David Stockman Debunks More Keynesian Rubbish From Europe's Jon Hilsenrath

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

Once upon a time Wall Street Journal reporters were economically literate. Now, apparently, when they muster-in for the job they get a Keynesian chip implant while signing their HR forms.

Otherwise, how can you explain the bolded sentence penned this AM by Brian Blackstone on the EU’s “disappointing” Q1 GDP report. He didn’t say Keynesian economists say you need more inflation to get jobs and growth. He just declared it!

The current bout of low inflation... appears to be weighing on the bloc’s more fragile countries such as Italy and Portugal. When consumer prices grow too slowly, or fall outright, it makes it harder to service debts and may weaken spending and profits.

Given this reflexive Keynesian axiom, it is not surprising that the Wall Street Journal is incapable of reporting anything about the ECB up-coming leap into the lunacy of negative deposit rates except to blather on with the party line. Yes, its all being done because there is not enough inflation in Euroland to hit the magical marker at 2% CPI.

ECB President Mario Draghi put financial markets on notice last week that new stimulus measures are likely next month, an expectation supported by the GDP figures, which analysts said are far from what is needed to bring annual inflation, which was 0.7% in April, closer to the ECB’s target of just below 2%.

Here was see yet another perversion of monetary central planning. Mr. Blackstone is an access journalist drop box and therefore dare not displease his sources inside the ECB—sources which leaked a story to him earlier this week on exactly the amount of sub-trend CPI the ECB staff needs to project for year-end 2016 in order for the Bundesbank to go along with more oomph at the printing press.

The truth of the matter is that other than the last few months Europe has had no want of inflation—even if depreciating money was some kind of growth elixir, which history proves rather decisively it is not. In any event, below is Europe’s CPI path during the era of the modern ECB.

Yes, in the last 12 months the CPI has clocked in a 0.6%, but in the year before that it was 1.7% and in each of the prior two years it was 2.7%. So in the 48 months ending in March 2014, Europe’s CPI came in at a compound annual rate of 1.9%. And if you want to dial back further, the CPI came in a 1.8% CAGR during the seven years since the pre-crisis peak.

Can you really get any closer to 2% than that?  Does an ultra short-term dip in the trend CPI really prove that Europe has some kind of calamitous “low-flation” problem? Even if inflation were a good thing, which it most definitely is not, isn’t it a bit early to declare a crisis given the trend path shown below?

And can it be that the dip in inflation may actually be having salutatory impacts on wage earners in the peripheral countries who had previously priced themselves out of the world market, and now find their nominal wages are stagnant or even being sharply pared back? “Low-flation” at least means that their purchasing power is being stretched further.

In other words, do Wall Street Journal reporters do anything other than post the official propaganda deposited in their drop boxes?  Most evidently, the don’t but in that modality of laziness and mendacity they can take one measure of comfort: The Reuters “reporters” are far worse.

Compare the above to the days of yore when Wall Street Journal reporters scoured the free market for actual economic information—knowing that there were unlimited news sources and that none needed to be placated at all costs in order to stay on the beat. Heck, there were even independent Wall Street economists back then like Henry Kaufman who cared not a wit about the Fed’s party line. Kaufman actually read and interpreted the economic and financial data because in those days that’s what economists did to earn their pay; there was no post-meeting statement to gum about.

To be sure, even in the pre-Greenspan era the WSJ editorial page and news page went their own ways. But during the regime of Robert Bartley, reporters might have at least noticed there were economic vantage points on the world other than the Keynesian catechism; and learned the reasons why the Great Inflation of the 1970s had been a thundering demonstration that the Phillips Curve and Full-Employment GDP were drastic errors.

Bartley would undoubtedly be rolling in his grave upon encountering the front page Keynesian gibberish that is the stock and trade of the Blackstone’s and Hilsenrath’s. Nor could he have much confidence that the editorial page might occasional rub-off on the news page drop boxes. The former is so busy promoting wars and denouncing taxes that a coherent non-Keynesian view of the world seems to have gotten lost amidst the bombast.

