David Stockman: America Now Lives Under A ‘Perverted Regime

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson, and it is September 26, 2016. Now, the 2016 US Presidential Race, just a little over a month away. And while it’s too early to call the race, it’s not too early to begin asking, “What’s going on here?” Now, as you know, I’ve been a huge critic of the role of the Federal Reserve and other central banks recently in blowing serial bubbles that have only enriched the few at the expense of the many, while enormously increasing the risk of a major financial accident, the likes of which the world has probably never before seen.

But nothing happens in a vacuum and the Fed’s policies have led to the most dramatic widening of both wealth and income gaps. And those are fueling, quite predictable and overdue, in my estimation, public resentment. And that is changing the political landscape. Now, as I said, nothing happens in a vacuum.

Back with us today to discuss all of this and much more is Mr. David Stockman, economic policymaker, politician, and financier. And as I’m sure you know, Mr. Stockman served as the Director of the Office of Management and Budget in the Reagan administration and was the youngest cabinet member of the 20^th century. He’s author of The Great Deformation: The Corruption of Capitalism in America, which came out in April, 2013. Now, that’s a blunt and very realistic and honest, sometimes scathing, examination of the various fiscal and policy blunders that have degraded our current and future hopes for prosperity. And he’s got a brand new book out entitled, Trumped: A Nation on the Brink of Ruin and How to Bring it Back. Welcome back to the program, David.

David Stockman: Very happy to be with you again, Chris. There’s a lot to talk about here. And I think the one thing I should clarify is that this election is enormously important but it’s not entirely about the candidates, per se, but about the fact that much of the country is beginning to recognize that we’ve been on the wrong path for a long time and we’re reaching a dead end. And that’s why, you know, on the cover of this new book, I have a map of America and the east and west coast are colored, shaded, and the vast area in between is in white. I call it Flyover America.

And part of the book is to try to explain the phenomena of the Trump campaign, which came out of nowhere, and why there seems to be such an unexpected ground swell of economically driven support. Of course, the elite media wants to blame it on racism and xenophobia and, you know, small-mindedness of one type or another. But I think the underlying driver here, the underlying alienation comes from an economic policy that has benefitted enormously the bicoastal elites and we go through that, a very small share of the population that lives off finance venture capital and the enormous expansion of the warfare state and welfare state in Washington. Versus the rest of America – call it the 90% to use a general term.

But the think that I try to demonstrate in the book is that since 1987 when Greenspan arrived at the Fed in this era of bubble finances I call it incepted, we basically have a bifurcated economy. The bottom 90% of the population has no more real net worth today if you use an honest inflation measure to deflate nominal values. It has no more net worth today than it did in 1987. That’s nearly 30 years of going nowhere. The top 1% has gained 300% in net worth, which the Forbes 400 to take the final clip on this, is 1,000% gain.

Now, that’s not market capitalism at work. That is a, as I called it, a deformed or mutant system of crony capitalism and finance-driven economic life coming right out of the central bank and that whole complex of unsound policy that has produced a result that is very unsustainable. Not only has there been no net worth gain as we lay out in the book but if you just go to the year 2000, real median household income – again, deflated with, I think, an accurate measure of the cost of living faced by most households – is down nearly 20% from where it was when Bill Clinton was shuffling out of the White House.

Another measure I use is breadwinner jobs. I have a system for tracking those that I report on my blog but it’s basically, you know, manufacturing, energy, mining, construction, the white collar professions, business management, and the core of the economy. There are no more breadwinner jobs today – there’s about 71-and-a-half million or half of the BLS count – that number is the same as it was – in fact, slightly lower – than in January 2001.

So there’s fundamental failures going on here. Shrinking living standards and real incomes – a failure of the economy to generate real jobs and growth, and a bubble finance system that is showering a tiny fraction of the population with huge gains – and they’re inflated gains, to be sure – in the value of financial assets.

So I think it is out of that kind of economic witches’ brew that the politics in America are being unsettled and roiled like we haven’t seen for a long time, if ever. And that’s why this election is so crucial because all of these forces, I think, are being brought to bear on the campaign as it unfolds in ways that we haven’t seen for a long time.

