying the new york fed did all it could, although didn't really answer why the fed didn't makehe findings on something that was struckically flawed. we'll take a break, get more of the chairman's testimony on the hill after this. announcer ] this is our beach. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price. but hurry, this offer ends july 31st. why? i thought jill was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a killer investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the e-trade 360 investing dashboard. well i'm watching you, watching him. this is new york state. we built the first railway,

is it the fed?> i think the fed certainly -- what i have been saying is it is relay would-word situation and that's anticipated stimulus. that if we get too low in terms of sentiment, in terms of indicators, et cetera, the fed will step in and chinese government will step in, et cetera. and that could help push things higher. >> here is the thing. even if the fed steps in, whether it steps in next week, in except, steps in after that, if there is a fiscal cliff and go over it, it feels to me no matter what the fed does, negative impact that that fiscal cliff will outweigh everything. >> you are absolutely right. if we do have a fiscal cliff, then it is going to take the fed with it. if you will. so i think that that's why bernanke would like to wait as long as possible. there have been four times since 1976 that the fed has either raised or lowered rates in october, in an election year. so it is not an out of the question situation. >> you would certainly admit, i'm sure, that the -- the situation n

the fed is now in the background. anything the fed does is tinkering, it does nothing to help the economy. >> is there any wiggle room for the ecb at this point? >> they gave us verbal intervention last week. on thursday they will have to add some meat to those comments and tell us what they're doing. it's all on that and they think less so. >> they say the fed is irrelevant, what do you think? >> to me, the whole week is back wards. i want to know what u.s. jobs is, what ecb will do and what fed will do in that order. i think the ecb is the mor important actor, but in the absence of ecb action, there is still an argument for the fed to lean against or to fight what the ecb is not doing. >> rick santelli, how do you read the markets? >> let's just proceed this way, say we get a 480,000, or minus, all of a sudden a lot of central bankers activity either becomes old news or not nearly as important. i totally agree with steve when he used the word actor for the ecb. he moved markets, but i don't know how he will deliver

reserves banks keep at the fed. that might force some banks to look for another place to park their money. >> banks need to put the money someplace and it might help to get some of that money out into the market. but they might put it elsewhere if they were afraid to make new loans. they could invest it directly in treasury obligations or similar types of instruments. >> reporter: the fed could also lend directly to banks that promise they would lend that money out either to small businesses or to help boost mortgage lending. a dramatic expansion in access to home loans could lead to an additional one million sales a year. but it is unclear how much risk, if any, the fed would be taking that a borrower may default. >> what we have seen is recently originated mortgages are performing exceptionally because recent home buyers are buying homes at a low price point. not at a high point like the bubble years. so it is a great opportunity for the fed to stimulate the economy, while taking on very light risk. >> reporter: t

the fed is doing what it can do.nds because of not only bad behavior in the u.s. look at the european politicians and they've created. but if you look at quantities too much -- >> fred's pointed out why it doesn't work right now. he pointed out all the issues. why should we keep running an experiment of qe 1, qe2, maybe qe3, twist 1, twist 2, zero interest rates since 2008 and trying to repeat that experiment -- >> what's the alternative? >> do a greenspan? >> normalize interest rates. allow the market to work. turn around long-term interest rates, it allocates resources over time. you're not allowing the markets to do their jobs. >> let me get in here. >> and savers and retirees have been hurt very badly by this cheap money policy. >> they always get hurt by low interest rate ps. >> i don't want them to always get hurt. they're part of america, too. >> but the way to get it back up in the long run is to get the economy moving again. >> you keep telling me that but this is the worst recovery in modern times. dan gree

we we need to not only audit the fed but my proposal goes deeper than that h.r. twenty nine ninety which is to say that the fed finally had to be brought under treasury wipe out the effect of the one nine hundred thirteenth fed act which what it did was give the money power to the private banks stright to. put the fed under the treasury and give the government the power to spend money into circulation to create jobs lower the debt lower taxes and by the way there is a big conference on that coming up if you can go to a website monetary dot org and there's a conference on september twenty first but tell me this looking at the current treasury department that we have the current treasury secretary secretary that we have and tim geithner some of the scandals that have been popping up if you just want to live or as one of them the fact that we haven't seen a criminal investigations really after the you know after the crash why would we want to give the treasury even more power well it's not just it's about making and fixing accountability within the government right