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km4's picture

Once upon a time Wall Street Journal reporters were economically literate. Now, apparently, when they muster-in for the job they get a Keynesian chip implant while signing their HR forms.

One of the best openers ;-)

Greenskeeper_Carl's picture

I agree. The other day he said something was 'going full retard'. Me thinks mr stockman might have been reading the comments on ZH

buyingsterling's picture

Methinks Stockman needs to run for president. He wouldn't win (America's not that smart) but it would be brilliant - he's basically an outsider now, and takes the piss out of the hacks any chance he gets. I would send him money.

t0mmyBerg's picture

No sane person will run for President.  Politics is the most vain and inglorious endeavor out there.  I once went to a beauty pageant.  I got to go behind the scenes because I was with one of the contestants who went on to a modeling career in NYC.  It was the most horrifying thing ever.  The people are simply not real at all.  It is complete pompous tomfoolery and superficial bullshit.  Plastic people.  Politics is exactly the same thing only worse.

As for the WSJ, it is a statist neocon rag now.  An outright apologist for unlimited state power and a drooling promoter of the NSA.  I ended my very long time subscription a year or two ago.  Bummer really.  The Bartley years were pretty good.

TheReplacement's picture

He just might be writing comments on ZH.

NoDebt's picture

I'd settle for critical thinking.  When it falls to a tinfoil hat-wearing fringe blog like ZH (and I mean that in the nicest possible way) to be the SOLE news entity to ask Draghi if there is a "Plan B" in the case of a Grexit, you know the rest of the "traditional" news outlets aren't just "main stream media", they're "main stream propoganda".  Bought an paid for, for a specific purpose.

BrosephStiglitz's picture

After tonight's Q&A with Draghi, ZH is now well on its way toward the WSJ.  It will (sadly) be firmly in the political spotlight.

WSJ is great.  Whatever those retards are saying regarding markets, do the opposite.  When they published an article on Bitcoin, I told my brother to sell that night.  He sold for max profit.  Bunch of saps bought into the crash.

Stockman is a boss though. 

All Risk No Reward's picture

Stockman is a useful idiot or controlled opposition and it doesn't really matter which.

DEBT BASED MONEY IS A PRIMA FASCIA FRAUD - and Stockman won't go near THAT TRUTH with a 20 foot pole.

Debt based money is an articially induced zero sum game...  one person's "debt receipt money" (debt was issued to create it, after all!) is another person's INEXTINGUISHABLE DEBT.

Henry Ford tried to tell us...

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. The one aim of these financiers is world control by the creation of inextinguishable debt.”
~Henry Ford

If I lend $20 ARNR into existence at 5% interest, in one year the borrower has $20 and I'm owed $21 due to double entry bookkeeping adjustments that create $1 interest liability for my borrower and $1 interest asset for me.

In other words, I HAVE 100% CONTROL AS TO WHETHER I BANKRUPT MY MUPPET BORROWER.  He's completely helpless and beholden to me.


Democracy doesn't exist when you can't even learn about your weaponized Debt Star monetary system, let alone vote for how it works.

For those graphically oriented, here is a money flow chart expressing the same idea in graph form:

Debt Money Tyranny:


We are all being punked.

The banquet of consequences has been prepared beginning over 100 years ago.

Anyone who doesn't go to the root cause mechanism at play is a useful idiot or controlled opposition.

OC Sure's picture






If what you are calling money is based on debt then you are in error by calling it money.

Money represents the measure of the labor done by the participants in the the exchange.

If the exchange is in essence of someone's labor exchanged for someone else's labor then you have an exchange of something for something.

If the exchange is in essence of someone's labor exchanged not for someone else's labor but only their claim that they have labored then you have an exchange of something for nothing.

Money = something for something

Counterfeit = something for nothing

Spit our the terms of tyranny, please.

All Risk No Reward's picture

Hi OC,

I think you are splitting hairs that don't need to be split.

Words can, and do, have multiple meanings.

Regarding "money""


I chose the #1 definition...