Chris Martenson:   Now, David, all of that is obviously fuel in this fire. And lest people at this point are thinking you’ve written a book in support of Trump, per se, I want to quote from your book here. You wrote, “Our purpose at this point, however, is to dispel any illusion that Donald Trump, the man and his platform, offers any semblance of a remedy. In the great scheme of history, the Donald’s role may be to merely disrupt and paralyze the status quo.” I’m really intrigued by that view. Because what you’re saying here to me, if I’ve heard this right, is that the status quo has been in place since the Greenspan Fed. It’s created this enormous structural and deformed landscape that we see where structural wealth disparity is just part of policies. These were active policies that people pursued with some aims that I guess made sense to them, and it’s hurting the bottom 90%. Can’t even call that Middle America because this is maybe even the bottom 95%. And this now has political ramifications.

So the question is, you know, do the people in power see that? I don’t get any sense that Hillary and her handlers and the press really understand what’s happened here. And second question, how could they not understand what’s happening here?

David Stockman:  Well, that’s the heart of the matter. And you know, the point they make about Hillary, she’s experienced, she’s been there, she’s informed – those are exactly the reasons why I hope she’s not elected. Because she basically is, in some sense, the class president of a failed generation that has been running policy in the wrong direction, war abroad, debt at home, bubble finance on Wall Street, a rogue central bank that has essentially taken over economic life for all practical purposes in this country. You know, there’s a generation that has put that in place and now they’re blind – I call it Imperial Washington – is blind to the consequences and the unsustainability and the unjustness and the failures of the policies that they’ve put in place.

So in that sense, I see Trump as a disruptor, that he hasn’t spent 30 years drinking the Kool-Aid in the Imperial City. He hasn’t learned all the reasons why you shouldn’t raise questions about what the Fed is doing. He hasn’t learned all the reasons why we still need to have NATO and its 300 bases around the world when the Cold War ended, you know, three decades ago.

So what I think is refreshing about Trump is that he lets loose of common sense observations every now and then that at least begin to crack the façade of the status quo and the Washington assumption and the elite media assumption that all of this is working just as intended. And we had a scare in 2008 but that’s behind us, it was once in 100 year flood, and we can move forward with a much more optimistic outlook. I think that is just terribly wrong, it’s just completely upside down. We’ve been drifting towards the wall, kicking the can, and there isn’t a lot of runway left in this whole scheme, which is, you know, on the verge of failure.

That’s why I call it the brink of ruin. The heart of my book really is not Trump per se, it’s the brink of ruin that’s been created by 30 years of, you know, mis-rule by the Washington and Wall Street elites. And Trump is a symptom that the political system is finally waking up to that fact and something has to give. Now, I think we’re going to have a – if he wins, we’re going to have a wild and wooly time for several years, if not his entire term, because there will be no – you know, there will be no consensus about anything. And there will be questions raised about everything from foreign policy to the independence of the Fed to, you know, energy and regulatory policy and the whole gamut.

So this, in my judgment, it will not be a confidence builder in the casino. They’re suddenly going to discover on Wall Street that Washington doesn’t have any firepower fiscally because we’re heading back to triple digit deficits. And the Fed and the other central banks are out of dry powder so there is no rescue brigade when we get another shock in the financial markets. This time, I think we’re going to have a long-lasting correction that will not be instantly reversed as it was after dot-com and as it was in March 2009 when they launched into this crazy period of ZIRP and QE.

So you know, we’re heading into a totally different landscape that is going to really shock the financial system, even as the political system undergoes this unprecedented uncertainty that lies ahead in this election.

Chris Martenson:  Now, David, you’ve said quite a lot in there. And the pieces that really jump out at me were the words “unsustainable.” Obviously, you know, we’ve tried to print our way to prosperity and this is a wholly unsustainable system. And the core of this is that you mentioned that, you know, that the rallying cry such as it is for Hillary is that she’s the most qualified and that the Donald then is unqualified. But this is precisely why so many people are gravitating to the Donald, because he’s unqualified. Because to be qualified means that you support the ideas of this increasingly interventionist Federal Reserve that has now assumed for itself taking over all facets of our economic lives. And most people in the press distinctly seem to be unaware of this idea that money printing is a zero sum game. So you print money and look at all these people getting rich. And we point to that and it’s the American dream and oh, but wait, they’re all Forbes 400 people getting really stupid rich. Not understanding that they didn’t get rich because they were smart and intelligent and built something, they got rich because the Fed handed that to them. The second part of that question is who did they take it from? The flyover states, the regular people are being screwed, if I can be blunt about this, and we have been for a long time. That’s finally coming up into the forefront. Of course this has a political dimension. So when Yellen’s out there on her FOMC statement saying, “Oh, no, we’re very much not political.” Of course you’re political. How dare you say that your policies haven’t exacerbated the wealth gap. It’s insulting at this point, and I think that’s that my personal ire but I think people are sharing that.

