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tv   Open Phones with John Tamny  CSPAN  February 19, 2017 12:55am-1:11am EST

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>> caller: with respect to the unwinding of the 4 trillion, why do they have to unwind it? why can't they just keep purchasing bonds, what's to stop them from purchasing bonds forever? thank you. >> it's a fair argument. implicit in this need for the fed to conduct open market operations is that banks would not have an outlet for their outlet or banks that own treasuries would not have an active liquid market if there to sell treasuries. treasuries must liquid market the world and if the fed were to remove itself from that there is still be huge demand for u.s. debt which means banks if there ever demand for loans increase they could sell the assets and make loans with great ease. the fed fed is just not that important. in your talk and savannah you
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talk about the fact that you don't have a phd and you are not an economist. >> yes. my view is that economics in modern times has become about grasp in charge and formulas. it's become rooted in things that are incorrect. just about every economists you will speak to if you asked what and of the great depression they said the killing and maiming around the world that was world war ii ended the great depression. just about any economist who would ask they freely acknowledge this causes inflation they say it's too much economic growth. th so i think the economics professor has gone off track and lost sight that economics is about human action.hat econom it's about why people to do things. i say thank goodness i'm not an
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economist because i'm not in affected the misunderstandings that have driven the profession. >> lucy is calling in from virginia.. go ahead. >> caller: good morning. i is 100 when the financial probably occurred in 2008, prior to the democrats to push for these subprime mortgages and some of people purchasing houses who were not qualified.ed and therefore ultimately it was precipitated by the feds when it raised interest rates a little bit. that led to the collapse of the whole thing. by then all of the cd owes and everything moved up into wall street and everything spun outut of control. so why would you think they would've been aware water simpl
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rate hike we do. to see what i'm saying? >> guest: it's a fair question. what i would say his first all,e let's go back to the 19 seventies. the fed was aggressively increasing interest rates yet we had a major housing boom that resembled what occurred in the 2000's. i don't think the fed had a lot to do with what led to this rush into housing. a mistake what caused the meltdown. you are correct that a lot of people who should not have been buying houses bought houses. hous and they should not have been loaned to them. if we had allowed banks to fail on all people who over borrowed to suffer the consequences, there's no crisis. what caused the meltdown is the fed and the bush administration getting in the way of what was n
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healthy. then the bailouts began which created great uncertainty about what government was going to do on an annual basis which led to uncertainty on the market crackup. if there's no intervention there would've been a healthy crotch in the housing market. a few banks were to fail but that's healthy too. capitalism but there would've been the global market shakeup just because the intervention g and what was healthy was the shakeup. i think even there does the fed have an impact, yes. but. but it's not the reasons people think. >> what would happen to us tomorrow if the fed were dismantled today? f >> could you say that again? >> what would happen to us tomorrow if the fed were dismantled today? >> i think people would beeople
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surprised by how little what happened. well run banks don't need the fed productive economy quite simply doesn't need the fed. there would be some failure among banks but thou be healthy because better run banks would run them better. so i think people overstate the economic impact. . . at important. they would stop buying us treasuries but massive demand for treasury, the problem now is we needlessly flatter the central bank and act as though its existence is essential for economic growth. the economy grows despite the fed and i would argue the fed can't stimulate growth or shrinkage very much. it is dealing with banks that are not that consequential to the overall economy. >> host: john is calling in from california. you are on the air.
