Eric King:  “David, how much danger has the Fed created for the world?”

Stockman:  “I think it’s created massive danger because it’s exported this model of massive liquidity injection to the other central banks of the world.  They are all doing it....

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So, we really have a race to the bottom among central banks all over the world.  We have a massive bubble everywhere, from Japan, to China, Europe, to the UK.  As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future.”

Eric King:  “President Reagan brought in people like yourself and Dr. Paul Craig Roberts to rescue the system in 1981.  We talked about the parallels last time, but this time around, is it going to be much worse?” 

Stockman:  “It’s going to be far worse because we’re 30 years down the road in terms of this absurd doctrine of central monetary planning by the central bank, and the enormous usurpation of power that’s been undertaken.   In 1981 we had gone through a decade of very serious inflation and a stagnant economy, but the Fed had not completely embraced the current doctrines.  We had Volcker at the head of the Fed, who understood that pain would have to be administered and that the bubble had to be burst.

That was a price bubble then, we now have an asset bubble, but both stem from bad central bank policy.  But there was a political will to admit there was a huge problem, to face it down and take difficult steps.  I see no evidence that there is any will, or even any realistic and honest recognition of the problem today.

We have a massive central bank error.  We have a destructive central bank policy that sooner or later will collapse.  And when central bank money collapses, then the historic money (gold) that is beyond the reach of central banks will have its day.  Eventually the world will flee to something with inherent and sustainable value outside of the regime of central banking, and gold is at the heart of that.”

Eric King:  “David, when you watch this massive amount of paper money in the fiat system exiting, and they are going into fine art, diamonds, whatever they can get their hands on (that’s tangible), and it is hyperinflating as (Keith) Barron described (in his KWN interview).  What are your thoughts as you see that?”

Stockman:  “It’s hyperinflation of financial assets.  No one ever said that the hyperinflation that can result from massive money printing will only end up in the CPI (Consumer Price Index), or in the price of goods and services.  It can very easily get channeled into the financial markets and into asset prices.  So what you are describing is the hyperinflation.  It’s (in) the art world, the jewelry, the diamonds that you are mentioning.”

IMPORTANT - 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 - KWN will be releasing extraordinary interviews all day today.

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.

Eric King

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