This Bubble, Too, Shall Collapse

By David Stockman  |  October 4, 2019

“We’re heading into a horrendous fiscal crisis in the 2020s. And we’re going to have a choice in the upcoming election between the biggest spender to inhabit the Oval Office in the last 50 years and Elizabeth Warren, who’s even worse. This is a dire outlook.

“We’ve been sleepwalking for the last two or three decades. The Fed has enabled the politicians to essentially escape fiscal responsibility.”

That’s how I responded to Neil Cavuto’s setup for my appearance on his Fox Business show yesterday.

Imperial Washington is all about impeachment, impeachment, impeachment… and that’s the way the Duopoly wants it – “Inside the Beltway” Democrats and Republicans – because it means their perfidy goes unnoticed.

Well, not for long…

Not for Long, Folks

It’s time to recognize that the “Everything Bubble” is the most extreme, exaggerated, severe financial mania in world history.

It will, inevitably, collapse. And there will be massive losses, even greater than occurred in 2001 and 2008.

Wall Street is simply chasing what the central banks are doing. There’s no honest price discovery, no real mechanism of supply and demand. Nobody’s discounting the future of economic growth, productivity, and investment.

You’ve got algorithms and chart monkeys – CPUs and 29-year-old day-traders – in charge of the market.

When the big correction comes, there are going to be massive losses. And the panic will be great.

Everything Is Going to Collapse

All correlations will go to 1 – which means everything will fall: the good, the bad, the ugly, the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player, too. That’s essentially what’s going to happen.

You can’t be saved by picking high-yielding stocks or conservative blue chips, or stocks that provide daily necessities like food – it doesn’t matter. Everything’s overpriced right now because of this huge financial distortion.

When the real correction comes – and our monetary central planners are revealed to be impotent and powerless – everything is going to collapse.

The time for speculation is over. We’ve had 30 years of central bank-subsidized speculation. We’re going to go into the time and era for capital preservation, and that means the highest priority is to not lose money. It’s to keep your capital safe.

We’ve recently taken steps to become more “active” in The Stockman Letter. Note, however, that we’ve stepped into this market with the best way to play gold right now…

The Ogres of the 21st Century

I don’t think the U.S. government is going to disappear. I don’t think we’re going to have a national bankruptcy or anything like that.

But there is a tremendous fiscal disaster coming.

And we must recognize that the 30-year experiment in monetary central planning is over.

It’s the one aspect of the Donald’s reign that redeems him: He’s exposed the Fed and the Duopoly. They are not your saviors – or even your friends.

Remember the Time magazine cover from the late 1990s, “The Committee to Save the World”? It had Robert Rubin, Alan Greenspan, and Larry Summers on the cover.

These are the ogres who’ve destroyed the world as we knew it.

After “Peak Trump”: Charting Uncharted Waters

It’s less than one week until I deliver the Keynote Address at the 2019 Irrational Economic Summit on the evening of October 10 – right outside Imperial Washington.

You don’t have to dare the Swamp to join us folks, because you can watch my Address as well as presentations from some of the brightest minds in finance and economics from the comfort of your own home with a Full-Access Livestream Pass.

The stakes are as high as they can be heading into 2020. The U.S. presidential campaign is already well underway. Markets appear to be cracking, catching up to an economy that’s been weak and getting weaker for years.

And the Tweeter-in-Chief is tied up in the day-to-day movements of the major stock indexes like no president before him. The increasingly desperate and soon to be impeached incumbent will do anything he must to hold the White House.

That’s why I’ve titled my Keynote Address, “After ‘Peak Trump’: Charting Uncharted Waters”.

Leviathan gets bigger, Wall Street gets richer, and Main Street… well, Main Street gets more and more little every day.

We’re rapidly approaching the end of the oldest, weakest economic “recovery” in American history. At this major tipping point, there’s no telling what the Donald’s great disruptions could do to your wealth.

Click here to learn more about the Full-Access Livestream Pass to the 2019 Irrational Economic Summit.

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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