About this week’s show:
- Rogue Central Bank
- Rigged markets
- Radically different world to follow
- Stockman’s latest book: Click here
About the Guest: David Alan Stockman is a former U.S. politician and businessman, serving as a Republican U.S. Representative from the state of Michigan and as the Director of the Office of Management and Budget.
The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick
Kevin: David, today we have a very special guest. He was the budget director for the Reagan White House and he has written a book to his daughters letting them know what is wrong and why, and he is really trying to prepare them for the next generation.
David: In 716 pages, it’s a polemic that looks at the issues from a nonpartisan perspective. It’s not intended to be a scathing critique of, specifically, Republicans, or specifically, Democrats. It’s a very fair appraisal of the political missteps made going back 100 years, and in terms of political economy, the way things have been mishandled through the years.
The growth and change at the Federal Reserve from a group that was very intent on sound money at one point in its history, to a group that very much abuses its privilege and has seen a tremendous amount of mission creep, not just the two stated mandates, but now asset price fixing in the open market, whether that is the Treasury market, the mortgage-backed securities market, or even a suggested target for the S&P 500 or the Russell 2000.
This is an interesting era to live in and what he is looking at in this book is the role of the state in directing the economy. How well have they done that? Are they supposed to do that? And what exactly has been the story? If you want to understand the present context and our future crisis, you have to understand what has led up to it. I would describe the book as invaluable. I would describe the book as a necessary purchase, not as something to sit on your shelf as some sort of a token, but something that you study through.
Some books are meant to be tasted, others chewed. This is intended to be fully digested. Is it a commitment? Yes, absolutely. You probably have 120 hours plus of reading ahead if you want to fully understand what is in it. But I would suggest, not only to appreciate where we are and where we are going, but perhaps to offer solutions in a future generation, you need to appreciate mis-narratives and the things that stand as myth in the marketplace about how we got here.
Kevin: David, one of the things that you are a proponent of here in the office is reading books. We try to get a book in once every month or two, and we get together and discuss it, and for the person who is intimidated by a 700-page book, what struck me as we read this book is that it is broken into five parts. It is really like buying five absolutely necessary books. So a person who buys this book might want to take it one bite at a time and just treat it as if they are reading five books over time.
David: You will find a very original interpretation, I think, on many of the events of the last 100 years, many of which, as they relate to the 1960s era and forward, were issues that David participated in directly.
David Stockman, as you mentioned, was in the Reagan White House as Budget Director, but before that was a Michigan Congressman, and got to see a transition firsthand, a transition from what was sort of a Truman and Eisenhower era way of managing finances, to absolute fiscal profligacy. And it was something that drove him crazy, even in the Reagan Administration.
Reagan was certainly credited for a significant change of political tenor, but in terms of economics, things went from bad to worse between Reagan’s and then George H. W. Bush’s administrations, and we had a tripling of the national debt, and the idea that somehow the growth in the economy, which we have seen, and been the beneficiaries of, was somehow organic in nature, and not contrived by central bank money printing, and massive fiscal deficits, the scale of which had never been seen in U.S. history, and frankly, only now look like molehills by comparison to what we have today.
This is what David is getting at. The contribution that Mr. Stockman has made, I think, is invaluable, absolutely invaluable. If you haven’t ordered a copy of the book, which was released this month, it is absolutely worth ordering.
Kevin: It’s called The Great Deformation, and that’s what he’s talking about. We have David on the line right now.
David: Mr. Stockman, after leaving the White House, you wrote a book called The Triumph of Politics, looking at the abuse of deficit finance, and frankly, the hypocrisy of the Republican Party. Then, in April of this year, you released, The Great Deformation: The Corruption of Capitalism in America. You are obviously still concerned about the fiscal path we have run down, and in this recent book you also chart the decay in our monetary system through time, and I have to say, from the first line to the last, there is a real fire in your belly.
Where to begin? I feel like I’ve just emerged from a graduate level seminar on things that you thought you knew, but were mistaken about. I guess the title of that seminar could be, “False Narratives of the 20th Century and Their True Social Costs.” You may recall, we met at the Plaza Hotel just a few weeks ago. I enjoyed your comments there, and you shared, more or less, a survey of past policy missteps which have contributed to landing us very much downstream in a curious, or even a desperate place. Maybe you could just start by walking us through the genesis of today’s predicament.
