Not too long ago, the national debt pushed above $30 trillion. Today, Uncle Sam is $30.26 trillion in the red. And he’s on the fast track toward $31 trillion.
Today, most people don’t bat an eye at the national debt. But that wasn’t always the case. As David Stockman pointed out there was a great deal of concern about the national debt when he was President Ronald Regan’s Director of the Office of Management and Budget.
We’ve been saying for months that the stock market has completely disconnected from economic reality. The markets have hit record highs despite the economic chaos caused by the government response to COVID-19. As Peter Schiff put it in a podcast back in May, the markets are on a Fed-induced sugar high.
In a recent article, David Stockman put the stock market bubble into perspective and asked a poignant question: how could the S&P 500 be trading at its highest multiple in 70 years when the growth rate of corporate earnings has been sinking for more than two decades?
A couple of weeks ago, the yield on the 10-year Treasury fell below the yield on the 2-year for the first time in 12 years. This inversion of the yield sparked recession fears in the mainstream. But in an interview with Tom Woods on Contra Krugman, former Reagan administration Office of Budget Management Director David Stockman said this is really a sign of a different problem. He said we’re actually in the mother of all bond bubbles.
Stockman said the mainstream is looking the yield curve inversion through the lens of conventional wisdom, but there is nothing conventional about the current financial situation.
The mainstream pundits and economists keep telling us inflation is “tame.” But is it really? Or are they just not looking in the right place? In this episode of the Friday Gold Wrap, host Mike Maharrey talks about inflation and how it factors into the bubble economy. He also covers the week’s activity in the gold market and gives you your daily dose of dumb.
Jim Grant recently interviewed former Ronald Reagan Officer of Budget and Management David Stockman on his Grant’s Interest Rate Observer podcast.
Their conclusion?
America is broke.
And central bank free money broke it.
In a podcast last week, Peter Schiff said rookie Federal Reserve chair Jerome Powell couldn’t be more wrong about the economy. He sees smooth sailing ahead. Peter sees a storm.
Former Reagan Office of Budget Management director David Stockman made a similar observation in a column last week.
What’s ahead is tumult, not smooth. That’s because the disconnect between a flat-lining main street economy and Wall Street’s bubble-ridden financial house of cards is blatantly unstable and unsustainable. Indeed, this fraught condition, which Powell and his Keynesian posse fail to see, will soon give rise to a thundering upheaval triggered by the Fed’s own action.”
As we’ve reported, the US government is spending money like a drunken sailor. But nobody really seems to care.
Since Nov. 8, the US national debt has risen $1 trillion. Meanwhile, the Russell 2000 (a small-cap stock market index) has risen by 30%. Former Reagan budget director David Stockman said this makes no sense in a rational world, and he thinks the FY 2019 is going to sink the casino.
