Stock Market

Fox Filter Failure

By David Stockman  |  May 10, 2018

“Abuse of words has been the great instrument of sophistry and chicanery, of party, faction, and division of society.” – John Adams, Letter to J.H. Tiffany, March 31, 1819

It’s a blind spot. And it may prove fatal.

Capitalist prosperity in America is dangerously imperiled. Great bubbles in the stock and bond markets are on borrowed time

And – during a recent appearance on Fox Business – we were reminded once again why.

It was a friendly but heated discussion with a whole panel of Fox-style conservatives

It was about the essence of Imperial Washington. That’s Forever War and Bubble Finance.

Neither Fox Business host Maria Bartiromo nor Wall Street Journal reporter Jon Hilsenrath, to make just a couple examples, is a big-government Socialist.

Actually, they agreed when we slammed the “Horribus” fiscal 2019 appropriations bill and out-of-control federal spending.

But their “nodding yeses” turned to “shaking noes” on the dime of the utterly wasteful $80 billion Pentagon increase…

…and the Syrian gas attack hoax…

…and the deficit-ballooning Trump tax cut…

…and the destructive impact of the Fed money printers…

…and the $1.8 trillion debt bomb fixing to slam the bond pits.

They just can’t or won’t see it.

Central planners at the Federal Reserve have destroyed honest price discovery and monetized vast amounts of public debt.

They’ve fostered massive inflation of asset prices for Wall Street.

And they’ve accommodated the “deficits don’t matter” gang in Imperial Washington.

That was OK as long as the Fed and its central-banking counterparts around the world were in “quantitative easing” mode.

But even these Keynesians now realize that they’ve over played their hands.

They’re trying to “normalize.” One major reason is that it’s the only way to reload dry powder for their next “hundred-year event.”

Meanwhile, this shift to “quantitative tightening” will leave the GOP’s gang of factions high and dry.

They still want to:

  • Police the planet via a massive Warfare State funded with borrowed money.
  • Leave the $2.5 trillion Welfare State and its 110 million beneficiaries intact.
  • Cut taxes for donors, business lobbies, and the affluent.
  • Throw spending bones to farmers, small businesses, exporters, veterans, border control nativists, and law-and-order conservatives.

All of that, friends, is a Fox-ified fantasy.

Deficits do matter.

Tax cuts do not pay for themselves.

Long-term, sustainable, real capitalist prosperity depends upon keeping the state and its central banking branch at bay and out of the way.

And, once upon a time, that pretty much happened.

The conservative party in Washington stood on sound money and fiscal rectitude. It was all about free markets at home and non-intervention abroad.

In the last three decades, however, the GOP uses these pillars of capitalist prosperity for mere ritual incantation.

True conservatives have had virtually no role in real governance since the Gipper last nodded in their direction decades ago.

Neo-cons hijacked the GOP’s approach to foreign policy.

Supply-siders have the faithful convinced that deficits don’t matter, and that you can grow your way out of unfinanced tax cuts.

And Alan Greenspan’s acolytes and Wall Street’s wolves buried “sound money.”

The new ideology embraces monetary central planning because it means “stock market bailouts.”

Imperial Washington takes care of Wall Street. Wall Street takes care of Imperial Washington.

The GOP is now an opportunistic gang of neo-cons, fiscal-cons, and social-cons.

It’s a Party of Empire. And our system is flying blind toward a monumental crack-up because of it.

David Stockman

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR