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Euro Pacific senior economic consultant John Browne sounds off on the Fed.
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David Ben Bernanke speaking about the financial crisis last night where the economy is right now we're gonna talk about it but first.
Listen to Bernanke.
About three and a half years have passed since the darkest days of the financial crisis but our economy is still far from fully recovered from its effects.
Every human and economic costs of the crisis.
Underscore the importance of taking all necessary steps.
To avoid a repeat of the events of the past few years all right -- Fed Chairman made no reference to that -- and that we all of QE3.
Quantitative easing a third round more stimulus essentially.
Was without would be well -- lot of debate about whether we need at what we should do next and we have John Brown.
This dependence on the -- Stimulus that's something -- job very concerned he's a senior economic consultant to Euro Pacific Capital was an advisor to the up.
The British prime minister Margaret Thatcher back in the day it's great to see you again John haven't seen you -- -- while that you've Kroll thank you tell us -- Margaret we have a debt repayment schedule and -- well in this case we should be doing what what concerns you the most.
What concerns me most is of course big governments big spending.
Out of course the big -- enough for that as the Federal Reserve System or the Fed.
Basically they've cut interest rates below -- market rates.
And -- buying out debt 61%.
Of new treasury is a bull by the citizens through money borrowed against their children and grandchildren.
So that's the great enabler and of course when he says the problems problem I have I don't believe that.
Have been the Fed has of course -- that distribution network of the big banks that are -- big but that -- Citi clobbered the consumer.
By.
And of course offering them negative rates just say so -- -- really it's dead people are worried and they don't trust the Fed.
That is why they laugh at Kmart last week saying the largest asset process investors noticed goat.
Right -- they don't trust the money.
And you think people are just too dependent on that.
Government money -- to this let me try to play the devil's advocate here try to spice things up a little bit the essentials.
Fed defense would be that hey listen in 2008.
After Lehman Brothers collapse if it was.
If it weren't for the Fed boy would we've been in real trouble Goldman and more Goldman Sachs and Morgan Stanley were allowed to be converted.
Bank holding companies and -- the Fed really.
Prevented us from going off a cliff now here we are three -- four years later and well we're not doing great but at least the economy is growing a little -- again.
What are you so worried about what's gonna happen John.
What of course Greenspan assisted by the knocking -- the Fed led us to the edge of the cliff.
By creating the largest asset boom in history and in neighboring Wall Street to gamble whether that deposits and shout isn't -- -- as money.
I'm just they mustang ever that their -- the well this not any big banks raised bank's rod distribution network we want.
-- worried about now what do you think's gonna happen next that worries you so much what's the follow Axel.
Our intangible there's actually gonna happen all it was tangible you know -- a collapse it was a -- what's gonna happen now.
Well of course the -- economic -- end of QE2 is not is being played down because I think they gained after a new -- renewed economic drug like crack.
We don't know what that is going to be yet.
But there are no signs that the borrowing is gonna -- No sign the spending is gonna stop and the end you'd need to have credibility question for the market right when we get to -- seventeen trillion.
Don't -- -- for the treasury and and aside from off balance sheet -- bring it to a hundred trillion.
The fact is investors made stop buying US treasuries but -- because they don't trust the treasury.
Beat because -- don't -- the dollar you don't like those things happen they have right subnet.
Real quick you know what else might be just this if not more likely.
And I know this is boring we might just muddle through this -- might have been a mess and we might not -- crazy you know like crazy year in the economy but.
The measures that the Fed put in place might just get let's get -- threat slowly but surely what about that.
Not -- I wish that -- -- over 10 with a drift.
Flapping wings without really -- to -- -- gonna have an awful crash.
And I believe in muddling through a process is days long ago where high on heroin they get a new invent a sort of crack.
And the -- it is -- one day come with the reality that the -- treasury credit isn't any good annoys the dollar up.
And they're already investors are turning to go their largest asset classes snap a reporter last week you're it's a it's a sign of things to come and if they don't buy treasuries.
The government and the -- had it.
You're always a great guest John we love your analogy should come armed with so I -- I wish to remote -- -- Nidal well come back in touch is again to John Brown from Europe this idea -- thanks a lot.
