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.
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The full archive is also available at youtube.com slash scotthorton show.
All right, you guys on the line.
I've got David Stockman from davidstockmanscontracorner.com, and he wrote a bunch of books, especially The Great Deformation and a couple about the Trump years here.
Welcome back.
Great.
Good to be with you.
Very happy to have you on the show here.
And you know, sometimes I see you on the business channels and stuff, and they never let you talk for more than a couple of minutes.
So I'm happy to give you a chance to say what's really on your mind here.
And especially, I'm looking at this piece, Riddle Me This.
Republicans are good for exactly nothing, and especially this list where you break down the boondoggle in just the first of the bazillion dollar bills that they've passed here in the name of saving us all from the virus outbreak here.
I think probably people heard that the Kennedy Center got a big payout.
And then, of course, a real fun one is a giant raise for the Congress themselves.
No surprise there.
But what are some of the other things in this bill that would surprise Americans who think that actually this somehow has to do with helping them?
Well, I would say almost everything.
This list that I published yesterday runs on a couple of pages.
Every single agency that is of interest to one or another congressional special interest group, and frankly, both on the Democrats' side and the Republicans' side, is getting some extra money.
I mean, even the Smithsonian, which I believe is closed, is getting $7.5 million.
The JFK Performing Arts Center, I think you mentioned, $35 million.
You could go on and on.
Public broadcasting, $300 million.
The money going to the education department, I can't even add it all up here, but it's in the billions and billions.
Mental health support, $435 million.
Well, you can almost understand that, given the insanity that's being generated by the mainstream media and most of Washington right now.
And so that's what I was really addressing yesterday.
The Republican Party is supposed to understand a little bit about the fundamentals of capitalist economics, that there aren't any free lunches anywhere in the world, and that the government doesn't create production or income or wealth or living standards, but simply shuffles it from one group to another or borrows it from the future and therefore puts the burden on the next generation of taxpayers.
So what's happened here is that we've had really a hysteria about the COVID-19, because CNN and the rest of the mainstream media, and frankly, the Donald evening reality show with his so-called medical advisors, that this is some kind of general pandemic that will strike down the population, old, young, in between healthy and unhealthy.
And this is really a lot of nonsense.
The shutdowns that we're having now are way, way overdone.
They are really destroying the economy in a way that we have never, ever seen before.
And the Republican response is not to get into, you know, the issue of understanding what this is all about and demanding an end to these sweeping shutdowns, lockdowns, which are coming, frankly, from Democrat governors and mayors who say they're, you know, totally concerned about the public health and, you know, that's on their tongues.
But what's in the back of their mind is that if they can make the economy bad enough, they can finally get rid of Trump.
Well, I don't have any beef for Trump, but we are mangling the economy because they're letting these guys, you know, Mayor, I mean, Governor Cuomo and all the rest of them get away with it.
But here's the truth of the matter.
This is a nasty winter flu that tends to strike people that are elderly or that have multiple serious health conditions already.
But it is not a deathly pandemic that's going to, you know, strike down the overwhelming share of the population that isn't old or that isn't in bad health.
This isn't something, you know, that I'm reading from tinfoil hat wearing bloggers.
This is something that in the last two days and you didn't see a word of it, you didn't see a, you know, 30 second blip about it on CNN or MSNBC.
But New York State finally published a pretty decent breakdown of the cases that they've had to date.
And we know that New York State is the epicenter of this and that their incidence of both infections and unfortunately deaths is massively higher than almost everywhere else in the nation.
But nevertheless, let's look at New York.
It's the epicenter of the thing.
And they showed that 63 percent of all the deaths and there have been at this point was two days ago nearly 4,800 deaths in New York, which is a good share, you know, 40 percent of the country, that among those 63 percent occurred among people over 70 and only 7 percent was accounted for by the bulk of the population under 50.
In other words, in New York State there are 19 million people.
There's a million three over 70.
They're getting hit by this.
They're the ones that should be self-isolated and protected.
But there are 12.5 million people 50 and under who are being told, stay home, don't work, don't go to the store, don't go to the restaurant, shelter in place.
And yet there are only 330 COVID deaths among them.
And, you know, the important thing is to look at it on a standardized basis per 100,000 population.
That's the only way you can make sense of anything.
And when you do that, you see that in New York and again, New York State, the epicenter of this whole, you know, hysteria, the death rate for those 70 and over was 183 per 100,000.
The death rate for those 50 and under was 2.6, two and a half people per 100,000.
So there is a 70 times higher, unfortunate mortality rate among the elderly.
And then when you break that down, it's overwhelmingly among people that have multiple pre-existing conditions.
Fifty five percent of those in the 70 plus group, you know, had hypertension.
Another 37 percent had diabetes.
And you could go on and list, you know, other underlying conditions, respiratory illnesses and so forth.