David Stockman: Yes. I think it is long, involved, and complex. It is a historical evolution where one questionable or false step led to the next, and in order to grasp it and comprehend it, I think you have to focus on where we ended up and then move back in time, historically. We have ended up with a rogue central bank that is basically defying every canon of monetary rectitude of sound finance that everyone believed in, I believe, as recently as 1980 or 1990.
And yet, today, it is taken for granted that the Fed can massively intervene in all the financial markets, essentially disable the pricing system in the financial economy. By that, I mean, interest rates are the price of money, they are the price of debt, they are the measure of yield curve, risk, future cash flows, and everything else that we have known, historically.
None of that works anymore. Everything is rigged and pegged by the Fed, and the market knows this, and therefore the market is now trading almost exclusively and solely the liquidity injections of the Fed and the words and statements and smoke signals that are emitted, both on a regular basis after their monthly meetings, and in various statements that the core of what I call the monetary politburo gives in speeches and public statements.
This is a massive deformation of any notion of central banking, whether gold standard, or even Friedmanesque, and what I’ve tried to do in the book is to work back in time and see how we ended up at, really, what is essentially a lunatic state that we are at today. I think the answer is, Greenspan led us off the deep end when, in the 1990s, he essentially created the policy notion of wealth effect management and that somehow by inflating the financial markets, wealth could be created, and that people would feel wealthier, and then spend and invest more, and are virtuous.
I think this is totally wrong and it has created, simply, a serial bubble machine, and led to the various panics that Greenspan presided over in 1987 after a Black Monday, in 1998 after the Long-Term Capital crisis, obviously in 2001 and 2002 after the dot.com crash, and then his heir did it even more dramatically in the fall of 2008 when Lehman went down and the fire hoses at the Fed were cranked up at unimaginable pressure levels. They were actually injecting new cash into the market seven weeks after Lehman at a $700-million rate per hour.
That’s a little bit of what I’ve tried to lay out in the book. Of course, there is a lot more to it. You could go back to Nixon and the Camp David events in August 1971, the huge mistake of shutting down Bretton Woods and defaulting on our obligations, of taking the dollar off the old gold exchange standard. That paved the way for everything that slowly evolved thereafter. There were some bad moments and good moments. Arthur Burns was a disaster. He was a tool of the Nixon White House, and he created the great inflation of the 1970s.
But we did have a reprieve when we got the right man at the right time and Volcker had the iron resolve that was necessary to face down the speculators in the commodity markets, and bring the commodity and food inflation to an end. But that was only a reprieve, it wasn’t a turning point. He was basically drummed out of the White House, as I lay out in my book, by the Baker Treasury Department, because he was unwilling to goose the economy into the 1988 election. So we got Greenspan, and then the gradual, but accelerating breakdown that occurred with the bubble finance that he instituted in the 1990s.
David: David, when we talk about crony capitalism, it didn’t appear out of nowhere. There is past precedent, there is political compromise, there is direct interference, as you mention, by the central bank. All of this plays into a world today of very politically connected players, playing by sometimes a very different set of rules, even when it comes to preferential tax treatment.
On our program we have mentioned GE’s tax credits and minimal corporate tax contributions as just one example. You look at the market today, and you suggest that maybe capitalism can’t fix it this time, that market capitalism is now at the end of an era, and it really is epitomized by this corrupt nature. You also include, though, some suggestions of what can be done to fix the problems that we have.
As I note, in terms of the volume of the book, the solutions are, I think, 8/100ths of 1 percent of the total volume of the book, which to me does suggest that perhaps you see a real inevitability to a market collapse, or certainly, just the consequences of 30 years of a debt super-cycle. Do you think there is a way to avoid an ultimate comeuppance in the marketplace?
David Stockman: I think the prudent answer to that would be no. I think we have now drifted so far into uncharted waters that we have machinery in place, and a belief system that at least dominates the mainstream narrative, that is certain to end in some kind of massive financial dislocation. No one knows when, or can predict the time, because we have never been here before.
We have never had a central bank in modern times, and now all the central banks are following the Fed today, but until the Greenspan era we never had central banks that were willing to intervene in markets this heavily, that believed they could basically manage the entire macro-economy through interest rates, market puts, the Greenspan and Bernanke put, managing the yield curve, trying to drive capital into markets that they prefer, such as housing through the massive purchase of mortgage-backed securities, or even going so far as many of the members of the monetary politburo do today, suggesting people should not be putting their money in CDs, and therefore we’ll give you 40 basis points if you do. Instead, we want you in the Russell 2000, we want you in the junk bond mutual funds, we want you out taking risks in the financial market.
