Entries from May 2009 ↓

Date: 5/29/2009
Channel: Fox Business

Transcript

Neil Cavuto: Dean Baker really doesn’t have a problem with all the Congressional spending. The Center for Economic Policy Research economist has a big problem though with our Federal Reserve and its spending. The same Fed officials he suggests maybe should be waterboarded to explain where all that money is going. I think he’s being facetious there, I hope he is because it’s a good thing he being remote here because it could get ugly.

Dean, good to have you. Thanks for coming.

Dean Baker: Yeah. Thanks for having me on, Neil. I am being facetious. Yeah.

Neil Cavuto: But your premise was, in all seriousness, look, we like to know what they’re up to, right?

Dean Baker: Yeah, the basic points here, you were just talking with Mike Huckabee and he mentioned the TARP and the TARP gives roughly 700 billion of money to the banks as a bank bailout and that of course is a big issue and I agree with him. We didn’t have to rush that through as we did.

But we have even more money about three times as much money, over $2 trillion being lent out by the Fed and at least with the TARP, I could look up on the web and find out how much does Citigroup get, how much does Bank of America get. I don’t get any information from the Fed.

So the point here is there’s a bill before Congress [HR 1207] that says we should have the Fed audited by the Government Accountability Office, so we will know where the money is going and the response have been… that’s where my waterboarding line came in. It is as though we were suggesting we waterboard them. We’re just saying we want to know where our money went. Simple story.

Neil Cavuto: No, I know. It was a very well written and a very good point. But where is the Fed getting the money? I mean, I didn’t realize they access to such large sums. I know when the Treasury in the past bought or sold dollars. That was a big deal. It made the statement and then the market was supposed to be either terrified or wowed by it and stand back in awe.

But this is financial shock and awe to a whole new level. Where do they get this money?

Dean Baker: Well, the Fed basically prints it. I mean, they have the authority to do that and under the current circumstances, I think that’s probably appropriate. I mean, I’m not upset about necessarily using the money. I just want to say we should know where it’s going. We’re in extraordinary times.

Neil Cavuto: But if you suggests that it’s being… I know, and you’re for a lot of the spending. But if you suggest that they’re printing a lot of it then they should state that because as you also know that that in of itself is inflationary and that later on down the road is going to be a problem, right?

Dean Baker: Well, we have to be mindful of it. I’m not too worried about; the fact is the market isn’t too worried about it. I mean, if we looked today at the ten-year Treasury rates, it’s around 3-1/2. I actually didn’t check what the latest number was, but that’s not an indication that the markets are very concerned that inflation is about to take off.

Neil Cavuto: But they still, they have been backing up. I mean, you’re right. These levels are historically extremely low, so, you know, 3-1/2 or 3-3/4 percent. Even if we were under 3 back last fall, it is still nominal. But, you know, it’s beginning to tick up there, right?

Dean Baker: Well, I think, it’s a good thing, though. It was under 3 because people were scared to put their money anywhere else.

Neil Cavuto: Right. Right. Right.

Dean Baker: So this has helped…

Neil Cavuto: But you just want to know, especially now with the Federal Reserve, ahead of a big meeting next month where a lot of folks in the market are hoping to see that they’ll make some statement on buying more mortgage-backed securities, more Treasury notes, bonds, et cetera, anything to help with this onslaught of supply. It gets back to the same issue. What are they going to do, how are we accounting for this, right?

Dean Baker: That’s right and again, the idea of having an audit just so that the public knows where their money is going, which again, you know, with the Fed maybe totally… I’m don’t even expect to find anything improper, but just why is there not a paper trail there?

Neil Cavuto: Well, is there any allure to being mysterious, you know, like Bo Derek in Ten until she started talking? You know what I’m saying like I liked it when she was just alluring, you know, when she was running on the beach.

Dean Baker: Yeah.

Neil Cavuto: And then she started talking.

Dean Baker: Well, you’re making the Fed somewhat attractive compared to Bo Derek.

Neil Cavuto: And I’m saying… I know, I’m making the Fed sound a hell a lot more attractive than it is. But, you know, I know the Fed is no Bo Derek. But my point is that maybe the mystery to where they get the money and the fact that, “Don’t worry. We can always get the money. Don’t worry about it,” has sort of a mob appeal to it. You know what I mean?

