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how do we create an economy where everybody from top to bottom folks on Wall Street and folks on Main Street have a shot at success I have to just say from a very personal level uh I'm not about to sit here and indict uh private Equity that doesn't it doesn't uh uh mean you're you weren't good at private Equity but that's not what my job is as president my job is to take into account everybody not just some well there's a danger that we all suffer from and have for years now in our current political class our politicians are incapable of distinguishing between capitalism where risk is retained and invested by the principal individuals and extraction ISM where effectively other people's money is used under the language and aaces of capitalism but for D very different purposes private Equity borrows other people's money are their incentives the same as somebody who invests their own money history and Mathematics would tell us they are very different things and yet the distinction between retaining your own capital in your own partnership at your own bank or your own firm and using other people's money let alone the ability to use the money of the state creates a total Distortion from an opportunity-seeking culture that invents and creates things for society to a risk transfer culture whose only incentive is to manufacture and transfer risk to somebody other than themselves Peter Schiff joins the table right now he's the author of The Real Crash how to save yourself and your country uh narrative goes along uh many of these lines he joins us at the at the panel the Cory Booker thing struck me Peter and I've watch so many politicians now offer really profound wonderful language on capitalism and I think that they mean it and they they want everybody to have an opportunity everybody to have a fair shake and all and I believe everybody's intent of both political persuasion I believe that most people actually feel that but we seem to have lost a sense of retained risk and the difference between an investor who has the responsibility for the risk of screwing it up and the incentive to do to that that comes with that and this new paradigm which basically allows me to get rid of all that risk call it capitalism but that's not capitalism you can call what you want but it's not capitalism what's not capitalism well where you have soci yeah I mean that's government that's that's crony fair enough but but but I'm saying politically and that's your opinion and I don't disagree with you and I agree with what you're saying but what I'm saying is we have watched since 2008 these words mixed up all over the place capitalism and I think it's time that for we have to have a little bit more compassion for our politicians and teach them cap capitalism is getting a bad name because we're not practicing it when Obama says we need to create a society where everybody has a chance to me but we don't have to create that it's already here the government just has to get out of the way and let the free market function and stop interfering with all their regulations and all their Central planning sure but forget even the fixes because I understand but then we and the fixes I don't want to get away from the fixes because everybody's got a different fix and a different thing I want to stick to the singular thing Karen which is the concept of retained risk and whether you're responsible for your decisions and your resources and to collaborate with us or whoever's around you and this is not a that's not a political posture that is a cultural view that we all As Americans hold as in our identity we just seem to have lost the ability to understand how to practice it but it feels like and I think this is part of the fairness argument the president was talking about I think it's been part of the lesson that I think a lot of people in that 99% felt when the market crashed is that there are a lot of people in this country who get to play by a different set of rules so they don't retain the risk and you know that whereas and those people come with access to politicians right right the access to politicians but also access because of their money and their resources to whether it's tax loopholes what you know you name it I agree whereas I think a lot of people at the and I think what Obama's talking about is there were a lot of people paid their mortgage did everything they were supposed to do still lost their I I want to make this about Obama don't make it about Obama this is bger than that right but he's talking about fairness why is it fair that my tax dollars are going to subsidize cylindr loans but yeah yes that's not fair fair enough but listen we all can forget cylinder's loans why are my tax dollars going you being used to pay off uncl back AIG bonuses from 2005 look the government the government should get out of the finance it should get out of banking no business being there but the point my tax dollar is going to fix the road on your street so that you can stop local government let's stop it we if you want to argue about roads and cylinder do it on another TV show seriously I I I such a limited amount of time to be here and there's such so many other things that I'd rather talk about I don't care about those things I care about a culture Suson that has lost its ability to distinguish between actual retained risk and transferring it away and we're using we've got a small group of people that are using their access to the government and the banking system to hide behind the very language that all of us would share regardless of cylinder and Roads we all share a culture of retained risk that's been taken from us and are and neither political leadership neither rep an nor Democrats are have done anything but make it worse well because the politicians get elected by selling that influence that's how they stay in office and we got to take the power away from we get it so how is the question we're all trying to no we got to limit the power of government we got to take away the ability of people in Washington to Dole out special favors you know we can't have the government subsidizing any Industries