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>> the us dollar is a major reserve currency for trading purposes on a global basis. what role does the fed play in that respect and what are the advantages and disadvantages to american taxpayers when their currency is the major reserve trading currency in the world. >> host: if you could repeat, john tamny had trouble hearing that which >> guest: the us dollar is the major trade of major reserve currency in the world so most trade occurs in us dollars. what is the role of the fed in that regard and what are the advantages or disadvantages to the american taxpayer when their dollars play such an important
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role as major reserve currency for global trade. >> host: were you able to hear that? >> guest: yes i was. the fed can increase money supply in a broad sense, increase the supply of dollars and circulation through its open market operations or banks and assets from banks that increase the dollars. the fed plays a role. my book argues we vastly overstate the fed's role in the value of the dollar. if you look at the major evaluation of the greenback since the fed began the first was 1933. fdr devalued the dollar from 120 to 135, this was fdr's decision that eugene meyer resigned over. the next evaluation was 1971 with the fed arguing against
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what president nixon did delinking the dollar from gold so my broad point is central banks don't control the value of the dollar the way people assume. it was devalued before we had a central bank. it is more a political concept. what does it mean for taxpayers? i don't think that much. thanks to the dollar being the reserve currency, realistically the federal government and i would argue this is a good thing, is able to borrow simply because it is backed by the most economically productive people on earth. lots of people have central banks, the u.s. treasury is able to borrow because americans are enormously productive economically so i think even when you look at the dollar we overrate a presidential a treasury concept. >> host: this is speculated, what if the euro became the
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major reserve currency? >> the treasury has done a lousy job of the dollar since 1971. it is not the gold standard, goals is the currency's value, 135th of assets gold, 120th of announce, the us had the world's currency and persistently devaluing that currency in the 80s and 90s, those were booming decades, we had two decades of major devaluation so i would see another country either compete more ferociously with the treasury to be the world's currency, we need some other entity to force treasury to be more responsible about maintaining the strong and stable dollar. i also think what will happen is technology is moving in the direction where increasingly private money sources will
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replace the traditional treasury dollars we earn. i wouldn't mind earning money at jpmorgan or visa dollar or walmart dollar because if they devalued on me i could replace them. with treasury having monopolies if they devalue we have nowhere to go so long-term private money as it historically has will replace government honey. >> host: in shepherdsville, kentucky, you are on booktv with john tamny. >> caller: thank you. i caught the tail end of your show. i have read a book or two about the formation of the federal reserve, very intriguing. i want to grab your book and read it but my question is do credit unions -- are they on the same play with the banks? do they have the same relationship with the federal reserve, do you see us going back to a gold standard to return the money into the free
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market and have it back? i will hang up and listen. >> guest: you are asking any central question. your point is so much credit occurs away from the banking system, i can't specifically talk about credit unions but what you describe happening, usaa, and a really excellent bank, lending club is huber for lending, they want to expose their savings to borrowers and had the money with lending club, which vets borrowers and lenders the money out so increasingly most lending occurs away from us banking system. what we know it terms of people getting loans, more and more taking away from banking and that is healthy because banks
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are so overregulated they can't take the risks, they would power innovative advances. in terms of the gold standard we are on the way back simply because if you look at the electorate, as long and frustrated by hurting dollars that don't hold their value not only evason rates paychecks but reduces the investment of how to gut economic growth. they are buying dollar income streams in the future so treasuries, the dollar makes investors more careful and less likely to commit their capital to innovative uses but what i ultimately think is going to happen is because governments have been so irresponsible with money technology will more and more make it possible for private money to be defined by something like gold to replace
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traditional government money. with technology, more and more will able to earn these private dollars that likely an issuer like that coin but far more credible, the dollars you earn from us will be defined as a set ounce of gold and people will get the stability they historically had, money wasn't a creation of the state, it was a creation of producers who wanted a common language to help them trade their goods with one another so money if it is not stable is not serving a singular purpose. it exists to exchange wealth. so gradually technology will get us back to the point we have money that is better than the gold standard money that is very stable. >> host: john -- john tamny is our guest, you listen to him at the savannah book festival. the name of the book, "who needs the fed?: what taylor swift, uber, and robots tell us about money, credit, and why we should abolish america's central bank". john tamny, thank you for spending a few minutes with our callers. >> thanks for having me on. >> host: coming up next from savannah, live coverage on
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booktv, cassandra king, novelist, widow of the novelist pat conroy and she will be talking about her nonfiction book "a lowcountry heart: reflections on a writing life". this is booktv's live coverage from savannah. >> good morning. what a wonderful group. or smack we have stragglers in the back. my name is linda huntoon. i am delighted to welcome you to the 10th annual savannah book
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festival presented by george power and the family foundation. what a terrific day we are blessed to host such celebrated authors in trinity united methodist church today which has been made possible by the generosity of curt anderson, we like to stand special thanks to our literary members and individual owners who have made and continue to make the festival free. before we get started saturdays, i said sundays. to make saturday's free festival events possible. before i get started there are always housekeeping issues. immediately following the presentation,


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