This transcript is automatically generated
Or on the -- the fiscal cliff but president Obama's performance that the G-20 summit in Mexico.
And more I'm joined by Wall Street legend most -- A former Morgan Stanley managing director chairman of alarm and institute so much more also be offered or the true gold standard.
We're great to have you -- deceiving them let's start with a fat diet the chairman as I said didn't throw.
And it was it was an investment climate at least as marked by the boot business -- that was there were.
Expecting anticipating something from the Fed.
At nothing right well.
The chairman as you said earlier didn't have too much competition means extremely well prepared in dissipated almost all the answers but the fact is that.
You six out of seven governors of the Federal Reserve System have been appointed by President Obama right.
And I I I do believe that chairman.
This is not to.
Questions probity but I believe he is set the board up to make it very big decision.
As soon as he feels.
That he has -- and that is before the election Teresi Bernanke unleashed before the election.
Not further constrained as some would have it.
And bank presidents who see him quite.
Quite differently brother -- -- rather homogenous.
Well I don't I don't think -- homogeneous board but I do believe that.
And this is a Bernanke.
But Federal Reserve System and it being area there the federal Bernanke system.
What can he do here he's he was -- Clue what you're ready to -- strongly.
A that he has a lot of arrows left in the corporate -- cliche.
It's heated news -- -- Just to -- -- felt like.
It went a lot of you were saying they can't figure out what the world is and what it can do hear what he he he does have more.
Arrows in his -- Open market operations.
Are unlimited by the 1980.
Federal Reserve -- control act.
The Fed can make a market in almost all securities including foreign securities and so -- can just keep buying assets and pretty money as the counterpart.
And hoping that.
He can whisk away the -- of deflation well the it -- -- so unlikely that for the greater part of the conversation over the past three years we've heard more discussions about.
Inflation hyper inflation.
-- it will win what I -- I'm looking at suggest exactly what you.
Said we're looking -- a prospect of disinflation that's because the American people in general firms and households are repaying debt faster.
Then Bernanke's Federal Reserve can create money.
So -- with every dollar that is created by the Federal Reserve it counterpart is an American household American individual working man.
Repaying that debt and eliminating that money supply.
Again the Fed Chairman talking about the prospect 8%.
And employment going through the end of this year.
Nothing better than 7% for more than two years out.
-- it would be good two years ought to at least 3% of GDP growth.
That is and to stop.
That most Americans -- want to hear are used to here.
Where in the world as our capacity to restore prosperity here because he did not take into account apparently a change of leadership of any kind.
In that outlook.
As a Princeton professor as an academic economists he made the case that the Federal Reserve does indeed have the power.
To restore an economy which is -- hands on long term unemployment.
Not to mention long term unemployment.
Business equipment and capital and capital equipment.
So he still believes that the problem is not Bernanke he has certain set of believes the problem is the institutional arrangements the Federal Reserve System.
He has inherited -- system.
And that was established about a hundred years ago which was up over the years has been changed dramatically and he's operating the tools that -- handed to.
And and it's arguable that the federal government is not handling the tools that work and that.
-- it it is also it seems to me Wu.
Interest thing that we're not -- -- a conversation that goes beyond.
Fiscal policy and monetary policy as some as if somehow they amounted to the American free enterprise capitalist economy.
Word is the discussion.
And -- understanding of the impact of almost forty years.
Of trade deficits on GDP growth -- the drag of that is placed.
On our economy.
Where is this broader intelligent discussion about what is happening.
And crushing of the job creation machines after.
That discussion is with people who are working for living.
It's with entrepreneurs.
And government officials academics who have never been entrepreneurs have never been responsible for innovation creating new products new services.
Think to a certain extent the government creates -- Not the free enterprise system is that is -- that is one that's what Europe is where it is.
And it seems like I've heard that I -- somewhere response I fear we're thanks very much thank him --