All right, y'all, welcome to the Scott Horton Show.
I am the Director of the Libertarian Institute, Editorial Director of Antiwar.com, author of the book Fool's Errand, Time to End the War in Afghanistan, and I've recorded more than 5,000 interviews going back to 2003, all of which are available at scotthorton.org.
You can also sign up for the podcast feed.
The full archive is also available at youtube.com slash scotthorton show.
All right, you guys, introducing David Stockman, former congressman, former advisor to Ronald Reagan, and author of The Great Deformation, the Corruption of Capitalism in America, Peak Trump, the Undrainable Swamp and the Fantasy of MAGA, and Trumped, a Nation on the Brink of Ruin and How to Bring It Back.
And he writes at the Contra Corner, David Stockman's Contra Corner.
That's davidstockmanscontracorner.com.
Welcome back to the show.
How you doing?
Very good.
I think I cited those subtitles in my book.
I think they're kind of relevant at the moment.
I think so.
Yeah.
On the brink.
That was a few weeks ago.
And now we've gone over it.
Huh?
Yeah, I think so.
This is a real calamity.
We have a serious but manageable and moderate public health problem that could easily be managed and extinguished, I think, in a matter of months that's being turned into an absolute calamity by Washington.
In a sense, the big government people and the statists and the Keynesians and the interventionists and the money printers and all the rest of them think they died and gone to heaven.
They've never had an opportunity like this.
Look what the Fed has been doing in the last week, what it did yesterday.
Congress is on the verge of just writing a check to everybody in America.
I call it the everything bailout.
$2 trillion in legislation that no one has even considered or thought about or assessed or analyzed, just throwing money at the economy.
That's damn near 10 percent of GDP.
I mean, this is, you know, you talk about hysteria, the hysteria in America today is not out on the streets of New York City where I live or any other town.
It's in the hallways and chambers of Washington, the Congress and the agencies.
They're really going hysterical and they're going to break a lot of furniture before this is over.
And it's almost impossible to imagine where it's going, but it's a huge setback for any hope we had for personal liberty, free markets, fiscal rectitude, and sound money.
I mean, it's all going out the door by the minute, by the hour.
This is a nightmare that's almost impossible to imagine.
I mean, we were all around in 2008 and 2009 when, you know, the hysteria erupted then, but that was a Sunday school picnic compared to what's going on now.
Did I read you right that you said that they have monetized, that is the Federal Reserve with new money, has bought $1 trillion worth of debt in the last week already?
Yeah.
Well, in the last 10 days, give them a little bit more credit.
Last week they bought, I think, $375 billion.
This week they are buying $125 billion worth of government bonds and GSE, Guaranteed Housing Securities, every single day.
They're buying so much that they have to schedule it by the hour in terms of the different securities and maturities that they're buying.
This is, this is crazy.
This is madness.
Well, now, let's stop for just a second there, Dave.
I want to make sure that people understand, you know, this is the anti-war show, and I want the lefties to hear that here is a capitalist who hates crony capitalism and what's going on here more than any lefty, and they can hear it in your voice.
Why is a free market guy like you begrudge a bunch of capitalists for making a bunch of money here?
Well, if they were making it honestly on the free market, I would say more power to them.
If they had turned the dogs of K Street loose, the racketeers, the lobbyists of K Street loose on this giant bailout pork barrel that's emerging, I would, you know, denounce them until the end of the day, and, you know, that's what's happening right now.
I've heard this cat, and boy, it really got me hot under the collar to tell you the truth this morning on CNBC, the CEO of Boeing kind of giving an argument why he should get a huge bailout from the taxpayers of the United States, from some poor guy out in Milwaukee who's driving a bus, and suddenly, you know, he's not even getting his paycheck because of all this.
These cats spent $100 billion buying back stock in order to goose their stock price, in order to fatten, you know, their stock options, and depleted their balance sheet, made all kinds of business mistakes with this MAX airplane and all the rest of it, and now they've got the gall to come in, and this guy said, you know, we wouldn't be asking for this if the markets were open to borrow.
That is so much baloney.
What he is saying is, if the markets were open to lend us money at 2 percent, I would go borrow it.