So what I'm getting at here is that we need a much more deft, subtle, discriminating, targeting public health response to this, not a plenary lockdown of the entire country.
Because what it's doing is creating so much economic, you know, dislocation, turmoil and fear that it's turning the Republican Party into a spending machine who, you know, and their basic pitch is we got to keep all the companies in America alive, big and small and in between and the prudent and the debt ridden.
It doesn't matter.
And that's where these hundreds of billions, in fact, when you put in all the Fed's matching money, it's four trillion for big business and three and a half, 350 billion for small business, which they've already used up.
So they want another 250.
So let's call it 600 billion for small business and four trillion for big business, you know, bailing out everything in sight without any kind of, you know, underwriting requirements or anything else.
And it is creating a fiscal disaster of biblical proportions.
And it is driven by the fact that the Republicans are unwilling to fight the shutdowns.
I know Trump is trying a little bit, keeps getting optimistic that in two weeks and it's always, you know, another two weeks forward we're going to open things up.
But nobody is trying to lay out the facts that we shouldn't have hysteria, that we shouldn't be closing down the economy and the society.
And the way to address that is to figure out how to have, as I say, more targeted public health measures, not to spend the country into oblivion.
And when I say spend into oblivion, you know, I'm not really engaging here in some kind of rhetorical hyperbole.
The fact is that we were already running a 1.1 trillion deficit this year before the COVID-19 hit, which was crazy, 10 years into an economic expansion at the top of the business cycle that was in its final days, to be borrowing a billion, a trillion dollars, almost 5 percent of GDP.
But now it is totally out of control.
They've already piled on the 2.2 trillion everything bailout, as I called it, of a week ago.
On top of that, you have a surging call on unemployment insurance, which is automatic.
It's already there.
They're going to be spending hundreds of billions on unemployment insurance at an annual rate within weeks compared to, you know, less than $30 billion last year.
Then they got the next Nancy Pelosi special coming right down the pike to top off, you know, everything that allegedly didn't get enough money in the $2.2 trillion bailout with another trillion.
And then right behind that is coming the, you know, the so-called stimulus slash infrastructure bill.
It gets to a point where, you know, it's the numbers are so gigantic and absurd, it's almost impossible to have an adult conversation about it.
But in any event, at minimum, before they even get, you know, the Nancy Pelosi special in or the infrastructure bill, Goldman Sachs, who, you know, is not necessarily trying to exaggerate anything, is telling its clients that the deficit in the current year has ballooned from a $1.1 trillion to $3.6 trillion, staggering 16 percent of GDP.
Nothing like this we've ever seen before.
It's never even been that bad in the worst, you know, European socialist democracies, Italy or any of the other so-called club meds.
I mean, I don't think Greece was that bad at the top of its crisis.
So we're heading for a 16 percent of GDP deficit.
And then they're predicting, and I think the numbers are going to actually be worse, that in 2021, which, you know, starts October 1, so all of this mess is going to be still flowing into the fiscal accounts, another $2.4 trillion.
So now just think about that, $3.6 this year, $2.4 in the, you know, $3.6 in the balance of this year, $2.4 trillion next year, that's $6 trillion in two years.
Now, let's put that in perspective.
It took 214 years and 43 presidents, you know, from George Washington to Bush the Younger to get the first $6 trillion, and these cats now in 24 months are going to add another $6 trillion.
And, you know, you're never going to dig out from under this.
And it could well be worse.
And, you know, the reason, of course, and I'm writing about that today, that all this is happening and why the Republican Party has now become useless, good for nothing, as I say, is that they've been so, I would, you know, I like the term fiscally lobotomized or euthanized by the Fed's money printing that they don't even recognize that this, you know, these massive, massive unprecedented deficits are going to ruin the economy sooner or later, because the Fed has been printing money at this crazy rate.
So, you know, the real evil here is not the, you know, the COVID-19 so-called pandemic.
It's really the spending and money printing pandemic that is triggered in Washington, and the opening to a really quasi-totalitarian state that is essentially, you know, as I said yesterday in my post, putting 12.5 million people just in New York under 50 in house arrest.
Essentially, you get fined if you're out doing something that the governor says he doesn't want you doing, when there is really no reason to keep people under 50 out of the restaurants or even any other public place.
All right.
Well, David, here, wait, let me, let me get in here because I got some, a couple of devil's advocates and then a couple of just straight questions, especially about the economic damage and all of that here.
But on the, just the lockdown itself, could someone argue that, listen, the government has created, or whoever all, has created massive shortages in hospital beds, in masks for people to wear, in rubbing alcohol for them to put on their hands.
If we're going to put all these under 50s back to work, they still need a lot of social distancing and good face covers and gloves and all these things that they just don't have.
