The Great Deformation : The Corruption of Capitalism in America

**A __New York Times__ bestseller**__The Great Deformation__ is a searing look at Washington’s craven response to the recent myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an eighty-year revisionist history of how the American state—especially the Federal Reserve—has fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America’s private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few.Defying right- and left-wing boxes, David Stockman provides a catalogue of corrupters and defenders of sound money, fiscal rectitude, and free markets. The former includes Franklin Roosevelt, who fathered crony capitalism; Richard Nixon, who destroyed national financial discipline and the Bretton Woods gold-backed dollar; Fed chairmen Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation; George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars; and Barack Obama, who revived failed Keynesian “borrow and spend” policies that have driven the national debt to perilous heights. By contrast, the book also traces a parade of statesmen who championed balanced budgets and financial market discipline including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair.Stockman’s analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue base—even as the Fed’s massive money printing allowed politicians to enjoy “deficits without tears.” But these policies have also fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs. __The Great Deformation__ explains how we got here and why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy. CONTENTS......Page 8 INTRODUCTION......Page 12 PART I: THE BLACKBERRY PANIC OF 2008......Page 22 CHAPTER 1. PAULSON’S FOLLY: The Needless Rescue of AIG and Wall Street......Page 24 CHAPTER 2. FALSE LEGENDS OF DARK ATMS AND FAILING BANKS......Page 40 CHAPTER 3. DAYS OF CRONY CAPITALIST PLUNDER......Page 56 PART II: THE REAGAN ERA REVISITED: FALSE NARRATIVES OF OUR TIMES......Page 74 CHAPTER 4. THE REAGAN REVOLUTION: Repudiations and Deformations......Page 76 CHAPTER 5. TRIUMPH OF THE WARFARE STATE: How the Budget Battle Was Lost......Page 91 CHAPTER 6. TRIUMPH OF THE WELFARE STATE: How the GOP Anti-Tax Religion Was Born......Page 108 CHAPTER 7. WHY THE CHICKENS DIDN’T COME HOME TO ROOST: The Nixon Abomination of August 1971......Page 129 PART III: NEW DEAL LEGENDS AND THE TWILIGHT OF SOUND MONEY......Page 156 CHAPTER 8. NEW DEAL MYTHS OF RECOVERY......Page 158 CHAPTER 9. THE NEW DEAL’S TRUE LEGACY: Crony Capitalism and Fiscal Demise......Page 190 CHAPTER 10. WAR FINANCE AND THE TWILIGHT OF SOUND MONEY......Page 216 CHAPTER 11. EISENHOWER’S DEFENSE MINIMUM AND THE LAST AGE OF FISCAL RECTITUDE......Page 234 CHAPTER 12: THE AMERICAN EMPIRE AND THE END OF SOUND MONEY......Page 256 CHAPTER 13: MILTON FRIEDMAN’S FOLLY: Rise of the T-Bill Standard......Page 281 PART IV: THE AGE OF BUBBLE FINANCE......Page 300 CHAPTER 14. PORK BELLIES, FLOATING MONEY, AND THE RISE OF SPECULATIVE FINANCE......Page 302 CHAPTER 15. GREENSPAN 2.0......Page 341 CHAPTER 16. BULL MARKET CULTURE AND THE DELUSION OF QUICK RICHES......Page 364 CHAPTER 17. SERIAL BUBBLES......Page 382 CHAPTER 18. THE GREAT DEFORMATION OF CAPITAL MARKETS: How Wall Street Got Huge......Page 403 CHAPTER 19. FROM WASHINGTONTO WALL STREET: Roots of the Great Housing Deformation......Page 425 CHAPTER 20. HOW THE FED BROUGHT THE GAMBLING MANIA TO AMERICA’S NEIGHBORHOODS......Page 446 CHAPTER 21. THE GREAT FINANCIAL ENGINEERING BINGE......Page 464 CHAPTER 22. THE GREAT RAID ON CORPORATE CASH......Page 476 CHAPTER 23. THE RANT THAT SHOOK THE ECCLES BUILDING: How the Fed Got Cramer’d......Page 496 CHAPTER 24. WHEN GIANT LBOS STRIP-MINED THE LAND......Page 522 CHAPTER 25. DEALS GONE WILD: Rise of the Debt Zombies......Page 541 CHAPTER 26. BONFIRES OF DEBT AND THE ROAD NOT TAKEN......Page 558 PART V: SUNDOWN IN AMERICA: THE END OF FREE MARKETS AND DEMOCRACY......Page 570 CHAPTER 27. WILLARD M. ROMNEY AND THE TRUMAN SHOW OF BUBBLE FINANCE......Page 572 CHAPTER 28. BONFIRES OF FOLLY: Bernanke’s False Depression Call and the $800 Billion Obama Stimulus......Page 598 CHAPTER 29. OBAMA’S GREEN ENERGY CAPERS: Crony Capitalist Larceny......Page 619 CHAPTER 30. THE END OF FREE MARKETS: The Rampages of Crony Capitalismin the Auto Belt......Page 634 CHAPTER 31. NO RECOVERY ON MAIN STREET......Page 652 CHAPTER 32. THE BERNANKE