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Stockman, Der Stevie, and Poop Gum

by John on 04/25/2013


I am still reading David Stockman’s book – Encyclopedia, tome, epic – called The Great Deformation.

Two things come to mind: 1.) Social Security; and 2.) my old college buddy Steve Kennedy affectionately known by our German friends as Der Stevie.

On Social Security: I can’t figure out what comes first; I receive Social Security or I finish this book.  It is long.  I have my audible app on 3X narration speed and Stockman’s don’t stop.

(Still, I am recommending this book to you.  I will also add more here or create a new post once I am done.)

On my old buddy Der Stevie: he told me this silly joke decades ago that came to mind while I am reading Stockman.  The joke goes like this:

A toothbrush company gives out lavish bonuses to the salesperson that sells the most truth brushes each month. And each month, the same guy wins.  It’s puzzling to all the other salespeople because this guy is so dumb.  So they secretly follow him as he makes his door-to-door sales.  He knocks on the door.  The person answers and he asks, “Want a piece of gum.”  They taste the gum and yell, “This tastes like shit.” The salesman says, “It is shit.  Want to buy a toothbrush.”

How is this similar?  Stockman’s book gives us a narrative of how Wall Street, its lobbyists, and the US lawmakers have sold us shit-gum (politically driven Fed, excessive speculation, booms and bust bubbles, massive debt, and a devalued currency) and then they sell us a toothbrush that they make money on.

Here’s why you should read Stockman’s book – despite its length.

  • He nails it about crony capitalism.  He concludes that the military industrial lobby has fueled the majority of our wars that have put money in their pockets at the cost of taxpayers.  It is very relevant to today when you see the massive amount of money we pay for military and security and it does little to battle terrorists.
  • Stockman takes to task many of the heroes of the 20th Century – including Ronald Reagan who brought Stockman to the White House as his budget director.  Stockman was infamously sent to the White House woodshed for his comments about the silliness of “trickle-down economics.”  Stockman doesn’t stop with Reaganomics thought. He blasts FDR, Richard Nixon, George W. Bush, and Barack Obama.  On the economic side, he lambasts Alan Greenspan, Milton Friedman, and Ben Bernanke.
  • However, he applauds Bill Clinton and Paul Volcker.

Does Stockman have a bias here?  Sure. He is clearly anti-Republican and anti-Democrat and seems to be siding with the Libertarians.  Economically, he is clearly in the camp of the Austrian economists.

Could this tome be a veiled attempt to makes this somewhat orthodox or fringe economic thought more palatable?  Sure, but I am no economist (nor have I played one on TV) so I will let you decide.

Stockman’s revisionist history of the American and world economy in the last half of the 20th Century is fabulous.  In fact, you will find yourself going, “Yup” a number of times.

However, I do have some small disagreements with Stockman’s assessment of things.

  1. He keeps pushing a return to the Gold Standard.  Granted, the use of central banks as a political tool has been very harmful, but I just don’t see how the Gold Standard would make anything any better – except for a few.
  2. He continues to bash John Maynard Keynes.  I am no Keynesian (nor have I played one on TV), but my quibble with him – and others – is that no one has ever been a true Keynesian.  Stockman even documents it.  In short, we have been eager to embrace Keynes when it comes to priming the economic pump, but no one – except Paul Volcker – has pulled in the reigns or taken away the proverbial punch bowl at the profit party.

Overall, I have two solutions that come to mind while reading this.

  • We should elect our Fed Chairman.  The candidates have to have a PhD in Economics before they can be on the ballot.
  • Create a North American currency that includes the US, Canada, and Mexico. This is not my idea. Clyde Prestowitz, in his 2004 book, Three Billion New Capitalists, had the idea.  I think it could work since it would be based on monetary policy and not economics.  The One World Conspiracy Folks just hit the ceiling.


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