The Economic Danger Posed by Trump

Published on
February 25th, 2019
Duration
32 minutes

The Economic Danger Posed by Trump

The Expert View ·
Featuring David Stockman

Published on: February 25th, 2019 • Duration: 32 minutes

David Stockman, the former director of the Office of Management and Budget under Ronald Reagan, and the so-called “Father of Reaganomics,” explains why he sees Donald Trump as a big departure from the Republican president he served. In his view, Trump’s policies will hasten an economic crisis. It all starts with the Fed, which Stockman says has inflated assets, thus increasing wealth inequality. He contends that Barack Obama missed an opportunity to change a “failed regime,” but that Trump’s policy position only furthers the path toward a dangerous outcome. Filmed on January 25, 2019 in New York.

Comments

  • VM
    Vincent M.
    20 March 2019 @ 18:01
    Guys lost me when he celebrated his time in SDS.... Another perma bear who will eventually be right.
  • WM
    Will M.
    8 March 2019 @ 17:06
    Almost everything David says is absolutely factual. Like so many of his ilk he has be banging on about the state of the US economy for many years and the refusal by western governments to accept that a recession cleans out the capitalist system and the use of central banks to completely distort the money supply and generate crony capitalism and destruction of the European bond markets, is leading us to total chaos. His points about the backlash against Trump, especially when a recession finally hits the US in 2019 or 2020 (likely originating from Europe or China), are happening before your very eyes as witnessed by some of the Democratic candidates and their statements. Just listen to anything the ignorant Alexandria Ocasio-Cortez says. The Democrats are going to swing to the left and bring forth left wing policies that will swing the US toward social violence. Some commentators here simply don't appear to read the facts. During the next recession the government deficit will soar above 2 trillion per year and interest rates will initially likely be forced to 0% or below as in Europe. Eventually the financial house is going to crash. I thought that would happen back in the late 2000s but the CBs staved it off again till now. We are all "frogs" slowing being boiled to death. Its simply a question of when the tide visibly goes out and exposes us all to the naked zombies companies and leveraged fat cats of finance. The fall out will be worse than the 2008 GFC. As for Trump, he has not grown in office and will suffer the wrath of the centre left next time around. May the Force take pity on us all.......
    • SY
      Steve Y.
      12 March 2019 @ 18:23
      Totally agree. I know Stockman has been preaching this doomsday scenario for some time, but he will be right sooner than later. IMO, this is the biggest asymmetric trade since the 2008 crisis. Short equities, long volatility whatever your preference, There is a tremendous amount of money to be made. You just need to be on the right side.
  • XF
    Xavier F.
    5 March 2019 @ 01:55
    another ...know it all, out of touch academic
  • DP
    David P.
    5 March 2019 @ 01:47
    I like Stockman and see most of his arguments as empirically sound. I've read his book "The Great Deformation" and its well argued and well researched - good overview of the abomination of U.S. fiscal and monetary policies going back about 50 years. My one criticism of the many times I've seen him interviewed is that he doesn't seem to play to his internal Socrates. THat is verbalizing: "If I'm wrong, he's what the world might look like." It's abundantly clear that central banks, governments, etc. are pursuing the "boiling the frog" strategy (can kicking)...It's worked amazingly well for a decade and not only do I know what financial repression is now, I live it. What's the medium term strategy if can kicking continues? Most people need a mid-way point between going short / all cash and remaining willfully unaware of the fragility of it all...
  • JE
    John E.
    1 March 2019 @ 01:54
    Leaning towards rigid ideologue, not as nuanced as Drunkenmiller or Dalio, but gives some interesting timelines. Also, his point that the Dems could offer a populist as polarizing as Trump is very interesting
  • CT
    CHRISTIAN T.
    28 February 2019 @ 00:18
    Fantastic, to the point and high level interview.. Big thumbs up!
  • MY
    Milan Y.
    27 February 2019 @ 12:10
    Economic and business cycles rinse and repeat itself regardless of which political identity is elected.
  • WG
    Wade G.
    26 February 2019 @ 23:09
    Good talk Mr. Stockman, thanks. Stockman's books Triumph, covering his Reagan years, and Deformation, on ongoing destruction of capitalism are must reads. Someone below thinks he's a RINO. It makes me wonder what the hell people think a RINO is. Stockman is a national treasure; an iconoclast for the ages. He's one of the few people who understand the system (Washington and Wall Street) and willingly, persistently, describes it, including all of its faults, including self-serving delusions and fraud. He's a laissez-faire capitalist-- something that used to be a defining characteristic of republicanism; judging from some of the remarks below, none of this is understood.