But if they're not, and I had to pay an honest price, given the risk that Boeing has now and the massive cash burn that they have underway because, you know, their customers are shut down around the world and they've made so many management mistakes, you know, if he had to pay an honest price, it might be a yield of 5 percent or 8 percent or 10 percent, but I say, who the hell cares?
That's what capitalism is about, and if you undermine your balance sheet, if you erode confidence in the financial markets, then you need capital, you need cash, you pay the price, or if worse comes to worse, file for Chapter 11.
You know, they would keep running Boeing, even if those cats in the corporate headquarters in Chicago, you know, had to be put out on the street.
You know, the court-appointed trustees would run the company, and it really wouldn't be much different.
So I only pick on Boeing because it's the most outrageous, egregious example.
And where are the lefties that you speak of?
Where are the liberals?
Where are the Democrats?
I just heard Nancy Pelosi on CNBC saying, well, she's almost coming together with this Mnuchin secretary of treasury.
You know, this guy shouldn't be teaching 10th grade geometry or 8th grade geography.
I mean, he's a totally incompetent boob, and he's now negotiating away the entire financial future of the United States, handing it out by $100 billion here, $100 billion there.
They're going to bail out the airlines.
Those fools did the same thing, bought their stock back, the big four, bought back $50 billion over the last five or six years.
Now they want a $50 billion bailout.
The cruise lines have no balance sheet, and so therefore they were able to make a lot of money and boost their stock price, and, you know, everybody got rich and happy.
But why didn't they have cash and resilience on their balance sheet?
Yeah, why didn't they?
Let me ask you that.
I mean, we're talking about, OK, some really incompetent CEOs here and there.
That makes sense.
But what explains this cluster of errors where you have the boards of directors of, sounds like all of the biggest and most powerful companies in America, decided that they didn't need any savings, that they would spend all their money on stock buybacks and these kinds of things instead of preparing for a rainy day that they had to have known was coming?
Why?
How?
Well, there's three causes of this problem.
Number one, the Fed.
Number two, the Fed.
Number three, the Fed.
All right.
Prices in the financial market, that is, the price of stocks, the yield on bonds, the yield curve, you know, in terms of what a ten-year security is paying in interest versus a five-year versus a 90-day, all of that, those are the most important sensitive prices in all of capitalism.
And they have to be allowed to work on an honest basis under supply and demand in a market that is not totally manipulated, repressed, and dominated by 12 people at the Federal Reserve, the so-called open market committee, that decides in their wisdom, you know, what the overnight rate ought to be.
Right now they have it at, you know, five-tenths of 1 percent.
Ridiculous.
And all the other madness they've come up with, including the idea that they can make the economy more prosperous by inflating the price of stock and creating wealth effects and causing people to spend more and invest more and so forth, all of this is what's behind this, because it's turned Wall Street into a Fed-fueled casino.
And when you get a casino going and you get jackpots of immense magnitude that become irresistible to CEOs and top management and boards of directors, they do what they're incentivized to do, which is to borrow money for nothing and use it to buy back their stock, shrink their balance sheet, impair and drain the, you know, safety cushions that you would build into the balance sheet of a big business in a highly risky world that we're in today.
But they've been incentivized to do the opposite, to basically strip mine their balance sheets, use up all the borrowing capacity they had available, use up their cash, don't, you know, they didn't create reserves and they didn't create a capital structure that might cost a little more and reduce their earnings but allow them to survive the kind of shock, short-run shock that we're having at the present time.
So to summarize, the Fed, the Fed, the Fed is the falsification of every kind of financial price there is.
It's the massive incentive for the corporate leadership of America to become totally short-term stock price oriented.
I call it the cult of the Dow, Dow, you know, industrials.
And it's really ruining everything.
And now Congress thinks that they have to, you know, sight on scene, practically throw $2 trillion at the economy so that this Dow index and the S&P 500 don't keep going down.
Well, that's no way to run a country.
Who the hell cares where the Dow is, okay?
That's a speculator's index anyway.
This isn't a real stock market anymore.
It's just one giant casino.
And yet these people are basically putting everybody in America in harm's way.
