Stockman: Stop The Real Steal!

Authored by David Stockman via,

The Donald would almost surely have bankrupted the nation by 2024, perhaps only a tad later than is likely to be the case under Sleepy Joe and/or the Kamala Harris Regency.

But, after this week’s certification, the question of which claimant to the Oval Office will do the most damage in the next four years is now moot.

The cardinal matter is that the Washington-based Democrat party is now intellectually and politically bankrupt. It has absolutely nothing to offer the American electorate except Woke virtue-signaling and collectivist rhetoric about the lie that America needs a unifier and that we are all in this together against a handful of billionaires, except for (most of) those who support the Dem agenda.

Consequently, the Dems real national agenda is brazenly this: Everything For More Democrat Votes. Period.

Their self-righteously proclaimed positions on open immigration, more beneficent welfare programs, the $15 minimum wage, Federal legislation against so-called “voter suppression”, statehood for DC and Puerto Rico, prison reform, Federal subventions to the nation’s decaying big cities etc. are all designed to round up more Dem votes and thereby keep today’s mendacious class of Dem pols in power.

For crying out loud, these people are so craven that they speciously claim that requiring voters to present an ID is burdensome and discriminatory. In fact, if people are too incompetent to get an ID, their failure to vote is their own damn fault and leaves American democracy no worse for the wear.

Accordingly, there could be nothing more untoward than GOP sanctioning of Washington control of the elections for Federal office. That would open the floodgates to legislative artifice and lawfare maneuver in the courts designed to make voter harvesting of one kind or another easier and more fruitful for the Dem apparatus in the socially and economically dispossessed precincts of the nation.

Meanwhile, what was actually being stolen in the recent past is not a few hundred-thousand votes in a handful of swing states that are the object of the futile Trumpite challenge.

At the end of the day, those legitimately dubious votes don’t begin to ixnay the election’s larger verdict: Namely, that Trump was such a lousy, self-obsessed candidate and the GOP’s agenda was so “me too” Big government that Sleepy Joe Biden, who barely left his basement bunker, massively won the popular vote by 81.28 million to 74.22 million. Even street-fighter Sidney Powell has not claimed voter fraud of anything close to that huge 7.0 million popular vote margin, the second largest plurality in American history.

So what matters now is whether control of the GOP can be wrested from the careerist pols and neocon empire advocates who dominate the so-called conservative party today. That’s because what has actually been stolen in recent months and years is trillions of dollars from future taxpayers to fund that bipartisan fiscal bacchanalia fostered by the Trumpite-GOP; and also the tens of trillions of windfall gains to the top 1.0% and 0.1% that have been pilfered from the main street economy owing to the Fed’s hideously unhinged money-pumping.

Consequently, unless the likes of Rand Paul can mobilize a new coalition of liberty-seeking young people, antiwar believers of all generations and adult citizens who can be made to see that capitalist prosperity and future opportunities for individual betterment are being quashed by a rogue central bank, the Real Steal will go on until it ends in fiscal and economic catastrophe.

In that respect, we find it telling that noisy Trumpites like Senator Hawley, who has already effectively thrown his hat in the ring for 2024, don’t have a clue about the Real Steal. For crying out loud, this brash populist know-nothing joined forces with Bernie Sanders in pushing the $2,000 helicopter drop of free stuff to everyone, and is so blindly and rabidly anti-Chinese that the neocon war machine could have ordered him from central casting.

By contrast, what Rand Paul and a few others understand, it that the motor force of the Real Steal lies in the upwardly soaring purple line in the chart below. That’s the Fed’s out-of-control balance sheet, which has grown by 10X just in the last 18 years.

The Fed’s Out-of-Control Balance Sheet, 2003-2021

Simply stated, there is no possible world in which sound fiscal governance and productive financial markets can function when the central bank is massively and systematically poisoning the system with falsified asset prices and overpowering inducements for debt accumulation and speculation in the public and private sectors alike.

As we have frequently noted, this central bank enabled distortion of fiscal and financial choice has been building for decades, ever since Alan Greenspan panicked during the overdue and healthy purge of the stock market on Black Monday during October 1987.

But by now the unproductive explosion of debt in all sectors of the U.S. economy – government, corporate, household and financial – has reached epic proportions. Since Q2 1987–

  • Total debt is up by 7.6X, from $10.7 trillion to $81.8 trillion;

  • Nominal GDP is up by only 4.4X, from $4.8 trillion to $21.1 trillion;

  • Consequently, the nation’s total leverage ratio has exploded from an already worrisome 2.22X in 1987 to an off-the-charts 3.88X as of Q3 2020.

This is the heart of the Real Steal. Owing to rotten money, the nation has gone mad burying itself in debt – stealing from the future in order to live high on the hog today.

Total Debt Vs. GDP, 1987-2020

The problem is that under the baleful regime of Keynesian central banking, like in Orwell’s Animal Farm, all of today’s high living hogs are not treated equal. On the margin, the overwhelming impact of runaway public and private debt has been the fantastic inflation of financial assets.

As the estimable Lance Roberts showed this morning, stock prices and earnings grew pretty much in tandem until 1987, as would be inherently the case under a sound money regime. Since then, however, the Fed’s uncontrolled money-printing has caused the mother of all financial distortions. To wit, since mid-1987 –

  • S&P 500 earnings are up by 6X;

  • The S&P 500 price index is up by 16X;

  • And the 1% have been laughing all the way to the bank.

So, yes, there is a reason that Sleepy Joe won.

The GOP has not had enough sense to understand that the Fed is the root of today’s economic failure in Flyover America – so the voters signed up for an old dufus and 47-year pol who still had enough wits about him to tilt at the baleful consequences of the nation’s rogue central bank.

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Reprinted with permission from David Stockman’s Contra Corner.

Former Congressman David A. Stockman was Reagan’s OMB director, which he wrote about in his best-selling book, The Triumph of Politics. His latest books are The Great Deformation: The Corruption of Capitalism in America and Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA. He’s the editor and publisher of the new David Stockman’s Contra Corner. He was an original partner in the Blackstone Group, and reads LRC the first thing every morning.