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David A. Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President ... more

The Donald Nailed It: “We Are In A Big Fat Ugly Bubble”

Date: Tuesday, September 27, 2016 9:41 PM EDT

Most of the 90 minutes last night was a waste—with both candidates lobbing well-worn clichés, slogans and sound bites at the audience and each other.

But there was one brief moment that made it all worthwhile. That was when Donald Trump peeled the bark off the Fed’s phony recovery narrative and warned that the stupendous stock market bubble it has created will come crashing down the minute it stops pegging rates to the zero bound.

“……Typical politician. All talk, no action. Sounds good, doesn’t work. Never going to happen. Our country is suffering because people like Secretary Clinton have made such bad decisions in terms of our jobs and in terms of what’s going on.

Now, look, we have the worst revival of an economy since the Great Depression. And believe me: We’re in a bubble right now. And the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down.

We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that’s doing political things. This Janet Yellen of the Fed. The Fed is doing political — by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.

Trump thereby landed a direct hit on the false Wall Street/Washington postulate that the Fed has been the nation’s economic savior. And he also elicited an almost instant defense of its destructive, anti-capitalist regime of Bubble Finance—-albeit in the guise of a “fact check” by the New York Times’ Fed reporter, Benyamin Appelbaum.

To be sure, there were actually no “facts” to check in Trump’ statement. It was simply an entirely correct judgment that the utterly unnatural interest rates engineered by the Fed have fueled an egregious inflation of financial asset prices and that “some very bad things” are going to happen when the Fed’s market rigging operation is finally halted.

Still, and opinion or not, Appelbaum emitted a barrage of harrumphing and scolding, implying that Trump is some kind of yokel who does not understand the sacred independence of the Fed:

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Dan Richards 2 years ago Member's comment

I caught that too. It was likely completely missed by most of his supporters, but #Trump hit the nail on the head. It will be a scary day indeed.