Posted on 04/07/2025 9:50:47 AM PDT by SeekAndFind
David Stockman was President Reagan's former budget director.
Back in the '80s, news magazines used to put him on the cover and call him things along the line of Mr. Mean, etc., because he was so serious about budget cutting.
He knows a lot about how to do it in a government context. He's also insistent that numbers add up. Over the years, he hasn't been afraid to speak truth to power, even if the power is one of the good guys. While he can be critical of good leaders on green eyeshade issues, he's not a #neverTrump or part of that swamp crowd. He's just an economist.
So when I started seeing tweets from him showing a masterly understanding of where inflation comes from, and how government spending eventually translates to inflation, I started following.
He came up with an intriguing thought about where the reduced status of American workers comes from, in a retort to Commerce Secretary Howard Lutnick, regarding trade deficits:
Well, no, Howard. The reason we have massive, unsustainable trade deficits is that the Fed inflated the bejesus out of domestic prices, wages and costs for decades, and priced American producers and workers out of global markets. "They" didn't "steal" our markets---the spenders… — David Stockman (@DA_Stockman) April 6, 2025
So, rather than trade pacts, or tech advances, the real root of the American worker's reduced status is Fed money-printing to pay for the ever expanding size of government. It brings inflation, devaluation and a disincentivization of savings, in favor of bigger government and weaker, poorer people. In return, the 'giveaway' that Stockman spoke of comes presumably as inflated American dollars buy foreign goods and foreign investors in turn take the dollars and pump them back into the Treasury market, which certainly suits the big spenders...
(Excerpt) Read more at americanthinker.com ...
Interesting
I’m not so sure that stockman is disagreeing with trump on tarriffs.
the policies enacted by the Reagan administration were done in lieu of accepting asymmetrical tariffs.
However we got here, we’ve got to get ourselves out—and deflation isn’t the answer.
I'm sure it's not the ONLY reason, as most things in life are not one dimensional. However, I'm pretty sure that, even if it is true, it does not preclude tariffs as part of a effective countermeasure.
1. People want to pay as little as possible for what they buy.
2. People want to charge as much as possible for what they sell (and for most people, what they are "selling" is their labor).
These two constantly drive irreconcilable conflicts between producers and consumers. The inevitable result in an advanced economy is that fewer and fewer transactions take place directly between a buyer and a seller. The modern economy only works if consumers are forced to buy things that they would never buy if they had the discretion to do so -- usually at inflated prices in an over-regulated marketplace. Examples of this "forced commerce" include aircraft carriers, useless government-funded college degrees, Medicaid for unproductive people, and new vehicles filled with distracting gizmos that provide no real value to the motorist.
Stockman is correct. The root of the issue is the ability of government or a central agency (the Federal Reserve) to create money from “nothing.”
Its been known for 100 years, but was made clear by the 17th century economist Richard Cantillon - money “created” by a central authority will always benefit government, and its cronies (the first handlers of new money) first - and harm society, workers and individuals.
What open/free trade has done has multiplied, and internationalized, the consequences. And many countries, particularly the highly-centralized ones with various forms of capital or trade controls, can game this system.
The US middle-class is the sucker at the table.
bkmk
I still hate that backstabbing twerp.
“Stockman’s betrayal is most notably tied to his 1981
Atlantic Monthly interview with William Greider, titled
“The Education of David Stockman.” In it, he expressed doubts about the feasibility of Reagan’s economic promises, admitting that the tax cuts were a “Trojan horse” to reduce rates for the wealthy, rather than a pure suppl side mechanism. He also suggested that the numbers behind the budget didn’t add up, famously calling the economic projections “rosy scenarios” that masked looming deficits. This public airing of skepticism contradicted the administration’s optimistic messaging and fueled critics who argued Reaganomics favored the rich and ignored fiscal responsibility.
く
Additionally, Stockman clashed with Reagan’s team over spending cuts. While Reagan aimed to shrink government, Stockman believed the administration wasn’t aggressive enough in slashing domestic programs to balance the tax cuts. He proposed deeper cuts than politically feasible, alienating allies in Congress and within the administration. His leaked criticisms and internal dissent painted as disloyal, undermining Reagan’s unified front. The fallout was significant:
Grok
Interesting. You mean my ‘rich Corinthian leather’ is just a ploy to trick me into paying more!? I thought I NEEDED that! :)
But yes, your points are interesting. Although I think that a manufacturer that minimizes those ‘irreconcilable conflicts’ might be more successful in marketing their products to the consumer, yes? It culminates into better value for the consumer I would think.
Me personally, my 2001 Tahoe has all the amenities I desire and is stone dependable. It's a tank. Love it. I don't need a $80k vehicle. I would think there is a market for that (as in I'd love to see an actual company making 1960 to 2000 tech vehicles), as when this one wear out I plan to scour the nation looking for an exact, low mileage replacement that I will drive probably until I die.
Both are true.
That's why you can't buy a new $10,000 car these days.
Its been known for 100 years, but was made clear by the 17th century economist Richard Cantillon - money “created” by a central authority will always benefit government, and its cronies (the first handlers of new money) first - and harm society, workers and individuals.
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When governments spend money they create out of thin air they spend it at the value money had before the new money was created. It is only after the “new” money is spent that inflation is created. So if a government spends newly created money to purchase a widgit, as soon as it is spent the money supply has grown so that the widgit price has to go up and now when you want to buy a widgit you have to pay more even though you can’t create the new money and must cut your spending in another area to buy a widgit.
When the government pays back the debt they use money that is worth less than it was than when it was borrowed. This is a good reason for people to borrow money for a purchase even if you have the cash. If you borrow $50,000 to buy a car and get a good rate or even zero percent on your loan then on say a 5 year loan, with 8 percent inflation you effectively save as much as 15 to 20 tousand bucks in inflated value. This only works of course if you get an interest rate that is lower than the inflation rate.
Fractional reserve banking also creates inflation but that system is self controlling and does little damage to the system compared to what governments do.
Government borrowing should never be allowed except in the event of a national emergency.
The US could get rid of the Internal Revenue Service if we would effectively use tarrifs. It would also keep our manufacturing base solid and keep wages high.
You can’t buy a $10k vehicle because of regulatory, material and labor costs. That’s the reason we outsourced but it didn’t work. Manufacturing costs continue to go up and up. I don’t like what Trump’s tariffs will do to middle America but I don’t know if there’s any other way to prevent us from exploding. It sux that the little guy is going to take it up the ass for the next few years.
“Additionally, Stockman clashed with Reagan’s team over spending cuts. While Reagan aimed to shrink government, Stockman believed the administration wasn’t aggressive enough in slashing domestic programs to balance the tax cuts. He proposed deeper cuts than politically feasible, alienating allies in Congress and within the administration. His leaked criticisms and internal dissent painted as disloyal, undermining Reagan’s unified front. The fallout was significant:
Grok”
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In politics, a gaffe is when you accidentally tell the truth. That was Stockman’s sin.
That's David "The Hogs Were Really Feeding" Stockman to you.
The market will adjust. In fact, that little guy you're referring to...maybe it's his time to hop on the entrepreneurial bandwagon and start supplying parts and services to this new developing market - cuz that is what we are becoming and THIS is the time of opportunity.
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