everybody thinks the fed should do something. bernanke says that they are looking to find new ways to boost the economy. can the fed really save the economy? >> save, no. they still have some arrows in their quiver, but they don't have a lot. what could they do? they could use communication, they could extend the period over which they expect to keep short-term rates low. to help hold down long rates. they could do another asset purchase program, that could squeeze down long-term rates a bit. but there's not a ton of things that they can do, and there's certainly no pan asee a, no magic wand they can wave to make the economy great. if there were such a thing they would have used it already. >> susie: there still is the question that if the fed does have to intervene, when might they do it. do you see something happening this year, maybe at the july meeting or at their august fed conference in jackson hole? >> i think it obviously depends on the evolution of the economy and so on. i don't think they're right on the cusp of doing s

before we get to the fed action what do you make of the audit of the fed passing so overwhelmingly withuge democratic support? does that get in the way of any fed action that may be coming up here in august or later? >> i don't think it gets in the way of fed action. i think it does point to, you know, the political fire that the fed has been in for the last four years. you know, frankly i don't think the bill is going to make it past the president's signature. i don't know that the senate will pass it. i don't think tim geithner would advise barack obama to sign it. it's a sign that the fed is being more scrutinized now than ever before. it has to really work at explaining itself. there are a lot of people on both sides, right and left, republican and democrat, who don't understand what it's doing and don't like what it's doing. >> you're right about that. i just wonder in terms of the potential fed stimulus, and maybe they will buy treasuries or mortgages as you wrote this morning, last night, and have more quantitative easing. maybe it slows them down. maybe it doesn't. >> on the pol

what else is there that the fed can responsibly do since the fed is the biggest lender to the federal government already far more than china and japan? >> well, there are a range of responsibilities and i don't want to give any signal that we're choosing one -- >> what are they? >> the logical range includes different types of programs that could include treasuries or mortgage backed securities. those are the two things we are allowed to buy. we could also use our discount window for lending purposes but that's another possibility. we could use communication to talk about our future plans regarding rates or our balance sheet. and a possibility that we have discussed in the past is cutting the interest rate we pay in excess reserves. that's a range of things that we could do each one of them has cost and benefits and that's an important part of the calculation. >> thank you for your service and being here. >> senator schumer. >> well, thank you, mr. president. i too thank you for your service. i think you've done a superb job in one of most difficulty periods to be chairman of e fed. n

a move from the fed can hurt you here. if you're long, the fed cannot fix your economy.ecession. this times time. a quantitative easing program will juice the market for a period of time and will not fix the economy. this is not really that important if you're an investor. >> many trasds to come on the rest of the program. steve liesman, thanks to you as always. focused on the weak kmern consumer as well. coming up, the critical back to school sales season kicking off and debra will tell us which retailers may not make the grade. on outspoken yahoo! shareholder gives his take on the new ceo, m r marisa meyer. i look at her, and i just want to give her everything. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm spe

the fed won't let them.s joe just said it's a lousy business to begin with but shows how tough wall street is to make money. >> according to my goldman atm machine. he asked for $300, it gives you like $240. oh, sorry, the fees. >> you guys fly a lot and we talk about whether we should go to the gym and be healthy. now you can workout at the airport. so there are now gyms and yoga studios at the airport. >> i would do it if it's a layover. >> anyway that's the story. >> stretch out and get the blood moving. >> i don't know if i could do it. i just want to go to mcdonald's. >> when we come back, bernanke on capitol hill, a new ceo at yahoo! plus earnings from coke and goldman and j&j. that powers sound decisions. duff & phelps financial advisory and investment banking services. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. >>> the fed in focus, the smartest money m

but yes, there is more the fed could do. i believe it set the margin, it depends on how bold it wants to be. if you want to talk about a $500 billion qe program, perhaps could give you 10 or 20 basis points at the margin, they said they expect to remain low to 2014. they could bump that into 2015. there are some people that say that promise could be worth 25 or 30 basis points, particularly on the shortened, five-year money and shorter than that. and then getting rid of interest rates on excess reserves or bringing it down to zero would have a hit to money markets but it could also perhaps motivate some banks to put some money in the economy. none of it will return growth but it could add a few basis points of positive here and there. bernanke is conscious of the cost as well to the policies. >> no doubt. rick, size up how the bond market reacted to all of this. don't forget about the dollar either. the dollar had a wild ride and you saw a big spike early in bernanke's commentary. >> the big spike is the decoder rings weren'

our guest tonight believes the fed will do something. alan blinder is a former vice chair of the fed, and now is a professor of economics at princeton university. so, alan, chairman bernanke has been saying that he's been looking for new approaches to fix the economy. will we be hearing something new from him next week? >> it depends what you mean by new. i don't think you be hearing anything very new. although if things get bad, you may hear new things down the road f. they announce anything at all, and i feel it's a 50/50 bet, maybe a little better than that even. i think the most likely thing they would announce is another round of what's called quantitative easing, and this round in mortgage backed securities. the idea to nudge down mortgage rates again. >> susie: will it give the economy a jolt? >> well, those are two different things, actually. i think tell work. it will probably nudge down mortgage rates a little bit. that will increase mortgage activity a little bit. it will create a bit more home building. a jolt is maybe a bit

