David Stockman: Massive Panic Selling When Fed Loses Control of Bubble
Former Reagan White House budget director and author of The Great Deformation: The Corruption of Capitalism in America
David Stockman was interviewed on Fox Business News. Stockman said the Federal Reserve has painted itself into a corner and violated every rule of sound money with manipulated interest rates and an artificial yield curve.
Stockman railed against the policies, or “monkey business,” that the Federal Reserve never would have dreamed of engaging in 20, or more, years ago.
Stockman said the Fed was responsible for the dot.com bubble and the housing bubble that followed.
Stockman said the Fed should go back to its original mission which was assigned by Carter Glass in 1913. “The Fed was a banker’s bank, it was a discount window, it never intervened in the open market, it couldn’t buy government bonds, it simply discounted good collateral that was brought by the banking system,” Stockman added.
The idea that the Fed is setting the price of everything is dangerous and reckless and leading to the greatest bubble yet in the bond market, Stockman said. When the Fed loses control of this bubble there will be massive panic selling and everything will go down with it, he added.
Back in 2010, Stockman warned of four great deformations affecting the U. S. economy [link].