David Stockman:  No, I agree with that, and that’s the reaction I had when she made that statement over and over that we’re not political. I mean, this Fed is the most ideological Fed that we’ve had in history since 1913. They’re died in the wool Keynesian interventionists. They have a view on the world that government stands at the center, that capitalism is some kind of, you know, invalid that is constantly getting sick or stumbling and heading towards recession or depression without the ministrations of the state whether it’s fiscal stimulus or monetary stimulus or, you know, pegging the interest rates and managing the yield curve and backing up the stock market. Everything else they do, that is a profoundly political point of view. And even worse, it’s un-democratic because at least if you believe those things as a fiscal Keynesian as they did back in the 60s and 70s when I was starting out in this, you had to persuade people who had been elected in the 50 states of America that this was going to help and that running up the debt was nothing to worry about, etc.

But now that the venue has changed – and this is what I quote Greenspan, you know, for he should be everlastingly faulted for this – but he essentially picked up the Keynesian brief and trotted it over to the Echols Building and essentially installed Keynesian activist interventionist policy in an institution that’s unelected, unresponsive to the electorate, and that becomes an ingrown power and center of group thing that, you know, was unimaginable even in 1987 when he stumbled on this path in the wake of the October crash.

So that, I think, is the larger point. And at least Trump has begun to let loose a few stray balls in the direction of the Fed. You know, he said this is a false market, this is an artificial interest rate. Yellen ought to be ashamed of herself. Yeah, these are just little sound bites, they’re probably no more than that, or slogans. But if you think about it, what mainstream candidate or President or, you know, advisor to a President has said one word, even mild criticism, about the Fed for the last 30 years? They haven’t. And so at least maybe we’re opening up a debate, and I hope he takes it further. The savers in America are getting killed. The retirees are getting killed. As I have a little section in my book, I point out that if you were a steel worker and had a pretty good wage and had sweated out a lifetime in the mill and were thrifty and saved 250,000 in cash over a lifetime, which would be hard to do, very high savings rate. Nevertheless, today under the Fed’s pegged interest rates, if you want to keep your retirement in a liquid bank account, which a lot of older people do, you’re earning one cappuccino worth – Starbucks cappuccino worth of interest a day – for a lifetime of work, thrift, and savings. Now that is beyond unjust. It’s almost cruel and unusual punishment, you know, in the Constitutional sense of the word. So that’s the first point.

The other point – big point I have in my book – is this idea of 2% inflation targeting is totally novel. It didn’t even exist in the 1980s when we were trying to turn around the country in the Reagan administration. I doubt if it existed even seriously in the 1990s. Inflation targeting was the brain child of Bernanke and a few other, you know, far out Keynesians who stumbled into the right positions, introduced it into policy after the turn of the century, and made it formal in 2012. But if you think about 2% inflation as a systematic matter of policy, that means that you’re targeting wagers who have to compete with a China price if you’re in a goods supplying sector of the economy, or the India price if more and more you’re in the service sectors of the economy where you do have the ability through technology communications to move jobs, you know, like data processing, call centers, and all the rest of it offshore.

So what they’re failing to realize is that 2% inflation is not a virtue and it has no relationship to economic growth or the other objectives they talk about. But it’s actually having a devastating negative impact on – again, as I call it, Flyover America, and the jobs in the lower half – let’s say middle to lower half – of the job spectrum that are in harm’s way due to offshoring both on the service and the goods side.

So you know, the idea you get from listening to Bernanke or Yellen or any of the others, as well, you know, 2% inflation, that’s the policy, everybody knows what it is. We march forward in lock step together. What counts is real as we see it, adjusted for inflation with our deflators. And so let’s, you know, move along, there’s nothing here to see. I think that profoundly wrong, destructive, and dangerous. There isn’t lock step 2% for everybody. Again, people at the top of the wage scale are in jobs like good government jobs or finance that aren’t going to be offshore and so they keep up with or stay ahead of inflation. Those that are in the global labor market get – either jobs get offshored and they lose their jobs or they’re forced to take wages that don’t keep up with inflation and they get further and further behind.