BUBBLE: Last Gift to the 1 Percent......Page 670 CHAPTER 33. SUNDOWN IN AMERICA: The State-Wreck Ahead......Page 693 CHAPTER 34. ANOTHER ROAD THAT COULD BE TAKEN......Page 727 NOTE ON SOURCES......Page 734 INDEX......Page 740 ABOUT THE AUTHOR......Page 764 In This 80-year Revisionist History Of The American State, Former Reagan Budget Director And Bestselling Author David Stockman Shows Where Capitalism Went Wrong, How It Was Corrupted, And How It Might Be Restored. He Argues That Washington -- And Especially The Federal Reserve -- Have Fallen Prey To The Politics Of Crony Capitalism And The Ideologies Of Fiscal Stimulus, Monetary Central Planning, And Financial Bailouts. These Policies Have Converged To Bloat The Welfare State, Perpetuate The Military-industrial Complex, Deplete The Revenue Base, Fuel New Financial Bubbles, Favor Wall Street With Cheap Money, Rig Stock And Bond Markets, Crush Main Street Savers, And Punish Family Budgets With Soaring Food And Energy Costs. Part I: The Blackberry Panic Of 2008. Paulson's Folly: The Needless Rescue Of Aig And Wall Street -- False Legends Of Dark Atms And Failing Banks -- Days Of Crony Capitalist Plunder -- The Reagan Era Revisited: False Narratives Of Our Times. The Reagan Revolution: Repudiations And Deformations. Part Ii: Triumph Of The Warfare State: How The Budget Battle Was Lost -- Triumph Of The Welfare State: How The Gop Anti-tax Religion Was Born -- Why The Chickens Didn't Come Home To Roost: The Nixon Abomination Of August 1971. Part Iii: New Deal Legends And The Twilight Of Sound Money. New Deal Myths Of Recovery -- The New Deal's True Legacy: Crony Capitalism And Fiscal Demise -- War Finance And The Twilight Of Sound Money -- Eisenhower's Defense Minimum And The Last Age Of Fiscal Rectitude --the American Empire And The End Of Sound Money -- Milton Friedman's Folly: Rise Of The T-bill Standard. Part Iv: The Age Of Bubble Finance. Pork Bellies, Floating Money, And The Rise Of Speculative Finance -- Greenspan 2.0 -- Bull Market Culture And The Delusion Of Quick Riches -- Serial Bubbles -- The Great Deformation Of Capital Markets: How Wall Street Got Huge -- From Washington To Wall Street: Roots Of The Great Housing Deformation -- How The Fed Brought The Gambling Mania To America's Neighborhoods -- The Great Financial Engineering Binge -- The Great Raid On Corporate Cash -- The Rant That Shook The Eccles Building: How The Fed Got Cramer'd -- When Giant Lbos Strip-mined The Land -- Deals Gone Wild: Rise Of The Debt Zombies -- Bonfires Of Debt And The Road Not Taken. Part V: Sundown In America: The End Of Free Markets And Democracy. Willard M. Romney And The Truman Show Of Bubble Finance -- Bonfires Of Folly: Bernanke's False Depression Call And The $800 Billion Obama Stimulus -- Obama's Green Energy Capers: Crony Capitalist Larceny -- The End Of Free Markets: The Rampages Of Crony Capitalism In The Auto Belt -- No Recovery On Main Street -- The Bernanke Bubble: Last Gift To The 1 Percent -- Sundown In America: The State-wreck Ahead -- Another Road That Could Be Taken. David A. Stockman. Includes Bibliographical References And Index. CONTENTS 8 INTRODUCTION 12 PART I: THE BLACKBERRY PANIC OF 2008 22 CHAPTER 1. PAULSON鈥橲 FOLLY: The Needless Rescue of AIG and Wall Street 24 CHAPTER 2. FALSE LEGENDS OF DARK ATMS AND FAILING BANKS 40 CHAPTER 3. DAYS OF CRONY CAPITALIST PLUNDER 56 PART II: THE REAGAN ERA REVISITED: FALSE NARRATIVES OF OUR TIMES 74 CHAPTER 4. THE REAGAN REVOLUTION: Repudiations and Deformations 76 CHAPTER 5. TRIUMPH OF THE WARFARE STATE: How the Budget Battle Was Lost 91 CHAPTER 6. TRIUMPH OF THE WELFARE STATE: How the GOP Anti-Tax Religion Was Born 108 CHAPTER 7. WHY THE CHICKENS DIDN鈥橳 COME HOME TO ROOST: The Nixon Abomination of August 1971 129 PART III: NEW DEAL LEGENDS AND THE TWILIGHT OF SOUND MONEY 156 CHAPTER 8. NEW DEAL MYTHS OF RECOVERY 158 CHAPTER 9. THE NEW DEAL鈥橲 TRUE LEGACY: Crony Capitalism and Fiscal Demise 190 CHAPTER 10. WAR FINANCE AND THE TWILIGHT OF SOUND MONEY 216 CHAPTER 11. EISENHOWER鈥橲 DEFENSE MINIMUM AND THE LAST AGE OF FISCAL RECTITUDE 234 CHAPTER 12: THE AMERICAN EMPIRE AND THE END OF SOUND MONEY 256 CHAPTER 13: MILTON FRIEDMAN鈥橲 FOLLY: Rise of the T-Bill Standard 281 PART IV: THE AGE OF BUBBLE FINANCE 300 CHAPTER 14. PORK BELLIES, FLOATING MONEY, AND THE RISE OF SPECULATIVE FINANCE 302 CHAPTER 15. GREENSPAN 2.0 341 CHAPTER 16. BULL MARKET CULTURE AND