Dawn J. Bennett, host of Financial Myth Busting, recently interviewed David Stockman, a bestselling author and former director of the Office of Management and Budget. In his new booked, Trumped! A Nation on the Brink of Ruin… And How to Bring it Bank, Stockman explains how 30 years of financial and political misrule by Washington and Wall Street elites have brought the United States to the brink of ruin.
According to Stockman, the Fed’s destructive ZIRP and QE policies have buried Flyover America in debt and clobbered the nation with shrinking real wages and vanishing job opportunities. Meanwhile, the bicoastal elites have greatly profited from the immense inflation of financial assets in the Wall Street casino and debt-fueled expansion of Imperial Washington’s domestic and global interventions.
In his book, he also argues Donald Trump’s unlikely candidacy occurred because Flyover American has had enough of the rigged system that benefits only a few and failed to deliver economic recovery and real prosperity at home and a safer, more stable world abroad.
In his interview with Dawn J. Bennett, Stockman explained that price discovery has been destroyed, market false liquidity has poured into the canyons of Wall Street like a flash flood, and bond prices are crazy worldwide.
“There’s $13 trillion of sovereign debt trading at sub-zero yield which on its face is the craziest thing anybody can imagine because no government should be paid for borrowing money,” he said.
Stockman also noted that in Flyover America, there’s no breadwinner jobs, as most of them have fled offshore, and there’s a 21% decline in the real standard of living. Meanwhile, $13 to $93 trillion worth of financial value falls onto a very small portion of the population.
Many progressives use income inequality to argue for more government intervention in the economy. Stockman explains in his book and interview that economic interventions actually worsen inequality.
“The point is that this income misdistribution they talk about is real and I mention it in my book, but it’s a consequence of bubble finance, it’s a consequence of the Fed falsifying the financial markets, of turning Wall Street into a casino,” said Stockman. “But the fact is that it is not real capitalism at work and that is not permanent wealth creation, so if we look at the period since ’87, the Forbes 400 has had a 1000% gain in real terms and net worth. The top 1%, a 300% gain in at least paper net worth, as calculated by the Federal Reserve. The bottom 90%, zero. Net worth today is not higher than it was in 1987. Now, that’s a perversion or corruption of capitalism, as I said in my last book.”
In his book, Stockman also argues that Trump’s candidacy is directly attributed to the growing sense that the U.S. economy is rigged and only helping those at the top.
“I think right now he’s [Trump] capitalizing on the [Populist] wave because clearly—and I don’t use this word in a condescending way—but I think it’s a fair statement that the rubes are in revolt,” said Stockman. “They’re treated as rubes by the Washington/Wall Street bicoastal elite and they’ve had enough and I think Trump’s phenomenal rise is reflective of that. Now, how that translates into fundamental change in policy… that’s a huge, open question.”