paul volcker was cutting off the money supply is to kill off inflation. the government's job when they are acting boldly means that they will probably do harm to some people. maybe government's role is to soften the blow to them. the real action that changes the american landscape will mean harm to someone. obama seems to be embracing that somehow. this will allow him to free himself for what he calls the legislator in chief. he is looking for a perfect

you saw that inflation was fifteen percent in one nine hundred eighty until paul volcker raised interest rates to twenty percent crashing inflation back down to closer to zero percent now this is what paul volcker says about what central banks add to stability of a monetary system it is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation not less if the overriding objective is price stability we did better with in one thousand nine hundred gold standard and passive central banks with currency boards or even with free banking the federal reserve bank and the u.s. is not independent by any stretch of the imagination and no independent body would independently suck up two point five trillion and toxic debts from wall street that's what an independent thinking fed would do there in the control of wall street so again the arguments against the chinese un being the world reserve currency don't hold water the u.s.

paul volcker was cutting off the money supply is to kill off inflation. the government's job when they are acting boldly means that they will probably do harm to some people. maybe government's role is to soften the blow to them. the real action that changes the american landscape will mean harm to someone. obama seems to be embracing that somehow. this will allow him to free himself for what he calls the legislator in chief. he is looking for a perfect solution and hoping that he will come up with it and he will not have to come out of the mud and start swinging. tavis: you mentioned summers and a geiger and it leads me to ask how much of the trouble that this president has encountered have to do with an issue that you discussed in the book that team?ked the lonwrong -- you mentioned summers and timothy geithner air. >> i think a lot of it. he had a strong bipartisan said of advisers coming through the campaign. he had robert reischauer, robert wolf, this dynamic chairman, the head of pbs. he cast them aside when things got tough in the fall of 2008. he

paul volcker went on to beat the fed chairman later on.alked to george schultze who had other jobs during that time who went on to the secretary of state and a celebrated career as an international negotiator with the soviets and others. arthur burns is a very forgotten fed chief but he was the ben bernanke of his day. he has a diary that came out recently that gives us almost a clockwork, hour by hour, day-by- day account of the crisis and his response to it. then there are various other people who were around that were either working for the fed or for the nixon administration who knew what their bosses were up to in 197140 years ago. host: our guest is roger lowenstein. we are talking about a peace of president nixon moving away from the gold standard. let's read from the storied. -- tehe story. why so urgent? guest: well, exactly for the problem that we were just talking about. dollars were piling up overseas. foreigners did not want these dollars. remember, currency values were all fixed. it was not so easy for them if the relationshi

miller. '80s, paul volcker as fed chairman. inflation came down under paul volcker. it was alan greenspan in the late 1980s. until 2006, inflation stayed pretty low. under ben bernanke's chairmanship, bernanke, according to newt gingrich is the most inflationary fed chairman of all-time -- bink. that's his inflation record. it's kind of anti-climactic, right? again, in normalsville, if you were assessing the inflationary prowess of the guy furthest to the right in red on this graph, he doesn't really look all that inflationary. in normalsville, that guy does not look like your inflation problem, but in republicanland, he must be replaced. he must be fired immediately. he must even be treated ugly by an imaginary mob in the great state of texas because of his horrible, horrible inflationary measures. as represented, again, by bink, that tiny little last position on the graph. it's the same thing with the effect of economic stimulus. with the whole idea of whether government can do anything to create jobs. when we have a really bad unemployment problem. it is held as a

you know, in the '70s and '80s, paul volcker was threatened with impeachment, the chairman of the houseking committee, was always beating up on the fed chairman. what's different now is that it's not these lower level people, it's not people on the fringe like ron paul, it's the leadership of the republican party, it's their leading presidential candidates. and they're essentially channeling the high degree of suspicion and skepticism of the republican base of any form of government activism. now i don't seriously think that pem at the fed are living this, to stop them from doing right now what's necessary. and indeed we saw them move perhaps a bit more aggressively than we expected. but over time, it does perhaps, you know, add a restraint on their willingness to act more aggressively. more interesting i think is in 2014 when ben bernanke the current chairman, when his term is up, who replaces him. it is entirely possible that if it were a republican administration he would be replaced with somebody with a more hawkish and austere view, vision about where monetary policy should go. >>

also quoted in the book, paul volcker, the great former fed chairman who headed the president's economicsory board. said "obama is smart but smart is not enough. leadership is another thing entirely about knowing your mind enough to make real decisions, ones that last." that's a profound criticism of the president. that's not really about this book. that's a profound charge about the need for a president to have a firm grip on his own thinki i or her on thinking, the ability to stay the course. he's saying obama doesn't have that. that's probably a more profound comment that we're talking about here. >> in some ways if you read near the end of the book, president obama also admits that, himself. this whole idea of it's not enough to be confident in the chair in the oval office. part of leadership is also transmitting that sense of confidence to the american people. he -- suskind interviews the president, it lasted 50 minutes in february. you do get the sense this was before. this whole idea of a feuding economics team and rahm emanuel and larry summers and those, big personalities rammin