guaranteeing any debts whether it's mortgages whether it's student loans the government needs to get out of the aspiration that is an as spiration I think that all of us know in principle is understandable but beyond that we have to be honest about where we are which is we have currently have no price Integrity in any asset in America and we're on the precipice of collapse that's we are right so let's be honest about that and say okay once we know where we want to go which is to this place of Integrity we're in this place of non- Integrity we can't just do that it's not like the switching political parties right now is going to change that is going to solve that problem but and if you look at it from a place of Academia so we take away the politics we take away trying to sell a message or this how do you explain what the solu maybe not what the solutions are rather but what is actually happening now and not that it's just Washington we have to take away but how do you kind of work towards fixing the problem or even identifying it at this point we have very deep structural problems underlying our economy because for years the Federal Reserve has kept interest rates artificially low to stimulated so we don't save enough we don't produce enough we borrow too much we spend too much the government is too big all this is because we have this cheap money policy coming from the FED it's going to come to an end when when this thing collapses it's going to be awful and I guess what we're saying is how do you do it without the collapse we cuz this room accepts that premise you don't have to convince us of that where we really yes okay we're saying okay this thing's going to have a heart attack and we're saying can we get in there and do heart bypass surgery before this turkey Keels over because we know it's screwed up and and how do you sell the heart bypass surgery to to a patient that doesn't want to see the doctor well you know that austerity is getting a bad wrap right now but that's what we need there's some bitter tasting medicine that will cure this economy but we don't want to do that we want to keep shooting it up with the stimulus novocaine so we don't feel the pain but the disease gets wor is there a third option which goes to a debt restructuring not at the expense of the poorest but a debt restructuring at the expense of the banks well the banks but a lot of people who depend who get checks from government are going to have to get smaller checks whether they're government employees govern pensioners but everybody's going to have to share sacrif B holders yeah Jimmy what are you thinking well I think that it's a lovely ideal and it's lofty I just think that at the end of the day either one believes that the government has a role or doesn't you're saying to me and to the panel and to the nation that you think the government has zero role when it comes to how capitalism functions I don't agree with that I think that it actually does have a role so you think the government should be able to eliminate Capital requirements and invent money no I think the government should say if you're going to play Big then you have to put more money up that's called regul the free market will provide that the free market put put us in 2008 no it didn't that wasn't the free market that was the government that did that that's how come I prank and I helped WR I mean I help WR grle Bly and I got to tell you you're wrong no I'm right and I predicted it when no one else did you remember this is if you guys will be patient with me I think this is very interesting because I know Peter for a long time I know Jimmy for a long time okay and I know that largely the three of us actually agree to the conversation that we're having the only point of disagreement is whether it was the government that created the problem or whether it is a free market or unrestricted words more than anything because really what we're saying is retain risk and capital is Central to the function of you think the free market does it he thinks government does no I don't think government does it no I don't I'm saying government can play a role I'm not saying we had we had the Federal Reserve that set interest rates too low we had the government that was guaranteeing Bank deposits and there was no free market cap m going on at all the government created this monster yes and but knowing that I think that it's that it's Reckless have so we we agree Banks everybody bought this madness had a bigger Paradigm Shift than just who did what to whom if well what I'm saying is that once we accept the fact that we've got this faka system right with at 10 ways that as much as we would like to be able to snap our fingers restore Capital requirements to and and reset all prices I would love that right we that the that the impact on human life of doing that when in the state of distortion we found ourselves is so violent that we ideally are going to need to find a transition that moves closer to price Integrity as a matter of policy as opposed to an apocalyptic the most important price is interest rates which have to go up but no one wants to let them go up because the banks will fail and the government will have to default on its obligations but that's those are the choices that we face and at the end of the day until we acknowledge the real cost of capital which is Mis price right now absolutely then everything then you get these ripples of distortion and my hope at least for all of our sake is that we're able to talk more in that that that I think we harm ourselves when we get lost in whether it's the government or the free market or the corporations or the government's fault and that we serve ourselves when we acknowledge what we all need to acknowledge which is that the Integrity of pricing period is being corrupted the government is a huge facilitator with a huge incentive to do that Federal Reserve is at the bases I don't dispute what Peter's saying and at the same time that the markets need to move forward and I thank you guys for even letting me attempt to referee this madness um Peter Jimmy thank you Susan Karen thank you
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