This kind of behavior by the central bank is so dangerous. It is so lacking in any kind of logic or historical demonstration that I have to believe that it is just winding the financial markets up for a massive failure once confidence is breached or cracked in the Federal Reserve and the 12 members running the Open Market Committee. Everything is front-running the Fed today, there is massive trading in the Treasury notes, but it is all based on repo, and therefore people are buying the Treasury to yield 1.7 and putting it up instantly as collateral but in the repo market, borrowing 98 cents on the dollar and paying 10 basis points, at most, for their carry.
Well this is dangerous stuff because when they ever decide to unwind the repo, either because the Fed ultimately has to normalize interest rates in the money market, or because yields start to rise and prices start to fall in the Treasury debt market, you are asking for a panic. I think we have a massive bond bubble that was artificially created by the Fed.
The simple question here is that if they were to put up a sign that said, “Gone fishing for six weeks,” or “six months,” do you think the 10-year Treasury note would be yielding 1.7? Of course not. There would be a massive sell-off, the yields would rise dramatically, and therefore the proof would be darn evident that this is not a real price, this is not a market price, this is an administered, rigged price, and that is the danger that we have throughout the financial markets, because ultimately, everything prices off of, one way or another, the Treasury yield curve.
David: We have, as you point out in your book, a situation where Wall Street has become a casino. It doesn’t offer the value of price discovery or capital allocation. It’s run rampant by leverage speculators, with what we used to call the Greenspan put, but it basically is a “Heads we win, tails you lose,” set of outcomes, and that is the backdrop for the market today. As you have just said, it is based on a read of Fed activity in the marketplace, no longer looking at the profitability of corporations or where we are in a business cycle, because largely, the business cycle has been eliminated or eradicated.
David Stockman: Yes, I think that is a really important point, and that’s what I have been saying. Basically, the price discovery and the pricing mechanism of the financial markets of Wall Street, if you will, has been totally disabled. So therefore, the massive churning in the markets daily, and the darting from one hot trade to another, one momentum play to the next, does not have an information basis to it, other than information about what’s trading up, and what’s trading down.
It doesn’t matter what the companies are doing, what their prospects are, what their financial statements say. It doesn’t matter what the financial, fiscal condition of the U.S. government is, or the Italian government, or any other issuing entity. The market is now simply trading on the actions of the Fed and the smoke signals that it emits. This is really dangerous because it does make it a casino. It is not a place where primary capital is raised anymore.
I show in the book that over the last 20 years there has been about net 4 trillion dollars of equities liquidation. In other words, even though there have been, from time to time, little spurts of IPOs, and even though some companies occasionally do secondary issues, the massive focus on stock buy-backs for short-run pops and earnings per share, for cash M&A deals that 3-4 years later fail, and billions are written off.
That has, basically, liquidated massive amounts of equity, and fueled short-run momentum trading and casino windfalls, but obviously undermines the long-run viability of most of the issuers in the public market. They have used their cash flow to buy back stocks, or to buy other companies, not to invest in what we normally used to think of as productive assets for the long-run future.
David: You point out that false prosperity can be seen throughout the last 100 years, but usually it is marked where the Fed is intervening in the marketplace. We had 20 years of growth in the equity markets and, as you point out under Reagan and George H. W. Bush, the public debt tripled. Supply-siders would argue that that was an era of fantastic growth and you look at the statistics and say, no, actually, it wasn’t.
But this is an issue of intervention in the natural course, and although we are at the end of a 30-year credit boom, there should be a naturally corrective process, and yet it is this mission creep from the Fed which is essentially holding the market in place, being a stabilizer, being an asset price-fixer, if you will. We would like to argue that there is comeuppance at some point. How long can you suspend the market from trading on the basis of fundamentals? That is obviously something that is lacking today. Fundamentals are not in the picture. As you said, it is Fed announcements, it’s the smoke signals from the Mariner Echols building. When do fundamentals begin to matter again?
