Tags: David Stockman | Stock Market | Fed | Casino

David Stockman: Bull Stock Market Is 'Wild West Casino'

David Stockman: Bull Stock Market Is 'Wild West Casino'

 (DPC)

By    |   Thursday, 23 February 2017 10:57 PM

Former Reagan Budget Director David Stockman tells Newsmax TV that despite the stock market seemingly setting record highs on a daily basis, an economic disaster looms on the nation's horizon.

Years of the Federal Reserve’s misguided quantitative-easing policy and low interest rates have “propped up the stock market to such an extent that it's become a Wild West casino,” the former director of the Office of Management and Budget told Sunday’s “The Income Generation Show.” 

“When you create a casino, you're asking for trouble,” he predicted, casting blame on excessive regulation and the nation’s central bank.

“They're tying the financial system in knots for no good reason. We ought to go to the source of the problem, have a house cleaning at the Fed," he explained to host David J. Scranton.

"I think (Fed Chairman) Janet Yellen ought to be in the crosshairs of what needs to happen here and not some broker who's trying to manage an account for his clients,” said Stockman, who served as a Republican U.S. Representative from the state of Michigan (1977–1981).

He said such wreckless Fed policies has destroyed discipline in financial markets.

“When you have markets that only go one way up, when you have people that learn year after year that you buy the dips and the market is going to go up tomorrow that there's really no downside risk and that the Fed is there to prop up things,” he said.

“But you don't solve that by regulating tens of thousands of brokers and other financial intermediaries,” said Stockman, who was the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

“You go to the 12 people sitting on the Open Market Committee at the Fed who are causing the problem. I don't know whether the Trump administration is going to get this right or not,” he said.

“I hope they would turn their guns to the real target of the problem, which is the Federal Reserve. And they've been quiet and they've got too many Goldman Sachs people in there who have had a career and made a prosperous living riding the bubbles that have been created by the Fed," he predicted.

"And so they're not likely to go front and center at the problem. They should be telling Janet Yellen 'You're done. You've created a huge mess,'” he said.

Lawmakers must deregulate America if we're going to get growth going again and create "some real breadwinner jobs," he said.

"We haven't really had any growth for a decade and a half. We have to stop regulating interest rates to zero because of what that's doing. People don't recognize it it's not only creating windfalls for some speculators on Wall Street, that's bad enough," he said.

"But it's inducing corporate America, the top executives on boards, to raise trillions of dollars with cheap debt to buy back their own stock or to engage in deals creating monster companies that really do not help the economy," he said.

"And then they end up restructuring and closing plants and stores and reducing jobs.”

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Former Reagan Budget Director David Stockman tells Newsmax TV that despite the stock market seemingly setting record highs on a daily basis, it is a financial timebomb.
David Stockman, Stock Market, Fed, Casino
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2017-57-23
Thursday, 23 February 2017 10:57 PM
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