"1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account."

So, yes, it is "money" according to the definition of "money" and it is created through the issuance of debt - aka, "debt based money."

I get your frustration with the whole hoax that's being perpetrated on use by these criminals...  I get it.

I also get your desire to mean something that can't easily be manipulated by crooks.  I get that, too.

But my guess is that our time fighting this beast is better spent than claiming a definition of "money" in the dictionary isn't accurate.  It is, as we say, "by definition."

Feel free to comment how the crooks running the system have rigged the debt money system to jack us...  we need to hear that trruth from as many angles as possible.

BTW, I agree that a positive money system has been COUNTERFEITED with a bad money system.  I just don't think being picayune with a general accepted definition of money add any value to the discussion.

Now, to make this message productive...

How to be a Crook

Renaissance 2.0

The result of being controlled by a financial oliogarchy is that potential terrorists are protected while honest public servants are "Black Hawk helicoptered" and and 26 year old witnesses who filmed the event are dead within months.

Top Prioority: The Terror Within



A Nanny Moose's picture

It's Bidensoft subroutine 2.0






It's been a while since I have done any coding, so I am a bit rusty....or drunk....perhaps both.

old naughty's picture

SPEND MOAR- doesn't compute.

Please do not use ZH terms.

Correct then re-submit.

Yen Cross's picture

  Awesome!  Tell that a-hole Draghi "frontman" Edwald Nowotny, that I've picked out his "Lamp<> Post"!


fonzannoon's picture

They can go with negative deposit rates because people will put up with it. They won't riot. They won't have a run on the banks. Eventually when you withdraw funds from the atm they will shock your balls when you hit "withdraw" and some dude will come out and kiss your wife, and people will put up with it. Because we have become big dumb animals.

Grande Tetons's picture

Once the public has taken it up the ass...they are more apt to look the other way when the ATM fondles their nutsack. 

fonzannoon's picture

we are way past fondling. It's not going to be pleasant. I love my dog as much as anything. I treat her like a queen. She sleeps at my feet. If I wound up and kicked her for no reason, a few mins later she would be sleeping at my feet again. That's what we have become.

Grande Tetons's picture

Dumb docile dog gets rabies...seeks revenge on humans. Takes out bastard who keeps kicking him. 

Well, at least that is how I remeber it. 

NoDebt's picture

In the movie the kid in the car lives.  In the book, he dies.

Grande Tetons's picture

No spoiler alert before that post? 

Kinda like watching the Passion of the Christ with a stupid chick who keeps asking....what happens in the end? 

Mistress Raindrop's picture

I like David Stockton.  What he says makes sense.  Bastards.

NoDebt's picture

"No spoiler alert before that post?"

After 30 years??  You just made my day.  I actually am LOL'ing.

A Nanny Moose's picture

We all have our crosses to bear.

Dr. Engali's picture

Your dog reminds me of a story about the difference between a dog and a cat. A dog is pampered, fed, and loved by its caretaker and the dog thinks to himself, " this person must be some kind of god to take such good care of me". A cat is pampered, fed, and loved by its caretaker and it thinks to itself "I must be some kind of god to be taken care of in such a manner."

Clearly we have become the dogs, waiting to be pampered and loved, and the elites are the cats.

Greenskeeper_Carl's picture

Unfortunately I think you are right about a huge majority of the population. But, at the same time, I think you are underestimating the number of people who wont tolerate what you describe, and while it won't be all that many, with our fractional reserve system, it really wouldn't take all that many people to cause a bank run, prob less than 5% of the population going in and demandong large ammounts cash. and once it starts, it would spread quick, and would be difficult to stop. And I don't see this happening any time soon in the US for one reason, as I've said here before: they have to get the guns first.

fonzannoon's picture

I dunno man. I honestly think they will never get the guns. They may try to bankrupt us into coughing them up like many have ended up at the cash for gold store. But the risk there is that people lose their mind (or wake up if that can happen simultaneously) and end up using  those guns on someone before they decide to pawn them.  As for the bank runs, I am well past the point of believing they will happen from an uprising. I speak to a lot pf people in a lot of different walks of life, and I get the sense that they are almost willing to chalk up a negative deposit rate as a form of insurance policy on their deposits.

