A Clear and Present Stranger Danger

By David Stockman  |  September 24, 2018

He wondered about the people in houses like those. They would be, for example, small clerks, shop-assistants, commercial travellers, insurance touts, tram conductors. Did they know that they were only puppets dancing when money pulled the strings? You bet they didn’t. And if they did, what would they care?

– George Orwell, Keep the Aspidistra Flying (1936)

It’s open combat on multiple fronts in the Imperial City.

We have positive proof the Donald is fighting back, hard, against the Deep State. Rod Rosenstein might have “resigned” this morning before the President could “You’re Fired!” him, but now it appears they’ll get together on Thursday.

Now, we’ll see if there’s a sequel to Tricky Dick’s “Saturday Night Massacre” in the works – a climax that this time must include the firing of Prosecutor Mueller.

And Brett Kavanaugh’s Supreme Court nomination is under fresh assault, with a new allegation of sexual impropriety. “Remember Merrick Garland” is a powerful rallying cry for Democrats – for this November and the next.

The midterm calendar makes Mitch McConnell’s decision-making hard, as a “lame duck” appointment is a little more vulnerable to parliamentary shenanigans.

Meanwhile, hard as it may be to believe, these are mere side-shows, though that may be just “for now”…

Because we don’t know who’s more dangerous when it comes to the economy.

There’s the Donald, who knows nothing. And there’s Congress, which does nothing.

And there are our Keynesian high priests, who know everything…

Here’s the rub.

We know all that need be known about the Tweeter-in-Chief. Only details are still hidden. And we elected him. We also elected those 535 Senators and Representatives.

Contrariwise, we know nothing about the unelected global clique of monetary central planners led by our very own Federal Reserve.

Oh, we’ll have a peak on Wednesday, when Chair Jerome Powell treats us to a post-Federal Open Market Committee meeting press conference.

That’s P.R. And it plays, on Bubblevision, where the groupthink is sold with snazzy chyrons and hot jams.

It’s a lot of noise.

The thing is there’s a lot of “signal” out there, too.

And that signal is all about central planning that serves and preserves Imperial Washington.

For instance, here’s what Olivier Blanchard, longtime chair of the economics department at the Massachusetts Institute of Technology and the former chief economist for the International Monetary Fund, told the Boston Fed’s monetary policy conference a couple weeks ago:

“We have this notion that it is only OK for the central bank to buy assets and not goods. But that’s a restriction we imposed on ourselves.”

Once this bubble pops, look for the Fed and other central banks to buy “high-premium” assets like stocks.

They’ll also be monetizing the federal deficit, maybe buying other stuff too, including “goods.” like baseball cards and beer bottles.

Why not? According to Blanchard – he makes the groupthink that Wall Street and Washington D.C. plug into – the size of the Fed’s balance sheet just doesn’t matter.

Hey, Main Street, the surest route to broad prosperity that includes you is for the Fed to buy AMZN, baseball cards, and beer bottles…

The Fed is the epicenter of a giant but implausible money shuffle. Its Keynesian money-pumping is an assault on the fundamentals of democratic-capitalist prosperity.

It impairs and destroys honest price discovery in the markets at the very heart of the system.

But all this can-kicking assumes, of course that the regime survives the intensifying frictions on its flanks.

Because passions sparked amid “side-shows” like these often converge amid economic chaos.

Today’s clueless GOP regulars have morphed into fiscal profligates and insatiable interventionists.

And establishment Democrats – already prone to get involved in other peoples’ business – moved to the “center” to form a permanent Warfare State-Welfare State lock on the country.

These are handmaids of American Empire.

And Main Street is their fodder.

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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