tom: i want to stay right there with paul volcker. my malaise is your microphone is not working so steve is going to fix it. we will speak, it is not going questions.a i promise you i will not ask you what janet is going to do tomorrow. mike is. the idea of a serious discussion about the years of research put into this. michael: that is what you have based your entire career on, your study of the economy. not just investing, but how the economy works. tell us about your concept of the machine. ray: the same things happen over and over again. anything that has happened economically, it happens over and over again. it is a very simple machine. it is the same for an individual. a country is nothing more than the collection of its individuals or companies. there are three main factors. productivity, which produces income. you can spend what you earn. what you earn is a function of your productivity. for the country, it is the same as individuals. work hard, well-educated, you can be more productive if you were carter or if you are -- if y

this is not a volcker, this is not martin, these are guys who don't know anything.rles: volcker raised rates a time it seemed, he gave us pain but we gave out better as a nation. >> and martin, you were not old enough but his he said his role was to take the punch bowl away when the party is getting hot. charles: it feels like the punch bowl does not work any more anyway. >> federal reserve balance sheet from 800 billion to 5 trillion in 7 years, that is up 600%. charles: i am getting a singapore, is china doing a stimulus? >> i think they will. charles: jim appreciate it. >> as you can see right there. a huge rally, all for donald trump, at american airline center in dallas, texas. tonight trump, is going to dunk a few more things other than basketball, and we're going to cover it live. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. you drop 40 grand on a new set of wheels, then... wham! a minivan t-bones you. guess what: your insurance company will only give you 37-thousand to replace it. "depreciation" they claim. "how

i think -- it reminds me of a time earlier in our careers, paul volcker was the chairman of the federal reserve and he was tightening interest rates, tightening monetary policy despite having double-digit unemployment. i do not really want to do this, but these rules i am using makes me do it. the federal reserve wanted to make. they were scrambling for excuses. excuses.very weak joe: you are staying with us. alix: what do you get when you divide the price of a town of copper by 1000? it is a very important number, when we come back. ♪ what do you get when you divide a ton of copper by 1000? is a correlation between chinese growth and copper prices. china is growing at 5%, not the 7% estimate. alix: i love this, i am totally fascinated. the country's growth outlook has worsened after weak economic data came out of her night. manufacturing falling to a six year low. mark chandler's still with us. how much more downside -- these numbers are ugly across the board. mark: this is -- this survey measures small and medium-sized companies. out is what we will find next week when the official su

there is no equivalent of this back to paul volcker.sense that i gt from our audience is that the fed is making a choice to keep rates where they are. forced to make a choice based on the savings? -- logo its two objectives inflation and employment dictate for an increase now is not obvious. in the past, certainly, going the other way. by the weakness of aggregate demand value that potential out put. tom: let's come back and continue this discussion. willem buiter with us. we look at equities, bonds, currencies, commodities. soggy,a little bit 44.58. brendan: this is "bloomberg surveillance." industrial output in china failed to meet targets last month. investment during the first eight months increased at the slowest pace in 15 years. chinese stocks had their first -- their worst day in three weeks. enda curran joins us from hong kong. where wew with china were two years ago with europe? bad news is good news because it means intervention? enda: the problem with china is they cannot break the circuit right now. it is a never ending cyc

every analysis of paul volcker showed he followed no rules. is no analysis that says volcker followed a rule. >> he was a commodity price rule guy and he was a gold guy. but look, there is no inflation! therefore, they should do nothing. >> unless you're talking about, larry, couple things. my point, you reference -- this brings us back perfectly to the beginning because you referenced the labor force participation rate. everybody that hates the economy right now says it is low. >> i don't hate the economy. >> back to 1977 lows. we're still where we were above in the '50s, '60s and '70s. you idiot, women didn't work then, then they joined the work force. child care costs are out of control. eating more and more salary. i know a lot of people who don't work -- >> child care costs may be too high. >> it's killing the labor force. you don't think so. >> you have to look at broad price indexes for christ sake. there's 3,000 prices in there. you can't make a fed tightening case on inflation. >> my points is, larry, it is not in the data. child care

paul volcker a lot. i thought he was a terrific guy and so many different ways.had a good polls, he had a good -- you know, the bead he had, he was doing what had to be done. john: for campaign finance reform, that's an important part of your platform. what is the cornerstone of your campaign about can paint finance reform? mr. trump: it could be. number one would be trade, obamacare, repealing and replacing, taking care of our vets, strengthening the military. we did talk all day long about things with the do. campaign-finance reform certainly would be something we could talk about. i think more than anything else, transparency. you know, there should be total transparency so if someone is going to do something and i think one of the reasons i am so high in the polls is everyone knows all of the lobbyists -- y of whom i used to employ and i know many of them -- they have tremendous power. they have tremendous power over these candidates. >> in the past you have expressed that the way to deal with the war on drugs is to legalize drugs. the situation with mayor wo

so for everything from paul volcker and reagan, you have a lot of government people that have gotten this wrong. i'm not in the camp that janet yellen is all knowing. she missed her window and now she's reacting to the market. >> andrew jackson? that's a little much. >> some are saying that hamilton should never have created the fed. but you're the one who likes what they have been doing. >> when you have a job that needs to be done, send a woman. >> there we go. >> oh, wow. >> i have to send that to jonas. quick response. >> if if you look at the history of this country when we didn't have central banking, that was a scary time. i will take the frothiness over the panic. i personally think this is the strongest economy right now. personally, it is a fact and the whole world right now, and in that case as an american invest investor, you don't need safe havens like gold. in america, stocks and bonds do well. gold is down 40% over the last few years. as much as the stock market fell this 2008 that is not a safe haven for u.s. based investors. >> i want it give it over to susie. >> i h

that slow crash plagued us until reagan and volcker came to the scene and broke down at long last the garbled mouthful, called stall nation. inflation was run -- stag nation, and inflation and jobs and economy and growth were going nowhere the prime rate went up to 21-1/2 percent. that's 2% a month for most borrowers, in 1980 inflation was over a percent a month. our economy was crushed. but what they determined, particularly volcker, the only way to bring this fever under control was to nearly bankrupt the country, and what they did is they raised the prime rate. higher and higher. crushing manufacturing. crushing automobiles. chrysler went bankrupt. crushing the billing trades. crushing everything that required borrowing in order to grow. but by 1983, the fever had broken. the fever had broken in the form of structural, redistribution. what had basically happened was in nation dropped to 3% -- inflation dropped to 3%. the problem is that for the middle class, that relevant inflation to them dish did not go done. middle class life at the time meant a new house, new car, health care,

. >> it was devised back in the volcker days. it constructs a rule of how the fed will behave. it works perfectly right until the time you started using it. it back tested fantastically, but it has not worked since. for the last five or six years, it should say interest rates should be higher than they actually are. the fed would have interest rates at 3.25% already. we have this fudge factor. is, economists are they have it at 1.25%, way below. we have this unquantifiable fudge factor, twice the size of the actual -- it is the new normal. , who becomes in charge? the global markets will say, we mustn't raise rates. it does not suit the economy. rishaad: there is a fundamental issue. economics is not an exact science. people seem to lose sight of that. -- you do not want to be at the beck and call of the markets. what would you be doing? mark: first of all, i would be at knowledge and my role -- acknowledging my role at the central bank. people think that making no decision is making no decision. as an investor, taking no decision is making an active decision of doing nothing.

"thisl volcker said, agreement is as good as you can get. to think we can unilaterally maintain sanctions doesn't make any sense." we should pause for a minute to contemplate what voting down for agreement might mean iran's cadre of hardliners, for those people in iran who lead the chance of "death to america" and "death to israel" and even --ath to the honey death "death to rouhani." this agreementnt to fall apart are the most extreme factions in iran. there opposition should tell you all you need to know. from the very beginning, these thatmists have warranted dealing with the united states would be the worst thing of all time. why would we now take a step that would prove them right? let me be clear. reject in this agreement would not be sending a signal a resolve to iran. it would be rude -- it would be broadcasting a message so puzzling that most people across the globe would find it impossible to company and. after all, -- to comprehend. after all, they listened when we spoke of the dangers of a nuclear iran. they watched as we spent f

coming up on the bloomberg andet day, online shopping an actual store in brick-and-mortar me paul volckerou. theill also talk about decision not to raise interest rates. the former ambassador to syria join us to talk about the migrants and more. arst off, it has been volatile year for media stocks. it is an incredibly diverse group of businesses. boosted some has valuations and cord cutting has had others -- hurt others. we get a better look. very nice to get you on the program. co me ask about this whole rd cutting that has searchmedia stocks the past month. it started with disney because espn is the big star of the media enterprises. it seems that some people have been shaving that out of packages. it is amazing somebody could live without espn. is this really happening? our people taking smaller À la carte packages? ? there is so much confusion in the video market. it is easy to say that consumers and viewers are jumping off of the video bundle. it is really about the valley. that is really not what is happening. the market is not growing. his declining slightly, but you have to breaku

i think the volcker rule is great because it won't allow a meltdown of your sister.08 i was scared the whole damn system would fall off, and that won't happen again. what i do think can happen is is it very dangerous territory. now, again, scott, i'm not telling you, oh, go short everything tomorrow. i don't know that. >> i think it's possibly, especially sent off by the high yields because the high yields for many reasons too many companies borrowed. some won't be able to pay back. they have very poor covenants. they -- i think it really is -- this is the real fair part. there's no liquidity for them. people think there is. >> i am not here to advise on trading. >> i think many smart investors have talked about bond market liquidity. some of the issues that you have raised yourself and i think everybody is kind of in agreement that maybe the plumbing there needs to be worked on better for some of the issues that you raise. let me do this, if you would, carl. i want to take a quick break. i want to come back on the other side. i want to talk to you more about what yo

you know somebody who didn't give a hoot about how the markets thought about what he did is paul volcker. when he was in there as fed chief he did what had to be done to maintain the value of the dollar. neil: remember he would hike rates a full point at a time. >> and he did not care at all about what the markets thought and how they're walking on eggshells, is the market going to think this? the market going to think that? the point of the federal reserve is not for the market, it's for america, primarily for the middle class. it's lost that mandate. the middle class is suffering because of zero interest rates. they have savings that are losing their premiums as a result of the interest rates. neil: a mistake to be at behest of the markets? >> i think it shows a lack of confidence. if they raise rates it would be amazing for the housing market. people trying to figure out what to do, we're at the cross point where the value of homes have gone up but interest rates are very low, if interest rates went up, this is it, this is my last chance and jump in, and that would really be a boom to

there's capital charges, the volcker rule.oo, the volcker rule went into effect in july. >> keeps them from putting their own bets on. are they not stepping in. why are people talking about a lack of liquidity? >> what is putting in your own money and an agency order for a client? that's what this 700-page rule was supposed to define and nobody knows. if you get it wrong, you'll be in trouble. >> we started out talking to investors in the short-term view versus the long-term view. how do you balance having healthy shareholder activism that keeps management teams on their toes and doing the right things for shareholders with the activists who may be really looking very short-term and may be hurting the longer term investor? >> it's a really good question. actually one the sec shouldn't be thinking about, quite frankly. we are, we've been inserted by congress, we administer shareholder proposal rules, 13-d, all of those things long-term versus short-term investing. we need to make sure there's a fair playing ground for the inves

the older ones at least remember 1980 when then chairman paul volcker raised rates repeatedly and manyr the loss of the election by jimmy carter. i can see why they'd be concerned. the bigger problem in my mind is this disconnect on the democratic side between saying the economy is growing, we're getting better, stick with us, and yet at the same time, not raising interest rates the entire time of the obama administration, and so for -- for hillary clinton to try to take on the obama legacy and say re-elect me, or elect me, it would be the third obama term, i don't see how you continue to say the economy is doing great when clearly the fed does not think so. melissa: it's true, christy you have janet yellen trash talking the economy. she's trying to say why it's not quite what you want it to be and why it's not time to raise rates, not quite stable enough but at the same time, have you politicians in the white house and office saying look what a great job we've brought the economy roaring back. how do you reconcile that if you're running in hillary clinton's shoes? >> i think today's a

key forkeith roy maynard, really great guy that came to us, training classes and so on and join the volckern society on the executive board.board. he was a great guy. his girlfriend was my wife's best friend. it was very sad when he passed away. that was always one of my biggest fears. somebody i helped get onto the job would pass away. so it was very difficult. >> i just wanted to piggyback. i think that during all of this time and also with the department, people have a tendency when the victim and not blame the person who had done in the 1st place. people need to take a look at the fire department. department. don't look at the people that were on. north people deserve to have a quality of life. i just want to go to work, go home command of a vacation, have a great quality of life i don't want to have a hostile environment. i just want to work, do what i want to do, go home i want to do, go home and take care of myself. you can't blame the people who were victimized. you have to see it for what it is an understand and stop blaming the victim. >> yes. myyes. my name is josÉ garcia. i just

in a break i said let's do it rip the band-aid off get fed out of there right. >> you know, paul volckerd band-aid off ripped people's hair out it wasn't just a rate hike it was multiple rate hikes drove people in bankruptcy, 2 by 4s to washington to track him down, it could get ugly depends how it is don't forget december rate hike if we don't get september, kind of traded like a game of space invaders on expectation there if you go to december, you get the q3 gdp report gets reported right before that, the odds here of gdp between zero and one, are rising for q3, because q2 so high again a very big picture that you have to kind of deal with. >> how dealing with with about inevitable rate hike the government addicted the amount of borrowing by federal government over the last decade or so, has been so unbelievable that when rates hike up going to cost the government more have to spend, the levels they -- >> federal reserve wants to be the catalyst to take that away? i mean they take credit for that they should probably get, you know look anticipatory gm numbers mortgage purchase applica

during the volcker years. the pressure came, but in different directions.ight now, the fed is under greater attack than probably any other time since paul volcker had interest rates north of 17%. it will pass. janet yellen is doing the best job she possibly can. my own guess is that the fed thisnot raise rates afternoon, but that is as good as my football and baseball predictions. mike: the people in the markets say we should worry about bond market reaction. are not carrying a lot of inventory, there may be a lot of volatility than their use to be. is that something that was envisioned when dodd-frank was put into place or is this one of those collateral damage, unintended consequences that we always need to worry about? was reallydodd-frank more a tactical move and a strategic move in the minds of the creators of the bond work it was pretty far from their thinking. frankly, this is been discounted so many times. whatever dramatic result occurs i think it will be very short-lived. to turn to the politics. there seemed to be a bit more .ivility last night l

. -- ng on, tom: chairman volcker, good morning. no. immense post german they'll your.ion is currently occupied -- he governor of the that shevery surprised put so much weight on certain issues. think about it from a broader perspective, but if domestic conditions continue say that -- continue to say that we should have hiked rates yesterday. tom: a number of good guests, abby joseph cohen. us, ihodes will join guess you will look for a fed increase. you agree, mike? mike: the question comes up this morning, what will it be? int will they tell us october and december that would lead people to believe a rate increase is coming. we will talk to bill about what the market is telling us about that. it is interesting. tom: abby joseph cohen will join us. she has been a resilient bu ll, hasn't she michael? mike: they have not taken away the punch bowl. they have added more. it is party time, i would imagine. to finishll continue the week as strong as we can. global correspondent. when he was at tulane university he broke down his senior project. a global macro correspondent.

