The Fed Is Blind to the Weakest Recovery in Post-War History (Video)

David Stockman, former Director of the Office of Management and Budget under President Reagan, told CNBC that the United States stock market is heading towards another crash. He bashed the Federal Reserve for being completely lost. He believes the Fed is driving the economy towards an even bigger financial crisis than the last one.

Highlights from Stockman’s interview:

Stockman: I think the Fed is totally lost. They’re blind and making it up as they go along. They’ve lost track of where we are. This is month 78 of zero interest rates. This is one of the longest expansion or recovery periods we’ve had in the post-war period…

During that period, since the last peak, real final sales – which are the best way to measure things, because you don’t have the seasonal noise that we heard about yesterday, you don’t have inventory fluctuations – real final sales up at 1.1% only since late 2007. That’s half the cycle increase that we had after 2000, and it’s only a third of the average 3.5% growth that we had in the prior 50 years. There’s something totally wrong with our economy. It’s stalled out. None of this massive money-printing has helped. Keeping the interest rates, the money market rate, at zero is just downright crazy. It’s fueling massive speculation day after day. We saw that yesterday when the market had another spasm upward on the suggestion that they won’t raise the rate in June after all. I think the news flash here is that the market is dying at the zero bond. It is only trading in the hopes that the Fed will find one more excuse for one more meeting to delay the inevitable. I think that is not going to last much longer. All the central banks of the world have painted themselves into a giant corner. Their era of rampant money-printing is done. Now the markets are going to be in for a huge, nasty morning after, as people begin to look at where we really are.

CNBC: So it sounds like you’re saying we’re setting up for a crash here.

Stockman: I think we are. We seem to have them every eight years. We had one in 2000. Everyone said this time is different. It was a massive, catastrophic decline. Eight years later, we had the same thing. Everyone said on Wall Street at the time, we’re in a Goldilocks economy. The Fed can keep pushing this thing forward. It wasn’t true – a nasty crash. Now we’ve had the weakest recovery in post-war history, given the enormous decline that occurred during the Great Recession. And what has happened? The Fed has simply reflated the bubble to an even more gigantic proportion.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!