Richard Rubin
Bloomberg
4/1/2013
The U.S. economy is in a bubble inflated by “phony money” from the Federal Reserve and will burst within a few years, warned David Stockman, who was budget director for President Ronald Reagan.
In an essay published yesterday in the New York Times (NYT), Stockman wrote that the Fed’s quantitative easing policies following the credit crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, is “unsustainable.”
“When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP (BX) and a former Republican congressman from Michigan. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”…
…The Fed, led by Ben S. Bernanke, is purchasing $85 billion in assets every month. The Fed is leaving its key interest rate near zero while it tries to reduce unemployment below 6.5 percent and hold inflation below 2.5 percent…
Read the complete article at Bloomberg.
Related: Household income tumbles during the Obama “recovery”
…Median household income is a big number driven by enormously complex calculations, so there are many factors involved, but maybe it’s time for these media analysts to think about the tectonic shift to part-time work inspired by fear of ObamaCare. Not only does part-time work pay less, but the dissolution of full-time career positions means fewer opportunities to build high income through a long relationship with a single employer. High unemployment in general drives median income down, and the number of people who exit the workforce entirely because they can never find work has increased. The media used to fret about such things under Obama’s predecessor, when unemployment was a little more than half what it is today.
Update: Stockman: Kinda right (but not entirely)
…Stockman’s piece is a polemic, and no polemic is ever perfect. It’s a good one if it manages to get a lot right, and Stockman’s does…
Update 2: The Horrifying Chart I Recommend You Forward to Every Democrat Voter You Know. Along with a polite thank you note…
Also, Fed Lies On The Record To Protect Bank Of America, Pulls Testimony