David Stockman: This is really the heart of the question, and the only thing we can do is look back at the serial bubbles that we have had since the Greenspan era inception, and I think we can see that there was an utter suspension of disbelief as we got to the top of the dot.com bubble. I showed in my book, for instance, I took 12 of the big cap names, from Microsoft, to Dell, to Lucent, and many others, at the peak of the bubble in the spring of 2000, and I showed that their market cap in the 40 months between that peak, and we all know there was a massive splattering after that, but in the 40 months ending in that peak and beginning when Greenspan gave the famous “irrational exuberance” speech in December of 1996, the market cap of the 12 leaders went from around 800 billion to 3.6 trillion.
Even though those were good companies, by then they were reaching maturity, they included big cap names like GE and AIG, which didn’t have high-tech growth characteristics at all, but the momentum was so great, the suspension of disbelief was so great, the “this time is different” theory was so prevalent, that suddenly these companies were trading at 40, 50, 80, 100 times forward income. And then the music stopped, and within about a year-and-a-half, literally 2.5 trillion of that market cap evaporated and never came back. Many of the companies disappeared on that list of the 12 big ones, and even the ones that have survived and bounced back a little bit never attained the kind of market cap, 500 billion or more, that they had at the peak.
What I’m saying is, no one saw it coming. All of a sudden massive market cap vaporized in a short period of time, and then they went back to the same old policy of reflating the bubble with the Greenspan panic reduction. He cut the interest rate from 6.5 on Christmas Eve of 2000 to 1% by May or June of 2003, just nothing like it, a 90% drop in the money market rate pegged by the Fed in a very short period of time. It obviously unleashed the speculative juices like never before. We got the housing bubble. Nobody could see it. Even by spring of 2007 Bernanke was saying, “It’s a small problem, subprime, small adjustment, no spillover, everything’s okay.” And then, suddenly, everything unwound in a few days after September 15, 2008.
I think the point I’m getting at is that you don’t know when the bubble is going to break, but suddenly it does, and then there is panic selling of massive magnitude. And we are setting ourselves up, I think, quite clearly, for the third big financial bubble, and then bust, of this century. The behavior that we saw in 2006-2007, or in 1999-2000, is now rampant everywhere. Look at Triple C junk bond yields. They are pushing 5.5%. That is utterly crazy, given the credit profile inherent with the Triple C, and given what is needed, ultimately, for even the benchmark Treasury rate to normalize. So we have it everywhere. The housing bubbles are beginning to come back dramatically, again, because of leveraged speculators coming in from the big funds in New York, hedge funds, the LBO funds, and sweeping out properties in single-family homes in suburban communities in all the busted housing markets. This isn’t natural. It is driven only by cheap debt. Hedge funds and LBO funds in New York are not natural owners of single-family homes, and so we are just setting up for the next bubble.
David: There is this sort of incestuous relationship between the Treasury and the Fed, where rates could not possibly be this low unless the Fed was interfering in that marketplace, and the back story to this is really the triumph of both the welfare and warfare state. These are fiscal legacies, which, in your book you chart out quite a back story, but we, today, are addicted to huge military spending. We must provide all of the needs to everyone, not only in the United States, but it seems, all over the planet. Fiscally, this is a disaster.
What we have been talking about is monetary and market vulnerabilities, but behind that is a fiscal mess that, frankly, we could spend the rest of our lives trying to clean up. Can we clean it up? We anyone address reality? Or will politicians continue to kick the can down the road, assuming that someone else will catch it on their watch?
David Stockman: Unfortunately, that is one of the enormously destructive side effects of this financial repression policy operated by the Fed. I checked this morning and the Treasury could borrow 90-day money at 5 basis points, 1-year money at 11, a 10th of 1 percent, 3-year money at 35 basis points, and 5-year money at 70. In other words, these are absurd prices for Treasury debt, even if it is allegedly risk free, in an economic environment in which inflation is 2%, at least, and has been for a decade or longer, and has no prospect of dropping lower.
Therefore, the Treasury is financing itself at negative real rates. When that signal is given to Washington politicians, their response is, “This is free money. Therefore, we’ll kick the can another year, another quarter, and we recognize that it is a fiscal problem, but it is down the road somewhere.” Right now, the ability to raise debt is so cheap that no one is going to fall on the sword. No one is going to tell the public that the pain needs to be dispersed.
Therefore, we have the absurdity of a 650-billion defense budget in a world in which we have no industrial-state enemies. The only threats we face are really police issues from the kind of random terrorists that we just saw another example of last week, but it has nothing to do with a 650-billion dollar defense budget, 11 carrier battle groups which each cost 30 billion, 1.5 million men and women under arms, full, massive procurement and bureaucracy of the Pentagon.
