Former Reagan White House Budget Director David Stockman is warning that the wealth created since the 2008 financial crisis is “phony.” He also wants everyone to know that they only safe asset right now, is gold or silver.
David Stockman sat down with USA Watchdog‘s Greg Hunter, and plainly laid out the terrifying state of affairs our financial system is currently in. Stockman contends that record high stock and bond prices are flashing danger signs and that everyone should be aware of that. He’s also not trusting of Bitcoin and sees it’s collapse as inevitable.
There’s a lot to talk about in “the midst of all this craziness that’s happening both in Washington and on Wall Street,” said Stockman.
“I don’t think we are going to have a liquidity crisis. I think it’s going to be a value reset. I think there is going to be a jarring downward price adjustment both in the stock market and in the bond market. This phantom or phony wealth that has been created since the last crisis is going to basically evaporate.”
Stockman’s appraisal of the tax cuts mirrors rational Americans’ thoughts.
“I think it’s going to be a fiscal calamity of Biblical proportions. I want to be clear. I am always for tax cuts and shrinking the size of government, but you have to earn it. You have to cut spending and entitlements and this massive defense budget. Obviously, they didn’t do that. If you look at honest accounting . . . this bill will add $2.5 trillion to the public debt which, and this is a key point, is already going to rise by $10 trillion over the next decade based on the current law and taxes that is still in.”
Stockman also places the blame of the “phantom wealth” on the government’s money printing scheme.
“More importantly, the central banks realize they cannot keep printing money at these crazy rates, and by that I mean the bond buying. Now, they are going to begin to normalize and shrink their balance sheet. . . . By the fall (of 2018), they (the Federal Reserve) will be shrinking their balance sheet by $600 billion a year. What that means in plain simple English is that they (the Fed) are dumping $600 billion a year of existing bonds into the market just as Uncle Sam will be attempting to borrow $1.25 trillion more. Now, if you don’t think that is a financial collision waiting to happen, then I am not sure what would be. We are heading for a thundering collision in the bond market that will drive yields upward far more than the market is expecting. The stock market operates on the illusion of permanently low interest rates. When interest rates start to rise, everything is going to come apart because cheap debt has been priced in forever, and we are heading for far more expensive debt. . . . Bond prices are going to collapse when yields begin to rise. . . . Stock prices are going to collapse big-time when the underlying predicate of cheap debt, massive stock buy backs and M&A deals and everything else supporting the market today finally reverses. So, we are going to have deflation in the canyons of Wall Street, and that will not be a happy day.”
But there’s one safe asset. And Stockman explains:
“I think the time to buy (gold and silver) is ideal. Gold is the ultimate and only real money. Gold is the only safe asset when push comes to shove. They tell you to buy the government bond, that’s a safe asset. It’s not a safe asset at its current price. I am not saying the federal government is going to default in the next two or three years. I am saying the yield on a 10-year bond of 2.4% is way below of where it’s going to end up. So, the only safe asset left is gold. This crazy Bitcoin mania has drained off what would otherwise be a demand for gold. . . . When Bitcoin collapses, spectacularly, which it will because it’s sheer mania in the markets right now. When it collapses, I think a lot of that demand will come back into gold, as well as people fleeing the standard stock and bond markets for the first time in 9 or 10 years.”
So, in other words, the time to buy gold is now, before Bitcoin’s collapse leaves people scrambling.
Financial Expert: ‘Phony Wealth Created Since The Last Crisis Is Going To Evaporate’
We have heard that they sky is fall for about 10 years now and I’ve not been hit on the head by any thing falling from the sky. Have YOU???
I would use caution in that assessment. The Bank of International Settlements and I believe the British Central Bank have stated there is a possibility of collapse. These people are not saying this loudly to warn the people, but they are just putting out there to deflect blame when they pull the plug. When those warnings become more numerous, it is time to heed them.
I would have never thought a decade ago that we would be where we are today. I never thought my mother a three pack a day cigarette smoker for 55 years would live until the age of 80. Can the film flam continue? Possibly, but every day it does makes it more likely that it won’t. I’ll say this, I balled out in Feb 2007 and lost one hell of a ride up, so what the hell do I know.
Much of that “Phony Wealth” created since 2008/2009 has already been reallocated into physical assets: real estate, precious metals, etc.
While all asset classes will initially decline in value with a Crash, the Uber Rich have also multiplied the number of physical assets they possess while still maintaining extensive sums of cash in financial assets; including CASH: with which they will purchase other assets at 10 cents on the dollar as others go bankrupt.
That’s the way the game is played. 😉
A bit off topic, but WHY we get to financial corruption is ultimately due to MORAL corruption. Here’s one from the files on that:
More from the gay-uber-alles PC Nazis. Now Santa is gay. https://www.newsbusters.org/blogs/nb/brad-wilmouth/2017/12/17/cnn-hypes-childrens-book-portraying-santa-claus-gay-man
Personally, I am offended. I think he should have married Vixen (don’t worry… normalizing bestiality will be the next barrier to be breached by the left). Remember Orwell’s discussion about, in taking over language or a culture, you simply pour new meaning into it by incessant propaganda…. of which CNN is Exhibit A
good. It’s long past time. Ain’t it good to know that stock-piling lead ‘n brass, cans and sundries, band-aids and beans actually will’ve been a good investment? Let ‘er rip Wall Street. Time you all got a taste of what it means to be men who’re desperate….. just like you’ve tried your level best to make us. “F” you.
The thing to recognize here is … look what has transpired from 10 years ago, up until now. The Feds have continually flooded the Markets with phony propped up funds to the point where they cannot manipulate it anymore.
Interest Rates have been at a astonishing low to 0% interest rates.
The current statistics don’t add up, and the charts make no sense.
I believe this charade that they (bankers) have made up, will soon show their true colors of the handiwork that they created.
It’s a manipulative scheme and only the 10% will survive the madness that they created while the other 90% go broke.
TIME TO RELEASE THE KRACKEN!
I agree. I don’t see interest rates staying at this level much longer. It was an aberration. I was able to lock in a 30-year fixed interest rate @ 2.875%. Will I ever see those rates again in my lifetime? I doubt it.
I respect Stockman. He doesn’t have any reason to lie to people and that interview was probably more honest that the garbage you will see on CNBC and Bloomberg.
Silver is probably the most undervalued asset of my lifetime. Like buying BTC before it was $17K per BTC. Not joking. Silver is still less than a $20 FRN. For how much longer? Good question.
But who knows how long they will keep this afloat..I, for one, cant believe its been going on for 10 years and who knows what other filthy tricks they have up their sleeves..I’ll probably not even be around to see it happen and what good will my metals and provisions do me then? This whole thing is phucked and Ill bet they come out smelling like a rose on the other side, IF anything happens…
“Bond prices are going to collapse when yields begin to rise”
Someone help me with this. I pay a lot of attention to the Bond market. The author seems to have it backwards. What else does he have backwards?
Ive no money invested in the stock market bonds or anything else. I have a bucket full of change is the only precious metal . So I actually don’t care. Well the Social Security Ponzi Eagle pooped at midnite this morning. It is time to go to Aldis and get some canned goods. Grocery prices continue to rise so they are a ok investment.
So your birthday is from the 11th to the 20th of some month.
I’ve been considering applying for Social Security, weighing tax and medical insurance issues, so every thing I learn about SS is a plus.
The only thing you can do is look at it as something that won’t last forever. Nice bonus while it lasts.