Future taxpayers for decades and decades and decades to come are going to service this enormous debt that's being done out of sheer hysteria, panic, and, you know, madness.
This is, it's a madness.
It's almost like there's something in the water down there that has turned these people into really lunatics.
Well, and that's part of being a politician is you don't have to understand economics at all.
You just have to react when businessmen say, give us some free money.
And so that's what they're doing.
And I think it was you that wrote that.
It was Mnuchin was the guy that ran Sears Roebuck into the ground in this exact same manner.
And now he's the guy in charge of saving everybody from his exact same mistake.
Yeah, it's even worse.
Even worse.
Mnuchin was kind of a no count flunky at Golden Sacks.
I don't know whether they got rid of him or he wandered off.
But in the last crisis, he got lucky.
And with a couple of other people, they bought a no count down in the mouth, bankrupt SNL called IndyMac that had no reason to exist.
They could have easily been liquidated and share depositors paid off and losses incurred.
That's what deposit insurance is about.
But no, Washington had to bail out with billions of dollars worth of infusions of capital into IndyMac.
And he bought it.
And he and his colleagues, after a couple of years, walked away with several billion dollars worth of profits.
So we have a secretary of Treasury who is the beneficiary of the last bailout mania, who basically ended up with a windfall of billions, he and his investors, that never, ever should have happened.
And so how do you expect this guy to have any perspective?
He's not even a Republican.
I mean, he's a Wall Street Democrat.
He's one of these Jim Cramer, whatever it takes.
The whole world, at least the United States and the taxpayers and the government and the balance sheet of Uncle Sam, all the rest of it, the Fed is here to make the stock market keep going up every day.
That's their view.
And he comes right out of that tradition.
And it is so dangerous.
Now, the worst thing is this is a so-called Republican administration.
This is the second time in this century that Republican administrations have basically set aside every semblance of fiscal sanity, have basically ash-canned sound money and encouraged the Fed to go off the deep end, and have buried the country in debt because they fail to understand how markets are supposed to work and how financial discipline is so essential if you're going to have a healthy, balanced, sustainable economy.
And obviously, when you bail out everything, you create moral hazard in capital letters on steroids.
And that's what they're doing now.
I mean, after everybody gets bailed out, including these utterly irresponsible people at Boeing, after they get bailed out, what future board or set of officers is going to worry about too much risk on their balance sheet, not enough ballast, not enough fallback capacity, financial flexibility, if they're going to get bailed out anyway?
Yeah, that's what they called the Greenspan put before, right?
When that one investment bank was going to fail, and he went and propped it up, and every other investment bank, this is in the late 90s, every other investment bank said, oh good, Greenspan's going to back us up, we can speculate on whatever we want, and we won't ever have to worry about going out of business.
Well, yeah, but the Greenspan put was bad enough, and it happened with long-term capital in 1998, and it's only grown from there.
But now what you have is a Washington put.
The whole system down there, Democrats, Republicans, the Federal Reserve, the U.S. Treasury Department, the whole K Street army of lobbyists are all in the business of marshalling the resources of the central bank and the U.S. Treasury to bail out themselves and their constituencies and their contributors whenever trouble appears on the horizon.
So I don't see how capitalism continues to function in this kind of system.
I truly don't.
Yeah, well, that's the real point, right?
I know this is a bad way to take the temperature, but if you look at Twitter, the consensus from everyone to the left of me, say, is capitalism has failed.
And once this crisis is over, we're going to have to have an entirely new economy, which I guess will mean even more power to Washington, D.C., and more power to bureaucrats, because obviously the capitalists don't know how to run an economy.
We need someone to command and control it to prevent it from being such a disaster like this.
Yeah, but all you have to do is listen to a knucklehead like Mnuchin for about a minute, or Nancy Pelosi, or Chuckle Schumer, or Trump, and you realize that these people are so incompetent that when they do take control of everything, which they're doing now, they're going to make a royal catastrophic mess of the whole thing.
And the country will go through a lot of traumas, a lot of dislocations, a lot of unnecessary pain, but maybe the silver lining that you can hope for is that it will be demonstrated that this is so wrong and so ineffective as an approach to running an economy that we get a severe political reaction backlash, and we go back to some more sensible policies.