"thisl volcker said, agreement is as good as you can get. to think we can unilaterally maintain sanctions doesn't make any sense." we should pause for a minute to contemplate what voting down for agreement might mean iran's cadre of hardliners, for those people in iran who lead the chance of "death to america" and "death to israel" and even --ath to the honey death "death to rouhani." this agreementnt to fall apart are the most extreme factions in iran. there opposition should tell you all you need to know. from the very beginning, these thatmists have warranted dealing with the united states would be the worst thing of all time. why would we now take a step that would prove them right? let me be clear. reject in this agreement would not be sending a signal a resolve to iran. it would be rude -- it would be broadcasting a message so puzzling that most people across the globe would find it impossible to company and. after all, -- to comprehend. after all, they listened when we spoke of the dangers of a nuclear iran. they watched as we spent f

and all volcker said, "this agreement is as good as you can get. to think we can unilaterally maintain sanctions doesn't make any sense." we should pause for a minute to contemplate what voting down this agreement might mean for iran's cadre of hardliners, for those people in iran who lead the chance of "death to america" and "death to israel" and even "death to the honey death -- "death to rouhani." the ones who want this agreement to fall apart are the most extreme factions in iran. there opposition should tell you all you need to know. from the very beginning, these extremists have warranted that dealing with the united states would be the worst thing of all time. why would we now take a step that would prove them right? let me be clear. reject in this agreement would not be sending a signal a resolve to iran. it would be rude -- it would be broadcasting a message so puzzling that most people across the globe would find it impossible to company and. after all, -- to comprehend. after all, they listened when we spoke of the dangers of a nuclear i

welcome robert heller, a fed governor who was able to serve under two chairmens, both rather historic, volckerlan greenspan who took over in 1987. thanks for taking the time this post-fed day. >> pleasure. >> all right. i guess the first place to start is, is when i look at the markets today, i'm not sure how many had it correct in terms of the direction of stocks. many had it correct in terms of the direction on interest rates. my question is more specific. if we recalibrated growth. the fed has always talked about growth significantly higher than 2.25%, it's just recently they seem to be getting use to the fact that this may be around for a while. if they can recalibrate growth, why can't they recalibrate the increasing pricing pressure and take that arbitrary and make it 1% or 1.5% or just look at the stability of the pricing information? your thought. >> well, stability is a very difficult thing to achieve. the fed can set a stable framework for the economy and for markets, and within those markets then they got to find their own level. i think with the fed not creating uncertainty, that's

but because there is so little liquidity in the market in the volcker rule stocks are move more thansitive stocks are going to move. if there isn't an increase, bank stocks which have been going up in anticipation of an increase are going to probably come down. you want to take advantage of that because it just doesn't have any impact on profitability of these companies. >> i think you said a really interesting phrase -- you said whether it is september or december or even later that that is completely irrelevant. would you agree there's way too much obsession over this, that we'll be fine, that rates and stocks can still move up together? >> i agree with charlie. whenever the hike comes, there will be a knee-jerk reaction. but at the beginning of my comments usually bull markets and stocks continue well into a fed rate hike campaign. but sure, there will definitely be some kind of knee-jerk reaction when it does happen. >> rob and charlie, thank you both very much for joining us today. >>> domini cc chu? >> as oil prices continue to slide transportation stocks are up by 3% this week

paul volcker, who chaired the federal reserve under president reagan said, quote, this agreement is as good as you are going to get to think that we can unilaterally maintain sanctions doesn't make any sense. we should pause for a minute, to contemplate what voting down this agreement might mean for iran's cadre of hard-liners. for those people in iran who lead the chants of death to america, death to israel and even death to rouhani. and who prosecute journalists simply for doing their jobs. the evidence documents that among those who most fervently want this agreement to fall apart are the most extreme factions in iran. and their opposition should tell you all you need to know. from the very beginning these extremists have warned that negotiating with the united states would be a waste of time. why on earth would we now take a step that proves them right? let me be clear. rejecting this agreement would not be sending a signal of resolve to iran. it would be broadcasting a message so puzzling, most people across the globe would find it impossible to comprehend. after all, they have li

