Over the years, much to his credit, David Stockman has consistently been vehemently emphatic when it comes to exposing the abject menace of unfunded fiscal overrun and overt monetary accommodation. Today, Stockman has become a veritable tour de force wrecking ball, directing his outrage squarely at the entrenched political and monetary establishment that has foolishly and recklessly ignored these undeniable economic malignancies that he has been tirelessly forewarning.
Whether it be via his recent best selling book, The Great Deformation , a seething tome which comprehensively indicts an America that has lost all sense and semblance of the capitalist ideals it was founded upon, or his vibrant blog, DS’s Contra Corner , an oasis for free market advocates who warn against the menacing collusion between the State and private capital, rest assured, Mr. Stockman is being heard.
This eloquent, accomplished and well informed man has not only outlined the grave intractable monetary and fiscal predicament staring down at us like a cocked and loaded double barreled shotgun, but also has identified the obstinate culprits who refuse to face that very real reality. No matter how delusionally determined a nation is, it simply can not spend and print its way to prosperity, same as it ever was. Lamentably, for them and for us, the ill-considered course our financial authorities and policy makers have set sail for will inevitably bring us all face to face with a disastrous economic maelstrom of monumental magnitude. The die is cast, or as my cousins would say; Les jeux sont fait.
As one who relished David’s brilliant book, as well as having been granted the privilege to share my own meager thoughts on his prolific blog, it will come as no surprise that I am in near complete accord with Mr. Stockman’s unambiguous assessment and entirely unassailable point of view. To quote Bob, Stockman is; “right on target, so direct”.
Having indicated my tremendous respect for the man, and shared my complete agreement with the great majority of his manifest reckoning, you should also know that I don’t see eye to eye with him on a distinct and crucial matter. In fact, we have reached a near total impasse on the issue.
Let me elaborate. In my view, David is far too sanguine in regards to these economic policy racketeers and pompous political hacks. He sees them simply as an entirely misguided group, primarily made up of hapless deluded academics, feckless financial authorities, imperious self-seeking politicians and openly self-serving connected insiders, whom are all whistling the pied piper tune of unbridled Keynesianism, dining together on the same wantonly perceived free lunch.
In short, Mr. Stockman believes the perpetrators are nothing but imprudent self-seeking lunatics that have unwittingly lost sight of things. The following passages from his most recent scathing article “Ritual Incantation – The Economic Gibberish Of The Keynesian Apparatchiks” offers up vintage Stockman:
Yep, the Keynesian priesthood is operating from sacred texts and magic numbers. One of these revelations says that 2% inflation was decreed by the great god of GDP and that any shortfall will precipitate his wrathful extractions from growth and jobs. But there is not a shed of empirical evidence for 2% versus 1% or 3% annual change in consumer inflation—–even if it were honestly measured. Its just revealed word as transmitted by the Keynesian priesthood…………….
But somewhere during the last two decades the Keynesian stimulus project migrated from the fiscal authorities to the central banks. This had far-reaching consequences because it shifted the locus of policy making from the unruly, paralysis prone machinery of legislative budgets and taxes to unelected bureaucrats and academics endowed with virtually plenary powers and 13 year terms.
What is worse, it put them in the full-time business of fiddling with the money and capital markets in the false belief that they could control the evolution of the macro-economy through its financial nerve center and deftly guide GDP back to the ordained path of full employment.
Consequently, all hell has broken loose These interventions have not levitated the real economy, nor have they closed the imaginary output gap. Instead, massive central bank stimulus has destroyed honest capital markets and enabled a giant casino of speculators to feast on the free money and market props, puts and bailouts offered by the central banks.
So where is the impasse I point to? Well, as stated above, I am not quite so sanguine as Mr. Stockman is regarding the reasons behind our apparent self induced economic undoing. It is my contention that there exists ample motive behind the apparent policy insanity we are indeed witnessing and actually navigating through.
What is being done is quite simply too plainly preposterous to be so innocently and readily dismissed. One has to consider what else may be driving the continuous and relentless stoking of a glaring, oncoming, head on collision train wreck dead ahead. No locomotive engineer can simply be assumed to be this brain dead, so completely out to lunch, it just doesn’t add up. Something else is at the heart of this mainlined monetary mayhem.
Call me a jaded cynic or even worse, a crackpot conspiracist, but when I see a country as majestic and powerful as the United States which has always stood for liberty and the pursuit of free enterprise, knowingly, willfully and conspicuously being undermined, as if being herded over a cliff like baffled buffaloe on the great plains , I smell a dubious dirty rat.
So I ask you again Sir David: Myopic Madness or Planned Demolition?
Let us bear in mind, that the IMF Multinational Central Bankers are waiting in the wings to pick up the pieces of the pending train wreckage with their deliberate SDR regime preparations. Currently, they are qualifying themselves to take on the existing immense capital account imbalances between the debtor and creditor nations. That will be a critical aspect of the developing picture.
As a new global monetary order begins to emerge and impose itself, the SDR composite will be expanded so as to address these utterly unsustainable trade imbalance. The envisaged multilateral SDR monetary instrument will be positioned to buy out the existing unserviceable sovereign debt loads, whereby the massively indebted nations of the developed world will cede a measure of influence to the creditor nations of the emerging world.
Ultimately this multinationalist central banking coup d’etat will further centralize the global monetary regime’s imposition and dominance of the new international economic order. Afterall, they are the ultimate central planners, as the entire globe is their Keynesian domain. Is the Stockman’s wrecking ball off the mark? Could there be something quite viable here…………
The G20, taking place in Brisbane over the weekend, is set to officially address the key question of IMF global convergence which was formally initiated earlier this year:
(Reuters) – Finance chiefs from around the globe on Friday gave the United States until year-end to ratify long-delayed reforms to the International Monetary Fund and threatened to move forward without it if it fails to do so.
The inability to proceed with giving emerging markets a more powerful voice at the IMF and shoring up the lender’s resources appeared the most contentious issue for officials from the Group of 20 leading economies and the representatives for all IMF member nations who met with them.
In a final communiqué, G20 finance ministers and central bankers said they were “deeply disappointed” with the delay.
“I take this opportunity to urge the United States to implement these reforms as a matter of urgency,” Australian Treasurer Joe Hockey told reporters on the sidelines of the IMF-World Bank spring meetings.
The reforms would double the Fund’s resources and hand more IMF voting power to countries like the so-called BRICS – Brazil, Russia, India, China and South Africa.
The U.S. Congress has refused to sign off on the overhaul, which was agreed to in 2010, and the failure overshadowed even the crisis in Ukraine and the spillover effects of ultra easy monetary policies in advanced economies in the discussions.
Some Republicans have complained the changes would cost too much at a time Washington was running big budget deficits. The reforms also ran afoul of a growing isolationist trend among the party’s influential Tea Party wing.
If Washington does not ratify the reforms this year, the G20 advanced and emerging economies said they would ask the IMF to develop possible next steps.
Moreover, this traumatic monetary transition will not go uncontested, there will most certainly be substantial tension between the Nation States involved in the pivotal negotiations, as well as with the disparate multinational interests which are at stake. Nevertheless, there are two key developments that you can absolutely count on through this transformative period.
The first is that the international central bankers will undoubtedly position themselves to grab hold of a meaty pound of flesh. The second is that during the intense transitional deliberations determining the parameters of the new agreed upon international means of exchange, as per usual, Gold, which Greenspan just dubbed the “premiere currency” at a recent CFR event he attended, will play a vital role to establish and maintain the trust between the arbitrating parties. Got Gold?
The StealthFlation Blog