Stockman:  “They are kind of paralyzed and frozen (the Fed), and now simply making up one excuse after another for delaying the day of reckoning.  This isn’t a good thing because it’s going to shatter confidence.  Therefore, the markets are becoming increasingly unstable....

Continue reading the David Stockman interview below...


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Eric King:  “How dangerous are these policies they are pursuing?”

Stockman:  “I think they are extremely dangerous because the heart of capitalism is the financial markets, and they have completely destroyed any kind of honest price discovery ... It’s all part of a doctrine that’s destined to blow up in my judgement.”

Eric King:  “As you watch this end game unfolding, David, I’m just wondering how disastrous this will be?”

Stockman:  “It’s going to be catastrophic.  The market has bid up financial assets of all types, and if confidence is ever broken due to an unexpected event, a black swan, or a Lehman event, I think there will be massive selling.  There won’t be any bids, and the Fed will be hard-pressed to make a new rescue regime like it did in September of 2008.  After all, interest rates are already at zero, it can’t radically drop them like it did back then.

I think we’re on the edge at the present time.  Sooner or later the Fed can’t print enough money, buy enough bonds, or inject enough liquidity into the market to prevent real pricing from reemerging.  And when it does the price of everything will be reset much lower.  There will be huge losses.  All of the leveraged positions will be unwound, and it will start a general contagion in the financial system which will rip through all categories of assets with extreme speed and violence.

And so if we know that everything is artificially and dramatically inflated, when the correction comes and the bubble bursts, it’s going to be severe.  I don’t see how the elevator, which is going to plunge down the shaft, gets stopped this time around.”

Eric King:  “How frightening will that period of chaos you just described be for investors?”

Stockman: “There is every reason to believe that it will be outside the range of prior experience.  Once it is clear that the Fed is out of ammunition, I think it’s going to cause an even greater wave of panic than we had last time (in 2008).  I think it’s a ship of fools (the Fed).  They have enormous power over the entire financial system, not only domestically, but over the entire global system.  It tells you why this doctrine of monetary central planning is so destructive and dangerous.  No twelve people should be in a position to unleash this kind of turmoil.”

Eric King:  “In the 1970s we saw the 25-fold move in gold, before you guys (Stockman, Volcker & Dr. Roberts) rescued the system.  But this time around we’ve already seen gold up almost 800% (at the peak in 2011).  It almost sounds like gold could repeat or even outperform what we saw in the 1970s as this chaos really starts to unfold.”

Stockman:  “The upside for gold is unfathomable.  If the monetary system really unwinds because the central banks take it to the edge, and over, there’s no telling how far gold could rise.”

IMPORTANT - The information above is only a small portion of what Stockman had to say in his extraordinary audio interview.  The KWN audio interview with David Stockman discussing financial collapse, a coming flight to gold, the end game and more is available now and you can listen to it by CLICKING HERE.   

UPDATE - This is Part I in a series of written interviews that have now been released with David Stockman.

David A. Stockman: Former Dir. of the US Office of Management and Budget, Economic Policy Maker, Politician, Financier & Acclaimed Author of New York Times best-seller, “The Great Deformation: The Corruption of Capitalism in America. To order from Amazon CLICK HERE.

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The audio interviews with Bill Fleckenstein, David Stockman, Robin Griffiths, Jim Grant, Gerald Celente, William Kaye, Dr. Paul Craig Roberts, Chris Powell, Michael Pento, Eric Sprott, Andrew Maguire and Grant Williams are available now. Also, other recent KWN interviews include Marc Faber and Felix Zulauf to listen CLICKING HERE.

Eric King

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