in value and what the federal reserve is doing by holding interest rates near zero which is crazy keynes had advocated back in nineteen thirty six that's wrecking the future of the economy everything they're doing is a negative and both parties are in cahoots with goldman sachs and j.p. morgan and citibank and bank of america those sorts of institutions against the american people nobody could be trusted with the power to do is print up unlimited numbers of new one hundred dollar bills in your basement and spend them on what you want well it would reveal of course absolutely the bankruptcy of many financial institutions but in order to get out of a depression the only way to get out is to liquidate the bad investments not have the government tax regular people to bail out the toxic assets of the big banks we have to have bankruptcy once we have bankruptcy and we have the return of reality then we can rebuild but as long as we have this phony baloney system punishing the average person for the rich guys connected to the government we're going to have more and more trouble and make this ou

i want to ask you, you wrote a book about keynes and hayek. you think the tea party has taken the lead. it strikes me as fascinating. this is a time for keynesianism if there ever was one. you are in a liquidity trap, a period of deflation, call it what you will. you're in a situation where it does seem as though there isn't much demand in the economy. for whatever reason, mostly because i think everyone has lots of debt. that's when government steps in, but you're saying that that's the moment in which keynes has been discredited? >> absolutely. the tea party, they may not know, i suppose they haven't read any frederick hiatt. but he wrote about it at great length. he was talking mostly about politics. his economics weren't as reliable. but what politically he said is there should be small government. there's no doubt the tea party has put small government or smaller government on the table and that's now the thing that dominates politically. >> arianna, how do you explain this? that you've had the biggest financial crisis and recession one w

in value and what the federal reserve is doing by holding interest rates near zero which the crazy keynes had advocated back and i think thirty six is not only wrecking savers and investors but it's wrecking the future of the economy everything they're doing is a negative and by the way the republicans are every bit as much responsible for this and this and of course was republican the democrats or so both parties are in cahoots with you know goldman sachs and j.p. morgan and citibank and bank of america those sorts of institutions against the american people and i would say against the people of the world so we need a radical change and i'm going to ron paul is talking about well speaking of a radical change in return to sound money would that even be possible at this point or as legendary gold trader jim sinclair is that is that impossible that open pandora's box and derivatives that are still floating around the entire globe and reveal the lack of balance sheet integrity in the u.s. banking system where you can buy your assets at whatever you think they're worth. well it would reveal o

global reserve currency as really interesting to be here at bretton woods talking about that because keynes argued for this seventy five years ago. in the aftermath of that of the great depression he understood. the links between you case problem the u.k. being the reserve currency down and then if we're going to have global economic stability we needed to move off of the. single currency country being the reserve currency. bretton woods failed from his perspective in this respect and didn't the us say hey we disagree we want to be the main reserve currency and got their way so the us still have that same power if world leaders got together again today for another bretton woods conference i think that same meeting were in britain woods the world is markedly different china has close to three trillion dollars of reserves about a third of the global reserves about nine trillion dollars you're holding three trillion dollars you have some voice in what kind of reserve currency system you want to have and china has been very clear that it worries about the current dollar based reserve system rig

richard nixon said we are all keynesians now well he was referring to a communist lord john maynard keynes the father of keynesianism which is the underpinning of modern governments only call it stewardship of the economy you know this is the guy that convinced so many that digging ditches and filling them back up was good for the economy but one thing is for certain i keynesian logic the riots in london are creating a lot of jobs with all those broken windows on the streets of london no not. they've got enough of those kinds of jobs but hiring street sweepers glass makers and a few extra police officers isn't going to save the british economy don't get any illusions about these riots though well it's i got to admit what is it is kind of awesome to see people take to the streets in fits of rage if this isn't the moral indignation libertarians are looking for this is not a protest to ask the government to stop doing something as much it is to do something and i would bet most of the actual rioters only understand why they're mad not the real reasons behind the things that make them mad mr a

syria according to the senator right after could alfy he said it's a start next but food maynard keynes statements are not surprising really because he's seen as a mouthpiece to those forces in washington who have this hawkish mentality and would want to see some countries go upside down especially rich nations who are strategically important ones that's pretty interesting that senator mccain is pointing at some of the world's richest countries russia that sitting on vast natural resources and china which is developing the extremely rapidly it's america's biggest creditor it's the world's number one export of goods as we know the senator is basically calling for revolutions in those countries presuming that their livelihood is soledad that they need to rebel immediately polls show that most americans are not happy with where their economy is going also they're not happy with their president is approval rating is below forty percent the nation's fourteen plus trillion dollar debt continues to rise the economy is not generating enough jobs and unemployment remains above nine percent as we

it's through the price mechanism and keynes recognized this is. that we often get ourselves out of recessions and usually it's because interest rates get low this is what's so scary now interest rates are lower and. you know classical macroeconomists would have called the liquidity trap where interest rates are so low they can't get below zero and that tool is really gone but here we are at this point depends upon borrowing large sums of money at very low interest rates and not really ties or hands as far as you know our ability to continue borrowing i think if the piece that we've been in borrowing it's often what in just twenty thirty seconds or what should we be doing. well you know how crude man talks about raising more about about actually having more stimulus through the olds in a noisy and working in an ideal world. or weren't already the size of our total income in the economy that might be something we can do but i don't think it is and not with the debt crisis in the years and two you know i think i think president obama needs to be stro