Grande Tetons's picture

Gimme a negative deposit rate on my deposit or let me buy physical gold trading in a range. Tough call. 

Add land to the mix as well...or...pre Fukushima wine. 

fonzannoon's picture

I'm drinking kirin light tonight. I give up on the pre fukashima idea. I need to pull myself together. I'm a mess.

shovelhead's picture

My dog farts loudly and goes to his own bed.

Yen Cross's picture

     Lies,lies,lies and MOAR lies.  The Fed, got exposed supporting "Fractional Reserve Currency"

  The euro isn't shit without the Fed.  Welcome to ROME, bitches

  Hey Fonz I loaded up on usd/jpy . I figure if the 100.70 area goes we're all FUCKED!

fonzannoon's picture

good luck man. I feel like the line in the sand at 2.50 on the 10yr has been drawn. We steadily drop below that and fireworks start going off across the board. The usd/jpy is one of them. I am curious if this PIIG yield blowout is a temporary phenomenom or if it's part of a bigger plan.

Hey Yen, you seen chump666?

Yen Cross's picture

  I have. He's running around here some-where, in good heath and idea.

BeanusCountus's picture

Went to Europe once. You are right. They will put up with it. Asked a guy why the hell they drink warm beer. The brit said it's better cold and nobody likes it, but its always been that way. Nuff said. I'm never going back.

what&#039;s that smell's picture

people? what people?

do you mean the undead?

"i smell dead people."

intric8's picture

EU - please re-assess your fucked up definition of 'inflation'

Cliff Claven Cheers's picture

Lets make a list of all the spelling variations of Obama's name.  I'll go first with a few:







philipat's picture

Perhaps the change in ownership might have some relevance?

razorthin's picture

Another asshole (Hilsenrath).  Until you have wage inflation (SOME) + employment participation, you can get no growth.  Its called the fucking economic cycle - that which no fiat pump can overcome.  But for your class of leaches, this upside down system is working out just swimmingly, isn't it.

Prairie Dog's picture

This sentence is put in bold:

When consumer prices grow too slowly, or fall outright, it makes it harder to service debts and may weaken spending and profits.

But I can't see that he addresses it anywhere in his subsequent rant. It's a statement of fact. So much for "debunks"!



Prairie Dog's picture

Deflation increases the real value of debt, therefore makes debt harder to service. This is a statement of fact. Anyone who understands basic arithmetic can understand this. But apparently not Stockman, nor most of the people commenting here! Why am I not surprised?


Umh's picture

Sounds like a very good reason to not be in debt.



new game's picture

i have the best reason - owned by a master...

Charles Wilson's picture

The WSJ even let Jude Wanniski have some time off to do research into Great Depression and Classical Economics.

Dr. Engali's picture

Critical thinking in journalism has been put on the back burner in order to gain access. It's gotten so bad in the MSM that they can only be considered entertainment at best, and a propaganda arm of the existing power structure at worse.

Ban KKiller's picture

"Infotainment" at its best...all media today, correct? Wall Street urinal...not original but seems to fit. Oligarch rag! Have you seen those ads for watches? Sheesh!

BrigstockBoy's picture

The journalist's creed was penned in 1914. It includes the following two tenets:

I believe that the public journal is a public trust; that all connected with it are, to the full measure of responsibility, trustees for the public; that all acceptance of lesser service than the public service is a betrayal of this trust.

I believe that clear thinking, clear statement, accuracy and fairness are fundamental to good journalism.

As far as I can tell, the only financial journalism taking place today is at ZH.

Wait What's picture

in a world where 'perception management' is more important that the reality staring everyone in the face, asking the tough questions is a challenge to the perception they're trying to create, which means it must be supressed, if not made to disappear. we're lucky ZH hasn't disappeared yet, but you'll know SHTF the moment it does.