The Return of Cassandra

The sky is falling!

That’s what Chicken Little said to Turkey Lurkey after an acorn fell on his head. And that’s what I thought when I read David Stockman’s latest op-ed in Sunday’s New York Times. He says the economy is in a “Great Deformation” in which the Fed, as a rogue central bank, mindlessly mints money, mistaking growth in the currency for growth in the economy. It’s a bipartisan attack on deficit spending by Presidents Reagan, Bush I, Bush II, and Obama. It hearkens back to a golden age of balanced budgets and economic growth under Truman and Eisenhower.

The article is broad-ranging, criticizing fiscal policy, monetary policy, and crony capitalism. His argument seems to run: debt is bad, we have too much, so we need to renounce our deficit-loving ways, cut spending way, way back, and let the economy heal itself as it contracts. But debt is neither good nor bad; its assessment must be situational. Don Quixote tilted at windmills, too, but in the end it got him unhorsed.

Stockman was famous as Ronald Reagan’s budget director. He didn’t seem to understand the engines of economic growth back then, and it seems that he still doesn’t today. How sad.

Douglas R. Tengdin, CFA

Chief Investment Officer

[catetgory Global Market Update]

By | 2013-04-02T09:08:57+00:00 April 2nd, 2013|Uncategorized|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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