my assignment, my privilege is to introduce paul volcker. but i can hear you calling out to me, don'tish in such a rush david, slow down, tell us about yourself, how are you doing? well, you're good to ask. thank you very much. i'm fine. i have the oddest thing i want to tell you about. i want to tell you about the occasion when i -- my wife and i moved from my bachelor's apartment to our starter home. it's 1986, and we went to the closing of the selling of my apartment, and i was introduced to the real estate agent for the buyer of the apartment and was told that her name was jean dixon. so in a break i turned to my real estate agent and said is there any chance this is the jean dixon, the astrologer, the futurist? and she said, yes, she is. so who knew that jean dixon was a capitol hill real estate agent. so we did the transaction, and there was nothing interesting about it, but when we finished we were saying good-bye to miss dixon, and she took my 22-year-old wife's hand, kathleen's hand, and put it in hers and she turned her palm upward

here's paul volcker and steve clemons who is my colleague at atlantic media. >> thank you, david.

that's a good thing in spite of what paul volcker says. >> despite what i say. comparing these banks with putting polka dot dresses in the store for the christmas season-- that's not the business banks are in. they're not in the business of stocking and this kind of stuff. they are buying and selling. if they're buying and selling in response to the customer, they can do it. that's what the law says. >> well, what did you hear his chief objection to being? >> well, i didn't hear it because he said, "we want to do market making," and i say, "yeah, okay, do your market making, but don't mix up proprietary trading in the market making." you know, he's a very responsible banker, really. but he's gotten, i think a little overboard here because we're going to permit market making. but the united states government isn't protecting the dress shop. that's a big difference. >> but if you were a banker would you want the government to force you out of proprietary trading? >> no. if i was a banker i wouldn't want to -- of course i wouldn't. but you've got great advantages i

. >> i heard paul volcker speak at lunch.and you know, i've known paul volcker since we both worked in the kennedy treasury way back in 1962, and we didn't always agree, but -- but, he said something very important. we have a long-term problem. that's my view. we need a long-term solution. we're not going to solve our problems by printing a little more money today or having a bigger deficit tomorrow. what we're -- what we need to do and what i would want to do is to say, we have a long-term problem. in fact, a number of them. so let's find some long-term solutions. let's say how the central question is, how do we get back to a long-term growth path for the american people that has low inflation? that's what we want to do, and we want to develop systemic stabilizing policies over a long period of time. does the federal reserve do that? no. does the congress do it? no. does the administration do it? no. do they even think about it? no. that's the worst part. you know, just to finish this, i read more federal reserve minutes tha

paul volcker at the federal reserve tried to move and get away from these monetary policies. pointer by president carter, but encourage dramatically by president reagan. i think for the most part to make this long story short as possible for the most part that kind of approach continued by president bush 41, president clinton would have the state of the union address with david that government being over and welcome the welfare reform bill, which evolved responsibility to the states in an enormous change in the middle of the role of the federal government. more recently we switched back i don't know exactly where to mark the states. we did a temporary rebate in 2001 and had a stimulus package in early 2008. a very interventionist policy by the federal reserve in this. and of course now we have had an enormous number of interventions the first time the home buyer cash for clunkers temporary extensions of the payroll tax, exactly the things we seem to not work very well in the past. said based on evidence and a little bit of the ideas of how these things have been, by looking a

then i go on a block or two and somebody else says, oh, you're paul volcker. thank you. my father bought government securities at 15% which put me through college. thank you very much. >> david bradley got his house. that's good. let me provoke you for a moment and ask you about your view about what happened during the financial crisis and the creation of financial instruments derivatives which you have said created a lot of confusion and opaqueness and distance, essentially, between regulators and those playing in the markets. >> right. >> some might say, mr. volcker, you're well meaning but you don't understand the new math and that just like steel getting tauter and stronger, that you have a generation of people that despite what happened with the financial crisis, nonetheless there is strength in the kind of leveraging that's out there and that there's been an overreaction to financial innovation. >> i think the answer is evident. i heard all those songs about the benefits of all this very complex financial engineering and how it was diffusing risk and risk kind of -

people are interested interested they can go to got it done or it's all there it's plain as day paul volcker it is lamar said one of the biggest mistakes he made was what he did manipulate the gold enough and suppress it enough and the people since him have taken over that the role which started really big league with robert rubin when he was treasury secretary of the treasury can you summarize then kind of what the most glaring evidence of it is or how this works now and the way that you see it absolutely and the most obvious things for the people that watch your show is how the market trades on a day to day basis it's always counter-intuitive black is white white is black just one goal to go up the most it gets hit it gets hit around certain events like an auction expire like j.p. morgan did this ill for just the other day now it's over and watch silver move right back up again they attack at certain times of the day the most obvious is about three am new york time when the london gold car traders go to work we call that plan a i don't know it must have been three out of five times a week

and they meet with paul volcker soon critical that's all we have time for thanks so much for watching don't forget to follow me on twitter at lauren lyster give us feedback on you tube dot com slash capital account and have a great.

and they made what paul volcker said pretty cool that's all we have time for thanks so much for watching don't forget to follow me on twitter at lauren lyster give us feedback on you tube dot com slash capital account and have a great deal. more news today borland says once again flared up. these are the images the world has been seeing from the streets of canada. giant corporations to rule the day.