So they're being given, I guess, a very long length of rope to hang themselves, and they will.
There's no doubt about it.
The Fed's already done that.
They came out with these guns blaring Monday, and the market puked all over them.
So they're going to hang themselves.
The question is, the unfortunate part is, everybody else is going to have to suffer in the process.
Well, but now what about the argument that I'm sure they would make that this isn't their fault?
The bubble would have gone on for another little while.
They might have saved up some money by the time it popped, but there's a global pandemic that's inducing this clamp down and this new bear market.
And so what are we going to do if all the most powerful companies in our country all fall apart and completely destroy the economy?
This is an emergency, David, a real one.
Well, they're not going to all fall apart.
This is a supply-side shock.
It's happening on both sides of the equation.
Production is falling, incomes are falling, spending is falling.
The idea that this is like some kind of inexorable whirlpool where everything gets sucked down the drain and it can't be stopped is totally wrong.
That's the Keynesian predicate, that if the government doesn't intervene when you have an economic dislocation like this, capitalism will just collapse on its own weight and eat itself alive and destroy everything in sight.
That's the myth of the Great Depression.
We don't have time to talk about that now, but it wasn't capitalism that failed.
It was central banks and governments and war finance and so forth that failed and created the Great Depression.
But my point is capitalism has tremendous powers of rejuvenation.
And as soon as this public health emergency and hysteria dials down and eventually dissipates, people will go back to work, restaurants will open, hotels will reopen, the airlines will start flying, production will commence, incomes will be produced, people will start spending again.
It's not going down a black hole.
And if there are some bankruptcies along the way, that's what the Chapter 11 system is designed to handle.
Well, why don't you explain that a little bit for those of us who've only had jobs and not run corporations before.
What does it mean if my corporation goes bankrupt and goes to Chapter 11?
All my people are fired and go homeless and all my capital equipment rots on a pile somewhere?
No.
Chapter 11 is actually pretty soft on the debtor, the filer.
And basically, their requirement to pay all of their creditors stops on a dime.
It's frozen.
Bankruptcy courts appoint trustees.
They take over.
They go out and are able to get what's called a dip loan, which is made senior by the courts to everything else the company owes.
That money is used to fund operations.
And if there's demand for the service or the product of the company in Chapter 11, it gets serviced.
The losers in Chapter 11 are the stockholders that get wiped out, and that's what capitalism is about.
The stock market is a risky place.
It's about time people learned that.
And the lenders who probably didn't fully compute the risk that they were taking, and so they get a haircut.
If they're senior, maybe they lose $0.30 on the dollar.
If they're subordinated way down at the bottom of the capital structure, maybe they lose $0.80.
So what?
I think it's good for the bond markets and the loan markets to be reminded that there's risk and that their job is to fully assess the risk of every creditor, every borrower that comes to their window.
So the key point, though, is the loss in Chapter 11 happens on the financial side.
It doesn't mean that every employee gets laid off or loses his job or his income.
If there is a viable business there, the heart of the viable business operates, and the financial crud and rot that was built up gets purged away.
Now, you can't have the whole country, obviously, in Chapter 11 at the same time.
But the point is, when they start telling you that everything's going down a black hole, that's not rational, all-in view.
That's not an honest economic assessment.
That's basically creditors and stockholders whining that they're going to take a loss and we shouldn't listen to them.
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All right now, so, but if the Fed's easy money policy in the 90s led to the popping of the terrible bubble in 99 and 2000, and then the Fed's easy money policies in the 2000s led to the terrible housing crisis and bubble pop in 2008 and nine there.
And then now that all the QE one through 10 or whatever it is, supposedly to fix that crisis has helped generate the bubbles, the bubble that's now being popped by this virus.
But now, and you're describing this reaction as, I don't know, two, three or 10 times the overreaction from last time.
What does that mean they're setting us up for in terms of distortions in the market going forward here?
Well, in the first case, it's a classic case of, you know, what Einstein said, doing the same thing over and over and expecting a different result is a pretty good indicator of insanity, right?
And that's what they're doing, but they're not just doing it over and over, they're doubling down and tripling down.
But this may be the last rodeo.
