David Stockman - “2014 Is The Year Of The End Game”
Eric King: “David, I wanted to ask you about the Fed’s manipulation of the markets. They have a massive trading room where they are essentially ‘managing’ these markets, to use a polite term. What is the difference between that (what the Fed is doing) and the banks’ criminal manipulation in fixing the LIBOR?”
Stockman: “There isn’t any. It’s price fixing pure and simple. That’s the heart of what’s wrong with the whole system today....
The Fed is engaged in what I refer to as ‘massive monetary central planning,’ erroneously believing that by pegging and fixing interest rates all up and down the curve, putting a ‘put’ under the risk asset markets explicitly targeting indices like the Russell 2000, and trying to generate wealth effects as a way of causing economic growth -- all of those things are part and parcel of the core of what you’ve described -- price fixing on a massive scale in the heart of the financial markets of capitalism.
And that’s the opposite of what is really required. If you don’t have free markets and honest interest rates and true price discovery in these markets, you are going to end up with waves of distortions, bubbles, all the symptoms that we have in this messed up economy that we have today.”
Eric King: “David, as you see it, why does the New York Fed feel the need to be essentially the biggest hedge fund in the world, fixing major markets?”
Stockman: “Because that’s the doctrine. The doctrine is that 12 people on the Open Market Committee can survey a $17 trillion domestic economy, or for that matter an $80 trillion world economy, think it all through, set some targets, and then manipulate the whole system through the crude instrument of short-, middle-, and long-term interest rate price fixing or pegging, and the other supplementary tools that they use, like forward guidance, wealth effects, and so forth. That’s the explanation.”
Eric King: “What is the danger going forward as you see it?
Stockman: “The danger is that none of these markets is stable. None of these markets reflects true supply and demand. None of them properly discounts real-world factors, whether it’s cash flows, economic future, and all the other things that markets are supposed to do.
The markets today jump to the tune of the minutes of the Fed meetings, of daily word clouds that are emitted by various Fed speakers. This really isn’t a capitalist financial market. It is entirely a ‘hothouse’ system driven by a rogue central bank that has totally usurped the role of capital and money markets.”
Eric King: “What are your thoughts as we move through 2014?”
Stockman: “This (2014) is the year of the end game. The party is over. We are now just at the point where they are rounding up the Wall Street drunks who are swilling on the fifth consecutive seasonally maladjusted phony recovery. That will become evident in the weeks and months ahead. Then I think the markets are going to have a pretty rude day of awakening.”
IMPORTANT - Part I of Stockman’s interview is only a small portion of what had to say in his extraordinary audio interview. Part II of his written interview will be released within hours. The KWN audio interview with David Stockman discussing financial instability and collapse, gold, the end game and much more is available now and you can listen to it by CLICKING HERE.
IMPORTANT - KWN will be releasing extraordinary interviews all day today and this weekend with David Stockman, William Kaye, and others.
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The audio interviews with David Stockman, Rick Rule, John Mauldin, Bill Fleckenstein, Dr. Stephen Leeb, Egon von Greyerz, Art Cashin, James Turk, Dr. Paul Craig Roberts, Andrew Maguire, Dr. Marc Faber and Eric Sprott areavailable now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.
Eric King
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