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David Stockman: US Economy at the Precipice. Austerity Is Not Discretionary

Austerity is something that happens when you're broke!


David gives a startlingly blunt assessment of the US's economic outlook and how it came to this precipice.


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only one guy who understands it, Ron Paul

40:40 minutes near the end of the interview on reasonTV: “ There’s only one guy who understands it; it’s Ron Paul. There’s no one else who understands it.”

David Stockman on TARP, the Fed, Ron Paul

Bill Moyers interviews David Stockman who gives a blistering analysis with respect to the Fed and crony capitalism in the USA.

What FOMC is:

The 12 people he's talking about, as per Wikipedia:

The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System, is charged under United States law with overseeing the nation's open market operations (i.e., the Fed's buying and selling of United States Treasury securities).

It is the Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply. It is the principal organ of United States national monetary policy.

The Committee sets monetary policy by specifying the short-term objective for the Fed's open market operations, which is currently a target level for the federal funds rate (the rate that commercial banks charge between themselves for overnight loans).

The FOMC also directs operations undertaken by the Federal Reserve System in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.

Read More: http://en.wikipedia.org/wiki/Federal_Open_Market_Committee

I wonder, when said he was "in cash" did he mean that LITERALLY?

As in - green folding paper called "Federal Reserve Notes" tucked in a safe or under his mattress or buried in coffee cans out back?

Or did he mean a multitude of nonsensical bullshit paper "securities" that he THINKS he can liquidate at a moment's notice?

As well, none of these clowns ever speak in language specific and unequivocal to what the average American has to deal with. No one ever gives advice to anyone financially about what to do with the little you have when you DON'T have 401k's, pensions, mutual funds, CDs, money market accounts, ETFs, et cetera.

Every one of them is NOT talking to the average person. They are talking to people much, much more well off (at least on paper) than most of the people you will ever meet.

The vast majority of people in this country have nothing other than the FRNs in their wallet or the few measly blips in their checking or perhaps if they are lucky, a meager savings account.

I wonder what advice Mr. Stockman has for them? In what form should THEY keep what little they have?

He said he was in bills,

He said he was in bills, meaning Tbills, 30 day treasuries and the like, the thought being that, come inflation, it won't be so hard and fast that he can't sell the bills and maintain his purchasing power (as opposed to if he held longer term debt, bonds). He also said he owned gold, for insurance.

I must be willing to give up what I am in order to become what I will be. Albert Einstein

They recommend investors...

- Focus on preservation, not yield or return. Those days are over.

- Stay out of any markets as they are unsafe. Stay liquid instead (e.g. cash & short-term treasury bills).

- Hold some % of gold (and presumably silver) as an "insurance policy."

They claim the USD will not collapse, "because all the rest of the currencies in the world are worse." What is Mr. Stockman basing that on? Although the USD still enjoys world reserve currency status, that seems to be changing. My research indicates that a collapse of the USD would certainly adversely affect other currencies (some more than others), because of its long-term preeminence. However, in the long-term, currencies of nations rich in resources; which display fiscal restraint; whose central banks’ pursue prudent monetary policies; and, that are well placed to benefit from ongoing Asian economic growth are poised to fair better than the USD. Some of those currencies include, but are not limited to, the Australian dollar; the Singapore dollar; the Canadian dollar; the New Zealand dollar; and, the Norwegian Krone.

I'm certain that many of you believe gold and silver are good insurance policies. Do you agree that one should stay out of all the markets and remain liquid? If so, would you suggest diversifying some % of USDs into select foreign currencies as yet another "insurance policy" against a falling USD? Or, do you agree with Mr. Stockman that as the USD goes, so they all go?

Considerations for the 2012 U.S. Presidential Race from the Mind of a Political Independent-Use this tool to educate the unconverted and prove support for Dr. Paul among Independents.



Considerations for the 2012 U.S. Presidential Race from the Mind of a Political Independent-Use this tool to educate the unconverted and prove support for Dr. Paul among Independents.

Henry Kissinger Jr.

I refuse to read or listen to anything this guy says. He is the enemy of freedom and the reason our government and the rest of us are broke.
Seriously what the hell is this doing on the DP!

This time don't give us Barabbus!

Oh, please. Stockman is one

Oh, please. Stockman is one of the good guys.

History 101: Stockman was Reagan's budget director, and a hero of the fiscally responsible back in the early 80's during the fight with Tip O'Neill and his commie congressional pals. Stockman was a fixture on the Sunday talk shows, which was how the working' man got his news, back in the pre web days. He was a solid fiscal conservative, and even principled enough to leave the Reagan administration after squabbling with uncle Ronnie over the growing deficits.