  • PG
    Philippe G.
    26 February 2019 @ 19:38
    You could argue that the gap between Main and Wall Street was one of the key factors which lead to Trump's election...so perhaps not a "fluke" Good clip overall.
  • WB
    William B.
    26 February 2019 @ 18:15
    Stagnant wages...stagnant industrial production growth...lack of meaningful job creation...etc... YES!!! This is what a multi-decade erosion of a country's standard of living advantage looks like. And it began for the U.S. when the Berlin Wall fell and a few billion humans from formerly closed economies in eastern Europe and Asia joined the global workforce in the ensuing years. Did anyone really believe equilibrium would be achieved by the standards of living for the folks in those regions rising all the way to match that of the U.S.? No, it was always going to be a mix of their living standards rising AND that of the average American's falling. It's an admittedly grim thought, but the only development that would seemingly reverse this trend is the emergence of a new geopolitical conflict - hot or cold - that returns the world to the days of a far less integrated global workforce. (Hmmm, let's see: might we be in the early days of that, at this very moment?)
  • MM
    Mike M.
    26 February 2019 @ 16:50
    Reading the responses to Stockman suspect the end of the Ponzi scheme is nigh. Real Vision will want to keep this interview for historical reference. Trumponomics is how the deep state and political class will insure this is one term president.
  • JO
    JOHN O.
    26 February 2019 @ 13:28
    Excellent piece! This is why I love RV. I agree with a lot of the other comments that Stockman's thesis might be a bit off base but he does bring up some excellent points to ponder. He also shoe-horns some valid statistics into arguments where they no longer belong (or never did). But you can't deny that there are many management teams that have strip-mined their balance sheets (love that term) for short term reward to the detriment of long term prosperity. And, I fear he might be right in predicting that the current administration's handling of fiscal policy, regulation and strong-arming the Fed will lead to a revolt to the left in 2020. WHERE HAVE ALL THE MODERATES GONE???
  • DI
    Dabangg I.
    26 February 2019 @ 06:45
    One long rant!
  • AA
    Aaron A.
    26 February 2019 @ 03:59
    Does Stockman hang out in Puerto Rico with Peter Schiff? Same bearish tone over the longest US bull market ever. Sure, eventually he will be right, but he just sounds like a Trump hater to me. “No breadwinner job growth”? Wtf is he smoking...I know a lot of people being hired into these type of jobs. Don’t blame Trump, blame the Fed. They are the true inflators and manipulators. Stockman just sounds like a hater. Maybe he should watch his own interview.
  • GF
    George F.
    26 February 2019 @ 02:44
    Hello Mr. Stockman, I purchase your books, but I believe more policymakers would listen to your analysis, if you also acknowledged the herculean efforts Mr. Trump has made, against many odds, to help the working class, the working poor, middle America and the real economy. i.e. expanding manufacturing, growing breadwinner jobs, increasing real wages, economic deregulation, job training, prison reform, minority employment, and energy self-sufficiency. America is in trouble and you should be part of the solution ... Thank you. gfv
    • MK
      Michael K.
      26 February 2019 @ 03:59
      Sorry sir but what planet do you live on? Where did all the tax cuts go exactly and how did they help the people who’s lot you lament?
  • GC
    Gary C.
    26 February 2019 @ 01:18
    This discussion by a government insider and long term Wall Street insider is a superb discussion of the mechanics of why we have minimal manufacturing and stagnant wages, and are heading for a financial denouement. Understanding the plumbing diagram is more important than the 30 second clip of what to do about it...”short the market” I can assure you after reading hundreds of pages of books and his Contra Corner daily comments, his investment option thoughts were left on the cutting room floor
  • PD
    Peter D.
    26 February 2019 @ 00:35
    Fed manipulations - both overt and behind the scenes - have made the most brilliant analysts and forecasters - of which David Stockman is one - look like complete idiots. The Fed - which implemented $8 trillion in secret swaps with other central banks during the last financial crisis, - will almost certainly pull similar stunts again. Share buybacks, possibly through other CBs, reverse repos, off-book stunts, everything is on the table now. Fundamental analysis is thus useless in the US. That should have everyone - not just investors - very worried.
  • BM
    Beth M.
    25 February 2019 @ 23:34