prior to the disinflation, the paul volcker disinflation, business expansions were much shorter.e fact that the fed was excessively inflationary and brought those expansions to an end prosecute maturely by raising interest rates and deliberately creating inflation to control recession. once the fed learned to put inflation first, we got both longer expansion and lower inflation. at that point, the fed essentially lengthened the life expectancy of business expansion and made possible death by another means. in this case, the asset price problem, extreme asset price fluctuations became more expansive. now, do i think the fed did much or too little in this particular expansion? under the circumstances, we've not seen anything like this before. i'm not someone to criticize the fed for what it did initially. but what i will say is i think history will judge whether the fed did the right thing this time around by whether it gets out of this without a rising rate of inflation, it's essentially something much higher, something closer to a more serious rate of inflation. >> both sides are

i worked with paul volcker and a good portion of alan greenspan's term and more recently. the most important thing is to ask the fed to go back to a more single mandate, and the dual mandate that it should consider a wide range of rules put in at the height of all this interventionist policy. let's take it out and reform the reserve act in that way. that will have the benefit of actually reducing unemployment in my view. then there are also the goals of restoring some reporting requirements in the federal reserve act that were removed in 2000. the federal reserve used to have to report about monetary growth rates. they don't have to report that explicitly anymore so going back to a requirement the federal reserve report a strategy for interest and congress shouldn't dictate what that strategy is. the fed should be able to describe what it is. entitlements and three very important here, think here the simple ideas just to keep, simply keep the growth of entitlements from expanding in the share of gdp. that really shouldn't be so hard for people to understand what that is ab

many parts of dodd-frank but the real stick her have the volcker rule and i had breakfast with paul volcker and my understanding coming away from that many, many months ago was what he was trying to do was ensure that individual's deposits wouldn't be soaked up and used by institutions for trading. fair enough, they shouldn't be. >> rose: and if you were a depository institution they didn't want you taking that kind of proprietary risk. >> and they shouldn't be. >> rose: so reading the volcker rule like that, you approve. >> absolutely! snft we shut down our proprietary businesses before volcker started coming into effect. before the volcker rule got... >> rose: but after the crash. after the crash because we learned ourselves. so i always felt a much more elegant solution to the volcker rule was not to try and legislate what you can and can't do. so we'll make it so punitive nobody will want to do it because your shareholders won't let you. so let a market mechanism drive it rather than a legislator trying to write the rules. as a result there's 390 pages and it's very complicated. >> rose

they enlisted george sulingts, paul volcker and kofi annan, javier-- the eu defense chief, people in the business community, archbishops of colombia, guatemala, military leaders, business leaders, social justice leaders are all stepping up so what is really new is that there has been a that would for the last a taboo for the last 40 years on any discussion. the u.s. government has suppressed it, ignored it and will continue to try to derail it and distort this debate. but the fact of the matter is this genie is now out of the bottle for the first time ever, and this conversation is going to continue. >> suarez: ray, walser is it fair to say that the leader who have spoken out in favor of some form of decriminalization are historically no softies on drugs. weren't the leaders of costa rica, guatemala, colombia among the leaders of their country's anti-drug efforts? >> oh, absolutely. i mean let's take colombia. look what the battle against 9 cartels in the '90s, the battle against narco terrorism of the-- central america was not necessarily a big battleground for transnational crime u

. >> also next week, former federal reserve chairman paul volcker, whose efforts to stop the big banks from taking us down, again, led to a rule named after him. that's it for this week. i'm bill moyers, and i'll see you next time.

we stabilize the currency under paul volcker and ronald reagan. by the way, most liberal economists thought i could never happen. reagan cut tax rates down to 28%. that is significant. 72 cents out keep of the dollar. it caused a boom in the stock market and jobs. incomes rose. it was an american renaissance. that is why when ronald reagan ran for reelection, you remember, his theme was morning in america. you'll never hear barack obama run on 18 of morning in america. it's called a -- run on morning in america. host: this tweet -- we have a spending problem with the military. guest: the defense secretary has said some of these cuts could be catastrophic. that is barack obama's defense secretary. we have to cut everything, every agency by 10%, 15%, just as a start. we spend too much money. hopefully as we withdraw from iraq and afghanistan we will be able to save a lot of money. george bush, i saw him this week, and i have to give him a lot up credit. there were a lot of policies he put into effect that i cannot agree with, but one of the reasons

under paul volcker late 70s, early 80s. we had paper.ust had a disciplined, tough monetary policy that was aimed at squeezing a hyper inflation out of the system. we need responsible policy. it not a question of hard or soft, gold or paper. we just need policy, discipline and an independent fed, not a fed that is eliminated, as you have argued in your book. >> but the purchasing power of the dollar since the fed's been in charge, we've lost 97% of it. the purchasing power of gold for thousands and thousands of years maintains its values and actually with increase of production, it goes up in value. >> let get stephen roach's response to that. is that right we've lost 97% of the value? >> no, not even close. i would challenge the congressman's numbers. how we lost 97% of the purchasing power of the dollar, relative to what? the american economy has done darn well. we're having problems right now, there's no question about it. we went through a horrific crisis and are the of that you're correct in pointing out reflected irresponsible monet