>> the fed official was a female, fabiola, ravisolo, on a fact finding mission for the fed. >> thanks. down to sue now. >> well, we will talk about the reaction of mr. bernanke's testimony on capitol hill. joining us to do that is senator mark warner, a virginia democrat on the senate banking committee. nice to have you here. >> thanks for having me. >> your reaction to mr. bernanke's testimony, specifically down grading economic growth, what those on the floor are most worried about. what struck you as the most important part of the testimony? >> the fact we're looking at economic growth 2% going forwards and the world economy begs out for additional fed action but congressional action. i've been part of this bipartisan gang of six that laid out a deficit reduction plan but on what's being asked from people in the world and uk, it's relatively small in terms of revenue and entitlement changes, we need to act upon that. doesn't look like we may get those actions before the presidential elections. i think you're seeing chairman bernanke say he will look at qe-3 as other central banks i

the fed will not sell these bonds. people have a wild misconception about what bank dos with the assets they purchase. >> they never sell. >> that's right. the risk of the fed disgourgeing it's bonding or mortgages with securities is not going to happen. >> thank you for joining us, another big day for the bulls with the dow up better than 650 points in the last three days. bob pisani watching it all unfold in his front row seat, what's your take? >> it was an interesting discussion. i think the market moved up 2% this week and not because the gdp was terrific or because the earnings were particularly good. traders are expecting the ecb and the fed to do something. this is very ambitious. you soak up all of the supply. you get the ecb do go out and buy bonds through the bailout fund, and to buy bonds through the ecb bond buying program out there, maria. >> let me get your take on next week, we have the ecb meeting, the jobs numbers on friday, b what are your expectations in terms of how that market trades, bob? is it a

i think the fed should do it. stop paying interest on the excess reserves of which there are about $1.5 trillion. >> that's exactly right. there's no reason for them to be paying the banks for them to keep their money in the bank instead of ending them out. if they can get the bank regulators off their backs. coming up, the markets boo eed bernanke in the morning then put the pop back in the stocks. i don't know what the hell you do with the stock market right now. i want to hear what they have to say. later on, mitt romney, ready to rumble. now he's pointing out the president wants americans to be ashamed of success. my special guest john sinunu sounds off. don't forget, folks. free market capitalism is the best path to prosperity. that, by the way, includes sound money. make the dollar as good as gold. [ female announcer ] the best things in life are the real things. nature valley trail mix bars are made with real ingredients you can see. like whole roasted nuts, chewy granola, and real fruit. nature valley trai

fed that we discuss are obviously central to the problem for the fed now and this is something that is a bipartisan. proposal and that's. saying the same thing that essentially in terms of knowing about what happens at that i mean the fact that we try to parse their minutes in these these very vague minutes they put out and there's so much tea leaf reading into this that it really leaves not only the people who make policy but just ordinary americans in the dark chorus as the fed become and this whole you know the british banking association actually that establishes library which is a private trade group it's not even a government agency have they become the tail is wagging the dog of finance and if so does that work to the detriment i think we were just reading this live or situation is serious i think we need to do a thorough investigation part of that is finding out what parties within the federal reserve what parties with the banking community what they knew when they knew it what role they played in the past when they have that information and what role they are playing at pre

there's a problem of the fed i think conservatives liberals agree that the fed is not serving a very good function for our society right now so i think there is bipartisan agreement before the fed and we had banks blowing up we never went more than fifteen years without a banking panic in history the united states until the mid thirty's and there are some who argue that the fed help soften that maybe not endear your thoughts but i think the fed the transparency problem for the fed that we discuss are obviously central to the problem for the fed now and this is something that is a bipartisan. proposal and that's. saying the same thing that it is because senator in terms of knowing about what happens at the fed i mean the fact that we try to parse their minutes these these very vague minutes they put out and there's so much tea leaf reading into this that it really leaves not only the people who make policy but just ordinary americans in the dark chorus as the fed become and this whole you know the british banking association actually that establishes library which is a private trade g