    And as much as I love Ronald Reagan (and I did) he blew the through debt ceilings regulary in his tenure...geee thanks David! And Pres. Trump wasn't elected on a "fluke" ...he's kept his word more than many presidents and that covers many decades. David needs to get a grip...Pres. Trump will win a second term and then he will have to eat crow...as so many other so called pundits already have!
  • SU
    Shakeel U.
    25 February 2019 @ 21:31
    Excellent, 10/10
  • DS
    David S.
    25 February 2019 @ 21:20
    Shorting the market in this scenario take near perfect timing. (You could already have been shorting for years.) A long term-hedge for those that are or must be fully invested should play out better. Counterparty risk in a major downturn is really a concern. Hopefully we will see content on multiple strategies on surviving the Stockman market collapse. DLS
  • GF
    George F.
    25 February 2019 @ 20:55
    “Get short” isn’t much of a policy prescription. I agree with much of the diagnosis but, Dave, what would you have done differently in September 2008 and what would you do differently now?
  • DS
    David S.
    25 February 2019 @ 20:40
    It is time to recognize that the CB around the world are not independent of their sovereigns. In the US politicians know they will not be reelected – number one job - in a bad economy. The Fed is now required to keep employment, the economy and Wall Street up in order that politicians will not change Federal Reserve oversight. In the last Fed U-turn, which I agree with for the short run, the Fed was bullied by the Congress and the President. The CBs of the world are the scapegoats for the actions of the entire government. Just blaming the Fed may be emotionally satisfying, but we are to blame as in the US we elect the Congress and the President. Another reason for term limits. DLS
  • RK
    Robert K.
    25 February 2019 @ 20:15
    I though I am alone. This literally lowered my blood pressure. Thank you.
  • BB
    Benjamin B.
    25 February 2019 @ 20:03
    If Trumps fiscal policies are bad for the country they will be a lot worse with the alternatives. Student debt loan forgiveness, universal healthcare for all, free college, reparations, etc. even with increased taxes on the ultra wealthy it won't cover the extreme leftest agenda being put forward by the democratic nominees.
    • DS
      David S.
      25 February 2019 @ 20:16
      Populism on the left is no the only alternative. DLS
    • BM
      Beth M.
      25 February 2019 @ 23:21
      I completely agree Ben...Stockman is just another RINO...with a long history of crying "fire" in a crowded theatre!
  • RA
    Robert A.
    25 February 2019 @ 19:56
    I imagine this Video will be quite controversial, but even though I am quite familiar with David’s’ views, I will listen or watch whatever he has to say. He is a great communicator and not only are his facts correct, each argument is logical and well thought out. But....here’s MY problem—CB unlimited money printing—which to my mind, is like a certain Popular Drug during the 70’s that starts with “C”.....”they say it kills horses and they say it kills Men, they just don’t say when!” If Stockmansan had written/said all this 15-20 years ago in Japan.....well, , Interest rates @ zero, a massive Debt to GDP with the BOJ buying and owing most of the Govt bonds as well as huge amounts of Corporate debt and equities and yet....and yet....life goes on and the Game and bubble continues. To me, Japan is THE template and I want to see what the upcoming Debt Jubilee looks like and how the aftermath shapes up.....no one knows although there is MUCH speculation in that regard... the final chapter has not yet been written. I wonder if there might not be a “rolling” Debt Jubilee among the Developed countries and China (eventually) with attempted coordination by the CBs and the Governments. I’ve been pushing Milton to get us some Heavy weight thinkers to present on the Debt Jubilee topic. You just know the DJ is coming—if the Debt can’t be paid back and can’t be inflated away then Default is the only other Option—I don’t like it one wit, but we need to learn from the smartest folks we can what it may look like and how we might prepare. Sounds like something that should be on Milton’s “to do” list.
    • RM
      R M.
      25 February 2019 @ 21:25
      Am with you on the request for a discussion of debt Jubilee and how indeed Japan appears to be the template for the world. Plz include Steve Keen who has interesting views on private vs public debt.
  • JB
    Jason B.
    25 February 2019 @ 19:45
    David Stockman is a brilliant guy but you cannot trade or invest on anything he says. He is partnered with another broken clock, Harry Dent, who is also routinely wrong all the time too.
  • GS
    Geoff S.
    25 February 2019 @ 18:41
    While I agree with his politics I think everyone here is well aware that you should never let your politics influence your investment strategy. And so his conclusion (that you should short the market) does not logically flow from the first half hour of the presentation.
  • IF
    Ian F.
