Can the Fed spot a bubble? Not if it is the one they created.
Listen to Dave Stockman on the budget:
He tells The Daily Ticker the real story is the debt ceiling, and he thinks we’re “finally getting to a defining moment when the truth comes out…if we run out of debt ceiling, the president does have the power to prioritize the inflow of revenue which is still massive coming in.” And the first thing the government will do, he says, is spend $30 billion paying the interest on the debt (according to Stockman, the government could also pay social security retirees, the armed services, and medicare reimbursements despite broaching the debt limit). “It is a complete red herring to say there will be a default,” he tells us. “There will never will be a time in which there is not enough cash to pay the interest.”
There is plenty of money to cover interest payments under a shutdown. Remember the shutdown leaves 60% of DC running and all taxes are still collected. That means we have a DC that consumes 15% of GDP, only two points short of the budget share from the 1950s, and three points short of Clinton's endpoint. In other words, this is all a bullshit attempt by Obama to steal from the middle class via the mechanism of debt spending.
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