"You Can't Be Safe In The Stock Market" Stockman Slams America's "Bad Money System"

Via  Greg Hunter’s USAWatchdog.com

Former Reagan White House Budget Director David Stockman says look out for the “perfect storm” coming our way. Stockman explains,

I think we are in peak crazy time, really, to launch an attack against Syria based on the flimsy evidence to date, and the likelihood it was another false flag operation...

Trump declared victory two weeks ago in Syria and said we are coming home, which is exactly the right thing to do and say. 

Then, all of a sudden, you have a gas attack and the clamor from the war party to do something, respond and bomb Assad yet one more time, even though those air bases and military bases are populated with Russian military..."

Stockman summarizes the chaos...

"You have a hot war against Russia and the Iranians, which we have no business starting.  You have a trade war brewing, I am afraid will get out of control with China, which is totally unnecessary.  You have a fiscal calamity brewing right before your eyes, and you have a Fed populated by Keynesians, who think they miraculously cured the economy and everything is fixed.  So, they are finally going to do what they should have done a long time ago and that is normalize interest rates...

The problem is they have waited so long...that by October, they will be shrinking their balance sheet by $50 billion a month... while the Treasury is attempting to sell $1.2 trillion a year of new debt...

You are going to have, and I am quite certain of it, you are going to have a yield shock like the world has not seen in a long time...

When yields hit 4%, the proverbial brown stuff is going to hit the fan.  It is the proverbial perfect storm of upset, upheaval and really insane kind of developments.  Finally, after kicking the can all these years, it is finally going to come together, and I don’t see what is really going to slow it down.

How did the world get into record debt and trade wars? Stockman says,

“The point is a free market based on honest money would never produce this kind of imbalance. 

Under the old system, when you start to run trade deficits this big...there would have been quick adjustment because we would have lost reserves. 

Pre-1914, that was gold.  When you lost financial reserves, gold, that caused the banking system to tighten up and caused interest rates to rise, credit to be curtailed, and the economy slowed down.  Prices adjusted and slowly imports declined and exports recovered...

We don’t have that anymore. We basically have a bad money system, which allows these kinds of trade imbalances to grow.

What Stockman sees is deflation, depression and financial Armageddon. Stockman says,

“In the bond market, I don’t know any other way to describe it... It’s uncharted territory, and we have never been here before...

The house of cards is so shaky and so fragile right now that there is the risk of the proverbial black swan event.  We don’t see something coming.  It shocks the system.  It triggers a panic, and the panic soon envelops itself and descends into some sort of doom loop.  That could very easily happen.”

Stockman says, “Gold and silver are the only safe investments to have . . . you can’t be safe in the stock market, and you can’t be safe in the bond market.”

Join Greg Hunter as he goes One-on-One with financial expert David Stockman.

Comments

Erek Sun, 04/15/2018 - 13:49 Permalink

"... a Fed populated by Keynesians, who think they miraculously cured the economy and everything is fixed..."

If it is "fixed" then it is only fixed to their advantage - everyone else is screwed.

DontWorry Erek Sun, 04/15/2018 - 14:16 Permalink

You mean David Stockman who was Reagan's budget director and architect of trickle down economics who doubled the national deficit?  The guy who, in his only job in the private sector (most of his career was working for the federal gov or wall street) ran an automotive components manufacturer into bankruptcy and was indicted on a scheme to defraud stockholders?  That guy?

He can shove his advice up is own ass.

In reply to by Erek

Frilton Miedman beepbop Sun, 04/15/2018 - 14:29 Permalink

The root of the problem is money in politics, US policy is devised by corporations & the wealthy who control what party/politician is elected, in turn we get wacko economic & trade policies that rape US workers to the benefit of legalized bribers. 

Trickle down is the best example, 4 decades of failure and we're still being propagandized that it "could still work"...

In reply to by beepbop

The Jaguar Sun, 04/15/2018 - 13:49 Permalink

What a bunch of bull. China has raped America and a trade war is long overdue. Russia is a weak third world barbarian country. Anyone who believes China, Russia and Iran are anything other than craphole barbarian communist dictatorships needs their sanity checking.

BigCumulusClouds silverer Sun, 04/15/2018 - 14:12 Permalink

There are people who can be safe in the stock and commodity markets. As long as you are an insider to staged government events, like the Syria bombing and Sandy Hook, you can go long oil and long gun companies, respectively. And when the oil price comes tumbling down on Monday 4/16/18, you can make money in the short contracts you purchased on Friday 4/13/28. And you also will get rich on the long position you took in oil when Trump said he was getting out of Syria. And if you are in the CIA, you don’t even have to use your own money: you’ve got the Hammer fund at your disposal. Remember too that the commercials had record short positions which they will be able to cover as the oil price comes tumbling down. 

In reply to by silverer

Endgame Napoleon Erek Sun, 04/15/2018 - 15:22 Permalink

It is a once-proud Republic, with a once widespread middle-class prosperity, that has descended into an oligarchy with a narrow middle class, sandwiched between a large, increasingly factional underclass and an elite composed of a 1% business class and a 19% class of dual-high-earner parents in low-risk, salaried jobs, and both sections of the elite invest their extra money mostly in global dictatorships with plenty of low-cost labor.

In reply to by Erek

Winston Churchill The Jaguar Sun, 04/15/2018 - 15:26 Permalink

The GRC status,overvalued USD, and Triffins paradox are the problem, if it hadn't of been China it would have

been someone,or a group of someones,else.Offshoring just extended the day of reckoning,it didn't abolish it.