paul volcker's in the book. pete peterson. everybody's in the book, telling obama in '08, even in '09, you've got one shot at this -- >> you've got to restructure this thing. >> -- please do it. tim and larry said, no, no. hippocratic risk, you'll love this, first, do no harm. >> do no harm to the banking system -- >> exactly! >> but do lots of harm to the poor people and the middle class. >> a strategic error. >> strategic error?! tell that to the people who don't have food. >> not separating wall street from american business and main street at the beginning, lumping them together, who was thinking? >> very quickly, is there a double standard in the media where the darling president of the liberal media, when you indict him in a book like this as being, as blowing it when it came to the fundamental problem in the global economy, which is the structure of the credit markets, meanwhile, you indict george bush and you're a hero? >> absolutely. absolutely. and the thing is, i'm sitting here saying, i'm a reporter, this is my job

paul volcker is quoted in this book as saying, obama is smart, but smart is not enough.er thing entirely, about knowing your mind enough to make real decision, ones that last. that's a pretty damning portrayal by a man who is described by this white house as a senior economic adviser sometimes. >> well, it is, john. as you well know, there are a number of arguments in this book that the president was in over his head, that he had a team of people around him on the economic side who were frequently clashing with each other, had the knives out for each other. most of the top economic advisers have specifically refuted what's been attributed, led by secretary geithner, as you just showed that clip. what's been interesting about ron suskind's book in the past he had three about the bush administration, in each case there were attacks on particular lines or statements people had made, what was attributed to them. sometimes it appeared they were wrong. but the main narrative of those books tended to hold up. i think the danger for the obama team is, you can disagree with one p

paul volcker said obama is smart but smart is not enough, leadership is another thing entirely, about enough to make real situations, ones that last. that's a profound criticism of the president, nia. that's a profound charge about the need for a president to have a firm grip on his own thinking or her own thinking, an ability to stay the course. and he's saying that obama doesn't have that. that's probably a more profound comment than we're talking about here? >> in some ways if you read near the end of the book, president obama almost admit that is himself, this whole idea of it's not enough to be confident in that chair in the oval office, part of leadership is also transmitting that sense of confidence to the american people. suskind had those interviews with the president. it lasted about 50 minutes in february. you do get the sense that this was before, this whole idea of a feuding economics team and rahm emanuel and larry summers and those big personalities ramming legislation through congress, that's what the president needed then. now that he has turned a chapter, post-shella

this is the solution that paul volcker are among others have said this should be the minimum that we should consider. to get together privately at first and then have this before thanksgiving to put the country first. >> what kind of mechanisms do they need to make sure this stays in place over the coming years? . >> they are worried they will be villano villano villified. >> given the current fiscal situation -- >> given the current fiscal situation in the united states, would you advise more stimulus spending as the than the president is proposing in his jobs plan. >> my personal opinion is, in order to create jobs it has to be about confidence and the way to get confidence back in the market is to get a long-term fiscal plan. you can talk about fiscal, the real plan is for members of congress to grow up, be adults, and put what's on the table that we have seen, whether it be the blueprint, the fiscal commission, other possibilities that may exist out there. that's how you create jobs, with certainty, long-tpe

reforms proposed by former president george bush and president obama's own commission directed by paul volckerave a chance, mr. president, now to make fundamental changes, fundamental changes that will change the direction of our economy, and i think the psychology of the american marketplace. in this debate, we can talk, for example, about the issues that are front and center with american workers. i'm certain that in those coffee shops in west virginia, one of the things that is said again and again is senator, make sure you keep the jobs here, keep them at home. we're tired of all those jobs going offshore. well, senator coats and i have a proposal that takes away the tax breaks for shipping jobs overseas and uses those dollars to create jobs here at home. red, white, and blue jobs, mr. president, jobs that pay good wages here in the united states because we changed tax policies and made it more attractive to do business in the united states. we could talk about the various ways to do it. there is discussion about a territorial system, discussion about a worldwide taxation system for the la

of leadership that do occur, and while he was not an elected official, no one could argue that paul volcker did not show tremendous leadership when he battled inflation. he also had the help of ronald reagan and up congress that said we will cut deficits and try to get spending under control. it was not a deal that was made 141. -- 1 for 1. it was both of them saying if we do this, is a rational to expect the federal reserve to do that? the congress did what it was supposed to. one problem is to we do not have very many veterans or people who understand that kind of sacrifice anymore. to the extent you did not have people who have seen a real sacrifice come a very serious hardship, you do not find a lot of people that will bear relatively painful hardship. that is a larger social comment that probably does not play well on a show devoted to saving money, but the fact is i do find many of the people in congress different than when i started working there. worse than that, i find the antagonism among staff members. he used to be you would say you know how congress is up or senators are, you a