So the two evils that I’ve gone after in the book are one; 2% inflation targeting, which I think is killing the jobs market on Main Street and real living standards, and the 0% interest rate targeting after 96 months – that’s where we’ll be in December – you have to call it the permanent policy. Those two things are just devastating in their impact and profoundly anti-democratic. Because if you had put to a vote in Congress 0% interest rates for the next eight years, it wouldn’t have gotten, you know, a corporal’s guard worth of votes because the people impacted – pensioners and savers and middle class producers – would’ve responded overwhelmingly in a negative way.

The same thing with inflation targeting. I don’t think, you know, you would have a corporal’s guard of support in the Congress for inflation targeting if it was explained that the impact is not, you know, uniform but it’s highly inequitable and destructive to the people who can least deal with it.

Chris Martenson:  Now let me add potentially a third evil to that, which is targeting 2% inflation while mis-recording and mis-reporting it. I’m wondering if you tackle that third one at all in here, which is the idea that our government statistics – which we’ve been treated to a bevy of them lately, which adds zero credibility to me. The sharpest rise in median income in 20 years. We just heard that more people than ever, millions have been lifted out of poverty. And the article failed to note something you noted in your book, which was that over the past 16 years, persons in households receiving means tested benefits has more than doubled from 50,000,000 to 110,000,000. I think that had a little lifting effect.

But inflation itself, come on. If you’re living in a major metropolitan area, you’ve been renting and you have any exposure at all to prescription drugs, you are not experiencing 2% CPI inflation, you’re experiencing, I don’t know, 8% or more. And it’s really, really damaging.

David Stockman:   Yes, exactly right. In fact, we addressed that front and center. We actually created something – and I’ll use it in my blog, too, from time to time – called a Flyover CPI. And what we essentially did was take the four horsemen of inflation, which is food, energy, medical, and housing. We re-weighted them to 66% of this Flyover CPI versus 55, recognizing that that’s what the overwhelming share of household paychecks and budgets go to. We then said, “Let’s get an accurate medical deflator,” and so we’ve used a private one that is widely regarded, the Milliman Index. And then we said for housing, for crying out loud, you can’t use this owner equivalent interest, which you know, they survey a few thousand people and say, “If you’re going to rent your castle, what do you think the rent rate would be and how does that compare to last month?” It’s ridiculous.

So we took as a measure of housing expense, we took the asking rent index produced both by the BLS itself, as well as several private ones, and came up with a better measure of housing expense. Now, when you do that, the inflation rate year in and year out since 1987 has been 3.1% per annum. It hasn’t slowed down very much at all, even as we’ve gone through this commodity deflation in the last year or two. Since the year 2000, it’s up 3.1%. If we look even in the last year, it was up nearly 2% and that’s with the big one-time gain from the oil collapse and certain other commodities.

So what we then do throughout the book is whenever we’re talking about inflation adjusted values whether it’s median income or household net worth and lots of other things we can look at, we deflate those nominal values with our Flyover CPI and I think we present a profound truth. Now, let me just give two examples of this. In one chart, we basically show the change from the year 2000 between the Flyover CPI constructed as I’ve described it, and the Fed’s favorite, what I call a sawed-off measuring stick. You know, the PCE deflator less food and energy. If anyone got by without food and energy since the year 2000, more power to them. It would be some type of miracle.

But the point is if you compare those two, what we find is that the Fed’s measuring stick is up less than 40% since the turn of the – or 30% since the turn of the century. The CPI – Flyover CPI as we’ve constructed it – is up 70%. Now, this is profound because it says there’s a 40% gap just in the last 16 years between what our policymakers in the Echols Building think is going on in America in terms of inflation and real values, and what is actually being experienced out on Main Street or in Flyover America. And if they’re wrong by 40%, they’re wrong directionally on everything that’s happened. So even with last week’s phony numbers – and we can address that later on the surprising, “surprising gain and medial real income in 2015” – even with that, what we show is the real median income is down 17% since the year 2000 if you use the Flyover CPI versus a couple of percent if you use the regular BLS measures.

Chris Martenson:   Wow.

