Let Reagan's Budget Director Explain At You About Gold And The Fed And Other Cool Ron Paul Stuff


Isn't that nice, Reagan's former budget director David A. Stockman has taken to the New York Timesto scold at us about debt and government spending and the fact that the "recovery" is a "bubble." The good news is that we weren't actually aware that there had been a recovery, so when the bubble pops we probably won't be affected. The bad news, according to this guy anyway, is everything else, but if you frequent Wonkette you are probably used to bad news and can take it.

First, did you know that we are in big, big trouble due to profligate spending? And that the fault for this is "bipartisan"? Also, something about the fed, and everything REALLY being the fault of FDR:

As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.

The culprits are bipartisan, though you’d never guess that from the blather that passes for political discourse these days. The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold), economic nationalism and capitalist cartels in agriculture and industry.

Capitalist Cartels! Band name, we call dibs!


We are both amused and fascinated by the fact that there really is something in this for everyone: you have your Ron Paul-style hankering for gold-backed currency, right-wing paranoid mumblings about "cartels," free-market libertarian nonsense about "economic nationalism," and even old white guy pretend-center discourse about "bipartisan" something and "blather."

Under [Milton Friedman's] successor, the lapsed hero Alan Greenspan, the Fed dropped Friedman’s penurious rules for monetary expansion, keeping interest rates too low for too long and flooding Wall Street with freshly minted cash.


That Mr. Greenspan’s loose monetary policies didn’t set off inflation was only because domestic prices for goods and labor were crushed by the huge flow of imports from the factories of Asia. By offshoring America’s tradable-goods sector, the Fed kept the Consumer Price Index contained, but also permitted the excess liquidity to foster a roaring inflation in financial assets. Mr. Greenspan’s pandering incited the greatest equity boom in history, with the stock market rising fivefold between the 1987 crash and the 2000 dot-com bust.

Soon Americans stopped saving and consumed everything they earned and all they could borrow. The Asians, burned by their own 1997 financial crisis, were happy to oblige us. They — China and Japan above all — accumulated huge dollar reserves, transforming their central banks into a string of monetary roach motels where sovereign debt goes in but never comes out. We’ve been living on borrowed time — and spending Asians’ borrowed dimes.

He is a poet and he just don't know it!

Anyway the op-ed is four pages long and it goes on and on like that. In addition to (once again) betraying the Reagan administration as the birthplace of right-wing paranoid nonsense, it demonstrates the 21st century reality of life without any editors: there is no one to ask stuff like "Hey do we really NEED another video of a cat playing with twine?" or "Do we really NEED four pages of ranting and raving about the fed and deficits and stuff about gold standards?"

In sum, the main takeaways from David A. Stockman's version of economics and history: none of this was actually Reagan's fault, lots of stuff about the Fed and gold, plus some alliteration and rhyme.

[NY Times]


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