In his book The Great Deformation, former budget director David Stockman hypothesizes that the United States’ budget problems do not stem from Barack Obama, the current congress, George W. Bush or even his former boss, Ronald Reagan. Rather, America’s budget problems go all the way back to the Great Depression and Franklin D. Roosevelt’s presidency. Stockman compared the government stimulating the economy to the relationship between a drug dealer and an addict.
“It’s like a narcotic. For a while, the big deficits we’ve had, all the money printing from the Fed worked.” Stockman said on The Daily Show with Jon Stewart on Monday night. “It did stimulate the economy, we had some growth. Over time, it becomes habit-forming.”
During the course of the interview, Stockman discussed the gold standard’s evolution in the American economy. After Stockman said called Richard Nixon’s abandonment of it as not “disciplined.” Stockman said he was most concerned about large-scale economic policy, calling it a “casino economy.” He mentioned that he’d like to go back to a pre-Roosevelt era, referencing a 1932 wide banking act.
“If you have narrow banks that are regulated under a Glass–Steagall regime. And you have a Fed that doles out the money only in response of the private market interest rates, you’re not going to get this massive casino,” he said.
After Stewart pushed Stockman on his Republican pedigree and hands-off economic worldview, Stockman noted that the deficit spending of the Reagan years was why he quit and even said “we have [had] two free-lunch parties since the eighties.” Stockman mocked the recent Fed leadership of both parties as “bubble believers.” In explaining the addiction to government intervention in the economy, Stockman was very succinct. He laid out the internal threat in a sentence: “The most dangerous combination in the world is free money and free markets.”
Because of the time limits for broadcast, The Daily Show posted an extended interview online. Watch it below.