I lost track of him until shortly after the 2008 crisis, after which he reappeared, supportive of the Austrian positions. He's an RP guy now, he's one of us.

Nobody's perfect. Everybody's made mistakes at some point in their lives. But people do grow to see the light.

We gotta stop eating our own!

I must be willing to give up what I am in order to become what I will be. Albert Einstein

itzSteve's picture

Awesome interview!

...and I love the use of the term Ponzi-economics. Brilliant!!!

The Truth

..is so liberating. What a great interview.

Tricks and treachery are the practice of fools, that don't have brains enough to be honest. - Ben Franklin

Thanks P.au.L....

...for this and some of the other excellent finds you have been posting lately. Feels like the old DP...feels good.

Those of us here want to *know* however painful the train wreck. Keep them coming!


I keep hearing the phrase "Our Debt" . . .

This idea that because a majority of R's or D's are elected each term that they can then in-debt us for goods and services that we never benefit from is is beyond sane.

It is not OUR DEBT. It is THEIR debt!

Contract Law states that if I do not benefit from a good or service that I never authorized, then I don't have to pay for it. If I did authorize it and I never received it, then I don't have to pay for it either.

It is THEIR debt. They benefit from the spending enormously while WE pay and suffer for it.

America did not win the Cold War, National Socialism won that war.

One more thing

I know this system is not national socialism because under Nazi rule in Germany Hitler managed to bring the German economy back to life. People had jobs, crime was low and they were not nearly as bad off as people think. Not that this is an endorsement for Hitler and Nazism. But the facts are facts. I have no idea whats going on in the US, but its not good. I can't pin a name on it or label it. People say fascism. But during the 1930 America was in a depression for for 10 years, in Europe they got out of the depression 5 years earlier than the US did. Even the fascist countries which saw great economic upswings. The US had that socialist FDR in office killing the live stock and devaluing the dollar. FDR prolonged the depression. Americans are fools to think he was great. Thats what I said when someone was comparing Obama to Hitler. I said thats not fair to Hitler, at least he fixed Germanys economy and they had jobs.

One more thing I would like to pint out is that the Weimar Republic in Germany was ran by jews. They saw massive inflation and it is where Hitler and the Nazis gained a foothold, with the economy. We are seeing massive inflation now.

"But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing." - Andrew Jackson

Its not our debt

Its the banksters debt. The big corporations debt and it was never meant to be paid off. It was meant to enslave us to a crushing system. I heard people talking about how you used to be able to get out of the class and conditions you were born in in the US. That this possibility is fading away. It was the same way in Britian and its still the same way in the UK. That country has a horrible class system and if you are born dirt poor you stay dirt poor. The US is falling under the same kind of system with the rich elite oligarchs and zionist jews taking over our country and our government. People in the US used to be able to mostly claw their way up out of the class they were born into, the class and the conditions. Thats not the case anymore. I heard years ago people like Lou Dobbs say that Americans would be living in worse livining conditions than their parents did. My parents grew up dirt poor, my mother was from kentucky in a coal mining town and my father certainly did not come from wealth, not even financially well off. Yet he managed to get a job that paid sort of well and bought a house. The current generations of Americans from generation x to the millenials will probably never have that experience. The US citizens are now facing 3rd world poverty. Why they continue to allow the government to stand and the zionist jews to rule over us like god kings is beyond me. It is true they don't do anything for us. They don't even secure the borders. The government is useless and should be gotten rid of.

"But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing." - Andrew Jackson

You nailed it.

Lizard boy Stockman is clearly trying to get people used to the idea of your tax money going to service this debt. He fails to realize that we did not authorize this debt nor are we going to pay for it since we never received it. That is why an audit of the fed will clearly show large amounts of this money going into Mr. Stockboys pocket. He needs to feel some austerity.

This time don't give us Barabbus!

Stockman sure would've made a lively witness

in one of Dr. Paul's sub-committee hearings..."The Great Margin-Call in the Sky", "The Doomsday Machine", "Before 1970, the Fed System today would have been seen as a Ponzi Scheme", "Put the Fed out of business", "Today we have a branch office casinos of the Fed, can't have Capitalism if capital markets are dead"...

I couldn't find one thing he and Dr. Paul disagree on.

It would have been nice to have his testimony on record.

"If you want something you've never had before, you have to do something you've never done before." Debra Medina

Stockman has a new book coming out!

Waiting for January 2013!

Waiting for January 2013!

Waiting for January 2013!