THE DELUSION OF QUICK RICHES 364 CHAPTER 17. SERIAL BUBBLES 382 CHAPTER 18. THE GREAT DEFORMATION OF CAPITAL MARKETS: How Wall Street Got Huge 403 CHAPTER 19. FROM WASHINGTONTO WALL STREET: Roots of the Great Housing Deformation 425 CHAPTER 20. HOW THE FED BROUGHT THE GAMBLING MANIA TO AMERICA鈥橲 NEIGHBORHOODS 446 CHAPTER 21. THE GREAT FINANCIAL ENGINEERING BINGE 464 CHAPTER 22. THE GREAT RAID ON CORPORATE CASH 476 CHAPTER 23. THE RANT THAT SHOOK THE ECCLES BUILDING: How the Fed Got Cramer鈥檇 496 CHAPTER 24. WHEN GIANT LBOS STRIP-MINED THE LAND 522 CHAPTER 25. DEALS GONE WILD: Rise of the Debt Zombies 541 CHAPTER 26. BONFIRES OF DEBT AND THE ROAD NOT TAKEN 558 PART V: SUNDOWN IN AMERICA: THE END OF FREE MARKETS AND DEMOCRACY 570 CHAPTER 27. WILLARD M. ROMNEY AND THE TRUMAN SHOW OF BUBBLE FINANCE 572 CHAPTER 28. BONFIRES OF FOLLY: Bernanke鈥檚 False Depression Call and the $800 Billion Obama Stimulus 598 CHAPTER 29. OBAMA鈥橲 GREEN ENERGY CAPERS: Crony Capitalist Larceny 619 CHAPTER 30. THE END OF FREE MARKETS: The Rampages of Crony Capitalismin the Auto Belt 634 CHAPTER 31. NO RECOVERY ON MAIN STREET 652 CHAPTER 32. THE BERNANKE BUBBLE: Last Gift to the 1 Percent 670 CHAPTER 33. SUNDOWN IN AMERICA: The State-Wreck Ahead 693 CHAPTER 34. ANOTHER ROAD THAT COULD BE TAKEN 727 NOTE ON SOURCES 734 INDEX 740 ABOUT THE AUTHOR 764 A New York Times bestseller The Great Deformation is a searing look at Washington’s craven response to the recent myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an eighty-year revisionist history of how the American state—especially the Federal Reserve—has fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America’s private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few. Defying right- and left-wing boxes, David Stockman provides a catalogue of corrupters and defenders of sound money, fiscal rectitude, and free markets. The former includes Franklin Roosevelt, who fathered crony capitalism; Richard Nixon, who destroyed national financial discipline and the Bretton Woods gold-backed dollar; Fed chairmen Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation; George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars; and Barack Obama, who revived failed Keynesian “borrow and spend” policies that have driven the national debt to perilous heights. By contrast, the book also traces a parade of statesmen who championed balanced budgets and financial market discipline including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair. Stockman’s analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue base—even as the Fed’s massive money printing allowed politicians to enjoy “deficits without tears.” But these policies have also fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs. The Great Deformation explains how we got here and why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy. A New York Times bestseller The Great Deformation is a searing look at Washington's craven response to the recent myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an eighty-year revisionist history of how the American state — especially the Federal Reserve — has fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America's private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few. Defying right- and left-wing boxes, David Stockman provides a catalogue of corrupters and defenders of sound money, fiscal rectitude, and free markets. The former includes Franklin Roosevelt, who fathered crony capitalism; Richard Nixon, who destroyed national financial discipline and the Bretton Woods gold-backed dollar; Fed chairmen Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation; George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars; and Barack Obama, who revived failed Keynesian "borrow and spend" policies that have driven the national debt to perilous heights. By contrast, the book also traces a parade of statesmen who championed balanced budgets and financial market discipline including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair. Stockman's analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue base — even as the Fed's massive money printing allowed politicians to enjoy "deficits without tears." But these policies have also fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs. The Great Deformation explains how we got here and why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy.