Here's Stockman on how loose monetary policy killed capitalism and gave birth to today's crony kleptocracy:
Viewed more broadly, the carnage on Wall Street in September 2008 was the inevitable crash of a 40-year financial bubble spawned by the Fed after Nixon closed the gold window in August 1971. As time passed, the Fed's market-rigging and money-printing actions had become increasingly destructive — leaving the banking system ever more unstable and populated with a growing bevy of Too Big to Fail institutions.
The 1984 rescue of Continental Illinois; the 1994 Mexican peso crisis bailouts; the Fed's 1998 life-support operation for LTCM — were all just steps along the way to the fall of 2008.
Then, faced with the collapse of their own handiwork, Washington panicked and joined the Fed in unleashing an indiscriminate bailout capitalism that has now thoroughly corrupted the halls of government, even as it has become a debilitating blight on the free market.
In this context, the linkage between printing-press money and fiscal profligacy merits special attention. In the post-TARP world, there remain no fiscal rules at all, and already we have had cash for clunkers, cash for caulkers, and under the homebuyer's credit, cash for convicts.
Indeed, my belief is that the subprime meltdown was only a warm-up. The real financial widow-maker of the present era is likely to be US government debt itself.
The sheer budgetary facts are bracing enough. It needs be recalled that fiscal year 2011, now underway, will encompass not a recession bottom but the sixth-through-ninth quarter of recovery. During this interval of purported rebound, however, the White House now projects red ink of $1.645 trillion. This means that 43 cents on every dollar spent will be borrowed, thereby generating a financing requirement just shy of 11 percent of national income.
These elephantine figures mark a big lurch southward — since deficits only half this size were expected for the current year as recently as last spring. Notwithstanding a full year of green shoots and booming stocks, however, Washington embraced a monumental round of new fiscal stimulus in December.
The result was a trillion-dollar Christmas tree festooned with fiscal largesse for every citizen — inclusive of the quick as well as the dead. Moreover, this bounty was extended without prejudice to each and every social class — with workers, the unemployed, the middle class, the merely rich, and billionaires, too, getting a share.
It would be foolish in the extreme to dismiss this budgetary eruption as a fit of transient exuberance — even if by the president's own admission the White House was in a shellacked state of mind, and in no position to restrain December's bipartisan stampede. In fact, the United States is clocking a 10-percent-of-GDP deficit for the third year running because this latest budgetary fling is just another episode in the epochal collapse of US financial discipline that began 40 years ago at Camp David.
That the demise of the gold standard should have been as destructive of fiscal discipline as it was of monetary probity can hardly be gainsaid. Under the ancient regime of fixed exchange rates and currency convertibility, fiscal deficits without tears were simply not sustainable — no matter what errant economic doctrines lawmakers got into their heads.
(Fellow graduates of the public school system: "gainsaid" means "denied.")
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Continental Illinois Holding Corporation accounces its incorporation in Delaware, USA
Destroyed America or killed capitalism? Which is it? Capitalism is a pyramid scheme... America is a country.
I'd say both. They destroyed capitalism and replaced it with a crony kleptocracy which has thoroughly corrupted the government.
When you've destroyed the principles of freedom and justice that the founders left us, you've destroyed America.
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