Yes, everyone's linking to it: David Stockman says we're doomed.
Which, I'm inclined to agree, we are. To my knowledge, financial markets have been severely, and increasingly, out of order at least since sometime in the 1990s (I used to think the dot-com boom had been masking the problem, but now realize that it was a symptom). While there's innovation trying to happen at low levels (bitcoin, kickstarter, and so on), the government and the large financial institutions are by now completely painted into a corner.
And yet... as I scan through Stockman's piece, I see some arguments that are just out of whack.
This explosion of borrowing was the stepchild of the floating-money contraption deposited in the Nixon White House by Milton Friedman, the supposed hero of free-market economics who in fact sowed the seed for a never-ending expansion of the money supply. ...
Under his successor, the lapsed hero Alan Greenspan, the Fed dropped Friedman’s penurious rules for monetary expansion, keeping interest rates too low for too long...
I'm not familiar with the details of the policy, but I think I see gold-bug logic behind this. In a well-functioning market economy, "a never-ending expansion of the money supply" is a necessary thing. Wealth is constantly being created, so surely the money supply should expand just as fast as necessary to represent the wealth, no? There's no need to keep the price of gold constant, so long as the price of bread doesn't get too far out of line (as, in point of fact, it has, as the expansion of the money supply has far outpaced the creation of the wealth that it should represent).
That Mr. Greenspan’s loose monetary policies didn’t set off inflation was only because domestic prices for goods and labor were crushed by the huge flow of imports from the factories of Asia.
I rather think that's how trade is supposed to work.
Most of the rest of the piece seems to make sense, though. And, his tone, with regard to corruption in high places? When you can't tell an old-school conservative from a Communist bomb-thrower, then maybe... just maybe... there's something seriously wrong with the system.
While I'm here, I'll toss in a note and a prediction.
Note: a much-needed increase in interest rates (other than certain real-world rates, such as credit-card debt) Ain't Gonna Happen. For one thing, it would lead to a wave of defaults on those ill-conceived adjustable-rate home loans; for another, it would make the eternal refinancing of the national debt suddenly more expensive.
Prediction: within the next two years, as states (possibly led by California) run out of options for paying their bills and those of their pension plans, the Ben-Bernank will start another program... QE5, or QE6, or QB VII, or whatever... whereby it will buy vast quantities of long-term state bonds, thereby debasing the currency still further while kicking the can down the road by another several years.