David Stockman:  There is a huge difference, obviously, between shrinking living standards for the median households – and this is, you know, out of the 119,000,000 households – the difference between kind of treading water, which is bad enough and that’s what the regular BLS deflator shows – and that going backwards by 17%, you know, that’s fundamental. And those are totally different economic circumstances and they have dramatically different economic implications – or political implications, as well.

So when people say we’re being left behind, you know, we’re not going to take it anymore, it’s not based on, you know, in my view, simply cultural prejudices or, you know, bad motivations like xenophobia and racism and all the rest that is charged by the elite media. I think it’s an indication, a signal of economic distress that is real and that policymakers in the Imperial City are oblivious to because they believe all the data that comes out of the statistical mills.

Now, the worst one at this, frankly – she’s so naïve it’s beyond belief – is the Chairman of the Fed, Janet Yellen. She seems to believe that every one of these – all this data that comes out of the BLS and other statistical mills is accurate to the decimal point and that even if the, you know, core CPI was food and energy is 1.6%, which is damn near 2%, they still have room to go to hit their target. You know, this is crazy. You can’t measure anything that precisely. There’s a whole problem that some people are aware of about what the general price level is anyway. But you know, we have a central bank being run by paint-by-the-numbers mechanical fanatics who, you know, continue to sit on the money market rate, which is the heart, is the core price in all of capitalism and all of financial markets. Because from the money market, everything else more or less eventually gets priced – the yield curve, equities, converts, everything else.

But the point is they’re literally, you know, focused on decimal point differences that aren’t even valid measures. And in the process, what they’re doing is just continuing to distort dramatically pricing in the financial market. So I mean, as we said before, if you get to December, which we will without another change in rates, that means roughly 96 months, the Fed had the economy latched to the zero bound and if there’s anything we know, and that is zero cost overnight money is the mother’s milk of speculation like no other force in the economic world. And so they have unleashed speculation that they don’t even begin to understand how it’s unfolded and worked its way into the warp and woof, really, of the economy. And what’s going to happen is when we finally hit some kind of trip wire or catalyst or black swan, whatever you want to call it, there’s going to be stuff coming out of the woodwork everywhere blowing up. And they’re going to say, “Well, you know, this is one time. We didn’t know it was there.” And of course they don’t know it’s there because there are millions of people every day being given a price signal that you can borrow money overnight and put it on an options position, you can go to your Wall Street prime broker and they’ll come up with all kinds of customized spread trades and financial – structured finance trades that, you know, are not visible to anybody but certainly not the people sitting in the Echols Building saying that, you know, valuations are normal, we don’t see any bubbles around, and there’s nothing to worry about.

This is, you know, it’s damn near criminal what they’re doing and when this blows – and I think the great, you know, opening may occur if Trump is elected – is that when the market blows this time, if it happens during a Trump White House, there is going to be a huge investigation, a huge political recrimination against the Fed. The Republicans will finally be unshackled because this is a Fed run by Democrats and Keynesians and people have made it clear that, you know, they want to see a continuation of the status quo.

So all of this is scary because who knows how it unfolds and unwinds. But on the other hand, in some longer term way, it’s encouraging because maybe, you know, this fantasyland that we’re in is, you know, coming to an end and we’re going to get some open and honest, you know, discovery of the folly that has been underway for so many years now.

Chris Martenson:  Well, David, I love the way you’ve approached this in your book, Trumped: A Nation on the Brink of Ruin and How to Bring it Back. Because what you’ve done here, particularly in this last comment, is you said, “Look. Here’s the cognitive dissonance that people are facing in this political cycle.” There are people – the majority of people have faced a 17% erosion since 2000 in their actual living standards. Their purchasing power has shrunk, they’ve felt it, and these are even the people who kept their jobs, not the ones who even lost their job and had to take a lower paying job. They got a double whammy. So there’s all these people who are feeling this pressure and this pain, and the media takes all of that and says, “Oh, if you don’t want to continue that, you must be a racist,” right?

David Stockman:  Right.

Chris Martenson: And that’s just like there’s such a terrible gap between the reality people are facing, which is we need to start doing things differently. And being called a racist, if that’s what you want to do, that maybe Trump isn’t like the perfect standard bearer for this but he’s exposed it. And so here we are.