In other words, they have gone so far off the deep end that there is going to be so much broken furniture in the wake of this, there's going to be so much political debate in recrimination, that maybe finally, you know, the central bank is going to have to become accountable.
And some big statutory changes possibly can be made.
This is just, you know, this is kind of a last straw, I'd say.
Well, so let me ask you this, then.
People are saying, for example, Pat Buchanan is saying, well, this is the end of the globalist project and the return of the nation-state.
Even in Germany, Angela Merkel is not taking charge of the European response to the virus.
She's taken control of the German response to the virus, and every other nation for himself.
And of course, you have all the supply lines and chains between here and China that, especially more right-leaning nationalists, are saying must be changed, right?
Tucker Carlson says, we let the Chinese make all our medicine, and now we're completely dependent on them for our medicine, and they can threaten to cut us off, which they actually threaten to cut us off.
I wonder if you think that the whole project of the internationalization of capitalism since, you know, the end of the Cold War is now in real jeopardy?
Well, I think the false exaggerated part of it is, because this wasn't sort of natural free market capitalism at work, the reason so much of the U.S. economy, including medical supplies and equipment and, you know, surgical gowns and all the rest of it, was offshore, is that the fools in the Eccles Building insisted on inflating the U.S. economy at 2% a year or better, thereby driving up the dollar cost of every factory in America at a time when China was draining its rice paddies of cheap labor and, you know, generating an export economy because America was pricing itself out of the world market.
We really should have had, since Greenspan took over in late 87, that was right before, you know, Mr. Deng said, to be rich is glorious, and China went from the Mao policies of power coming from the end of a gun to Deng's policy of communist rule coming from the end of a printing press.
From that point forward, the U.S. economy, under an honest regime of sound money and free markets, would have deflated.
We would have reduced the buildup costs, artificially buildup costs, that we had from the great inflation of the late 60s and 70s and early 80s.
That would have been wrung out of our economy, and the dollar cost of producing here would have not been nearly as disadvantageous as it became over the 90s and especially during the first decade of the 2000s.
So this excess offshoring and these very fragile supply chains that were created and anchored in China are not really natural free market economics.
Some of it would have happened, but a lot of it wouldn't in a regime of sound money and honest free markets.
So I think that part of it is going to be rolled back.
But on the other hand, if the central bank doesn't allow, you know, the pricing system to work in the financial markets, I'm not sure how much headway we're really going to make, and we're going to end up with Trumpian policies instead.
In other words, there's two ways to fix this.
One is with honest money and free trade and free markets.
The other is with Trumpian protectionism and cheap money and more central bank distortion of the whole financial system and the domestic cost, price, and wage levels.
Unfortunately, I think we're heading more for the Trumpian protectionist solution, which is even worse than what we have now, than for the correct solution, which is hard money and free markets.
So, you know, every place you turn right now, we're heading in the wrong direction.
There's no, you know, there's no way around it.
You know, you have to face the reality.
This is pretty grim.
And, you know, millions of innocent people who just want to make a living and improve their circumstances in life and maybe even save a little money or take a risk and build a business or invent something, you know, they're all going to be stymied by this terrible takeover of the economy by the fiscal and monetary authorities and all of the larcenous in the imperial city, as I call it.
Well, and now what about the warfare state?
On one hand, we just can't afford to keep killing Arabs at this rate.
But on the other hand, what a great jobs program.
Maybe we'll conscript some men and bring the unemployment rate down and we'll funnel some more money into Lockheed and make things seem like they're productive and kill even more innocent people over there.
What do you think?
Well, you know, there may be one silver lining in this god-awful, catastrophic mess that we're facing, and that is, I think, the shock of the economy going down.
I mean, we're going to have next week, you know, there's going to be like a million, two million people filing for unemployment.
Just numbers people have never seen before that'll get magnified and, you know, almost put into hysterical headlines and CNBC crawlers across the bottom of the screen.
It's going to create such a shock and such a dissonance with all of the boasting that Trump was doing about the greatest economy ever, which was always complete baloney, that I think he's finished.
And the Democrats, even if they put up Joe, are going to take over and they're going to face a fiscal crisis of horrendous magnitude.
And when push comes to shove, it's more likely they'll hang on to more of the welfare and less of the warfare.
And whether, you know, whether they would like to become more rational about foreign policy and more non-interventionist or not, I think they'll be forced to because they'll be out of money.
They're going to be out of money.
There's nothing probably better to stop the war machine at this point than a Democratic government that's out of money.
And that's probably where we'll be in 2021.
Well, I wonder, you know, I mean, that's the story of post-World War II England, was that the people, the voters of England fired Churchill.
Great job on Hitler and everything there.
But now you get out and they brought in Heath, right, to save the welfare state at the expense of the empire.
But rewind just a few years before that, America was completely broke and FDR's idea was, well, what we'll do is we'll conscript an army of 16 million men and we'll send them off to fight and that'll bring our unemployment rate down.
And it'll be, you know, it'll create all this demand for industrial capacity and all these things.
And it'll be great for at least disguising the pain of the depression until everybody gets home and can get back to work.
The difference, though, Scott, is that in the 30s, even after the New Deal, which, of course, you know, we like to, you know, beat upon as a terrible thing.
And it was, I mean, it totally backfired.
It didn't do any good.
But it didn't build up that much debt, surprisingly.
The debt of the United States relative to GDP was like 3 percent when the Great Depression started and the New Deal was launched.
And by the eve of World War I, by the eve of Pearl Harbor, you know, I doubt it was much more than 10 percent.
I've written a lot about this in the past.
So we had a big, clean balance sheet that could be used to fund a massive sudden increase in the warfare state to take on the Nazi and the Japanese, for better or worse.
That's not the case today.
The case today is, you know, by the end of this year, we're going to have $24 trillion, $25 trillion of debt with $2 trillion or $3 trillion a year built in.
There is, you know, they're in fiscal handcuffs.
And it's not likely that the Fed can print enough money to buy up all this debt.
I think that, you know, there's a risk here that finally they've gone so far that the bond vigilantes will awake from their slumber, their 30-year nap.
And if the, you know, bond market ever begins to roll over and people start selling bonds because they're afraid of where we're going, you know, then that will be, you know, that will be a showstopper, because then interest rates will soar and everything will stop in terms of this, you know, fiscal nonsense that's going on right now.
And the biggest, when push comes to shove, you know, they'll cut the military sooner than they'll cut food stamps.
I really think that's the case.
I'm not so sure about that, but yeah.
I would bet on that at the end of the day.
Well, that's good to hear.
So now the liberals, they have this modern monetary theory.
I'm sure you've seen, I think there's even a bill has been introduced to order the treasury to mint two platinum coins and then just carve into them that they're each worth a trillion dollars.
And so that the government can then spend that money on helping the poor, whatever.
I guess the idea is if they're going to send us a thousand bucks each, why not send us a hundred thousand bucks each?
And not a hundred thousand, make everybody rich.
I mean, it's so absurd that you can't even critique it because you feel embarrassed, like you're arguing with a third grader or something, you know.
In terms of modern monetary theory, we more or less have it now.
They're printing on a limited amounts of money.
They're buying up the debt.
The only difference is they go through the fiction of buying the debt that is the Fed from the 23 dealers in the secondary market rather than buying it from the treasury directly.
But what the hell's the difference?
The treasury puts it out at 10 this morning, borrows some more money, and at two o'clock this afternoon, the Fed buys it back from the dealers.
They might as well save the skim that the dealers got and sold it to the Fed at 10 a.m. this morning.
And that would be modern monetary theory in practice.
So we're almost there.
This stupid trillion dollar coin is just a way of saying, you know, we can raise the debt ceiling without having any political consequences.
It's kind of a sideshow.
It's a fiction.
The real danger is that markets need to set a price of every kind of security, every kind of debt, long, short, in between high risk, low risk, government, junk bonds, corporates, Boeing.
It needs to be set through price discovery at a level playing field of supply and demand and not by the Federal Reserve in Washington.
And we're 180 degrees away from that.
And that's the real calamity that's underway at the present time.
Moser.
And of course, more and more people are...
Because after all, never mind all your nuance about a free market or a gold standard or this and that.
We have a Fed, we have a massive regulatory state, we have all these things.
