the chair has a tremendous amount of influence on the economy, on the path of the economy. we certainly have seen in my opinion is that the monetary policy we had a decade ago contributed to inflating the housing bubble. so when you get monetary policy wrong, lots of bad things can happen that affect all of us, that affect labor mark and our wallet, so i think it's important that you get someone there. i say someone who is a former staffer on the bank committee who worked on fed nominees, there has been a shocking lack of due diligence on the part of congress in terms of actually kind of looking at these nominees in a serious way. most of the time they're just really run through without very little questioning in a serious manner. i hope in the future we spend a fair amount of time on this. i think it's important for the public to understand monetary policy and i don't think that education has happened. >> we have ten days to hammer out a budget, how does that go into the mix? >> the nomination of the fed chair will go to the committee and be accompanied by some other nomine

in light of the weaker economy. bernanke: as i mentioned earlier the committee has regularly reviewed the forward guidance, and there are a number of ways in which the forward guidance could be strengthened. for example, inflation floor, there are other steps we can take, we can provide more information of what happens after he gets to 6.5% in those sort of things. the extent we can provide precise guidance, that would be desirable. now it is very important we not take any of these steps lightly. we understand all the implications and that we are comfortable it will be, any modifications of the guidance will be credible to the market and to the public. we continue to think about options, a number of options we have talked about, but today, as of today we did not choose to make any changes to the guidance. >> l.a. times. as you may know, the census bureau reported yesterday that the poverty rate in the median household income saw no improvement last year. wonder when you see median income turning up significantly for

in the late 1990s, the economy was booming. ployment was at a 30-year low and inflation was also at a 30-year low. did that mean inflation was dead? during the 1970s the american dream threatened to become the american nightmare. for the first time, we were faced with skyrocketing prices and exploding unemployment. stagflation -- why couldn't we beat it? with economic analyst richard gill we'll explore that question on this edition of "economics usa." i'm david schoumacher. schoumacher: since the passage of the employment act in 1946, it has been accepted policy for the government to fight unemployment by stimulating total demand. often, inflation resulted. when that happened the government shifted gears and clamped down on demand in order to decrease inflation. for five administrations the government more or less successfully practiced the delicate art of balancing off unemployment and inflation. the experience of the 1950s and 1960s indicated that when unemployment went up, inflation would, correspondingly, fall. by the time r

the economy erupted into prosperity. predictions of hard times vanished in the explosion of pent-up consumer demand. the law that was supposed to prevent another great depression became the continuing justification for fiscal policy. the war's end signaled the beginning of a long, uninterrupted period of continuing prosperity. passage of the 1946 employment act marked the government's commitment to use its considerable power to ensure that prosperity continued. we asked economic analyst richard gill the rationale for using fiscal policy to maintain economic stability. the rationale was very much influenced by the ideas of john maynard keynes whose major work was published in 1936. keynes thought total private spending might be insufficient to sustain national income at the full employment level. the solution? increase government spending to fill the gap. we can illustrate this idea with a simple diagram. let's measure total spending by consumers, businessmen, and the government on this vertical axis, and national income,

but in reality, the economy is a set of rules. there's no economy in the state of nature. they're rules. i mean, there are rules about property and liability and anti-trust and bankruptcy and subsidies for certain things and taxes for certain things. these rules really are the rules of the game. they determine economic outcomes. if we don't like them, we can change the rules. i mean, if we had a democracy that was working as a democracy should be working, we could adapt the rules so that, for example, the gains of economic growth were more widely distributed without a sacrifice of efficiency or innovation. >> those rules are difficult to explain in writing, much less on film. and yet you and kornbluth do very well at it. let me play an excerpt for our audience to see how you did it. >> of all developed nations today, the united states has the most unequal distribution of income and wealth by far. and we're surging towards even greater inequality. one way of looking at and measuring inequality is to look at the earnings of people at the top versus the earnings of the typica

