David Stockman: Debt Default, the ‘Doomsday Budget Machine,’ and Failed Fiscal Restraint Explained

“For capitalism to work, you have to have effectively functioning, solid capital markets. And in order to do that, you need savings—real savings, not money printed by a central bank, but real savings from businesses and households,” says David Stockman, who served as budget director for President Ronald Reagan.“Back then, the public debt was 30-40 percent of GDP—not good, but tolerable in terms of historic trends,” says Stockman. “Today, it’s 120 percent and growing rapidly—total change. We basically tried to borrow our way to prosperity.”Stockman is the author of “The Great Money Bubble: Protect Yourself from the Coming Inflation Storm.”“You can’t keep borrowing two or three trillion a year, building up the public debt, and leaving that massive burden to future generations. You can’t do it,” says Stockman. “There’s a lot of whining on Wall Street and elsewhere about how fast the Fed has raised interest rates. But the problem is they started at zero.”How did we end up in the current fiscal crisis, what happens when we raise the debt ceiling, and what are we not being told?“In this deal, there are no enforcement mechanisms at all beyond the current year,” says Stockman. “The mainstream media didn’t want any alternative except for the Republicans to blink and the debt to be raised yet again. And that’s exactly what happened.”