[Urgent Note: David Stockman warns that the nation’s economy and a massive debt ceiling hangs in the balance as Wall Street’s peak bull stocks carry on. The economist is on a mission to send his new book TRUMPED! A Nation on the Brink of Ruin… and How to Bring It Back out to every American who responds, absolutely free. Click here for more details.]
The American economy has been mangled by decades of assault on capitalist prosperity.
Growth is now dying because the Federal Reserve’s hit on corporate America that has strip-mined its balance sheets to feed the halls of Wall Street. Trillions of dollars have been thrown into financial engineering (stock buybacks, M&A deals and leveraged recaps) while neglecting real investment and productivity in Flyover America.
The single most important thing that speculators and bulls on Wall Street should be looking at now is where we came from. If Wall Street understood this, they wouldn’t continue to expect the “born again” Reagan stimulus that has been imagined since Trump’s inauguration.
The extent of what actually happened during the Reagan era is also important to examine. In the eight years after Reagan’s tax bill got handed out, the national debt and defense budget exploded. We had more red ink during in that eight year period than during the first 190 years of the Republic – in fact it doubled.
The national debt, which you can see starting in 1980 went from around $800-900 billion to well over $3 trillion. The share of GDP soared during that period.
This is how the Reagan defense and tax cuts were funded. The move left the nation’s fiscal accounts in a dramatically different condition than when it started. Even Ronald Reagan, with his best of intentions, went in believing he was going to end up with less national debt and balanced budgets – though he ended up adding $1.8 trillion.
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