what we are going to do is the right thing for the economy. and our assessment of the data since june is that taken collectively that it didn't quite meet the standard of satisfying our -- or of ratifying or confirming our basic outlook for, again, increasing growth, improving labor markets and inflation moving back towards target. we tried our best to communicate to markets. we'll continue to do that. but we can't let market expectations dictate our policy actions. our policy actions have to be determined by our best assessment of what's needed for the economy. >> reporter: peter barnes, fox business. you mentioned fiscal business in the statement today. are you concerned about a government shutdown? we're hearing more about that possibility. did that come up in your discussions at this meeting? what do you think will be the impact of a government shutdown on the economy? and what could the feds -- or would the fed be prepared to respond to that and help the economy with additional accommodation? for example, additional asset purchases. thank

economy is one of the most important things that can happen to help the economies of emerging markets. again, i think mike collies in many of the emerging markets appreciate -- i think my colleagues in many of the emerging markets appreciate some of the fx they have experienced. economies come down to the global economy including emerging markets as well. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> on c-span today, "washington journal" is next. then we begin our live coverage at the house of representatives. after morning business, members are scheduled to work on a short-term spending bill for the fiscal year that begins october 1. then a nutrition assistance bill that includes food stamps. in 45 minutes, we will talk with congressman scott garrett about raising the federal debt ceiling. then representative james mcgovern on the food stamp program. reporter on house hearings looking into last year's attacks on the u.s. consulate in benghazi, libya. >> there should be no conversation about shutting the government

still the economy plunged downward. meone asked john maynard keynes if he could think of anything similar to this depression. "yes, it was called the dark ages." what was so different about keynes' view of the economy? to realize what a revolutionary idea keynes had, we have to recall again the classical view which said supply creates its own demand. if consumers don't want to consume all their incomes they can lend their savings to businesses who will invest it. the idea is that if consumption goes down, investment demand will go up. if investment demand goes down, consumption demand will go up. in either case total demand remains high. keynes said if you had a fall in investment spending, this might lead to a fall in consumption spending. total demand-- consumption demand plus investment demand-- might fall. it might be a multiplied fall once the process got started. let me stress this was a shocking idea. when demand falls, it may not repair itself a la says law. it may fall further. there may not be enough total dema

it will help us lower interest rates and grow the economy and lower tax rates while the grow the economy which means we can get this thing under control even with the retirement of the baby boom population. is that basically what i'm getting out of this click status of point we are trying to make here. this is where we want to go. the reason this debt limit fight is coming is because when we have had great fiscal bipartisan agreements in the past whether it was reagan or whether was pushed with democrats in the senate whether it was gingrich and clinton or bca and bowles-simpson these things were part of debt limit agreements. they have always been that forcing actions that got us agreements and what we are getting here is if we put together a package now before the federal reserve normalizes and before the federal -- we will put the nation in a very good position. but if we miss this moment, if we just kick the can because we keep fighting each other then we will not get this opportunity. the federal reserve will start tapering. it's not if its plan. interest rates will go up and shame

what is the source of the real income of the economy? the goods that the economy produces. znets' studies illuminated the structure of the economy, but also they did more. imagine trying to plan a major war effort without knowing the size of the real gnp that your economy is producing. as the nation prepared for world war ii, this was no academic question. the militarists of berlin and tokyo started this war, but the massed, angered forces of common humanity will finish it. january 6, 1942. president franklin roosevelt is giving the country its marching orders. the success of those orders in winning world war ii depended on the american economy. for months, the issue of how to prepare for war without actually fighting swung back and forth from congress to the white house. economists were trying to answer the critical question, how much could the economy produce and how fast? german armies moved through europe in 1940, pushing allied forces into the sea at dunkirk. fdr took only tentative steps because of pressures to keep america out of war. in 1940, congress agreed to only

in 2010, we had a $1.5 trillion budget deficit and the economy was $15 trillion then. today we have a $17 trillion budget deficit. there's no appetite in congress to do it. >> let's talk federal reserve and the new head. you know larry summers. >> i do. >> what do you think the issues would be if he were to become chairman? is he the guy to take over for bernanke? >> there are two people for sure -- one, larry summers. larry summers wants them and so does obama. 's going to have a little trouble getting confirmed. it's a question of whether or not obama wants the fight. look at it from obama's standpoint. he's got three fights ahead of them -- syria, a serious one, the debt ceiling, another one, and the confirmation of the new fed chairman. i think of all those three, the fight on the fed chairman is the one he's most likely to abdicate on. and then he picked janet yellen. >> it could go either way? >> yes. >> as far as the heart attacks are concerned, how do you advise investors? will the nervousness be unending? >> the market's done very well over the last two years.

