David Stockman: I Invest In Anything Bernanke Can't Destroy

CNBC ^ | John Carney

[Atlas Sneezed]

“I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries," David Stockman tells Jennifer DePaul of the Fiscal Times.

Stockman rose to fame as a Hayek quoting Congressman who became Ronald Reagan's budget director. His conversations with journalist William Greider created a firestorm because Stockman was deeply critical of the Reagan administration's supply-side budget practices. These days he's working on a book about the financial crisis.

I can't find anything to argue with in his assessment of our current troubles:

We are not in a conventional business cycle recovery, so stimulus is futile and just adds needlessly to the $9 trillion of Treasury paper already floating dangerously around world financial markets. Instead, after 40 years of profligate accumulation of public and private debt, and reckless money-printing by the Fed, we had an economic crash landing, which left us with an enduring structural breakdown, not just a cyclical downturn.

In effect, we undertook a national leveraged buyout, raising total credit market debt to $52 trillion which represented a 3.6X leverage ratio against national income or GDP. By contrast, during the 110 years prior to 1980, our aggregate leverage hugged closely to a far more modest ratio at 1.5 times national income.

The only solution is a long period of debt deflation, downsizing and economic rehabilitation, including a sustained downshift in consumption and corresponding rise in national savings.

[egannacht]

Voo doo economics was George HW Bush’s RINO assessment of Reagan’s attachment to Friedman and Hayek.

[goat granny]

thanks won’t make that mistake again :O)