with very rare exceptions, notably in the years when paul volcker led the disinflation policy, one looks in vain for a statement of the medium-term consequences of the actions taken at the meeting. the staff and others provided forecasts of the future, but the fomc never charged to reach agreement on the consequences of its actions for the public. publishes forecasts but there is no clear relation between the forecast and the actions. second, concerns at fomc meetings are mainly about the near-term. the federal reserve has little influence over what will happen in the near term but much greater influence on the medium term. the present is characteristic. the fed chairman and some others seem determined to "do something." more about the executive waste an arm of-employment. the neglect the fact that there is no shortage of money and equity and they have pushed and prodded market interest rates to the lowest levels ever achieved anywhere. the united states does not have a problem of too little equity. there is not much the federal reserve can do by adding reserves or lowering interest rate

there are crazy critiques and then there are more paul volcker critiques.oughtful critique. >> i do not. i am persuaded that the way we went about seeking the authority to be able to extract more intelligence from a handful of individuals -- we are talking not about your rank-and- file enemy troop. this does not involve the military. this does not involve the department of defense. this is program that was authorized by the president's, by the national security council, carried out with all kinds of safeguards by the central intelligence agency. we had a case where we had a handful of individuals who clearly had knowledge of what was in the works from the standpoint of al qaeda, what they hoped to be able to do, how they function, who the key members were. it was people like khalid sheikh mohammed. the notion that somehow the united states was wobbly torturing anybody is not true, and anybody who takes the time to look at the program i think will come to the same conclusion. obviously there are people out there who differ with respect to that perspective, b

while he was not an elected official, no one would argue paul volcker did not show tremendous leadership when he battled inflation. he also had the help of ronald reagan and help of a congress that said ok, we're trying to cut deficits and get spending under control. it was not a deal made 141. -- mayone for one. if we'd do this, do you expect the federal reserve to do that? one thing that want to say it will seem out of right or left field, one problem is we don't have very many veterans or people understand that kind of sacrifice in this senate or house anymore. to the extent you don't have people have seen real sacrifice, serious hardship, you don't find a lot of people who will bear relatively painful hardship. that's a larger social comment that probably does not paid -- does not play well on a show devoted to saving money. but i do find many of the people in congress different than when i started working there. worse than that, i find the antagonism among staff members -- we used to say, you know how senators are or congressman are. but you and i have to make a deal. if i do this w

the federal reserve generally, not just the current fed, but the federal reserve going back to paul volcker in the mid-80's has maintained a very good record of low and stable inflation, which means stable purchasing power for the dollar in terms of domestic goods and services. low inflation domestically does not always mean immediately that the foreign-exchange value of the dollar will be high or low. that moves according to a whole variety of factors, including how much risk aversion there is in the market, what is happening to our trade balance, and a variety of other things. in the longer term, there is a close connection between our mandate and the value of the dollar, specifically, in the medium term, the value of the dollar depends on two things. it depends on our inflation rate relative to other inflation rates in other countries, and it depends on the strength of our economy. again, we kept inflation low and inflation in the u.s. has been lower than most countries in the past couple of years. in that town, by keeping inflation low and purchasing power stable, we're going to enhance

paul volcker but that's what we're going to try to encourage them to do, to get together privately at first then have a big public announce meavent before thanksgiving, put the country first. >> what kind of announce the do they need to make sure this stays in place over the next four years? >> i do not want to talk to much. what they should do is beat up front about enforcement. it the committee deadlocks and is unable to decide an automatic sequestration, those to not happen until 2013, after the next election when there will be a new congress, and possibly a new president. that looks kind of fake. this is something the super committee can take up with a committee can take up with a

there are crazy critiques and then there are more paul volcker critiques.hink that is a more thoughtful critique. >> i do not. i am persuaded that the way we went about seeking the authority to be able to extract more intelligence from a handful of individuals -- we are talking not about your rank-and-file enemy troop. this does not involve the military. this does not involve the department of defense. this is program that was authorized by the president's, by the national security council, carried out with all kinds of safeguards by the central intelligence agency. we had a case where we had a handful of individuals who clearly had knowledge of what was in the works from the standpoint of al qaeda, what they hoped to be able to do, how they function, who the key members were. it was people like khalid sheikh mohammed. the notion that somehow the united states was wobbly torturing anybody is not true, and anybody who takes the time to look at the program i think will come to the same conclusion. obviously there are people out there who differ with respect t