I think it is the equivalent, today, of the WPA. It is just a giant make-work jobs program, that is wasting massive fiscal and societal resources, for no purpose, and yet the narrative is that we have to keep it going, and we can’t even face that problem, because the military industrial complex, the crony capitalism that drives the Pentagon budget, is so powerful, and so unyielding.
David: G20 is basically giving a nod to the Japanese to do what we are doing, on perhaps a more subtle basis, 2% degrade to the dollar, versus a much more rapid decline in the yen this year. You do see, and I think reasonable minds would ask, can the Japanese government bond market hold together with a massive reflation in play? And frankly, you could ask the same question here in the U.S. Treasury market. The end game seems pretty clear. Timing, of course, is a separate issue.
You conclude one of your chapters with this: “The cruel corollary is that free market capitalism cannot help. It has been abused, burdened, demoralized, and impaired by decades of central bank money-printing and the speculative raids and rent-seeking deformations which it fosters. Now the White House has a vague mandate that the 1% should pay more, but it is too late. The coming crash will leave a lot less to tax.”
Is this the end of Keynesian economics? Or from here do we see sort of an explosion of hyper-Keynesianism?
David Stockman: I think that is a very interesting formulation. Clearly, what they are doing in Japan is now the most absurd extension of central bank Keynesianism yet. To put the two-year buy that they are committed to in U.S. economy scale, it would be the equivalent of the Fed announcing it is going to expand its balance sheet by 5 trillion over the next two years. This is just off in loony land, I think.
And yet, the G20 adults, so called, got together over the weekend and no one was willing to even disturb the fiction that the Japanese, by massively printing yen, are not driving down the exchange rate, though it is obviously visible by the minute and the hour, that the exchange rate of the yen is collapsing. It is intended. And yet, they have basically given Japan a pass because no one wants to say that the whole system of central banks, globally, is on a path of a race to the bottom, and that the entire monetary system of the globe, of the world, is at risk.
They try to play it one week at a time, and I think what we saw in the non-statement, the non-response to this, is another indication that no one knows what is going to happen next, that everything is seat of the pants, they are making it up as they go, just as they are in Europe with the unraveling of the euro and their goal at the ECB and Brussels is playing into that farce. It’s happening everywhere around the globe, and I can’t predict how soon confidence evaporates suddenly and massive selling of everything begins, but at some point, clearly, that is the real risk in front of the markets.
David: As we wrap up, I mentioned that you write this from cover to cover with a real fire in your belly, and I can understand the frustration that you had in the Reagan White House, seeing budgets blown to pieces and deficit-spending on a scale never witnessed in U.S. history. Could you have imagined, at that point, that we would have covered the kind of ground we have since you left the Reagan White House? To put that in perspective, you wrote this book for your daughters, you open it up that way. You have to be looking and saying, “I have to speak to this. I have to speak to the issues here, and perhaps represent some possible alternative solutions, but this is madness.”
David Stockman: Right. And that is really the point that you began with there. In 1986 when I wrote the first book, I believed that these massive deficits would eventually hit the wall, that they would be self-correcting, because according to what everyone believed at the time, you were going to end up pressuring the bond market, interest rates were going to rise, private investment capital was going to be squeezed out.
There would be consequences, and at some point, the fiscal gap would be closed or fixed, but what happened was, Greenspan came along and discovered that in a world where East Asia became addicted to what I call the mercantilist export model and pegging their currency through buying dollars in unlimited quantity, what happened was that we gained a couple of decades because the Treasury debt now could be financed at the central banks of East Asia, and then eventually, the central banks of the world.
No one could have foreseen that the People’s Printing Press of China, as I call it, would own 3½ trillion dollars’ worth of reserve assets. Those aren’t reserves. Those are just the visible evidence that they have been massively pegging their currency, rigging their exchange rate for years, in order to afford their house-of-cards export economy.
None of that could have been foreseen in 1986, yet it happened. It created the massive disarray that we have in the fiscal and monetary world and financial markets today, and therefore if you were to repeat the exercise and imagine what the outcome might be 25 years from now, I think it is totally impossible. This one is so radical, this one is so historically unprecedented, that it is nearly impossible to imagine where we are going, but it can’t be in a good direction because if it is in a good direction, what have we been waiting for? We should have been running massive deficits and running the printing presses of all the central banks of the world overtime for the last century.
