David Stockman was interviewed on Russia Today’s ‘Boom-Bust News’ (October 16, 2013) by Bob English. In case you didn’t know, Bob English is one of the many Tyler Durdan(s) from the zerohedge global financial intelligence-network-community. We can all learn a lot from Bob and his excellent questions, and answers he receives from RT guests.
In case you forgot, David Stockman served as Director of the Office of Management and Budget under Reagan and was co-architect of Reaganomics, which restored strength in the US dollar by slowing down the currency printing presses to reign in inflation. He is also author of new book, The Great Deformation.
Transcribed below from audio interview by us at the Nubex. Another nail in the U.S. dollar’s coffin (Mike Maloney’s metaphor)?
English: I asked him (Stockman) about how the Fed would keep reigning in what is now over $2 trillion in excess reserves. But first, I asked about the Fed’s exit strategy from its post-Lehman Brother’s QE interventions. Here’s what he said …
Stockman: The issue is a willingness on the part of the Fed to understand there will be a hissy fit in the market once they start tapering, once they start removing what I call this monetary heroin. And the longer they wait, the worse the reaction is going to be … and yet, what they’re doing today is unsustainable. The decision they made, I thought was abysmal in September, to defer yet once again the taper. Unfortunately, it was easy to make things up as they slid by the seat of their pants, after the Lehman crisis in 2008. Now they have no clue as to how they’re really going to get out of this in terms of managing a market.
When everything is mispriced … when bonds are way over-valued, when stocks are floating on a sea of speculation, then it is hard to unwind your taper, and yet this is exactly the corner the Fed painted itself into and it should have been obvious for a long time now.
English: Yes. And it’s hard to think that anybody expected Ben Bernanke to keep lows (interest rates) at near zero (percent) for five years now. But the Fed, is actually facing another item in its painted corner here. And that is that it [the Fed] has been remitting to the Treasury so-called profits. Last year it was $88 billion and it’s been doing this to the tune of I think of over $290 billion over the last 3 or 4 years … and this can’t last forever.
And it’s a circular game where the Treasury pays interest to the Fed and then the Fed, just has its operating expenses, and it gives it right back to the Treasury along with its other income. Could you talk a bit about this scheme (scam) and its relevance in terms of the Fed’s exit strategy?
Stockman: Yes, I mean, you’ve hit the nail on the head. The heart of that is a complete fiscal scam (not scheme). We might as well just have Treasury issue greenbacks* to pay its bills, because issuing greenbacks, which was thought to be a reckless and radical thing in the 19th century … is not much different than having the Fed issue debt T-bills that are immediately bought in by the Fed, based on newly minted deposits that are created out of thin air and credited to the bank accounts of the twenty-one (21) Wall Street dealers (banks). *Greenbacks is another fiat currency printed and was used in America during the U.S. Civil War in the 1860’s.
So this is a circular Ponzi scheme if you will. It can’t last. If it were true that you could print money to pay all the government bills, or a large share of them, 30% or more like we’re doing today, then we shouldn’t even bother with taxes at all. Just drop the money from a helicopter and let America live happily ever after. Everybody knows better than that. And when you peel back all the sophisticated talk that you get out of the Fed, it really amounts to a little more than dropping money from a helicopter … just like Bernanke said he would do by the way, way back in 2002, during his first year on the Fed.
It may all sound a bit technical and confusing, but Stockman just said the exact same thing as what Maloney said on Episode 4 of Hidden Secrets of Money: The Biggest Scam In The History Of Mankind, but just in a different, more technical format for some of our other reader who enjoy technicality.
The main point is this. The former Director of the Office of Management and Budget, under U.S. President Reagan, openly acknowledges and honestly states that the U.S. dollar fiat monetary system under the U.S. Federal Reserve, between the U.S. Fed, the U.S. Treasury, and the twenty-one (21) Wall Street dealer banks is a big, circular Ponzi scheme! And it cannot last!!
Another one of the many famous Tyler Durden(s) over at zerohedge (though now retired from the Hedge) is Turd Ferguson of tfmetalsreport.com. Check out the Turd and get educated. His articles are another excellent source for updates in the precious metals market and further enhanced learning.
And in case you still haven’t figured out just who is Tyler Durden(s), he is many people all writing under the one name of Tyler Durden at the Hedge. Zerohedge has a fleet of excellent, top-notch financial writers and economists who choose to write anonymously under the one name of Tyler Durden. And yet another nail for Maloney’s the U.S. dollar coffin metaphor.
China Set To Become World’s Biggest Oil Importer. – Shawn McCarthy, Global Energy Reporter, August 10, 2013.
China is poised to overtake the United States as the world’s leading oil importer in October, part of a long-term trend that is forcing the Asian giant to find new supply sources including Canada to fuel its economy.
Chinese crude imports will exceed those of the United States for the first time on a monthly basis in October, and for the entire year in 2014, the U.S. Energy Administration said Friday.
Even with a slowing economy, China’s fuel consumption is targeted to increase to nearly 13 million barrels a day next year, a 13 per-cent increase from 2011 levels.
By the end of 2014, China will be importing nearly seven million barrels a day, while U.S. imports will drop to just over five million.
Even as the U.S. breaks its addiction to imported crude, China’s dependency will increase, driving both economic and strategic policies aimed at ensuring the country has a secure supply.”
Trans 1: China’s 7 million barrels/day consumption is about 2,500,000,000 (2.5 billion) barrels/year. And that’s a lot of oil from just one buyer.
Trans 2: He who controls energy (oil is energy) as the largest buyer by volume (not the producer or seller) controls the global trade payment settlement (currency) mechanisms.
Trans 3: Goodbye U.S. petro-dollar.
Trans 4: Long live petro-yuan. Or petro-minbi (renminbi).
David Stockman, economist, former Director of the Office of Management and Budget under Reagan: “So this is a circular Ponzi scheme. It can’t last.”
Michael Maloney, educator, producer, historical researcher, precious metals bullion dealer: “The biggest scam in the history of mankind.”
John Williams, statistician, economist: “Very serious trouble in the next year. Weaker dollar and hyperinflation.”
William Kaye, fund manager: “There is no question that we are in the end game.”
David Morgan, precious metals and silver specialist: “During the last bull market, a lot of people gave up at $100 gold.”
Tom Fitzpatrick, top Citi analyst: “The US dollar is now set to plunge.”
Michael Pento, fund manager: “Complete collapse and economic meltdown will shock the world.”
So when will the U.S. Federal Reserve (fiat ponzi, debt-based monetary) System and its U.S. dollar finally collapse?
That is the $10,000 question that remains to be answered. But when? No one knows for sure. But gold and silver are insurance. Gold/silver are insurance policies against the further devaluation of fiat currencies by global governments and their central banks. Gold/silver insurance is like life/health insurance. It’s something that you will not be able to buy when you need it the most.
You purchase insurance not knowing exactly when exactly you may become hospitalized. But when that golden moment in history arrives, you will have been some of the few who were six months too early, rather the many who quickly discover that they were already six minutes too late.
See you at Nubex.
Regards
Jill