buffett says the u.s. economy is continuing the, quote, gradual increase it started since the fall of twine, end quote. as for the fed not tapering yesterday, here's what he had to say. >> i didn't have any great expectations one way or the other and it doesn't really make any difference to me in terms of our business or investments whether it's zero, $10 billion or $20 billion. someday it will stop and maybe go the other direction. >> our guest tonight says he was surprised the fed did not taper and that he's not making changes to his investment strategy based on whether it tapers or not. he is jim paulson, chief inrestment strategiinves investment strategist at wells imagine management. did the fed miss an opportunity. >> that's a sign of every successful recovery is the fed reins in its stimulus. i think they had an opportunity. obviously the markets leading up the last several weeks fully, most of us, all thought they were going to taper and the market seemed fine with it. the s&p before yesterday was close to

these arnt aren't the policies to grow the economy faster. they're not the policies to help grow the middle class. in fact, they do the opposite. up until now republicans have argued that these cuts are necessary in the name of fiscal responsibility. our deficits are now falling at the fastest rate since the end of world war ii. i want to repeat that. our deficits are going down faster than any time since before i was born. by the end of this year -- [ applause ] by the end of this year, we will have cut our deficits by more than half since i took office. that doesn't mean that we don't still have some long-term fiscal challenges primarily because the population is getting older, and they're using more health care services. so we still have changes to make, and there's not a government agency or program out there that still can't be streamlined, become more customer-friendly, more efficient. so i do believe we should cut out programs that we don't need. we need to fix ones that aren't working the way they're supposed to or have outlived their

the economy is growing, the unemployment rate has fallen in the last year. if this economy is not good enough to take away the most extreme monetary ease what economy would be? there is a cost to keeping this easy money going and i think in the long run we'll look back on this day a few years from now when we're dealing with an inflation problem and said the fed ought to have thave guts toe the inflation. >> i don't think it was a wimpy decision. this is going to be a heated debate. i'm surprised because i think they set the market up $10 billion one way or the other in the context of what they're buying doesn't matter all that much. it's important to note that as strong as david is saying things are, it decelerated over the summer. the economy looks like it's growing less than 2% rate again and what we're facing in terms of what could be a continuing resolution showdown in congress and in another debt ceiling debacle in congress the fed is waiting out the fiscal situation putting in that fiscal situation. >> diane? >> diane, the thing ta was the most interes

the accelerator. good news for investors. and more big name economies are changing their healthcare to private exchanges. we'll explain what this means for you and your healthcare cost. but the man who is putting his name on the debt crisis. this is david schuster for ali velshi, and this is "real money." [♪ music ] >> this is "real money," and you are the most important part of the show, so join our live conversation for the next half hour by using the twitter ashe tag aj real money. there was a big announcement that thrilled investors. in a huge surprise fed chair ben bernanke said that the fed would not take money away from stimulus programs because of head winds facing the economy. >> in light of these encertain thes we decided to wait for more evidence. of the sustained economy. >> some of those developments are high unemployment rate and cut backs that are restraining the committee. the fed has been pumping $85 billion into the final system every month of the year. it does so by buying bonds from banks and brokers who can turn around and borrow th

for the economy as a whole, the result was disastrous.h interest rates discouraged borrowing, choking off business credit. more businesses failed, more jobs lost, and more banks collapsed. the country was pushed deeper into the great depression. well, professor, if you graded the fed-- a, b, c, d, f-- what would it be in the 1930s? i would grade it as an "f" applying today's standar. probably a "d," applying even the standards-- the most advanced standards of tt day. sure, you can criticize the d. it made mistakes. but what it did wrong was a matter of degree, mostly, ther than... total mistakes of policy. the men who met around this table were some of t country's most influential bankers. they were the federaresee'sard. were some of t country's when they met to changediss most influential bankers. ey senripples across theation. they were practicing a rudimentary form of monetary policy. they were affecting the money suly how important was the money supply? economist richard gill has an anasis. to understand this question, we neesome sens

