Texas Governor Rick Perry made headlines in only his second day on the presidential campaign trail when he said the Federal Reserve's money printing policies are almost "treasonous." President Obama reacted Tuesday saying the GOP hopeful should be "a little more careful" with his words.
The Daily Ticker's guest David Stockman agrees with Obama about Perry's poor choice of words but also wholeheartedly agrees with Perry's sentiment. " I think he was dead on in his thought," the former director of the Office of Management and Budget in the Reagan administration tells Aaron Task in the accompanying clip. "I think it's time Republicans woke up to the fact that is the fundamental problem in our economy today."
Stockman, who has long been a critic of the Fed's low interest rate policy, says it is "totally wrong." Stockman says "exceptionally low" interest rates have resulted in excessive speculation on Wall Street "that is utterly destroying our capital markets" and adding to the already unsustainable debt crisis. He goes on to say, "The fact is the Fed is the number one problem holding back this economy, punishing savers, savaging low income people trying to buy food, energy or fuel."
Stockman fears the worst is yet to come when current tax breaks and stimulus come to an end in 2013. "The mother of all Keynesian contractions is coming in 2013 -- when all these tax cuts expire, when all this stimulus is gone."
What results will be another recession caused by a necessary but painful period of austerity that will crimp growth and job creation. Therefore, current deficit projections will have to be revised downward as tax revenues fall behind and the millions of new jobs Congress anticipates never materialize.