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Following the surprising shock of a Trump election victory, economist and best selling author David Stockman joined Fox Business to discuss what is to come in the first 100 days of the Trump administration. He expanded his analysis on the Federal Reserve policy, the U.S national debt bomb waiting to happen and why the market is running on a fool’s errand of hope.
When asked what happens what happens when the new and incoming administration begins to pay off the national debt he responded, “There is a $20 trillion dollar ticking time bomb called the debt ceiling right in front of us, that will happen in March. The new Trump administration is going to inherit that mess. I call it a stink bomb left from last October when Boehner and Obama made that deal. For the new president it is going to consume the first 100 days trying to get that thing through. Republicans are not going to want to vote for a $20 trillion debt ceiling.”
David Stockman is a former Reagan administration official having worked as the director of the Office of Management and Budget. He also served in the United States Congress and followed that with working in Wall Street for multiple decades. His latest best seller, Trumped! A Nation on the Brink of Ruin… And How to Bring it Back, is out now – learn how to claim your free copy by clicking here.
“The market was giddy on the view that Washington is coming to the rescue with a huge new fiscal stimulus and infrastructure plan. That is dead wrong. The news flash is that Washington is out of business. The imperial city is in smoking ruins. It will not function, confrontation, brinksmanship. That means we will hit the next recession with nothing to break the fall. The Fed is out of dry powder and Washington will be paralyzed.”
When prompted by the Fox Business reporter on whether the growth projections out there were realistic and his thoughts on GDP growth anticipation in the markets Stockman took direct aim. He responded, “That is the skunk in the woodpile. The growth in the baseline is totally unrealistic. The CBO baseline. It is a rosy scenario. If you did everything that Trump wants to do and it works as the supply siders say, you’ll be lucky to get what is already assumed. There is no extra revenue. There is no deficit reduction. The CBO baseline assumes we are going to go for 208 months without recession which has never happened in human history.”
“We are entering a chaotic period of non-governance. Of a central bank that can’t function anymore. There is nothing to rescue this economy. We are going to have a recession. I follow the IRS, not the BLS. The IRS tells me how much money they are collecting. It has been flat, and actually negative for the past several months. That means the economy is long in the tooth and slipping into a recession.”
In summary about his projection for President Trump in his first months in office he noted, “When the confrontation over the debt ceiling happens, when the disappointment over no traction on the Trump stimulus happens, we will be in recession. I will say in 6 months, the deficit will explode over a trillion dollars annually. They’re not going to be in a position to do all of these huge things. I don’t blame Donald Trump, he is inheriting a mess. A rigged system that is far worse than anything he imagined.”
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