Eric King:  “David, what did you think of Janet Yellen’s testimony?”

Stockman:  “Well, frankly I thought it was appalling.  It was superficial, mechanical, naive, and disingenuous.  I would start with one of the direct questions she got from one of the senators, ‘Are you monetizing the debt?’  She (Yellen) said, ‘No, we are only carrying out the directions of Congress.’  That (answer) is just absurd....

Continue reading the David Stockman interview below...  


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“Yellen has been part of this Fed system since the 1990s.  Just start with the year 2000:  The balance sheet of the Fed was $500 billion.  Today it’s pushing $4 trillion.  That’s an eight-fold increase just in this century.  She’s been part of it all along, and if that isn’t monetizing the debt, (then) I don’t know what the word means.

It is only the top 1% that has experienced a huge windfall from the serial bubbles that the Fed has created.  So, if you go right to the core of what this is all about -- what the Fed’s mission is, what the new chairman of the Fed will be doing and saying, I think we had a pretty good indication that she’s going to take this lunatic policy that we’ve had for years now right over the edge in a final spree of Keynesian money printing and attempted manipulation that is failing badly.

The greatest danger is the Fed.  It has become a serial bubble machine.  We have seen this move three times already this century ... and now they have inflated it even more fantastically for the 4th time.  And yet we now have testimony from Yellen, yesterday, in which she couldn’t even use the word, ‘bubble.’  She kept referring to it (the bubbles) as a ‘misalignment of prices.’

So we have a complete disconnect between the Main Street economy, which is struggling and floundering, and financial bubbles throughout Wall Street and the financial system that are clearly being fueled by the lunatic policies of the Fed.  And now we have a (Fed) chairman who can not see them, or even hear the word.”

Eric King:  “Where does that leave us?”

Stockman:  “It leaves us in a very precarious state.  Almost anyone who thinks about this rationally knows it can’t go on much longer.  When you are buying $85 billion a month of bonds and GSE paper (at a time) when you are entering the fifth year of an economic expansion, you’ve almost reached the point of absurdity.

And yet they’ve backed themselves into this corner, and she (Yellen) was one of the architects of how we got here.  They (the Fed) did it one step at a time, one excuse at a time, one rationalization at a time.  Now they are deep into this corner and they have no idea how to get out.”

Eric King:  “In light of everything you’ve just said, David, what about the end game as you see it?  Where is all of this headed?”

Stockman:  “At some point the financial markets will realize that this is just one massive central bank-driven bubble, that it cannot be sustained much longer, and panic will set in.  It’s happened every time in recorded history. Who knows what the trigger or catalyst will be -- from what direction the black swan will arrive? But it will. 

The whole thing is a house of cards.  There is so much leveraged speculation built into all of the financial markets of the world that when the selling starts, look out below.  There won’t be any bids and the central banks won’t have the ability to forestall the collapse.  It’s a very dangerous situation and it’s one that is completely uncharted in terms of any historic precedent or benchmark.”

IMPORTANT - Part I of Stockman’s interview is only a small portion of what had to say in his extraordinary audio interview.  Part II of his written interview will be released within hours.  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.   

IMPORTANT - KWN will be releasing extraordinary interviews all day today and this weekend with David Stockman, Art Cashin, and others.

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 David Stockman, Art Cashin, Dr. Stephen Leeb, John Hathaway, Bill Fleckenstein, James Turk, Andrew Maguire, William Kaye, Gerald Celente, Dr. Paul Craig Roberts, Eric Sprott and Jim Grant are available now. Other recent KWN interviews include Marc Faber and Felix Zulauf to listen CLICKING HERE.

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