Thanks Fed, But Main Street Doesn't Need Your "Help"

By John Morgan at Newsmax Finance

The tale of two streets is that Main Street is being throttled while Wall Street is being paved with riches, all thanks to the heavy hand of the "monetary Politburo" at the Federal Reserve, according to former White House budget chief David Stockman.

He says the broad U.S. economy is already at peak debt levels, given its $58 trillion of government and corporate debt.

Thus, Stockman sees no reason for monetary easing from the Fed, and "no case for zero nominal interest rates, negative real rates and the accompanying torrential money printing spree that we have had during the last several decades."

"All of that artificial liquidity and fiat credit never leaves the canyons of Wall Street," Stockman, former head of the Office of Management and Budget in the Reagan administration, wrote on his Contra Corner blog.

Meanwhile, he said the Main Street economy could produce 2 percent annual growth all on its own, without the machinations from the central bank that have produced distortions in financial markets.

"At the end of the day, therefore, our modern Keynesian central bank amounts to little more than a serial bubble machine. Its cheap money and severe financial repression campaigns inexorably fuel leveraged speculation in the financial markets which eventually cause asset prices and valuations to become unhinged from the real Main Street economy."

In Stockman's view, the only thing the Fed's ultra-loose monetary policy has accomplished is reflation of financial markets, with the large gains in the S&P 500 mostly flowing toward a tiny segment of the population.

"They are redistributing income and wealth to the top, not the bottom of society as liberals have always claimed," he wrote.

"Needless to say, Main Street does not need that kind of 'help'. And it would do far better on its own hind legs if the monetary politburo joined its Soviet colleagues in the afterlife of mistaken ideologies."

Meanwhile, U.S. consumer spending barely nudged higher in February, even as American households battened down and boosted savings to their highest level in more than two years.

The data are the latest sign that the economy hit a "soft patch" in the first quarter of 2015, Reuters reported.

Laura Rosner, an economist at BNP Paribas in New York, said, "At first glance, it looks like we could be tracking a full percentage point lower on first-quarter real consumption growth. However, the surprise weakness in consumption suggests we could see a greater build in inventories in the first quarter."

"They are redistributing income and wealth to the top, not the bottom of society as liberals have always claimed," he wrote.

"Needless to say, Main Street does not need that kind of 'help'. And it would do far better on its own hind legs if the monetary politburo joined its Soviet colleagues in the afterlife of mistaken ideologies."

Stockman: Main Street Economy Is Fine Without the Fed.

David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.

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