The Tom Woods Show Ep. 2689 Peace in Ukraine and Madness at the Fed? with David Stockman
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Sep 6, 2025 David Stockman, former director of President Reagan's Office of Management and Budget, shares insights on the potential end of the Ukraine war and the historical evolution of the Federal Reserve. He critiques the Fed's increasing power and its impact on the economy. Stockman emphasizes the need for transparency in financial policies and argues for a return to free market principles. Additionally, he discusses the implications of U.S. foreign policy in light of global territorial disputes, urging a reassessment of America's military commitments.
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Fed As Monetary Politburo
- The Fed has become a monetary politburo that pegs rates and trains traders to follow its words, not market signals.
- This central control distorts capital allocation and creates recurring financial bubbles and crises.
Judge Rates By Real Returns
- Investors should evaluate interest rates relative to inflation and after-tax real returns, not raw nominal levels.
- Avoid following market commentary that reacts only to Fed wording; price assets by real economic fundamentals instead.
Balance Sheet Outpaces Economic Growth
- The Fed's balance sheet has grown far faster than nominal or real GDP, signaling runaway money creation versus real output.
- That divergence shows long-term distortion: liquidity rose ~35x while nominal GDP grew ~5x and real GDP ~2.5x.