noted in the wall street journal and other places that micro economics has improved since the days of keyneshe newer models take longer time horizontals. they looked at obama stimulus in 2009, gave it a multiplier of nearly nothing. christina romer, other new keynesians look at tax cuts and find multipliers of three to five. leaving people's money is a more efficient way of growing the economy than taking the money to washington and giving it back to them. >> we have to wrap it up really soon. we have to get to other folks here. >> there is no evidence. >> without getting too in the weeds about the economic talks and wall street talk and what have you, the jury's still out. no one knows what this deal will do. they are in uncharted territory here. i will give you the final word, donna. >> i think you are right. we don't entirely know. we do know that the boat wasn't sinking. we have now plugged the hole. i totally accept that this is necessary. i have been saying it's been necessary. i don't understand how anybody can argue that this creates a single job. i don't understand this deal other t

to the extent that one of the reviewers described the book as joan maynard keynes' written by the argentineyang novelist -- [laughter] actually, the reviewer meant it as a criticism, but i took it as praise because, you know, i love boorhurst, and it's exactly the kind of description that i wanted to get attached to the book. it is an economics book, but it's unusually interesting, sometimes bizarre. so let me tell you a few things about this book. the book will, basically, tell you that a lot of things that you thought you knew about capitalism are, at best, partial truth and at worst downright myth. now, in the book the chapters are called things, yeah? so thing one, thing two and thing three in the first of dr. seuss. do you remember "cat in the hat" with thing one and thing two? he had only two things, but i have 23 of them. [laughter] so thing one says that there's no such thing as a free market. now, a lot of you might be puzzled by it. i mean, you might say we may like or dislike the free market, but, i mean, how, how can you say that we are liking or disliking something that doesn't

when everybody does that, it creates what john maynard keynes said it was the paradox of thrift. one person spending is another person's receipt. you cannot save out of that in become so things cannot appeared magically out of nowhere. we are in danger of toppling into that paradox. host: i want to get your reaction on what president obama said yesterday. >> the american people have been continuing to worry about the underlying state of the economy, about jobs, about their wages, reduced hours, about fewer customers. of the economy is still in weekend -- the economy is still weakened, partly because of things that we could not control. unfortunately, the debt ceiling crisis over the last month i think has had the necessary- impact on the economy here as well. i am meeting with my cabinet to make sure even as they have been thrown out these weeks are redoubling their efforts to focus on what matters to the american people which is how we are going to put people back to work, increased security, how we can make sure they will recover fully from the worst recession we have had since

when everybody does that, it creates what john maynard keynes said it was the paradox of thrift. one person spending is another person's receipt. you cannot save out of that in become so things cannot appeared magically out of nowhere. we are in danger of toppling into that paradox. host: i want to get your reaction on what president obama said yesterday. >> the american people have been continuing to worry about the underlying state of the economy, about jobs, about their wages, reduced hours, about fewer customers. of the economy is still in weekend -- the economy is still weakened, partly because of things that we could not control. unfortunately, the debt ceiling crisis over the last month i think has had the necessary- impact on the economy here as well. i am meeting with my cabinet to make sure even as they have been thrown out these weeks are redoubling their efforts to focus on what matters to the american people which is how we are going to put people back to work, increased security, how we can make sure they will recover fully from the worst recession we have had since

costs were considerably higher than what they would be but the tax, and, of course, john maynard keynes made a comment about it. even with any sort of tax that bob and i might propose, so i guess what i want to ask, and jim, we had transaction levels at this cost in the past. you talk as if there would be new arbitrage, but they were there. the arbitrage person jumps in. three tenths of one percentage point in the price may be in revenue, one-tenth of a percentage point in price, and if that is the case, who cares? >> the question is, who cares when prices get out of alignment? well, i care in that when i go to buy the exchange traded fund for my retirement account, i want to make sure the price reflects what is going on in the underlying stock. well, on may 6, 2010, we had a big glitch in the market. a long technical story is that there were all kinds of problems that occurred, but one of the things that happen is because of the technical glitches in the market, those in arbitrage got to the sidelines, and we saw what happened when they are not there. the prices fluctuate wildly, band

when everybody does that, it creates what john maynard keynes said it was the paradox of thrift. one person spending is another person's receipt. you cannot save out of that in become so things cannot appeared magically out of nowhere. we are in danger of toppling into that paradox. host: i want to get your reaction on what president obama said yesterday. >> the american people have been continuing to worry about the underlying state of the economy, about jobs, about their wages, reduced hours, about fewer customers. of the economy is still in weekend -- the economy is still weakened, partly because of things that we could not control. unfortunately, the debt ceiling crisis over the last month i think has had the necessary- impact on the economy here as well. i am meeting with my cabinet to make sure even as they have been thrown out these weeks are redoubling their efforts to focus on what matters to the american people which is how we are going to put people back to work, increased security, how we can make sure they will recover fully from the worst recession we have had since

when everybody does that, it creates what john maynard keynes said it was the paradox of thrift. one person spending is another person's receipt. you cannot save out of that in become so things cannot appeared magically out of nowhere. we are in danger of toppling into that paradox. host: i want to get your reaction on what president obama said yesterday. >> the american people have been continuing to worry about the underlying state of the economy, about jobs, about their wages, reduced hours, about fewer customers. of the economy is still in weekend -- the economy is still weakened, partly because of things that we could not control. unfortunately, the debt ceiling crisis over the last month i think has had the necessary- impact on the economy here as well. i am meeting with my cabinet to make sure even as they have been thrown out these weeks are redoubling their efforts to focus on what matters to the american people which is how we are going to put people back to work, increased security, how we can make sure they will recover fully from the worst recession we have had since