David Stockman The Fed Created a Bubble Machine – Global Economic Crisis
Has the Federal Reserve’s ultra-easy money ZIRP policies destroyed honest market price discovery and inflated a massive asset bubble? Outspoken former Reagan White House budget director David Stockman thinks so and believes the Fed has created a massive bubble. He sounds off on the Fed and the huge financial challenges we face in the months and years ahead.
David Stockman’s Non-Recovery Part 5: Peak Debt And The Wages Of Keynesian Sin
In the final section of this five-part series (Part 1, Part 2, Part 3, and Part 4) on the dismal reality behind the non-recovery, David Stockman explains what lies ahead. He details in his new book ‘The Great Deformation’, that the mainstream notion that there is a choice between fiscal austerity and fiscal stimulus is wishful thinking. It does not recognize that owing to the triumph of crony capitalism and printing-press money America has become a failed state fiscally. What lies ahead is a continuous, mad-cap cycling back and forth – virtually on an odd-even day basis – between deficit cutting and fiscal stimulus to the GDP. As Stockman notes, the proximate cause of this recession waiting to happen is the federal government’s unfolding encounter with Peak Debt. The latter is not a magical statistical point such as a federal debt ratio of 100 percent of GDP, but a condition of permanent crisis - “no viable economy can survive on chronic fiscal deficits nor can it fail to save at a sufficient rate to fund a healthy level of investment in productive capital assets. The blithe assumption to the contrary which animates current policy rests on self-serving clichés such as “deficits don’t matter” and the Chinese savings glut.” So the American economy faces a long twilight of no growth, rising taxes, and brutally intensifying fiscal conflict. These are the wages of five decades of Keynesian sin – the price of abandoning financial discipline.
Is the U.S. Facing the Mother of All Bubbles?