of the treasury paulson and former chairman of the fed board volume kerr have reached the-- the-- volcker have reached the same conclusion. last woke i delivered an address at the university of delaware in my home state to explain in more detail why i have ultimately decided to support this deal and today, mr. president, i'm here to speak to my colleagues in the senate because i believe strongly this floor must be a place of vigorous, spirited, and honest debate. though nearly every one of my colleagues, perhaps all of my clerks have made their arguments, announced their decisions and positions and discussed their conclusions. as i have in my home states and as many others have with the media, i still believe we cannot ignore this floor as an important place for debate and discussion. i think it's particularly important on an issue that has always in the past garnered such strong and bipartisan support, as our nation's enduring spiewrt for israel -- support for israel. mr. president, let me be clear about my position and where i stand. i will support this agreement. and vote against measu

level since 2011, but if i could max out this chart, the velocity of decline is the highest since the volckerhen you have this level of bearish sentiment, it can presage a rebound in stocks. we will see if that happens this time. one thing fueling the rebound today is the idea that the fed is indeed going to raise rates before the end of the year. jim lockhart that forward saying that he's confident the rate liftoff will occur later this year, making those comments in the 12:00 hour. i have up the world interest rate out ability to monitor. the number you want to pay attention to hear is this 1 -- 48%. this is what futures traders are pricing in as the level of a likelihood of raising rates. that probability has been fluctuating, but just under 50% as we get fed commentary. yields move higher today and especially from the depressed levels where they were last week. reflected in the dollar trade. the dollar has been moving higher against a basket of currencies, pretty much holding steady since this morning with a 1% gain. getting back to stocks, one of the things fueling the push and pull on t

of the treasury paulson and former chairman of the fed board volume kerr have reached the-- the-- volcker have reached the same conclusion. last woke i delivered an address at the university of delaware in my home state to explain in more detail why i have ultimately decided to support this deal and today, mr. president, i'm here to speak to my colleagues in the senate because i believe strongly this floor must be a place of vigorous, spirited, and honest debate. though nearly every one of my colleagues, perhaps all of my clerks have made their arguments, announced their decisions and positions and discussed their conclusions. as i have in my home states and as many others have with the media, i still believe we cannot ignore this floor as an important place for debate and discussion. i think it's particularly important on an issue that has always in the past garnered such strong and bipartisan support, as our nation's enduring spiewrt for israel -- support for israel. mr. president, let me be clear about my position and where i stand. i will support this agreement. and vote against measu

adam posen with the peterson institute. ,wo year yield back to volcker coming down, the nirvana of thedjusted, here's the beginning here. adam posen, we are getting back because there's next to no inflation. is that getting back when inflation disappears? adam: that is a killer chart. you got to think about the real component being driven by population growth and down the inflation component. zerotill want it above especially since the economy is growing and the financial markets need stability. that is not the way you want to get it about zero. if larry summers is right about secular stagnation that is not going to go up much. tom: did you take ec-10 at harvard a million years ago? adam: actually, i skipped it. frdstein, summers, ben eidman. vonnie: did you hear what he said? tom: he took it in eighth grade. benjamin friedman is one of the giants. adam: he was my dissertation advisor. tom: so long, so negative. at the forefront in the 1980's of getting us to focus on credit rather than money supply. which is one of the key insights. and than others picked up on it. i think ben was foc

key forkeith roy maynard, really great guy that came to us, training classes and so on and join the volcker in society on the executive board.board. he was a great guy. his girlfriend was my wife's best friend. it was very sad when he passed away. that was always one of my biggest fears. somebody i helped get onto the job would pass away. so it was very difficult. >> i just wanted to piggyback. i think that during all of this time and also with the department, people have a tendency when the victim and not blame the person who had done in the 1st place. people need to take a look at the fire department. department. don't look at the people that were on. north people deserve to have a quality of life. i just want to go to work, go home command of a vacation, have a great quality of life i don't want to have a hostile environment. i just want to work, do what i want to do, go home i want to do, go home and take care of myself. you can't blame the people who were victimized. you have to see it for what it is an understand and stop blaming the victim. >> yes. myyes. my name is josÉ garcia. i ju