Now, here’s the question that’s really important. I have to ask it while we have time. I personally know plenty of very financially savvy individuals who are worried silly about the coming financial crash. And the more experienced they are, they more worried they seem to be. So leaving them aside, what’s your advice? What’s your advice for ordinary people who are spending their time coping with all this increasing complexity and the diminishing purchase power, and who maybe aren’t spending as much time as they should be learning about the true risks they face? Maybe they can’t, they don’t have time. But if you get to talk to them, what do you say to them?

David Stockman:  Well, that’s a very profound and also hard question. Because the whole financial system has been so distorted and deformed that it’s really not safe, it’s not stable. And so therefore, you know, the idea that you can get out of harm’s way by maybe buying some utility stocks because, you know, they’ll hold up better when a crash comes, or getting your portfolio mix more towards fixed income and less towards equity. You know, those are the traditional kinds of advice, and I think none of it is suitable to the uncharted waters we’re in today. The bond market is in a bigger bubble than the stock market. The stock market is in a giant bubble and it’s funded all kinds of, you know, speculation, directly and indirectly, that is spread throughout the financial system whether it’s junk bonds or, as I said, structured finance of every kind.

So the best advice to people is if you’re in the stock market, get out completely. If you’re in any kind of duration based fixed income, get out. Because you can’t have 13 trillion of government debt trading at sub-zero rates in the world and not expect that one of these days there’s going to be a huge implosion of that market. And when the sovereign debt markets start to crater, they’re going to take everything with them – corporation, you know, investment grade corporates, high yield, real estate, securitized real estate, and everything else.

So I think you have to get out of those. I think there will – the coming crisis will be a repudiation of Keynesian central banking and that means that gold will have a new era to shine. I think it will be seen as the default asset that people will believe in once the central banks have failed and become visibly discredited and under political attack. And that’s, you know, it’s another whole topic we could talk about. It’s beginning to happen both here and in Europe and in Japan and elsewhere.

So gold will, you know, have a new lease on life, I think, and could rise to incredible heights. It’s one place where you can put assets. But on the other hand, I don’t think there’s going to be any hyper inflationary blow-off so cash, at the end of the day, is going to be a very valuable commodity. Because when we go through the Big Reset, as I call it, and bond prices start becoming real, and real estate cap rates go back up to 8 or 9 rather than 3 or 4 where they are today, especially in, you know, the major urban areas; then, there are going to be great opportunities to re-enter these markets at much more reasonable, sustainable, income-based values.

So right now, it’s a threefold advice, I think. Get out of stocks, get out of bonds, get into gold, and keep your powder dry because, you know, an opportunity after the crisis is going to come of really incredible proportions.

Chris Martenson:  Great advice. I support all of that and thank you for sharing that with us. We’ve been talking to David Stockman, author of the new book, Trumped: A Nation on the Brink of Ruin and How to Bring it Back. David, we’ve hardly touched on, obviously, a portion of what’s in there. And as I know you and your writing, it’s going to be fantastically rich for people who care about the details. They matter. The details matter. And so tell people how they can get your book, when it’s available, and…

David Stockman:  Well, it’s available – yeah, Chris, thank you – it’s available on Amazon now as an e-book. The printed version, we’re rushing it to press but will be available in a week or two. It can be preordered now.

The one thing I wanted to say is besides defining this whole crisis in a historical like 30-year context, I do lay out a direction forward. And I have ten deals that, you know, Donald Trump fancies himself the greatest dealmaker of modern times. And what I say in the book is, “Okay, if that’s kind of the vocabulary you like, if that’s directionally how you can formulate how you would govern, here are ten deals. A peace deal, a jobs deal, a sound money deal, a Glass-Steagall deal, a federalist deal, a liberty deal, a regulatory deal. I lay them all out and I think that’s another part of the book that some readers might find very interesting.

Chris Martenson:  Well, you do mention in the subtitle that there is a way out of this, potentially. And of course, we’d have to start doing things very differently from the last 30 years’ trajectory. Do you believe, David, that if we did make these new deals – may be an unfortunate way to phrase that – if we did come forward with some new ways of putting these forward, that there is – that we really could avoid some of the pain? Or do we just have that pain before us and we’re going to have to make deals to make the best of it?