strengthen the u.s. economy also needs to the benefits of the broader economy, including emerging markets as well. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] later today, president obama will be meeting family members of the 12 victims killed at last week's shooting at the washington navy yard. he will also deliver remarks at the navy yard memorial service. you can watch live coverage on c-span beginning at 5 p.m. eastern. >> the subject of whistleblowers is a very important and sensitive subject. depend on whistleblowers. we value their information. it is very important that they feel comfortable coming forward and saying, i have you need to protect my identity. we understand that. the statute requires us to extend protection. in practice, what we will do is to advise whistleblowers to say givee extent you can specific information that is much more helpful. it may be that an educated and may not be able to guess the identity. you need to be a

and wait for the president's remarks here on the economy. as supposed to be an address in a rose garden speech but you have -- some bad weather right now. in our nation's capitol, the ceiling is very low with regard to cloud that could be the reason as to why they moved it back inside. lauri with me as

increased we had we worked on the assumption that the government would continue spending to keep the economy stimulated and now here we are almost in october and we have an october report coming out about what the budget is going to be it's completely reversed why well i think the government is looking at it is that they're emphasizing stability and you know there's still a great deal of uncertainty in the global economy of course as we've seen with the the actions of the fed will they want to kind of comes to tapering in of we do expect another round of at least uncertainty in the euro zone as the baby tackles the banks is tightening up the budget the right strategy. and i don't believe so i think it's been proven time and time again taking budgets you know is it might contain stability for a while but the danger is you might even see some refer to retraction in the economy you know historically this is a strategy to say to the i.m.f. as you said many times going to countries in trouble and insisting on budget cuts making the matters worse now you know the thinking is you better off expandi

the rfc was a milestone, a major government involvement in the economy. e industries and financial institutions could turn to the rfc for capital. this bold step didn't work. why not? it was unsuccessful because, well, i'd say if you were involved in an avalanche and it had tremendous momentum and you put up a barrier that was impossibly moderate or modest compared with that onward force, it couldn't stop it very well. the depression had become so deep, the slide so precipitous, and the decline in business so great that pouring money into the businesses to start new projects wasn't working. the problem was that the demand for goods and services wasn't there. but by 1932, millions of americans were broke, hungry, and homeless. millions more watched their lifesavings disappear as banks toppled like dominoes. in 1929, americans had saved almost $4 billion. in 1932, savings dried up, which meant no money for investment. as the reconstruction finance corporation showed, businessmen couldn't afford to invest money to produce commodities no one could buy. it took

the economy grew at annual rate of 2.5%. revised upwards from 1.7%. readings in exports and invests were responsible for much of the revision. the markets got off to a nervous start this week, having the worse day in more than two months on tuesday. concerns about american involvement in syria. stocks recovered though later in the week. america's housing market continues to improve, though at a slower pace, the k-schiller index of cities, saw housing up 12% from a year ago americans are not driving that much. they have since plateaued even though the economy has recovered. that number continue to fall in the first half of in year and the drop is partly due to the economy and lifestyle as more people choose to live in cities. >> watching syria, waiting for the fed and just how is september shaping up, let's talk about joining me now is the chief investment officer in black rock they've $632 billion and david gordon is head of research. thank you both for joining me today. david, this long lead up to whatever is going to happen in syria, has certainly pe

hello and welcome to on the money with a business is business i'm peter lavelle where is the russian economy going into the government and the central bank have a sound growth strategy over the past few months we have witnessed the government change its economic assumptions and policies by one hundred eighty degrees is this a sign of panic or sound judgment. i'm joined by chris we for he is the senior partner with macro advisory and we also have a year or so if we so vola key is the chief economist at deutsche bank russia ok chris if i can start with you first is the government battening down the hatches because three months ago we saw spending increased we had we worked on the assumption that the government would continue spending to keep the economy stimulated and now here we are almost in october and we have an october report coming out about what the budget is going to be it's completely reversed why well you know i think the government is looking at is that they're emphasizing stability and you know there's still a great deal of uncertainty in the global economy of course as we've seen

only 45% approve of his handling of the economy. a recent bloomberg pole show 68% of the countr country say the cy is heading in the wrong direction. >> creating jobs is our number one priority, and this bill will help us to do it. it's hard to get to the number one priority when you have some of the shenanigans going on in the u.s. house and some of this manufactured crisis they've created. >> reporter: as americans watch the budget battle unfold on capitol hill in theaters across the country a new movie tackles the issue of the shrinking middle class. >> the united states has the most unequal distribution of income. and we're surging to a greater inequality. >> it's called "inequality" for all. inside story talked with its director. >> i made this film specifically for people like me who are worried, have economic anxiety about what their future is like, are they going to be retire, get healthcare, but i wanted them to be able to understand, get a real framework of what i consider to be the noise of the 24 hours news cycle that com