But the whole thing, our system, is called capitalism.
And so, from the point of view of everyone to the left, they're just moving further and further to the left, because every bit of what's going wrong here is the fault of capitalism and capitalists.
And who could deny it?
Yeah.
And the thing is, we're doing de facto socialism right now.
I call it ersatz socialism, which means, you know, sort of ad hoc.
But, you know, when you bail out everybody in sight, when you have a soup line of corporate mendicants from one coast to the other, well, that's socialism.
Okay?
That's not capitalism.
That's not supply and demand at work.
That's not risk and reward.
That's not succeeding or failing on your own petard, so to speak.
And so then the Republicans get themselves all worked up into a rhetorical frenzy about, we have to stop Bernie Sanders and the socialist left in the Democratic Party.
I mean, you know, greater hypocrisy has never been exhibited in Washington, to my knowledge.
Yeah.
And of course, everyone on the left can see that.
Yeah, socialism for giant corporations is fine.
They get to privatize all their profits and socialize all their costs.
But the old lady who needs help paying her medical bills, screw her.
Yeah.
Well, they're doing more.
This nincompoop Mnuchin and Trump himself, you know, they're doing more to undermine the idea of capitalism than any Bernie Sanders could do in a month of Sundays.
Okay.
Well, so let me ask you this, and I know you're not an epidemiologist, but I wonder how you, you know, balance in your imagination here, the cost of this clampdown and the deliberate, you know, kind of introduction of a Great Depression in order to try to stop this contagion versus the suffering we'd all have to go through, the Great Depression we'd probably all have to go through if we did nothing and let the virus spread and kill that many more people and these kinds of things.
Is there a balance point in there that you got your finger on there?
Yeah, I don't think you have to go that far.
First of all, it's, you have to understand that this isn't some kind of virus spreading, you know, in some sci-fi movie faction fashion in a unstoppable way.
What we have is perception.
That is, when you start testing, you get more cases, and the more panic you get about the testing, the more testing you do, the more cases you get.
It looks like there's a curve going out of sight, but it, you know, it's not the disease that's happening, it's the reporting.
And so, therefore, I think it's pretty clear that social distancing, shutting down big public events and sports stadiums and so forth is not the end of the world, but it will burn out in a matter of weeks.
It has in most places around the world, I think it will here as well.
And we're not going into a Great Depression.
This is a service economy, and the minute someone feels they can open their restaurant, they're going to do it, and their flower shop and their nail polish shop and all the rest of it.
We're going to go back to production, I think, quite rapidly, and I will give Trump some credit, and he's being crucified by CNN for it, but saying we got to get the economy reopened as quickly as we can.
And once it reopens, then we'll find out that capitalism doesn't have a death wish.
There's not a black hole.
There are not certain inexorable forces that circle the drain and disappear.
This is a lot of nonsense.
Production will start.
Incomes will resume.
Spending will pick up.
But the idea that the United States can't go for five or six months of, let's call it, economic spring vacation without calamity is just wrong.
We have a social safety net in this country that in normal times costs a billion dollars a year, trillion dollars a year, excuse me.
That's what Medicaid and food stamps and cash assistance and all the rest of it provides.
And in these circumstances, there's going to be no humanitarian crisis.
Unemployment benefits are automatic.
In 26 weeks, people will get them.
If they have to go to Medicaid and food stamps and the other benefits, they will.
So there is a bottom to this.
There are shock absorbers built into the system.
And it's only a matter of months before I think this will pass just like it did in China.
And the interesting thing is just when people get all worked up about some kind of horrible plague inexorably taking down everything, I would note that today if you look at the case in the United States, 46,000 right now because we're beginning to test rapidly, so the number is going up rapidly.
That's not because the number of infections is going up.
It's because the testing reporting is happening.
But it's still one hundredth of one percent of the population.
That's about what China has in terms of 83,000 cases they've had.
That's about one hundredth of one percent.
If you go to Italy, it's one tenth of one percent for some reason, partly because it's an older population.
But here's the interesting one.
If you go to Japan, which is the oldest population on earth, so it should be the most vulnerable.
It's got the highest rate of smoking on earth, and this is a respiratory problem, so they should be especially vulnerable.