markets perception that the fed is can is in control is an important element in what the fed does. yeah i mean that the what the fed is doing in fact is to cause to come into existence. untold hundreds of billions of dollars as defined which take the shape of electronic impulses that stored in somebodies hard drive of the federal reserve bank of new york that really create no wealth. that at best lubricate the census and the expectations of people who may choose to materialize themselves bank crimea it all gets to be very kind diet and rather mystical so perception faith is is part of the this magical mystery tour that we call central banking and yeah do you think that power perception has run out for for the fed i think that the market is increasingly skeptical in the market needs more and more these larger larger dosages of whatever the fed's dispensing. coming up you will hear more of our interview with jim grant and still ahead if library manipulation central bank manipulation p.s.g. fraud and that's global fraud all have you looking for a way out of the financial system you ma

if you look at the rate of growth in the fed's own balance sheet, but the fed can give speeches and forunderstanding, what it's about, check the balance sheet. the rate of growth over three months, six months and 12 months is to shrink, so the fed is actually shrinking its assets which is something very few people seem to be paying attention to. >> no, i would have been lost on that question if that was on a quiz. >> the european central bank's footings are up 50% year over year and bank of england has a big expansion mode but the fed gradually by degree and quite out of the lime light has been shrinking its assets. >> how? >> the maturities fall off. >> they were twisting for a while. >> yeah, but that twisting is not meant to increase the size of the balance sheet. >> but not shrink it either. >> it has shrunk a little bit but that is another reason to expect some expansion. >> is the way that eventually the way ecb prints? most people want them to do that. is that the wrong move? what would your remedy be? >> my remedy for central banks is less. >> don't print. >> and to reestablish

lying fallow as it were doing no harm on the balance sheet of the fed out this takes just a moment of explanation so you mentioned in your question that in order to purchase these treasury bills bonds and mortgages the fed must print the money to do so that's central banking one hundred one it does that it prints it materializes money that didn't exist before in order to buy the securities with which which through which purchases it manipulates our financial system so the question you ask is a very good one namely what happens to these bills bonds and mortgages that the fed and other central banks have accumulated in such unimaginable volume what will they go and do they have to have to sell them so that the feds idea is that it will it will immobilise the dollars it created to buy these things by dexterously raising more manipulating the interest rate on the dollars that the central the commercial banks have a deposit at the fed now that is perhaps partially intelligible but the central point is that the central banks believe that they have the the nimbleness and the judgment in the

but again, to highlight the macroof this, the fed minutes not that much different than the fed minutes last time. looking for grand hint about quantitative 3, quantitative easing 3, mandy, welcome back by the way -- >> yeah. >> you won't get it from the minutes. >> okay. i've been watching the market reaction of the 10-year yield. we have dropped quite a few points, though, in terms of the equity markets. brian shactman is at the nyse. getting to rick santelli, as well, in chicago. looks like a marginally reaction in equities. anyone down there said anything in terms of what they're latching on to for the minutes, brian? >> rallied maybe 10, 15 points and slipped back down. down 55, 60 points. bouncing around a range here. the one headline i saw across the board and got people's attention is division over the threshold of more action and says that it's not a slam dunk to do something in terms of qe3 in august and generally speaking volumes remain muted. if you expected a shot trade here, real price action, we have not gotten it but sometimes takes a little while to feed through and peo

economy is that the us stock market has held up better is just the fed has more tools. affect everything it wants rather than what we're seeing in germany with all the bickering over bailouts for spain for greece first for ireland. and once again it's this dirty shirt concept we've talked about that before us has benefited from the past but this decoupling is not going to last forever. once the u.s. job market you know continues to tank and once earnings growth hits the wall which i think is happening right now and before we get to the fed's ability to prop up the stock market and defy this trend i want to ask about auto sales because you predict that they're going to collapse globally which is not something i've really heard a lot of people talk about or really anybody talk about so what are you forecasting first and why is this important. well to him two important pieces back share housing and auto sales and certainly housing is dredging along here right at the bottom we've not seen a recovery in housing i don't think we're going to see a recovery in housing for a dec

recently to hear his current thoughts let's let's look back and hear what he's had to say about the fed looking a little further back let's play you some of our interview one of our past interviews with jim graham founder and editor of grant's interest rate observer. welcome back we've been talking with jim grant about the fed's manipulation of the future so let's talk about what the excuse me of the present so let's talk about what this means for the future because another speaker at his recent conference was the deflation where hugh hendry and he laid out a case that what will likely preceded the event you while itty of inflation is actually the polar opposite a severe deep lation and the collapse of mercantilism asia style now this is been one of the more popular debates raging in the financial blogosphere going on at least five years now we talk about this a lot so let's hear our guests are you on that let's bring back jim grant founder and editor of grant's interest rate observer so mr brown where do you stand in your view on this inflation deflation debate. i think it might be a g