Stockman: Central Banks caused inflation, debt deal is a scam.

The Fed and Central Banks are the Root of Inflation

The current inflationary environment in the US and global economies is a result of central banks worldwide distorting the economy through fiat credit expansion, leading to sky-high inflation and financial bubbles. This is according to David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan.

During the coronavirus pandemic in 2020 and 2021, governments and central banks unleashed immense fiscal and monetary stimulus and relief packages, flooding the marketplace with trillions in liquidity. Then, after claiming that high inflation was transitory, policymakers abandoned this view, reversed course, and raised interest rates from historically low levels.

“So you have to understand that the big problem in the world today is the Fed, the central banks, all of them have sort of gotten in some big money printers’ convoy,” Stockman said on EpochTV’s “American Thought Leaders.”

The Need for a “House Cleaning”

Because of everything that has transpired before, during, and after the pandemic, Stockman recommended a “house cleaning from top to bottom” at the Fed and other central banks.

“We also need to recognize that [it] was all of this easy money, these ultra-low interest rates that enabled Congress to spend like there was no tomorrow to build up the national debt,” he said.

Unsustainable Policies

While pandemic-era measures have eroded Americans’ paychecks and purchasing power, the expansive policies also facilitated the federal government’s accumulation of enormous debt, leading to the current debt limit challenges, according to Stockman.

“None of this was really sustainable,” he said. “It didn’t represent what I would call sound economics, or sound money, or sound public finance. It was all kind of a fantasy. And now you’re going to have to deal with the consequences.”

Since the COVID-19 public health crisis began, the national debt has skyrocketed by about $8 trillion, and approximately $7 trillion was added to the national money supply.

The Debt Ceiling Agreement

The House of Representatives passed the bipartisan debt ceiling agreement crafted by President Joe Biden, House Speaker Kevin McCarthy (R-Calif.), and their teams of negotiators. It would suspend the debt limit through Jan. 1, 2025.

Seventy-one Republicans and 46 Democrats opposed the Biden-McCarthy package. Members of the GOP caucus argued that it doesn’t go far enough; the progressive wing of the Democratic Party countered that it went too far.

Stockman, the bestselling author of “The Great Deformation” and “The Great Money Bubble,” described the plan as “a shell game” and “a total scam.”

“They didn’t save anything. They actually spent a lot more money to save a little bit,” he said. “But on net, in terms of the big picture that we’re talking about here, it’s a total scam. This is what the bill is riddled with: scams. Scam after scam conjured up. That’s all there is in here.”

Despite criticism from a chorus of Republicans, the GOP leadership has stated that this is merely the beginning of the party’s broader efforts to restore fiscal responsibility in Washington. Republican leaders have touted the Congressional Budget Office’s (CBO) latest report that estimates that the statutory caps on discretionary funding for fiscal 2024 and 2025 would be equal to $1.59 trillion and $1.606 trillion, respectively.

But Stockman said he doesn’t think this package addresses the fundamental long-term contributors to the budget.

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