Dean Baker: Well, I tell you what I’m concerned about. The Fed is obviously very close to the banks and it’s really disproportionately essentially controlled by the banks. It’s in its governing structure and this is a conspiracy. I mean, if you look how there are twelve district banks and the bank presidents are essentially selected by the banks within the district.

And to my mind, the Fed is a public institution. It should be accountable to the President and Congress, and that’s the real problem. And the secrecy, I think, gets to the core of it. It’s sort of saying to the public, “This is none of your business. We decide this. You stay out of it.” And to my mind, this is $2 trillion. It’s our money. It’s our business.

Neil Cavuto: Very good point. And that should scare you mightily that I agree with you. Dean, thank you very much. It’s always a pleasure.

Dean Baker: You ruined my weekend.

Neil Cavuto: Exactly.

Dean Baker: Thanks for having me.

Neil Cavuto: Thank you very, very much.

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Date: 5/30/2009

Transcript

Ron Paul: This week there was a lot of concern expressed about North Korea’s nuclear capability. It was reported that they detonated a small nuclear weapon. This indeed is a serious thing, but as usual, I think, most of the world has overreacted to it. But more interesting is the fact that they wouldn’t have had these weapons if they hadn’t been subsidized by the West.

We directly helped them in their nuclear program in the way of bribing them under the Clinton administration and actually helped them. During the Clinton administration, they were trying to negotiate a deal, so they promised some technology to the North Koreans if they promised not to build nuclear weapons.

But, you know, any type of nuclear intelligence and nuclear ability is always helpful. Not only that, we have subsidized the Pakistanis to the tune of tens of billions of dollars over the years and it is said that probably a lot of the technology also came from Pakistan. So this to me is sort of an expression of the weakness of our policy overall, and besides I think the reaction was overblown a bit.

If you look at what the South Koreans did, they hardly blinked an eye. They weren’t yelling and screaming and they are the most vulnerable and if there is indeed a military threat in that part of the world, it should be the business of South Korea. It should be the business of Japan. It should be the business of China. Not the American taxpayer.

Interestingly enough, there has been a treaty with South Korea for 50 years or so, which means that no matter what happens over there, we have obligated the next generation of Americans to go over there and fight. I don’t like these kinds of treaties. I don’t think we have the moral right or the constitutional right to obligate future generations to automatically go to war, and for this reason, I don’t think this kind of a treaty that we’ve had with South Korea is proper.

As a matter of fact, I think we’d be a lot better off if we follow a completely different program with South Korea. I’ve advocated bringing the troops home for a long time. I’ve advocated to get out of the way of any negotiations between the South and North Koreans, and obviously we shouldn’t give them any more money. That’s the last thing we should do.

North Korea is sort of like a spoiled child. They get up there and they yell and scream and they’re going to blow up the world, so we say, “Oh, don’t do it. We’ll give you more money”, or we threaten them, even, you know, militarily. And I don’t think we should do either one. I think it would be proper to even talk about trading with North Korea. We started trading with China a long time ago and they have become more capitalistic, not less.

While China has become more capitalistic, we have become more socialistic. So I don’t see anything wrong with talking about trading with them, but I don’t think we should threaten, we shouldn’t intimidate them, we shouldn’t promise them any more money, and I think the world would be a lot better off under those conditions.

North Korea is not going to start bombing anybody. They’re just threatening us and we’ve actually encouraged it indirectly by rewarding people who have nuclear weapons. They know that they will be treated differently if they can prove they have a nuclear weapon. The last weapon they exploded several months ago was, in essence, a fizzle. So they were really motivated to come back and show that they really know how to do it and that puts them in a different position for negotiating.

I don’t think for a minute they have any intentions of attacking South Korea or attacking Japan or attacking China. I mean, that is not their goal. Their goal is to play with us and it’s just a shame that a nation as powerful and supposedly as smart as we are that we can be easily intimidated by a Third World nation like this, a country can’t even feed itself.

So once again, I think it brings to our attention that we ought to reconsider our foreign policy overall. A foreign policy of non-intervention makes a lot more sense than us trying to be the policeman of the world. Besides, how much more can we offer to the world? We’re flat out broke, so we can’t be buying our friends any longer.

So it’s very necessary for us to be serious and start talking about changing our foreign policy to one of non-intervention and one that is based on the Constitution and one where we could save a lot of money and have a lot more friends around the world.

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