And when they do get sick, if they're going to survive it and build up herd immunity and all this, they got to have a bed and not get triaged to die in the hallway or the parking lot like Italy.
And you know, I can come up with a million reasons why this is the Congress's fault in the first place on the state and the federal level, especially the shortage of hospital beds and that kind of thing.
But I mean, what if we just did this for a few more weeks?
We're trying to flatten the curve till we can get to the backside of the curve, and then maybe we can just go back to work in just a little while longer.
Yeah, well, you know, that's what they say, but, you know, listen to what, you know, the, what I call it, you know, the infectious disease mafia is saying that, you know, we can't reopen the economy.
We can't let people come out of their shelter in place until we think it's safe, which may be when we have a vaccine, which is months and months, if not years away.
I mean, that's the Fed saying that, but it's the governors who are really in charge of this.
Right.
I mean, yeah, well, I mean, but, you know, but they're going to the governors are happy to listen to, you know, the so-called medical experts, including Dr. Fauci and, you know, the woman he has on there all the time, Dr. Burks.
And so as long as Washington keeps pumping money into the states to cover their budget shortfall, which is what it's doing and adding more in this next Pelosi bill and paying everybody, you know, in the state of New York, the average benefit's about $500 a month, a week, unemployment, and it's more than that for the maximum.
They're getting 600 on top of that.
So you know, the average unemployed person is taking home about $60,000 a year at an annual rate from unemployment insurance.
So you know, what I'm saying is this massive, you know, eruption of spending for everybody, for small business, big business, the, you know, the helicopter money, $1,200 for everybody, whether they're unemployed or still drawing their paycheck, is creating, is destroying any political resistance to an extended shutdown because everybody's being held harmless by future taxpayers who are getting hit by trillions.
But now let me just address your point about, well, there aren't enough face masks and so forth.
You know, the incidence of serious hospitalization for people under 50 is practically nil.
I mean, the hospital beds that are allegedly full, and it's mainly New York City, you go out in most of the rest of the country and hospitals are not overflowing and the halls and aisleways are not full and so forth.
That's not happening.
That's just CNN focusing on, you know, the hospitals in the Queens and other parts of New York that truly are flooded.
So I don't think you need all those face masks necessarily to restart the economy for people who aren't in a, you know, serious exposure group, but we're not allowing them to do it.
We're not allowing people to make any decisions on their own.
They're being ordered by a governor, you know, on an across the board way.
Stay home or we'll find you.
Or maybe some of them are even talking about, you know, arresting you.
This is crazy.
It is not unsafe for most people under 50 if they have good health to be out in society and in Congress.
Period.
So what about this, though?
What about back to the thing about just a few more weeks here, because I get it what you're saying about Fauci says this has got to go on forever or whatever.
What does he care?
But big business isn't going to put up with that.
And once we get to the backside of the curve just here in hopefully a few weeks or something like that, they're going to be pushing hard as hell to go back to work.
And then the ability of the states to relock down after that, I think, would be very limited.
Right.
Seems like they've got a relatively short window to enforce this level of control.
Well, this may be true.
You would like to think so.
But we'll see.
When you're pumping this much money out there, you know, there's an implicit deal in Washington.
Come and, you know, put your hand in Uncle Sam's empty pocket and then keep your mouth shut when it comes to, you know, all of these so-called public health measures and shutdowns and lockdowns and mitigation, mitigation, mitigation, as they call it, that they want to do.
So we'll see.
But the horse is already out the barn door.
All this money has been appropriated and there's more coming.
And I want to talk about the totals here for a second.
You say $4 trillion already for big business.
So that's $2 trillion, almost $2 trillion from the Congress and another $2 trillion created out of nothing by the Federal Reserve.
Is that right?
It's even worse than that.
If you take the $2.2 trillion bill, $600 of that went to households directly, $300 million for the helicopter money, the $1,200 per almost everybody except the very top of the income spectrum.
And then another $250 million for these extended and added unemployment benefits.
Billion, you mean, right?
Or million?
Pardon?
Yeah.
And then on top of that, $600, the other $1.6 trillion is one way or another going to business and state and local governments and hospitals, and then the whole list of everything that I had published yesterday from NASA to the National Endowment for the Arts and farmers and veterans and everybody else in between.
But here's the key thing.
Of that $2.2 trillion, and listen to this, this is the scam that's underway, $500 billion roughly was earmarked for mid-sized and big business support.
About $60 billion of that was set aside for the airlines and air freight companies.
But the $450 billion left has been cleverly transformed by the Treasury Department that's run by this evil lunkhead, Mnuchin, into equity to be put in a flaky vehicle called an SPV, a special purpose vehicle that will function as the seed capital or the bottom layer first risk capital, let's call it that.
And then the Fed is going to layer on top of that $3.5 trillion that it creates out of thin air.