Cutting spending to equal your income is not austerity -

it's reality.

The purpose of Federal reserve fractional reserve banking is to

make people, businesses and governments debt slaves. We have become the indentured servants of banks complete with a huge transfer of wealth out of the pockets of the public, resulting in the skewed distribution of wealth popularized by the Occupy Movement in their 99%/1% characterization. What the banks and other special interests do not steal from us, the government taxes from us.

A society where the middle class disappears into poverty is a slave society. Slave societies have a small group at the top with all the wealth, a very small middle class, with everyone else living in poverty. This is what government is bringing us as they rig the markets with the countless laws that favor one group over another, and since these laws are bought and paid for through the lobby / bribe system, we know who the laws favor. This is simply fascism, also known as corporatism, and the USA can now be best described as one big government/corporate owned slave plantation.

The debt super cycle could not exist if we had gold and silver coins as our money supply coupled with 100% reserve requirements for deposit banks. The only available funds to borrow would be the supply of gold and silver coins that their owners were willing to save and make available for loans. This would limit government in size to what they could tax without causing revolt. But since our money is now bank debt which can be created out of thin air and loaned into circulation, we have huge debt levels, prices driven to the stratosphere, our economy destroyed, and our wealth extracted by the government and aristocracy who control the government.

Seems to me we need the French solution, Madame Guillotine.

"Bend over and grab your ankles" should be etched in stone at the entrance to every government building and every government office.

The Elephant in the Room

What amazes me is that men like this, who are so well-versed in economics & the financial markets, refuse to see the elephant in the room. Yes, ignorance is bliss, but it is DANGEROUS. Do they really think that those, who control the Fed, are unaware of what they are doing? These people KNOW exactly where they are intentionally taking the country. For what reason? These DE-lites have stated openly for any who have ears to hear... the "New World Order". Bush proclaimed, as many others ...Kissinger, etc, etc. Research for yourself. They cannot bring this about without destroying the USA & then act as the saviors to the chaos they have deliberately created. Once I thought such was crazy, but I keep reading as I hope you will. It is a rude awakening, but check it out for yourself. Ignorance is DANGEROUS to you & your family.

Putting motivation and purpose aside

the result of the Federal Reserve Fractional Banking system is debt slavery. Good intentions or not, the result is independent of the purpose.

All too often debates get sucked down a motivation path which all too often leads to stalemate.

Madame Guillotine unfortunately will end up being the solution here. The likely revolution around the corner will not be a revolution for Independence as the Americans fought for in 1776, it will be a Revolution of Revenge as the French fought for a few years later.

The Central Planners must be aware of this, so whether it be hubris that blinds them, or their confidence that it is their subjects who will meet Madame is also moot. The result will be a great deal of suffering for all.

Well said

The French Revolution led to Napoleon, so I hope we don't repeat that here.

Tricks and treachery are the practice of fools, that don't have brains enough to be honest. - Ben Franklin

Wow! Great interview indeed!

I was gonna say how did this guy fly under my radar for so long but I feel sure I've heard of David Stockman before. Maybe I've only heard audio's of his previous speeches because he doesn't look familar to me. Who knows...but either way...thats a keeper of an interview.

Thanks for posting. I swear, all I have to do to stay on top of things and keep expanding my knowledge is to keep visting the DP daily.

Seems the 2008 "warm up" for what's coming took down all of those people like me who were living too close to the edge 5 years ago. In some ways I feel like I'm in a better position to deal with whats ahead because I've already taken the hit and have learned to live within my means. I went from living in a 150k home earning 150k a year to now living in a efficency "apartment" and earning maybe 24k a year which leaves me with zero disposable income. As long as I can keep my piss ant job...I can't fall much lower. But boy are a lot of my frinds going to be in shock in the near future. Having your standard of living drop significantly over a 6 - 12 month period is a brutal adjustment. I'm rather easy going and pretty much roll with the punches but most of my "wealthy" friends are already stressed to the max and wound too tight. Not sure they are going to "adjust" to what's headed their way as well as my wife and I did.

I have a funny feeling that all the people I have been trying to wake up since I lost it all are all of the sudden going to be contacting me to say "I didn't really listen to you or read your 100's of emails over the past few years...could you please tell me WTF is going on?"

I should say...yes, I'll give you a refresher course but please have all you gold and silver jewelry on the table to give me as payment for not listening to me the first time. :)

Excellent Interview, thanks

Excellent Interview, thanks for posting!

If my need to be RIGHT is greater than my desire for TRUTH, then I will not recognize it when it arrives ~ Libertybelle