Stockman: "After March 15 Everything Will Grind To A Halt"

Tyler Durden's picture

Two weeks after David Stockman warned that "the market is apparently pricing in a huge Trump stimulus. But if you just look at the real world out there, the only thing that's going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S. history" and exclaimed that, when looking at markets, "what's going on today is complete insanity" he is back with another interview, this time with Greg Hunter of USAWatchdog in which he, once again warns, that a giant fiscal bloodbatch is coming soon, and urges listeners to pay especially close attention to the March 15, 2017 debt ceiling deadling, at which point everything could "grind to a halt."

As Greg Hunter writes, former Reagan Administration White House Budget Director David Stockman says financial pain is a mathematical certainty. Stockman explains, “I think we are likely to have more of a fiscal bloodbath rather than fiscal stimulus.  Unfortunately for Donald Trump, not only did the public vote the establishment out, they left on his doorstep the inheritance of 30 years of debt build-up and a fiscal policy that’s been really reckless in the extreme.  People would like to think he’s the second coming of Ronald Reagan and we are going to have morning in America.  Unfortunately, I don’t think it looks that promising because Trump is inheriting a mess that pales into insignificance what we had to deal with in January of 1981 when I joined the Reagan White House as Budget Director.”

So, can the Trump bump in the stock market keep going? Stockman, who wrote a book titled “Trumped” predicting a Trump victory in 2016, says, “I don’t think there is a snowball’s chance in the hot place that’s going to happen. This is delusional.  This is the greatest suckers’ rally of all time.  It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut.  Donald Trump is in a trap.  Today the debt is $20 trillion.  It’s 106% of GDP. . . .Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in.  Yet, he wants more defense spending, not less.  He wants drastic sweeping tax cuts for corporations and individuals.  He wants to spend more money on border security and law enforcement.  He’s going to do more for the veterans.  He wants this big trillion dollar infrastructure program.  You put all that together and it’s madness.  It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”

Then, Stockman drops this bomb and says:

“I think what people are missing is this date, March 15th 2017.  That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.  That holiday expires.  The debt ceiling will freeze in at $20 trillion.  It will then be law.  It will be a hard stop.  The Treasury will have roughly $200 billion in cash.  We are burning cash at a $75 billion a month rate.  By summer, they will be out of cash.  Then we will be in the mother of all debt ceiling crises.  Everything will grind to a halt.  I think we will have a government shutdown.  There will not be Obama Care repeal and replace.  There will be no tax cut.  There will be no infrastructure stimulus.  There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

Stockman also predicts very positive price moves for gold and silver as a result of the coming budget calamity.

There is much more in the video interview below in which Greg Hunter goes One-on-One with David Stockman.

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stant's picture

Stayed up late to watch that, great interview

Kotzbomber747's picture

Oh, silly me, I thought he was talking about the Dutch elections! LOL!

Beam Me Up Scotty's picture

They have raised the debt ceiling every single time we have approached it in the past.  Can someone please tell me why they wouldn't do it this time, especially when they R's control both houses AND the WH??  The debt ceiling is a joke anyway.  There IS NO DEBT CEILING, when it gets raised every time and this time will be no different.  Trump has 20 Trillion to play with over 8 years just to double the debt, like Obama did.

Kotzbomber747's picture

By the way, David Stockman has made a few predictions about market crashes last year, none of them happened. Perhaps he's really good at the big macro-picture and in describing what's wrong with the system, but his timing sucks.

OregonGrown's picture

.......and let the games begin! 

CuttingEdge's picture

O/T Thought for tonight (Sorry Mr Stockman).

How appropriate would it be for La La land to sweep the awards tonight?

Given most of the fuckwits attending the Oscars already live there...

Billy the Poet's picture

Watched this last night. Greg has really reined himself in lately and has curtailed his frequent interruptions and multiple rephrasings of the same question. Celente keeps him in line the best, Greg did get a little verbose once or twice with Stockman.

fx's picture

There will be no ceiling crisis at all. The GOP can't blame the Dems for such a crisis this time, meaning they would be themselves held responsible for it by the public. They cannot blame it on Trump either, as most people would simply see it as the establishment's obstruction against the POTUS. So they will try to bargain for some stuff with trump but will get little and be forced to raise the ceiling without much fanfare.

TheRideNeverEnds's picture

But what happens when the government runs out of money? It's not like they can just create new money from nothing.... oh wait.

Escrava Isaura's picture

The fact that we’re having this nonsense debt ceiling post by a bozo just show how ignorant we remain about money.

US can never go bankrupted or run out of money, idiot, because US is a sovereign nation and own its currency —the dollar.

 

 

rphb's picture

Of course it can go bankrupt, but it wont happen because of an artifical break, it will happen when the dollar have been printed into oblivion. There is going to be a crash, and we will have real defaltion. Everyone will be scared and credit will freeze up. The Fed will want to fix it as they always does, and print and print until deflation gives way, but when it gives way velocity will go to the moon. Like in Weimer Germany confidence in the dollar will break. And then the US will be forced to default.