In other words, roughly this is eight to one leverage, right?
And the theory is that the Fed will dump $3.5 trillion into this vehicle, and then this $4 trillion vehicle will make loans left and right to any business, including Boeing, let's say, that spent the last 10 years buying in its stock $50 billion, paying dividends another $50 billion, and then left itself high and dry when the kind of worldwide cyclical business they're in got into big trouble.
So what I'm saying is this is really evil, because even beyond the insanity of $4 trillion of cheap loans for every business, regardless of whether they're balance-sheet and standard or whether they deserve it or whether they've been prudent or reckless, the point is the statute that Congress passed long ago and then amended at the time of the 2008 crisis, when some people got really aroused by the Wall Street bailouts, basically says that the Fed can't make loans to corporations, it can't make loans to municipal, state and local units of government, it can't buy junk bonds, it can't buy equities.
And what these characters have done is circumvent that whole congressional statute and ban on all these things through the artifact of setting up special purpose vehicles that, get this, are owned by the U.S. Treasury, and the Fed is only funding, let's call it, the senior capital.
And somehow, if any private company set up a shell operation, and that's what this is, shell a huge, gigantic, multi-trillion set of shell companies, if any private company did that, you know, they would be taken to the nearest federal hospitality suite for massive fraud and for circumvention of the law.
Well, this is what this new complex of the U.S. Treasury and the Fed are doing.
It's almost like the Treasury and the central bank and its printing press have been merged.
I mean, this makes whatever Bernanke was making up and conjuring up in his hysteria at the time of the 2008-2009 crisis look like small potatoes, a Sunday school picnic.
So wait a minute, David, we're almost out of time here.
We've got about three minutes.
So are you saying we're going to face hyperinflation and the total destruction of all real capital in the country and a serious-ass Great Depression now?
Well, it's going to be a massive dislocation, as again, I'm not a hyperinflationist in the goods and services world, because the central banks have created so much cheap capital that the world today is flooded with capacity and labor.
You know, there's a billion people that were drained out of the swamps of Asia and into factories built with cheap capital, because that's what the central banks were doing.
So there's plenty of, you know, excess workers in the world keeping wages down.
There's plenty of excess capacity for everything from steel to, you know, solar panels to keep industrial prices down.
You know, look at the oil thing today.
It's crazy as hell.
I mean, you know, demand has now dropped by 25 million barrels a day out of 100.
Crazy.
The cartel is now scrambling to try to cut production.
They'll never agree.
Trump's got his big fat, fat head in the middle of it.
I don't know what he thinks he's doing.
The only good thing going for the American economy right now is oil is going to get really cheap.
But my point is that commodity, which is this, you know, central commodity, is heading way below 20.
I mean, it could go to $5, to tell you the truth, in the next few weeks or months.
And the rest of the commodity complex is going with it.
So you're going to have commodity deflation.
You've got no labor cost pressure in the world, and you've got plenty of manufacturing and transportation capacity.
So this isn't about some kind of rip-roaring, you know, Weimar Republic inflation of 1923.
This is about a total destruction of price discovery and honest valuation in the financial markets.
And, you know, it's eventually going to lead to such, so much speculative waste and what we call, you know, us Austrian type people, we call malinvestment, that the economy is going to just kind of grind to a low level stagnation.
All that money's got to go somewhere, right?
So which bubble should I invest in now?
You know, I think the only thing to invest in now is gold, OK, because gold is going higher and higher and higher as soon as it crosses 1900, which is where it peaked, you know, eight years ago.
It's off to the races after that, because gold is a relatively small market compared to the 90 trillion of bonds out in the world or the 80 trillion of equity that trades in the various forces around the world.
So as people see the insanity of what these central banks are doing, I think on the margin they're going to, you know, seek a safe asset.
And the only real safe haven at the end of the day will be something the central banks can't destroy or distort or manipulate or mangle, and that is gold.
So I think if you're looking for some upside, that would be the place to go.
And if you're looking for some insurance, that's also the place to go.
But the last place to be is in the casino, in the stock and bond market, because, you know, that, you know, when things are moving a thousand points a day, you know, this isn't rational human beings at work.
This is just machines and speculators and, you know, the crazies who have been let loose by these out of control central bankers.
All right, you guys, that is David Stockman.
Oh, I should have said he was a congressman and was Reagan's budget director until they quit listening to him.
And he wrote the book, The Great Deformation, and you can find all his articles and they're behind a paywall.
But I think you'll find it's worth it.
David Stockman's ContraCorner.com.
Thank you, sir.
Thank you.
Glad to be with you.
The Scott Horton Show, anti-war radio, can be heard on KPFK 90.7 FM in L.A.
APSradio.com, antiwar.com, scotthorton.org, and libertarianinstitute.org.
