The World According to David Stockman
Posted on April 1, 2013
In case you didn't see it, Ronald Reagan's former Budget Director David Stockman just released a new book and had an excerpt in the New York Times yesterday.
Stockman basically believes that American-style capitalism is inherently corrupt, that Ben Bernanke is akin to Bernie Maddoff, that the stock market is a complete fraud, that Wall-Street is a bunch of gangsters, the housing market is built on quicksand and that Washington politicians are all to blame.
We live in a bubble-world and the bubble is going to burst.
He blames Richard Nixon and Milton Friedman and Alan Greenspan, and of course, George Bush and Henry Paulson, and don't forget about the big banks.
It is an impressive jeremiad. It reminds me of the sermons of Jonathan Edwards and other old-time preachers who tell us that the end is near.
And our monetary system has much in common with old time religion. So much of it is built on faith. And at times, religion and money become confused in people's minds. Preachers care too much about money. And money becomes all too often the object of idolatry for the money-obsessed.
Stockman believes that we all started going down the tubes when we went off the Gold Standard. Having a floating exchange rate was like when the Catholic Church stopped doing the Latin Rite after Vatican 2. It all about the mystery. And when the mystery is gone, well, that is when we see the Oz behind the curtain.
It is probably no coincidence that both Vatican 2 and Nixon's decision to depart the Gold Standard happened in the same decade. The 1960's was the decade when everything started going to Hell in a handbasket. The Kennedys were shot, Martin Luther King was shot, crime went up, drugs, sex and rock and roll ruled the universe. Of course, some of that rock and roll was exceptional, and important strides were made in civil rights and gender equality.
On a side-note, a new season of Mad Men is premiering next week. That will give you a real sense of how fun the 1960's could really be.
But I digress.
Mr. Stockman, the Budget director who lied about the budget during the Reagan years, now promotes himself as the only man who is telling us the truth about our economy today. He believes the economic lives we are all living is a gigantic fraud, perpetrated by the high and mighty at the expense of the low and humble.
For the life of me, I don't know how a tight monetary policy would help the poor get out of poverty. Usually, when central banks constrict the money supply, it is the poor that get hit the hardest.
But that is what Stockman wants. To him, our current economic system is a fraud. And when it comes to fraud, he is an expert.