the economy hurt the banks and the banks hurt the economy. historian eugene white explains. problems began to feed the fires of the depression through a multiple credit contraction. once a bank ceased to make a lot of loans when it began increasing its reserves, not making new loans to new customers an increasing number of businesses began to fail. businesses couldn't pay back their loans. many banks found their loans weaker and they contracted even further. so it was a slow unwinding of the financial system. what was the federal reserve doing? the fed was supposed to engage in a countercyclical policy to counteract trends in the economy. but instead, it, at the beginning began to play a very neutral role. it just let the banking system slide very slowly into chaos. once again panic took hold. in 1930, 1,000 banks failed. in 1931, more than 2,000. in 1932, the american people looked to new leadership to lift the country out of its economic crisis. i propose to show that this leadership misunderstood the forces that were involved in the economic life of the country. it encour

the economy has done poorly. it's not a catastrophe but it's done poorly relative to the united states which is an obvious compareor and by the way they haven't reaped any inflation benefit. it's not like okay, well we paid this price but now we've got lower inflation than the united states. by the way, why would you want that? but if you do, you don't have in the britain. >> i mean, there's a rich philosophical and economic and political debate about how large a government you want to have and? the long term we need us a stair any this country because we've promised ourselves more benefits than we can afford. but i think in the short term in the wake of a crisis i find historical evidence to be overwhelming. whether it's the 1930s, whether it's japan, whether it's england in the wake of this crisis. whether it's this country for good and for will austerity just doesn't work in the aftermath of a financial crisis. >> rose: so finally you guys all are experts in economic matters and less so in political matters hav

for the economy, a government shutdown could be the lesser of two evils.publicans shut down the government they would probably shy away from another huge confrontation, and be less likely to stand in the way of raising the debt ceiling, indeed a shutdown is nothing compared to the possible armageddon of not raising the debt ceiling. that's our show for today. next week we'll keep you on top of all of the governments with the affordable care act, and the potential government shutdown. i'm david shuster in for ali velshi. thanks for joining us. ♪ >> hi, i'm lisa fletcher here in the stream. you probably never heard of it, about i bet you drank what comes from there. stream water. it runs through the town and is dividing it over the question, who has the right to own water? filling in tonight for our digital producer, and this is a show that our community does. >> normally, we have a rul

downgraded its outlook for the economy. it now expects gdp growth will be in the 2 to 2.3% range for this year. as for the market response to the fed's announcement, well, stocks soared to all-time highs. looks like game on as far as any of these short-term traders are concerned. you saw bond yields retreating. the dow jones industrial average closed at 15,676. the ten-year yield crept down to 2.7%. the dow and the s&p posting their best day since mid-june. all the sectors closed in positive territory. among the biggest winners, the home builders. we talked about how that was an interest rate sensitive group. 2.7% was where it closed yesterday. the futures this morning are sitting like they're going to be higher once again today. dow futures up by about 61 points. s&p up by 7.5. in europe, the ftse 1 is 00 is up by 1.4%. gains of better than 1% for both the cac and the dax. in asia overnight, you saw major rallies with the nikkei up by 1.8%. the hang seng up by 1.6%. the dollar, after all of twhb obviously, you might expect

dagen: they you think the economy is weak enough to kick the book down the road. >> the economy, we haveo get used to this type of growth are round 2% or so, on a longer-term basis on gdp and non-farm payrolls really about the 200,000. i don't think that will change anytime soon, you have a potential head wind coming down the line with obamacare. that will have a negative impact on job hiring going forward and also going to cause people who are part-time to have their hours cut back so they're not eligible for a health-care under the new law. dagen: do you think we will see the highs in long-term interest rates? we did the morning before last month's job report came out is that as high as we will go for how long? >> you could be in that situation for potentially several months. they have to reduce paper sooner rather than later. the fed itself says really not having much impact on the economy so why do you want to keep pumping, bloating of your balance sheet at the fed. dagen: some stability in interest rates in the ten year comfortably below the 3% level on the yield have you seen the o

