The Fed Is Waging Jihad Against Savers and Retirees (Video)

David Stockman, former Budget Director under President Reagan, appeared on Fox Business to warn that the United States faces a financial “time bomb” of $19 trillion of ballooning debt. This debt load will eventually become unsustainable when interest rates rise, which is an inevitability. Stockman points to the same historical data as Alan Greenspan – interest rates are traditionally 2-4% above the rate of inflation, and no amount of manipulation by the Federal Reserve can suppress them forever.

The 2% [inflation] is totally a made up target that conveniently allows them to shovel free money into Wall Street. It never does get to Main Street. The whole idea of zero interest rates is to get consumers and households all jiggy, and get them borrowing and spending. But that doesn’t work anymore, because we’re at peak debt. Households have $13 trillion of debt. “

Stockman’s warnings about debt are one of the key reasons investors should consider buying gold now.

Highlights from the interview:

“[Debt] is the time bomb. It’s the heart of the issue. I’m talking about the Fed and the upcoming decision. I’m arguing that the jig is up. 80 months of ZIRP – zero interest rates – is crazy enough. It’s time for the Fed to stop its wretched jihad against the savers and retirees of America, and allow the market to find an interest rate that makes sense. There are savers out there – millions – there are borrowers out there – millions. Let them figure out the right rate, not 12 people sitting on the FOMC…

“Zero interest rates are crazy under any situation, regardless of inflation, because it says the cost of money for 7 years running is free. That can’t be true. The market is not setting interest rates…

“The 2% [inflation] is totally a made up target that conveniently allows them to shovel free money into Wall Street. It never does get to Main Street. The whole idea of zero interest rates is to get consumers and households all jiggy, and get them borrowing and spending. But that doesn’t work anymore, because we’re at peak debt. Households have $13 trillion of debt. 90% of households are tapped out. They can’t borrow regardless of the interest rate…

“We can’t solve this economy by picking sides at the Fed between savers and borrowers, and say we’re going to keep it at zero for borrowers forever… [The Fed] should be neutral, and it shouldn’t be intruding in such a massive way into the financial market…

“One of the evils of zero interest rates, of this massive monetization of the debt, remember – in the last six-and-a-half years, the Fed has purchased $3.5 trillion of government debt and basically funded it out of thin air by hitting the ‘send’ button on its computers. What that has done is made interest rates so cheap that the politicians in Washington think they can kick the can indefinitely, because even $19 trillion of national debt… doesn’t cost very much to carry… The $19 trillion costs less than the $6 trillion we had at the turn of the decade… So what they’re doing is creating a false financial market, a false signal – not only to Wall Street gamblers… but to the gamblers in Washington who think we can just let the entitlements run…

“Not one of the [politicians running for president] is focused on the true evil in the system, which is a rogue central bank that’s destroying free market capitalism…

“Interest rates eventually are going to normalize. You can’t have free money forever… Historically, interest rates have been 2-4% above the inflation rate. The inflation rate today is manipulated by the BLS [Bureau of Labor and Statistics] in Washington. It’s easily 2%…

“Overnight rates should be in the 3-6% range. It would cause consternation [in regards to the debt]. But also, it would stop the gambling. Why do we have $59 trillion of debt in our economy… The debt outstanding of households, businesses – it is a staggering number. It compares to $10 trillion 2 decades ago…”

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