    25 February 2019 @ 18:33
    To identify all of the wage, job, and capital investment issues over the past 30 years and to say it has nothing to do with WTO and everything to do with the Fed is a little myopic imo. These libertarians can't help themselves but to continue to beat the same drum over and over again.
  • MI
    Madhu I.
    25 February 2019 @ 18:30
    He has been saying this for 4 years. I don’t know how to use this information meaningfully since timing is off. He will be right someday.
    • JL
      Johnny L.
      25 February 2019 @ 19:07
      in any other time before 2009 and CB intervention he'd be right, also on the global data. Only a new investor would not know this. Federal Reserve has whored up the markets beyond anything I've seen since 1985. He'll is right. Markets will get that. WS mocked him on his call for 2008 as well. The data is clear about the outcome, the gimmicks/timing can not be figured out. He is telling you the outcome, not the day it happens.
    • EN
      Eric N.
      31 March 2019 @ 08:28
      Johnny, there are a lot of equally bearish investors which include CB intervention as an additional data point in their time horizon. Being able to reasonably adjust your worldview to fundamentally changing times is an important part in "being right". Let's be clear: everyone is 'eventually' right, and because not everyone can be right, some have to be wrong - being off this much in timing, at some point is the same as being wrong.
  • Sv
    Sid v.
    25 February 2019 @ 17:51
    The sky is always falling, except that it isn't.
    • WM
      Will M.
      8 March 2019 @ 16:44
      Sid i understand exactly what you are saying. I turned negative in 97, was blasé and resigned in 2006, and amazed that it hadn't all crashed by 2010 and again in 2012/13. The problem is things just keep getting worse. So, how long before the sky does indeed give us zero visibility at ground level. As a near retiree, I see no bright future but possibly one more government attempt to keep things going. This may or may not fail, but if the latter, then very bad things are guaranteed to happen IMHO
  • GG
    Guillermo G.
    25 February 2019 @ 17:44
    If part-time jobs have been the norm for the past decade, then it is no surprise that real economic growth in the US has gone nowhere. If David is right, this economy has no legs and growth (no matter how small it is) is not sustainable.
  • PB
    Pieter B.
    25 February 2019 @ 17:11
    It would be interesting if the USA replaces Maduro and then gets a socialist like Bernie Sanders shortly after....
  • PB
    Pieter B.
    25 February 2019 @ 16:47
    Thanks a lot David!
    • PB
      Pieter B.
      25 February 2019 @ 17:12
      Your analysis is absolutely brilliant!
  • EN
    Eric N.
    25 February 2019 @ 16:30
    I don't disagree with what he says, it just seems he said it so many times for so long, he is just rolling down all his data points, his boxed in conclusions, without really going through the thought process, and why what he said mattered, with the viewer. The facts are only half of what makes an interview or a presentation, what is just as important is the story. I missed the story here.
  • WB
    Wes B.
    25 February 2019 @ 15:54
    He seems REALLY ANCHORED to the world falling apart.
  • CB
    Chris B.
    25 February 2019 @ 12:54
    He may not be wrong but his absolute positions seem simplistic.
  • DY
    Donny Y.
    25 February 2019 @ 11:33
    Damn! This guy makes me want to jump off a cliff! 📉 But hey, that’s what makes a market!
  • AR
    Abishek R.
    25 February 2019 @ 10:34
    Inflation adjusted wages have remained flat. This means the Keynesian concept has just worked perfectly, the wages of the public have risen exactly in proportion to the cost of living. The book to buy is “The general theory of employment, interest and money” by JMK
    • JA
      John A.
      25 February 2019 @ 13:35
      First, you need to trust the inflation numbers (I don’t). Then you need to eliminate any idea of an increasing standard of living (I won’t) As people get better at what they do, they become more efficient, and prices should fall. Over time, our money buys us more stuff, and we experience prosperity. By targeting a price inflation rate, the Fed has effectively stolen the prosperity of the American people.
    • TM
      The-First-James M.
      25 February 2019 @ 14:00
      "the wages of the public have risen exactly in proportion to the cost of living" .... except housing and healthcare; kind of a large proportion of the cost of living from where I'm sitting...
    • DS
      David S.
      25 February 2019 @ 22:54
      John Maynard Keynes, 1883 – 1946, said to pay off the recession deficits during recoveries - which we have not. He did not envisage and age where the politicians bullied CBs to just keep increasing the money supply and not pay off the debt. He also lived in a time of the gold standard to help to control some of the politician’s willful spending. Who is controlling politicians now? We certainly are not. DLS