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The Great Deformation By David Stockman Online. Book Details: Language: English Published Original Language Unknown, Isbn: , Publisher. DAVID A. STOCKMAN 18 The Great Deformation of Capital Markets: How Wall Street. Got Huge .. the roots of the Great Deformation, difficult in the extreme. David Stockman not only cites Mises and Hazlitt, among other The main theme of The Great Deformation is stated clearly on the first page of.

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The Great Deformation: The Corruption of Capitalism in America

David Stockman not only cites Mises and Hazlitt, among other Austrians, but is also a severe critic of the supposedly free-market Chicago School of monetarism and its patron saint, Milton Friedman. This is a man who was once a member of Congress and dzvid director of the U.

Office of Management and Budget during the first four years of the Reagan administration.

Since then, he has been a consummate Wall Street insider, first with Salomon Brothers and then as a private equity investor with The Blackstone Group. He is also very well read in economics and economic history.

The Great Deformation: The Corruption of Capitalism in America by David A. Stockman

It is doubtful that any other human being has a comparable combination of talents. Only David Stockman could have written this book, in other words. For example, there was never any reason for the government to bail out Goldman Sachs. Nor was a bailout of the insurance company, AIG necessary. It worked well for him. The third part of The Great Deformation is devoted to debunking various New Deal myths that have long been used to support statism and interventionism.


Far from being the scourge of crony capitalists, FDR was their best friend, as his National Recovery Administration was nothing more than a giant, government-enforced price-fixing scheme. Keynes, meanwhile, was busy praising Hitlerian autarky during the late s, as Stockman shows.

The former probably davd the Korean War by insisting that most of it be financed with taxes, whereas Eisenhower shrunk the U. Army by about 40 percent with a one-third reduction in military spending during his terms in office. Stockman brilliantly critiques many of the establishment economists for their cluelessness about the economy. They showed the undeniable correlation between the collapse of GDP and the money supply, but proved no causation whatsoever.

But Stockman reserves his sharpest critiques for Milton Friedman and the Chicago School monetarists, concluding that they were never much more than a cult that believed in reformation dubious a priori assumption despite all their chatter about empiricism and positivism.

In this regard, Friedman and his fellow Chicagoans were no different from Samuelsonian statists. Friedman thus sided with the central planners Speculation on the free market has the effect of stabilizing prices when speculators take goods off the market when they buy low with futures contractsthereby increasing prices, and then selling when prices are higher, causing prices to moderate. Speculation based on bets regarding Fed behavior is totally different: Stockman entertainingly points out that the periodic successes of companies like Procter and Gamble and General Electric were not so much the result of the brilliant management skills of CEOs wtockman Jack Welch, but were caused by the cheap credit orchestrated by Fed central planners.


Fed-induced speculation is indeed economically wasteful and destructive; free-market speculation is not.

He suggests a path to returning to a gold-backed dollar; the abolition of deposit insurance and the moral hazard problems it causes; the abolition of congressional incumbency through term limits; and a requirement to balance the federal budget. The latter is problematic since it gives Congress an excuse to raise economically destructive taxes for the sake of budgetary balance. Stockman would end macroeconomic central planning if he were king, and abolish social security, bailouts, and corporate welfare.

Quarterly Journal of Austrian Economics

Ten federal agencies would be scrapped, along with the minimum wage. Review of The Great Deformation: View the discussion thread.

Skip to main content. Quarterly Journal of Austrian Economics. It has cemented into place neo-mercantilism as the American economic system. It is a treasure trove of ideas for future research on financial markets and regulation from an Austrian perspective.