Washington DC

The Donald Speaks “The Donald” to Power

By David Stockman  |  September 27, 2018

The record shows I took the blows
And did it my way

– Frank Sinatra, “My Way” (1969)

Donald the Disruptor may have established another new precedent for presidential communication yesterday.

That press conference may go down as the greatest live display of irreverence by anyone, anywhere, anytime.

After this, his successors can’t fail by comparison. Of course, that’s in the eyes of the Mainstream Media and the Acela Corridor establishment it serves.

So, he may have actually knocked down another wall that separates the people from its president. Presumably… hopefully… other elected leaders will follow his lead.

The Donald is off the mark, a lot. But this is yet another way his disruptions are generally good for democracy.

That’s especially so in a time of empire.

Imperial Washington embraces a “the system is fixed/it’s better than ever” narrative.

To wit, this month we “celebrate” the 10-year anniversary of Lehman Brothers’ meltdown. And we venerate the “heroes” who prevented another depression, as they themselves say.

That’s the only way to hide the monumental trap into which they’re leading the country.

Bailouts and money-pumping did not succeed. They did not restore a booming economy.

That’s self-serving horseshit.

And, right now, it’s exceedingly dangerous self-serving horseshit.

Wall Street has never been as dumbed down as it is today. It roars because it’s peddling to sheeple.

The Federal Reserve is taking full-employment victory laps. And, of course, it’s hiking interest rates right as wages start to show signs of meaningful growth…

Meanwhile, living standards for Main Street are dead in the water.

We need more open engagement, more often.

Specifically, we need to talk about stuff like the fact that the federal government borrowed $214 billion in August.

That’s the biggest August deficit ever. In fact, it’s one of the highest monthly deficits on record.

And it’s no aberration. It’s part of a perilous trend.

The net public debt is $21.2 trillion. That’s up from $20.0 trillion a year ago. Uncle Sam has borrowed about $1.2 trillion – or 6% of gross domestic product – in just the last 12 months alone.

The rolling 12-month deficit trend is far, far more important than the highly processed and equally aberrant second-quarter GDP growth figure.

And we’re in the 10th year of the second-longest “recovery” in history.

The truth is there’s never been a doubling of the deficit run-rate this late in any cycle – let alone one this historically weak.

In the face of the Fed’s belated shift to “quantitative tightening,” it’s an invitation to a bond-market disaster nary a soul on either end of the Acela Corridor cares to consider.

It’s not merely that Wall Street and Imperial Washington are trifling with an unprecedented late-cycle borrowing spree.

It’s that they’re flat-out defying an ineluctable truth embedded in present trends.

Over the last 11 years, on a peak-to-peak basis nominal GDP growth has averaged just 3.2%. But right now we’re borrowing 6% of GDP per year.

There’s no escaping that math.

And it adds up to “insolvency.”

Monetary central planning destroyed honest price discovery and free markets – to the benefit of both Wall Street and Imperial Washington, to the detriment of Main Street.

And there’s nothing better than a Big Lie to justify massive usurpations of power and enormous transfers of wealth.

But the Donald’s insouciance indicates a whole new bonfire of vanities, with Imperial Washington’s joining Wall Street’s this time…

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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