Seems there's no more road to kick the can down.

Take your choice; GRC or jobs with a lower standard of living ?

Choose wisely your life literally depends on it.This is normally resolved by a world war.

In reply to by The Jaguar

karenm Sun, 04/15/2018 - 14:00 Permalink

Everywhere in the media someone is "Slamming!" this and "Raging" at that.

When you see such a united, concerted effort at a meme, know it is orchestrated and purposeful.

 

They believe in behavior modeling, and that we will do what we see. This is why so many commercials have Marge going nuts over some laundry detergent, like it saved her life. This is modeling the behaviour they want women to adopt, and so are these headlines.

 

Which I might add.....ZH rams down our throats ceaselessly. 

 

 

ALL MEDIA IS PART OF THE SYSTEM, they just have different roles. These people aren't one dimensional or linear. They know how to use a bit of truth to gain your trust, then feed you lies once your guard is down. That is how they gain control over everyone, regardless of their political stance. Even gold buyers and people on ZH are controllable, because they know what we believe. 

Endgame Napoleon BigCumulusClouds Sun, 04/15/2018 - 15:30 Permalink

That is all most of the people we elect, or that are appointed to various government positions, are interested in doing: making $$$$$. The .gov career path has become one big contact list and piggy bank. 

But hey, Tyler fixed the bullet points. It works great now, automatically adding the little dots while you are still in the editor. Thanks, Tyler. That makes it much easier. Did you do that with PHP? 

In reply to by BigCumulusClouds

Endgame Napoleon Cosmicserpent Sun, 04/15/2018 - 15:37 Permalink

It is like an aggregator site, where they are pulling from a lot of good blogs that we would normally not visit. It is a good way to become familiar with these bloggers, some of whom are not famous. Occasionally, a Tyler adds an article. Those articles are often more economics-focused, like the original Tyler was. People come to ZH for more articles on economics than the MSM has the appetite for. The serious, economy-focused articles on ZH are still more entertaining than most. ZH is hardcore, sometimes even with hardcore math, but not bland. 

In reply to by Cosmicserpent

tion karenm Sun, 04/15/2018 - 15:18 Permalink

People surrendering responsibility for their own limp wristed cognitive ability is part of the problem, don’t you think? The Tylers offer a different side of the coin. If you look to them and the other authors here to tell you what to think, you may do better to take a harder look at yourself first.

In reply to by karenm

Savvy Sun, 04/15/2018 - 14:22 Permalink

The US will just keep attacking country after country after country. No body is immune. One Jihadist in Canada or the Saudis sell to China for RMB not $US.

Doesn't matter. The US will bomb anyone for any planted excuse that isn't fueling the US debt machine.

Batman11 Sun, 04/15/2018 - 14:35 Permalink

The problems are inherent in neoclassical economics.

The economics wasn’t new, and it has the same problems it’s always had.

The two elements of neoclassical economics that come together to cause financial crises.

  1. It doesn’t consider debt
  2. It holds a set of beliefs about markets where they represent the rational decisions of market participants; they reach stable equilibriums and the valuations represent real wealth.

Everyone marvels at the wealth creation of rising asset prices, no one looks at the debt that is driving it.  

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

The “black swan” was obvious all along and it was pretty much the same as 1929.

1929 – Inflating US stock prices with debt (margin lending)

2008 - Inflating US real estate prices with debt (mortgage lending)

“Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.

An earlier neoclassical economist believed in price discovery, stable equilibriums and the rational decisions of market participants, and what the neoclassical economist believes about the markets means can’t even imagine there could be a bubble.

The amount of real wealth stored in the markets becomes apparent once the bubble has burst.

Batman11 Batman11 Sun, 04/15/2018 - 14:38 Permalink

The Chinese revealed they have found the cause of financial crises at Davos this year.

Over inflated asset prices and the debt-to-GDP ratio (see graph above).

https://www.youtube.com/watch?v=1WOs6S0VrlA

A globalisation, using neoclassical economics as the gold standard, was bound to cause a lot of financial crises, as it has.

American exceptionalism meant they had to go one better and leverage up their real estate boom with complex financial instruments to take out the global economy.

In reply to by Batman11

whosyerdaddy Sun, 04/15/2018 - 14:55 Permalink

You've got to be a real wonk to listen to Stockboy for 41 minutes. When was the last time he was right about anything? Gartman/ Stockman 2020 for the Wrongway ticket.

Muppet Sun, 04/15/2018 - 15:02 Permalink

The CBs now own the markets in their continued attempts to convince the world that the economy is still viable.  In truth, the CBs know they broke it.  Currency, debt and financial measurements are tainted to the point of being meaningless.  

The CBs now paint reality.  They paint the markets to spur jobs and spending but there's no way back.  We're in the Truman Show or the Matrix now.   Chaos is at the doorstep.  That is likely why military buildup is occurring worldwide.

luna_man Sun, 04/15/2018 - 17:13 Permalink

 

Hey, ZeroHedge, put that David Stockman, on the payroll!...Only if he's willing to do a daily report on the economic deterioration of the US economy.

David, calls it like he sees it.

Double Zero Sun, 04/15/2018 - 19:30 Permalink

Has anyone seen a chart of the stock market during hyperinflation?  Now how about a chart of the stock market in a hyperinflation priced in Gold?  Awwwwww