David Stockman, former Director of the Office Management and Budget (OMD) under President Ronald Reagan has been the proverbial canary in the coal mine. The U.S. economy as it is currently configured is a teetering house of cards in which economic prospects of average people are crushed by rising inflation and falling property values. This while the government provides an endless supply of free money to Wall Street casinos to gamble with. Mr. Stockman was ruthlessly attacked by elite vested interests when he dared to point this out in a New York Times editorial last year “State-Wrecked: The Corruption of Capitalism in America” on the dangers of government meddling in financial markets.
I excerpt the following from Stockman’s piece:
So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.
When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.
He is absolutely right. This once great country is headed for not only an economic collapse but a massive implosion of historic proportions. This can be clearly seen by anyone with any sense yet they are mocked and ignored. People like Stockman who dare to spread the warning are treated at best as heretics and blasphemers of the holy temple of the Federal Reserve which protects the interests of the economic winners who can afford to fork over the ante into the great ongoing economic crap game. In cruder days he would have had his tongue cut out for daring to question the high priests of finance capital but the criminals in high places are far more sophisticated now.
Stockman was denounced as a crank, an alarmist, a conspiracy theorist and the other smears that the establishment likes to use when someone pulls back the curtain on their criminal operation. Nobody likes a skunk at their party, especially when those parties are in such tony enclaves of the politically connected like The Hampton’s and Martha’s Vineyard and they only continue because the U.S. taxpayer is being screwed to foot the bill. Think about the type of debauchery shown in the movie “The Wolf of Wall Street” (warning: uncensored video) and note that El Presidente is currently schmoozing with the high-rollers at swanky Martha’s Vineyard while the Middle East burns and you get an idea of the magnitude of the problem. The system is not only rotten to the core but the entire orchard is as well.
Now Stockman is at it again as the credentialed iconoclast is once again warning of the coming “train wreck” that will collapse that economic house of cards once and for all. Libertarian financial website Zero Hedge ran a story based on an interview that Stockman gave to King World News entitled “The Train Wreck Is Coming,” David Stockman Warns, “All Hell Will Break Loose” from which I excerpt:
We are headed into a perfect storm of policy failures. This is not simply a failure by the Fed, which has inflated this massive bubble and painted itself into a corner with no clue how to get out, but we are also seeing an absolute failure of American world dominance….
Our foreign policy is collapsing everywhere and yet the Washington war party keeps wanting to do more of the same. This confrontation with Putin is utterly out of hand and unnecessary. Now we have a trade war going that is going to ricochet through an already fragile European economy.
We hear today that Obama is considering going back into Iraq. What is he thinking? If you layer that on top of an already fragile financial bubble that is waiting to burst, I think we are in a zone of extreme danger. It’s hard to predict whether this will be the big, destructive bear market that inevitably has to come, or simply just another dip that encourages the robots and the trained seals on Wall Street to buy for another move higher. But one of these times we are going to have a big failure and I don’t think it’s too far down the road.
“Train wreck is a pretty good term to describe what is coming. But this train wreck isn’t simply going to hit a wall out of the blue. Actually, it has been forming and accumulating and expanding for many years now, and yet it has simply been ignored, particularly by the financial markets which have ridden this bubble to these extreme and historic heights.
But when you take the balance sheet of the Fed from $900 billion to $4.5 trillion in less than 70 months, and when that pattern is replicated around the world, that is a train wreck in slow motion. The only issue is, when does it hit the wall? The answer to that question is it’s not very far down the road, and I can promise you that is when all hell is going to break loose.”
The next leg down in the economic collapse will be so bad that all of the Federal Reserve’s printing presses and the grandmotherly Janet Yellen will not be able to put Humpty Dumpty back together again. Nero fiddled while Rome burned and Obama is out trolling for big money Democrat donors and working on his short game.
You can hear that whistle blowing if you listen…and it’s getting closer by the day.
David Stockman is the author of the book “The Great Deformation: The Corruption of Capitalism in America”.
His website is David Stockman’s Contra Corner.