People used to know better than that, and now everyone is caught up in the bubble, in the denial, in the entertainment of propositions that are really absurd, and so therefore the future can’t be very good.
David: At the dinner table, how would you advise your kids, as you look to future generations and you say, “Listen, what I’ve left you is something of a legacy here to understand the past and the current predicament that we are in, but at a very practical, at a very strategic level, here is what you need to consider. These are the changes in our midst. Here is what you must do?”
David Stockman: Yes, I think you have to say you need to prepare for a different world. Since World War II we assumed that growth was given, that the only issue is whether it be 3%, or 4½%, if you followed the right recipe, Keynesian, and then Lafferism, and supply side-ism and so forth, but growth was inevitable, living standards would rise, everyone would do better than their parents, and I think the point going forward is that maybe the era of growth is over. Maybe we have so exhausted the balance sheets of both the private and public of our economy, that we are going to be lugging this millstone of debt for decades into the future, and therefore you have to prepare yourself for a troubled, austere economic future, because that’s pretty much what this generation is handing on to the next.
David: We appreciate your contribution. Again I come back to my earlier comments that finishing this book was like walking out of a graduate level seminar on the false narratives that you have been taught in business school and in the current lecture halls where you learn finance and various economic models. I appreciate you taking the time to write it.
David Stockman: Great. Thank you.
Kevin: You know, it is interesting, David, we have so many people right now who are getting beat up in the markets. Markets are not doing what they are supposed to do. If you look at fundamentals, things are going the wrong direction, even gold, the last couple of weeks, just purely manipulative markets. He talks about that. Price discovery is no longer even a function of the market. It’s a function of little tidbits and inside information and manipulations from the Fed, and announcements, interest rate maneuvering, all the things that we have no control over.
David: Right. Not trading on the basis of fundamentals, trading on the basis of smoke signals from the Mariner Echols building, that is, the Fed headquarters. This is fascinating, because today we have the opportunity to learn and to grow. We have the opportunity to gain insight, and this brief interview does not do justice to the 700-plus pages that David put into The Great Deformation: The Corruption of Capitalism in America.
The critique that will be leveled against capitalism is that capitalism has failed, and therefore we need some other kind of system. What I think you can conclude after reading David Stockman’s book is that what is failing today is not capitalism at all, what he describes as crony capitalism, would, in past generations, have even been described as corporatism, and in even an earlier generation, fascism.
This is a system where insiders win, no one else does, and this is a system that ultimately is not sustainable. To appreciate what is responsible, the policy measures which have been put in place over the last 100 years, the policy missteps, both in terms of public policy and monetary policy – absolutely essential. I can’t recommend the book highly enough. I don’t know where to begin in terms of what was the most valuable part of this book, because page after page after page – actually, if I were just to read my notes in the margin, it would take me a day-and-a-half.
Kevin: David, for the person who is absolutely worn out reading about the financial problem of 2008, and just doesn’t want to read another book on it, I think the key on this is that this book does have solutions that he is suggesting at the end, but he is also, in the analysis of the problem, sharing with the next generation how not to do it again. We have, in the past, talked about fourth turnings going to first turnings. In other words, you have to sometimes have a collapse to have a restart, and actually, you have to understand the problem and how we got there to have a correct restart.
David: That’s exactly right, and I think by casting the characters as accurately as he does, with policy villains and policy heroes. He has the villains as Franklin Delano Roosevelt, Richard Nixon, Arthur Burns, Walter Heller, Milton Friedman, John Connolly, George Schultz, Art Laffer, Casper Weinberger, Alan Greenspan, Newt Gingrich, Bob Rubin, George W. Bush, Hank Paulson, Tim Geithner, Barack Obama, Paul Krugman, Larry Summers, and Ben Bernanke, we can’t leave him out. These are the policy villains.
If you want to understand the story, you have to figure out who is on the right side of these issues, the policy heroes, including Carter Glass, Professor H. Walker Willis, Calvin Coolidge, Herbert Hoover, Louis Douglas, James Warburg – some names that you don’t even know, but you need to get familiar with – Harry Truman, Dwight Eisenhower, George Humphrey, a real hero in this story, William McChesney Martin, Douglas Dillon, Paul Volcker, Bill Clinton, Paul O’Neill.
There will be surprises for you in terms of who were the villains and who were the heroes, but when it comes to fiscal issues, and monetary issues, the book dispels many a myth, and goes back to those false narratives which you need to undo and relearn.