what is it going to take to move the needle on this economy, do you think? >> fiscal stimulus. >> tax policies? >> well, tax policies is one of the things. in 2010, we had a 1.5 trillion budget deficit, and the economy was $15 trillion in. today, we have a $17 trillion economy, and the budget deficit is 17.4, it has gone from 7% gdp to 4%, we have room for fiscal stimulus, and we're not doing it. there is no room in congress to do it. >> all right, you know larry summers, you spent time with him. what do you think the issues would be if he were to become chairman? do you think he is the guy, or is it janet yellen to take over to ben bernanke? >> two people for sure that want larry summers, larry summers wants it, and so does president obama. the question is, he is going to have a little trouble getting confirmed. and it is the question of whether or not obama wants to fight. now look at it from obama's standpoint. he has three fights ahead of him. syria, a serious one. the debt ceiling, another one. and the confirmation of the new fed chairman. i think of all

economy. it's going otake us all building together to build the critical mass so we can change that economy andate the values that the vast majority of the people in america agree on. >> how will it work at this convention where you go to your members and say okay here is my plan for saving these unions, here's what i'm going to do in terms of reaching out. what's the message? >> that's not how we did it. we did it completely different than that. in the past we would have committee meetings three days before a convention, and then go to a convention, have a bunch of speeches and a bunch of resolutions and the convention would end and quite frankly nothing would change. we started six months ago. we brought people together. all of our friends, our partners, our allies from the community we brought in rank and file workers, we brought in students, we brought in academics, we brought in all the best thinkers that we could. and we said let's sit and talk about what we need to become, in order to meet the needs of working america today. what we have to do. and we jointly developed that plan. and wha

>>> prepare for a government shutdown, some parts of the economy will suffer more than others. we will explain what it means for you. and the affordable care act may effect the care you get at your local hospitals, and plus some investors are putting a price tag on how much you are worth. i'm david shuster in for ali money." ♪ >>> this is "real money" and you the most important part of the show, so join our live conversation for the next half by using the twitter hashtag ajrealmoney. the government is now down to the wire to avoid potential drags on the u.s. economy. the first comes october 1st, and on friday the sense of uncertainty was captured by the u.s. senate chaplain. >> lord deliver us from governing by crisis. >> but crisis is now where things are headed. the republican-lead house said it is unwilling to consider an emergency spending bill that just passed the senate, because the senate bill didn't kill obamacare with house reasoning refusing to drop testify that fort, stocks closed lower for the sixth straight day as investors worried the government will shut down octo

vast middle class simply doesn't have the wherewithal to to buy what the economy is capable of producing so people like harvey weinstein who is at the upper end of this can do more and self gavi. yes i mean look at we have warren buffett in the movie and we have nick hanauer and many others who are among the wealthiest in this country who are who are saying inequality is bad for everybody and equality for all that's why we came up with the name of the of the title of the movie and equality is bad for the entire country it's bad for the economy it's bad for politics in our democracy because we have more and more money in politics that is making more and more people cynical about our democracy it's also very divisive because if people can't get ahead they get angry and their anger is used by demagogues on the left and the right i mean if you would but you have polarization in this country like we have not seen in years you and i both remember you know joe mccarthy's witch hunts and the divisiveness of the civil rights era and the divisiveness of watergate and the div

he finally saw a more liberal approach was needed to stimulate the economy. it took the form of a massive tax cut proposed in i962. this net reduction in tax liabilities of $10 billion will increase the purchasing power of american families and business enterprises in every tax bracket. but john f. kennedy didn't live to see his programs enacted. instead, on that fateful november day, lyndon baines johnson was sworn in as the 36th president of the united states. johnson pursued kennedy's economic proposals and pushed the tax plan through congress. how well did it work? perfectly. business week, which isn't exactly a liberal pro-kennedy publication, said it probably was the most successful tax cut in history. it came out of the textbooks. it went back into the textbooks as the fiscal measure that came closer to carrying out what people had projected for it. that was a tax cut that worked. the economic policies of the kennedy-johnson administration had stimulated demand, creating growth in the economy. busiss was boomi. jobs were plentiful, unemployment near an