I might point out that as a person of the 1960's who watched the US unravel, and who made a film about this period, the end game here is different than most people appreciate.
From a few scattered protests over the war in Vietnam these protests grew in a very brief time into a national protest movement.
The protests which began in New York 10 days ago seem to have morphed at this moment into a national movement of protest about the way the United States is run.
I doubt seriously that the genie can be stuffed back into the bottle here.
Stockman on the markets and on the subject of Darth Vader ... I've included his thoughts on gold though I personally don't see how you can run the economies of 7 billion people on earth with so scarce a monetary reference metric.
Best to you all,
Clark David Stockman: ... you must get out of the risk asset markets. This whole thing, in my view, is a scam that has been promoted by the day and hour by the talking heads of Wall Street and the so-called economists that they trot out on the financial media constantly with all kinds of spurious explanations as to why there’s a light at the end of the tunnel, that we’ve solved the problem, that the crisis is over, and that the normal machinery of economic recovery is back in shape.
All of that, I think, is a dangerous delusion. And therefore, all of the risk assets are dramatically overpriced, from copper futures to the SNP index and especially, the higher baited names in the stock market. So my point would be it’s a dangerous place. Both the bond market, we’re in the greatest bubble of all times, it’s been driven by the Feds’ bond buying, which is now coming to the end. So the bond market, the fixed income market, is an extremely dangerous place that should be avoided at all hazards.
The stock market and the various derivative markets that relate to it are exceedingly dangerous. And so the best thing to do at the present time is conserve capital. And ultimately, the monetary systems of the world are coming apart. They’re falling apart. They’re losing their credibility, and therefore, gold is becoming the de facto money.
We’re going to be back to a gold standard one way or another, through the back door, in only a matter of time, simply because the central banks are dominated by the ritual incantation of dying Keynesian theory. And therefore, I would say that’s what someone needs to do to protect themselves. What do you need to do politically?
I see not a lot of hope at the present time, because both parties, as I’ve indicated, are in denial. They have their heads in the sand. They’re more or less embracing free-lunch economics. And I think until we have a thundering crisis in the bond market that truly puts the fear of God into Washington, we’re not going to get any break from the path of drift towards disaster that we’re on right now.
Christ Martenson: How does that story end, in your mind?
David Stockman: Well, it ends badly. But I think we have to go right to the source. You’ve hit on it. It is the Federal Reserve and it’s the current leadership of the Federal Reserve. As far as I’m concerned, Bernanke is the monetary Darth Vader. He has destroyed the bond market. Because fundamentally, in a healthy capitalist system, the interest rate in the money market and in the longer-term capital market is the price of money and the price of capital. And if the pricing system isn’t working, if it’s been totally crushed, disabled, manipulated, rigged, medicated, everything that the Fed has done with QE1, QE2, zero interest rates, Operation Twist, all the rest of this insanity, then we’ve destroyed the ability of the capital market to function and we’re giving false signals in every direction. |
