This transcript is automatically generated
Well joining me now Wall Street -- -- slamming former Morgan Stanley managing director chairman of alarm and institute and author of the book the true gold standard.
We're good to have you with -- -- to be where you live.
I can't think of much more of the could be going wrong with the global economy than right that this moment can you.
But the point is that as you say it's a global.
Financial crisis and it -- panic worldwide and we see that and Wall Street where everybody is begging for another.
Money printing exercise by the Federal Reserve to -- I and the Fed in the sense.
Spending its balance should.
Trillion and a half dollars.
Moved into the financial system.
-- we've seen Operation Twist -- to conclude at least plan to include the small.
In which the Fed moved to a group of the long end of the spectrum.
But I don't see the effect and I don't see exactly what the Fed can do even if they wish to do so right here right now.
I think your -- is sound.
And because the number is prove it the Fed stopped expanding money.
Last June the Operation Twist is not.
Create new money the -- the Fed -- under QQE one QE2.
So at the end of the the second half of last year when the Fed stop printing money.
Commodities sort of well.
The dollar started to rise in the panic began.
Worldwide as the dollar became very difficult to obtain for meeting settlements on debt payments as well as -- international trade settlements and.
As we look at what is happening now in -- -- -- -- secretary Timothy Geithner calling on the Europeans again to fix their problems but not much of without much excitement -- concrete specificity about what to do.
The what should the Europeans be doing here is there a step that they can take it's reasonable.
-- should they be acting in concert with the United States.
Well they will be acting in concert with United States I have little doubt that.
The chairman of the ECB -- and Bernanke not to mention Mervyn king of the Bank of England.
They've been in talks all along here as the crisis developed and the it and the European gotten used to the US Central Bank the Federal Reserve System supplying all the dollars they need when the crisis gets to that the melting point.
So I think that we are involved know whether it's a good idea or not.
And we've and we watched the spectacle today.
And Jamie Dimon the CEO.
JPMorgan chase are going before the senate banking committee.
Are being talked to virtually no more than that it was dressed up as a hearing on oversight that there just talk.
What -- your impressions and what -- the senate banking committee be doing or should they be doing here.
What should be the role of the federal government it seems to me that that's a pretty well run bank -- a two billion.
Our plus loss it is well run bank but I think it's fair for some of the senators who point out over appointed off out.
Off the television sets add -- -- -- banking system -- minutes about a cartel of the money center banks are very small group of privileged banks which.
Obtain their credit from the Federal Reserve for zero interest rates and they let relented for 20% how can you -- broken out of business model.
I think that that's the point in the federal deposit insurance company a corporation.
Guarantees the deposits which are in in JPMorgan.
-- -- the taxpayer subsidy there they did zero interest.
Loans from the Federal Reserve's.
And they also get bailed out.
Trouble it is on their -- Orchestra you've got a problem with the fact the six institutions hold 80% that they -- My.
-- W I know you're right on them motor -- in my view and you have a little problem about a Central Bank.
That extends the power -- of those six banks and and and closets -- friends from harm and injury in the banking system is that also correct -- couldn't say better.
So what are we gonna do.
We need to reform the banking system in much simpler ways -- producing more and more regulations we just think of a very simple.
It's like our comes razor and the simplest solution or this they have in the shortest line -- the one between two points wide to the banks fail wide of the major money center banks fail.
It's because the assets they own.
Compared to the deposit that they're backing up.
Are collapsing and they're not worth what they -- -- to be worth and that of course was a crisis of formulate -- the situation can be reformed very easily by.
Requiring banks to hold.
Assets on their balance sheet which can be liquidated for the very same value at which -- purchase.
That means the bank will always be liquid and able to take care -- -- the depositors.
I'm I'm wondered why the senate banking committee isn't talking to you I think there should be -- lemon here and perhaps -- -- Well Lou with some of my solutions are not the most respectable solutions among the academic economists and in New Haven in Cambridge and the University of Chicago or -- -- -- a hell of an endorsement without bail out.
Thanks a lot for -- -- and --