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Markets have talked about a bubble machine and a serial one at that -- destroyed honest price discovery and our markets that is how our next guest describes the Federal Reserve.
David Stockman is a former Reagan white house budget director housing Altman and crisis.
And -- soon.
I don't think it's gonna end well the Fed is painted itself into a corner it's violated every rule of sound money.
The never existed all interest rates are manipulated the yield curve is artificial.
It's created by -- 85 billion of buying every month by the Fed.
The stock market essentially does not discount future earnings -- simply trades the juice.
And the word clouds.
And the latest him or maneuvered coming out of the twelve members of the Politburo who are basically running this country you cannot run.
A financial system with trillions of dollars worth of trading value and capitalized value.
On the basis of twelve people in fact one person the chairman emitting word clouds.
Like he did yesterday afternoon twenty minutes before the close to create.
-- and rally.
Take telling have preferred reporter from the Wall Street Journal drive but you misunderstand me fills this address this is so different from what any central banker ever thought.
Twenty years ago wouldn't you think Volcker would have done this.
The veterans are -- that this reserve is only truly been independent since 1951.
Right with it didn't go exactly -- the treasury fed -- because of the Treasury Department told the Fed.
During the World War II start and what 1942 said you have to fix interest rates we need to keep interest rates low so this is gone -- before in a different -- -- have yeah.
I address that in my book by the -- and that was an act contingency during the war in which.
There was nothing to -- eight people save most of their income they put it into government bonds the government decided to fix the interest rates.
And then maintain -- after the war women shouldn't but the point is William McChesney Martin became the Fed Chairman.
After the 51 accord he would have dreamed.
That kind of monkey business this is Mickey Mouse stuff but coming from the chairman of the Fed did more modern times the defenders of the Federal Reserve will say since the crisis in 2000 native -- fed had not been as aggressive that's it was.
Things would have been a lot worse the -- of fed created the crisis we never housing bubble.
Now first of all we had the dot com bubble that was clearly fueled by -- that you love for cash in my 1990s.
And then after the dotcom bubble was a warning sign for the Fed to back off.
Let interest rates be set by the market not many -- what about -- so it well but the point is you then inflated housing bubble you inflated credit bubble you had a great party in American at all crash be happy if we got rid of it.
I think the central I think we ought to go back to the original mission that was signed by Carter glass in 1913 when they passed the law.
The Fed was a bakers -- it was a discount window it never intervened in the open market committee couldn't buy government bonds.
It simply discounted good collateral that was bought.
Brought by the bank -- And -- go to hell -- a -- we didn't go to hell when the Fed was doing the very same thing in the forties.
The very same thing in the forties was a different world it was still a world of war it wasn't a function in the economy like we have today and it wasn't sustainable even -- And that's why it ended in 1951.
If you look at the history try but since then and in the world economy we live in today where there's vast capital flows.
By the nano second the idea that a fad is going to be setting the price of everything in financial markets.
Is dangerous it's reckless and it's leading to the greatest bubble yet we have a -- bond market worse and the problem is -- in the market loses confidence for whatever reason a Black Swan where the dot com bust in April 2000.
Or delete none of them which wasn't expected they lose control of this bubble there will be massive.
Panic selling and everything will go to.
-- that essentially answer the question about 2000 into the 2013 but -- -- -- -- work thank you Virginia video you have to have.
-- it's always great to have your point again thanks for coming on negative in the stock OK stocks now.
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