The US Is a “Fiscal Titanic” with the Fed as Captain (Video)
Just hours before Congress passed a funding bill last night, David Stockman appeared on CNBC to explain why the United States needs to experience a dramatic government shutdown. He argues, like Peter Schiff, that US debt is a massive bubble waiting to burst. Though one of the CNBC anchors agreed with him, another argued that the US debt load is very manageable. They also disputed his claim that the Federal Reserve is the main culprit behind America’s “fiscal paralysis.”
[The debt load] is not manageable at all, because thanks to Yellen and her merry band of money printers, we are not paying the true cost of the debt. This year, it’s $230 billion on $13 trillion of public [debt]. That’s 1.75%. That’s ridiculous. When it normalizes – which it will someday – we’ll be paying $400-500 billion more at a minimum. So I blame the Fed. The Fed is the number one culprit in this whole fiscal paralysis, because it’s told all the politicians, ‘You can kick the can, you can dodge the bullet.’”
Highlights from the interview:
“We’re going to have a shutdown sooner or later. We’re on the fiscal Titanic, and we’re going to hit something hard and immoveable one of these days. We’re in month 75 of this so-called recovery. Congress has squandered the entire time, done nothing about the long-run fiscal outlook. If anything, they’ve basically been trying to find ways to get out from under the caps they put on themselves in 2011. But nobody outlawed the business cycle. There will be another recession. The average cycle is 60 months, the longest is 100. We’re overdue, and it may be coming sooner than people think. When it happens, we’re back in trillion dollar deficit land. We’re heading towards a doubling of the national debt, which is huge already. And we’ll be in an environment in which it will be impossible to cope with it…
“Today, [a government shutdown] is a farce. We have 2.4 million federal employees. 85% of them will go back to work – all the armed forces, anybody having anything to do with life or property or health or safety or anything else people can imagine. The TSA will keep groping you. The NSA will keep spying on you. The DEA will keep arresting you…
“We have a dysfunctional, non-functional government, waiting for something to hit the wall. Everybody, unfortunately, on Wall Street says, ‘Oh no, let’s not have a government shutdown. Keep the game going, because we like the bubble we’re in.’ Here’s the news flash: we’re in a bubble and it’s going to break…
“[The debt load] is not manageable at all, because thanks to Yellen and her merry band of money printers, we are not paying the true cost of the debt. This year, it’s $230 billion on $13 trillion of public [debt]. That’s 1.75%. That’s ridiculous. When it normalizes – which it will someday – we’ll be paying $400-500 billion more at a minimum. So I blame the Fed. The Fed is the number one culprit in this whole fiscal paralysis, because it’s told all the politicians, ‘You can kick the can, you can dodge the bullet.’ ….”
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