David Stockman:  Well, I think the pain is going to happen because the system is so inertia-ridden right now and is so dominated by, again, the Washington-Wall Street elites that until they’re kind of blown out of position and discredited in a major, dramatic, and disruptive way; I don’t think policy’s going to change. But once that opening is provided, then maybe people will say, “Yeah, maybe capitalism will work without a central bank that is basically running – turning, you know, the financial markets into a casino.” Maybe they’ll say, “Hey, wait a minute. The Cold War ended 30 years ago. Maybe we don’t need to have a confrontation with Russia. Maybe Trump should make a deal with Putin. Maybe we could actually disband NATO, maybe we could reduce the defense budget by a couple hundred billion dollars, maybe we could get out of the Middle East and let the local Shia and Sunni fight it out themselves.

So the point is if we have a big enough upheaval and the status quo comes under, you know, fundamental assault, then there might be an opening for some of these new directions. But I don’t think it’s anything that the system – if you want to use that word – is going to voluntarily embrace until it’s driven from power and you know, a big political disruption occurs. That’s essentially what Trump is. He’s a large political disruption. There are some real risks to it, obviously, but nothing, as I said in the book, compared to the status quo. I said I – you know, I lay out in some detail areas where I disagree profoundly with Trump, including all his, you know, all of his shrill rhetoric about crime being out of control, which is really not true, and I lay that out. That there are terrorists lurking in every town and village and city in America, which is not true. You’d have a much better chance of being killed by lightning than you do by a terrorist attack.

So I lay all this out. But my point is nothing could be worse than Hillary Clinton and another four years of the same thing that we’ve been doing at this late stage of the game. Because if you try it at this late stage of the game, you’re going to end up in a war with Russia, which is crazy and unnecessary. You’re going to end up with a total breakdown of the monetary system if the Fed goes into QE five, six, whatever it might be. You’re going to end up with a bankrupt country if you try huge fiscal stimulus in order to reverse a recession that’s clearly overdue and coming down the road, you know, visibly as we speak.

So you know, that’s the bottom line. We need a disruption and there is nothing worse than the status quo. That’s what’s ruined us. And if we get the disruption, then here are ten fundamental ideas to, you know, reset the whole governance process to really restore small government and vigorous capitalist prosperity.

Chris Martenson:  David, you say disruption, I say intervention for a punch-drunk empire that seems to – doesn’t know when to say no. And as we’re recording this, the news coming out of Syria regarding the United States and NATO poking at Russia even more seriously. We’re in active, open, what seems to be military conflict at this point. This is, of course, extremely worrying and I, for one, have no interest in seeing my nation go to war with Russia over reasons I can’t articulate except we don’t like it when people don’t do exactly what we say in the way we say it, no matter how bad that is for their standpoint.

So yes, could we find somebody who could actually negotiate with the world rather than bully the world? Obviously, time to begin that process long ago. So any continuation of the status quo in my mind, I agree with you completely, is just getting us two or three more rungs up an already dangerous high stepladder. The fall will be really potentially fatal if we keep up that path.

So David…

David Stockman:  I want to say, Chris, just in completing this thought here, one-third of the book, the last one-third is addressed to the international arena and the question of what I’d call imperial policy and all of the disasters that it has generated around the world, especially since 1991 when the Cold War ended and we could’ve dismantled the whole Cold War machine but they found new missions. And you know, half of what’s going on in the world today is simply mission justification and it’s very dangerous and it’s even bringing this to flash points in places like Syria or Eastern Ukraine, the Donbass, which are utterly unrelated to the security of any American in any city or town from coast to coast.

Chris Martenson: Absolutely, yeah, there’s so much more to discuss there, as well. So listen, David, this has been a fantastic conversation. I hope to continue it at some point in time and we’re out of time right now. So how can people follow you more closely? They know how to find your book, we’ll provide a link to that, of course, at the bottom of this podcast. But I want people to know about you and your website. And of course, you have a new service starting up, as well.

David Stockman:  Yeah, the site is called David Stockman’s Contra Corner. You can find that just by Googling it today. In a couple of weeks, we’re going to be converting that to a more thorough daily briefing commentary from me and some others on key issues in politics, finance, Wall Street, China, Japan, and everything in between. And it will be a subscription service but people can Google my existing site, David Stockman’s Contra Corner, and find out how to sign up.

Chris Martenson:  Well, fantastic. David, thank you so much for your time today. Best of luck with the new book. And people, you really should read it. David, of course, is going to have some of the best, most condensed and elegantly stated information in there. That book is Trumped: A Nation on the Brink of Ruin and How to Bring it Back. David, thank you so much.

David Stockman: Very good to be with you. Thank you.