But there's only about 1,100 cases in Japan, which means that their infection rate against the population is one thousandth of one percent.
So one thousandth in Japan.
What's the explanation for that, do you think?
I've been trying to figure out.
Well, one, they haven't shut down Japan.
I'm just citing some facts, but I'm telling you, that's why you can't assume this is some kind of mathematical germ that's going to take everything down in an unstoppable, inexorable fashion.
Because if you look around the world, that clearly hasn't happened.
Now, you know, you heard silly things like they don't shake hands in Japan, they bow.
Okay, so maybe there's less contact.
I don't know.
But the point is, there's empirical evidence.
Japan had its first case long before we did, or South Korea did.
There's empirical evidence that populations around the world have responded dramatically differently in terms of the infection rate, and that's the only thing that counts to this, number one.
And second, no matter which country you look at, Italy at one-tenth of one percent of their 60 million people, or Japan at one thousandth of a percent of their 126 million people, it's a small fraction of people that are infected, and obviously a much smaller mortality rate among that.
I'm not dismissing it or saying it should be ignored, but this isn't the black plague that's taking down 25 percent of the population or something like that, and we need to keep that in mind.
Yeah, it's the irony of viruses, is the more dangerous they are, the faster they burn themselves out.
It's the viruses like the cold that are really successful, that don't kill you, but are good at spreading themselves in that way.
And then usually the most dangerous ones end up evolving or devolving to become less dangerous, usually somewhat quickly.
Yeah, herd immunities develop and all the rest of it.
There are a lot of good epidemiologists around who dissent from the mainstream view of this, which is being amplified and drummed in relentlessly by CNN and The Washington Post and The New York Times and all the rest of it.
The establishment media, I think, you hate to say this, but kind of relishes this kind of crisis because it means the government should be doing more and Trump has failed again.
Yeah, well, but all that aside, you know, I decided back in January that, you know, because I don't watch TV anyway ever since Hillary Clinton ran for president, I just can't deal.
So, and then on, I got all these other, I got to keep up with the wars and all this stuff, so in terms of the germ, I've just been reading The Wall Street Journal because I figured their audience matters, right?
Unlike us plebeians out here in the world.
These are the owners of America and they need to know, and I'm not talking about the editorial page either, forget them, but just the hard news section of The Wall Street Journal.
And they've been saying, hey, business owners, get your act together.
This is a big deal.
We're going to need a real clamp down.
And it seems like, you know, the biggest businesses in America, they're going along with this because they're getting the same briefing that the government's getting, that we're better off clamping down for the short term now than suffering through the long-term consequences of not reacting harshly enough on this.
What do you think of that?
Well, you know, I think you can't make a blanket statement.
I think a lot of businesses that are dependent, like restaurants and so forth, airlines on big crowds, are well advised to be shutting down for the duration.
But, you know, it seems like after a period of a few weeks here, businesses that can come up with a way to, you know, put everybody in masks and is working or keep them distanced, should be allowed to restart if they can do it in a safe manner.
And I think actually people are going to be coming up with ways to do it.
Business doesn't want to sit at home watching Netflix, you know, it wants to produce, it wants to generate cash flow, it wants to pay its bills.
So I think, you know, we shouldn't go overboard with pessimism here.
There's going to be a growing crescendo of demand to reopen the economy and people will find safer ways to do it.
All right.
Well, there you have it, folks.
David Stockman, the best guy you'll ever see on any of these financial channels, like CNBC and so forth.
And by the way, I just love it when you say anti-war stuff to them and make all their brains explode.
It's just hilarious every time.
And I could mention to people, please check out David's archives at antiwar.com.
He is just as good at hating the wars as me or Raimondo have ever been.
And just as good as he is on the economy, he is on the wars too.
And that includes the minutia debunking the fake sarin gas attacks in Syria and all the rest.
Just great stuff always from you, David.
And I appreciate it so much.
Well, thank you.
Thank you very much.
All right, you guys, David Stockman, that's davidstockmanscontracorner.com.
And again, the books are The Great Deformation, Peak Trump, and Trumped, A Nation on the Brink of Ruin and How to Bring It Back.
