After recently debunking the bogus employment data that is supposed to show an economic "recovery," former director of the Office of Management and Budget, David Stockman, made a third television appearance in as many months, this time on Dylan Ratigan's show. And as always, it's a must see.
Here's the key soundbite:
"We have had a Fed-engineered serial bubble, that has created the appearance of wealth, that has caused people to consume beyond their means through borrowing, and that has flushed the income and wealth of our society up to the top, as a result of the Fed turning the financial markets into a casino. These are pure casinos, they are not capital markets, they are not adding to the productive capacity of our economy, they simply are a bunch of robots trading with each other by the millisecond as a result of the Fed giving them zero cost overnight money, and giving them all kinds of hand signals on what to front-run."
"The Fed is destroying prosperity by funding demand that we can't support with earnings and productions, causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which makes for a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable."
Stockman notes that America has incurred enough debt to have effectively "Leverage Buy Outed" itself. The net result is a husk of country whose most valuable assets have been bled dry. The last straw for America can now only be the inevitable rise in interest rates: At some point over the next five years, Stockman grimly states, the Fed and Treasury will have to sell a combined $5 trillion in debt, and that alone will destroy the supply/demand equilibrium and send interest rates surging, which will result in either debt repudiation or outright bankruptcy. The only consolation is that the great experiment of LBOing America by its kleptocratic elite is coming to its (sad) conclusion.
Some other startling things reported by David Stockman:
- In 2000, there were 72 million middle-class jobs: manufacturing, construction, insurance, real estate, transportation, etc; today, there are 65 million jobs. In other words, in the span of a decade we have lost a full 10% of our middleclass-supporting jobs. We have replaced these with part-time jobs of a kind often referred to as "McJobs."
- In 1981 the national debt was $1 trillion. Today, it is $14 trillion. While the economy over the same period has become 3 to 4 times bigger, the national debt is 14 times bigger.
- Booby-trapping the 2012 election with a the latest set of tax-cuts that expire just days ahead, will panic the White House into once again making the wrong decision for the economy, in another political trade-off that merely delays the inevitable collapse.
View the clip by clicking here.