Remember the US have already partially defaulted two times before in the 20th century, in 1933 and in 1971, but three strikes and you are out. There will be no coming back from this.

kochevnik's picture

Actually the opposite situation.  The eurodollar (petrodollar) market is dying from a lack of eurodollars.  That can cause a world economic crisis.  Then nations will abandon the dollar as a reserve currency. Only at that point will FED printing cause domestic hyperinflation

techies-r-us's picture
techies-r-us (not verified) kochevnik Feb 26, 2017 10:37 PM

That's what usually happens when MONEY itself has become the problem.

https://biblicisminstitute.wordpress.com/2015/08/14/when-money-is-the-pr...

Manthong's picture

I like David, but get a grip…

I mean, like Et Tu  ?????

 

 

it will be interesting to see if the three levels of this response gel here.

 

wildbad's picture

I like him too. He hangs it al out there. He makes specific predictions.

March 15th is just a couple of weeks away. Pretty close for Armageddon. Pretty bold.

tmosley's picture

I suspect a government shutdown is EXACTLY what Trump wants. He gets total discretionary power over spending, cuts off funding for all of his enemies in government, and gets to focus on exactly what he wants to focus on, with everything else taking a deep back seat.

Markets will turmoil for sure. Might even see some crazy shit like a dollar collapse (followed quickly with a new gold standard--something Trump is very interested in).

Hold that gold and that silver, and be prepared to part with it to buy up the cheapest stocks anyone has ever seen.

wildbad's picture

I like him too. He hangs it all out there. He makes specific predictions.

March 15th is just a couple of weeks away. Pretty close for Armageddon. Pretty bold.

CNONC's picture

Eurodollar and petrodollar are not the same thing.  Eurodollars exist, and are created, outside the US monetary and banking system.  Petrodollars are recycled entirely within the US system.  Petrodollar recycling increases US money supply, creation of Eurodollars does not.  Petrodollar funds US fiscal and current account deficits.  Eurodollar provides a funding mechanism for international finance of trade and investment.  Since eurodollar positions must be serviced in dollars, liquidity in a crisis is dependent on the US Fed, which can expose the Fed to counterparty risk versus the foreign commercial banks with unservicable eurodollar liabilities. 

Manthong's picture

“outside the US monetary and banking system”

Unless you are talking sea shells, wampum or rubles…

 What the F is outside of the Fed?

 You might reply crypto.. bet think about it for a bit.

 I have a 1964 quarter to show you that has graduated out of the monetary regime.

CNONC's picture

I said "created outside" the system. I did not say "exist outside" the system.

Troy Ounce's picture

 

 

Right you are. It is all about trust. And we have trust in the system because our leaders have the ability to print money out of thin air until Jesus comes back to earth. The fact that history proves that it is not sustainable is of no value to this discussion. 

It works! So?

"You have a great life and I have a great life." Discussion closed. A breakdown of this broken system is just too ghastly to contemplate so we do not discuss it.

So we're stuck in the BS narrative: gold & silver price manipulation, nail-outs, zero interest rates, non existent debt ceilings...it will go on until someone says: but...but...the Emperor does not have any clothes!

And then we will hear that "Nobody could have seen this coming.Trust us. We will make it whole again"

 

SIGH

 

 

 

 

Manthong's picture

History seems to show that the average age of a fiat currency regime is about 90 years.

We seem to be in a bit of an exceptional period likely due to the facts of a global reserve currency and that the Fed is orchestrating massive digital “currency” creation.

When global currency becomes global poison..  

Hoo boy, watch what happens.

tmosley's picture

>History seems to show that the average age of a fiat currency regime is about 90 years.

No, the maximum age for any system of circulating fiat currency (ie excluding tally sticks) is 69 years. That was Yuan Dynasty China, and was punctuated by three bouts of hyperinflation.

Thanks to the Petrodollar, the fiat US dollar has been the most stable fiat currency in human history. Unprecedented, really. But that ends the second the Arabs decide it ends, or the second they lose control of the oil market. Both end cases are becomeing more likely.

CNONC's picture

Right. The existence of the petrodollar serves to link the value of the dollar to oil, providing a reference value for all other currencies. It is not coincidental that the closing of the gold window and the creation of the petrodollar occured in the same time period, and that that period featured high dollar inflation. Breaking the link between oil and the dollar may result in extaordinary volatility in gloabal trade and FX markets as the only remaining monetary value reference dissolves.  With that reference gone, inflation expectations can freely rise, resulting in a loss of confidence in the bond markets and rising interest rates.  The inability to determine value in intercurrency trades will reduce the volume of global trade, and it is that reduction, which causes the failure of today's vertically integrated supply chains, which causes the daisy chain of defaults which ends the current system. 

INTJ Economist's picture

The old quantity theory of money, huh?  You ignorant fool.  More specifically, though, the Weimar was a very special case of hyperinflation.  Money printing to oblivion doesn't automatically lead to hyperinflation.  The problem that Weimar had was that the war reparations were required to be paid in gold or foreign currency (both of which Weimar had very little of).

marathonman's picture

Yep, in calculus the limit of 1/x as x approaches infinity is ZERO.  x is the supply of dollars.  1/x is the value of each dollar.  The math is certain.  The political fallout from this mathematical certainty is uncertain.

MaxThrust's picture

"because US is a sovereign nation and own its currency"

because the US is a soverign nation and the Rothchilds own it's currency. There fixed it for you.

RevIdahoSpud3's picture

Is it safe or OK to say Rothchilds? I thought that in the last couple of days Google or Facebook or someone was editing out any comment that used the word. Anyway, why would they(whoever the hell they is) care? It's not like someone would take a drone and fry the evil banksters ass...would they?

americanreality's picture

Reddit was (is?) editing out Rothschild from the donald subreddit for some reason.  Reddit is an immature joke. 

Obadiah's picture

You right but it aint a dollar foo, it's a Federal reserve Note  i.e. IOU.

 

Bankrupt that mudderf@##$cker!

kochevnik's picture

Yes, a USD is actually the lack of a dollar.  It is negative money

frank further's picture

Uh, what if no one continues to buy US debt?  You are delusional.

EddieBurgerPie's picture

Escrava, I see that you are still hanging around these parts ocuping space rambling on and overstating the obvious and missing the point. TheRideNeverEnds was making a sarcastic statement refering to the fact that we can print money away because yes, the US is sovereign nation with its own currency. Yes, the DOLLAR.  Stockman is as much a bozo as you are a fucking genius. 

americanreality's picture

Don't be a dick.  Lose the aggressive anger.  

PennilessPauper's picture

"and own its currency —the dollar."  No, actually it doesn't own the dollar that would be the private banking cartel know as the Federal reserve.  Which is neither a Federal entity nor do they own any reserves.  Please read The Creature From Jekly Island by Edward Griffin.

The Federal government borrows the money from a private banking reserve plus interest.  So regardless of which puppet gets into office the Federal Deficit will increase because the whole thing is a ponzi scheme.

new game's picture

IT MUST INCREASE TO PAY THE USERY...

CONTROLLED PONZI SCHEME

and. it can go on for very long tyme.

especially when gamed with yen euro bond circle jerk, plus confidence.

confidence

the 

wild

card....

Anonymous Liberty's picture

US maybe a sovereign nation, but doesn't have own currency. US bankruptcy is what created the federal reserve in the first place. Which is not owned, operated and answers to no one in federal government. Every dollar they print or create out of thin air for the US interest is owed on it. 

Anonymous Liberty's picture

US maybe a sovereign nation, but doesn't have own currency. US bankruptcy is what created the federal reserve in the first place. Which is not owned, operated and answers to no one in federal government. Every dollar they print or create out of thin air for the US interest is owed on it. 

OverTheHedge's picture

Escriva, have you lent your account to a republican? Or are you secretly coming over to the dark side?

If money is debt, you can NOT limit the amount of debt, because that will limit the amount of money  and therefore growth. Can't go limiting growth - that is BAD. As you so rightly say, no deb ceiling crisis. (Unless they want a crisis, that is.....)

americanreality's picture

Uh-oh, the angry crowd is ganging up again.  Posters feel so embiggened when in the company of others on this site, leading to the heard mentality.  This isn't some elite website, you guys aren't special, enlightened, snowflakes, you're just angry people lashing out at whatever is in your field of vision.  There are so few decent , educated, people posting here that zerohedge has become a joke on the internet.  I used to learn things here. Now its juvenile sex jokes, personal insults, and gangbanger mentality. 

"Zerohedge?  The angry, slightly informed crowd that doesn't know how to spell liberal correctly?  The crowd that is so angry that they spit when they type?  Yeah, I know what you mean."

RevIdahoSpud3's picture

I think you meant "herd" mentality. I hear you.

Mr 9x19's picture

hey brazilian clown,  go see what is zimbabwe money.

 

Johangroza's picture

Im in South Africa, I got a couple of 500 billion Zim$ notes..... Nice to play with. 

Good neighbours, flooding our borders..... 

detached.amusement's picture

yeah except history proves you wrong a couple times over.  I mean unless of course you're a fan of rewritten history and think the US never went bankrupt, much less a few times.

jerry_theking_lawler's picture

You almost had it...its not money. You can willy nilly create money out of thin air...its currency they are creating. Money has real tangible value and stores wealth over time, plus some other odds and ends but you can look that definition up on wiki yourself.

beemasters's picture

The ceiling has become a floor long time ago.