The Great Money Bubble: Protect Yourself from the Coming Inflation Storm, by David A. Stockman, Humanix Books, 2022; 229 pp.
(Mises)—David Stockman served for a short while as budget director during Ronald Reagan’s first term as president, but he soon resigned owing to Reagan’s refusal to cut government spending. He has since that time worked as a private investment adviser, at which difficult profession he has been highly successful, and he has written a number of books, among which the monumental Great Deformation (Public Affairs Press, 2013), is the most notable. The Great Money Bubble contains many vital lessons about money and macroeconomics, and in what follows I’ll discuss a few of these. But I’m not able to assess one part of the book.
Stockman identifies a common failing in Keynesian economics and in the monetarism of Milton Friedman and his disciple Ben Bernanke, the most popular alternative to Keynesian economics among mainstream economists. According to both of these doctrines, it is necessary to raise aggregate demand to boost employment during a depression, with government spending, according to Keynes, and with monetary expansion, according to Friedman. Stockman denies the need for the government to manage, holding that the free market can take care of itself. He says:
As a congressman from Michigan in the late 1970s. . . . I didn’t think it was the role of politicians to second-guess economic data . . . that resulted from the interactions of millions of workers, employers, entrepreneurs, savers, investors, and speculators on the free market. Decades later, I still don’t. Indeed, the idea that market-driven GDP should find its own natural level without a heavy-handed assist from the government was then and remains today the opposite of the reigning orthodoxy. Rather than vibrant, free, productive capitalism, that orthodoxy sees the U.S. economy as a self-contained, hermetically sealed system that is always badly malfunctioning and forever falling short of its potential, thereby requiring constant external stimulus from Washington via its fiscal and central banking branches. . . . That wasn’t remotely true even a half century ago when the U.S. economy was more inward looking, but it’s utterly preposterous today. That’s because the domestic U.S. economy is self-evidently wide open to the overpowering influences of global trade, capital flows, and the relative labor and production costs everywhere on the planet, all at once.
One way in which critics of the free market argue for the need for government intervention is to challenge the argument that the market will adjust to a decrease in demand by lowering wages, thus staving off unemployment. The critics allege that wages are “sticky” downward (i.e., that employers are reluctant to lower them and employees to accept them). But, Stockman says, this is for the most part false. “The only shred of truth in the ‘sticky’ wages and price argument pertains to wage rates set by quasi-monopoly unions in the heavy industrial sectors such as steel, autos, chemicals, and textiles during the decades immediately after World War II.”
Stockman makes two claims in the passages just quoted which need to be distinguished. One is that the free market doesn’t require government management to deal with economic downturns. The other is that government intervention to secure a desired level of employment will fail because the US economy (and presumably other economies as well) isn’t isolated in the way that would be required for the intervention to succeed. The claims are different because the first could be false while the second is true. That is, it is possible that the free market is incapable of dealing with prolonged unemployment but that the government cannot remedy this. This would be rather like suffering from an incurable illness, a sad but not impossible state of affairs. Fortunately, the free market can indeed cope with unemployment.
But what about the Great Depression? Doesn’t the collapse of the banking system in the dark years between 1929 and 1933 show that the government needs to stimulate the economy during especially bad times? A simple response to this contention is that a central bank system controlled by the government, as was already in place in 1929, would not exist in a free market. Stockman goes beyond this response by challenging the customary account directly: contrary to Milton Friedman, there was nothing amiss in the alleged “collapse” of the banking system at all. Stockman explains, in his typically forthright way:
In summary, the “deflation” that Friedman decried was not caused by Fed actions from 1929 to 1933. Instead, it represented the necessary work of a free market healing itself. The shrinkage of the bloated banking system and overextended credit, which essentially peaked in 1929, was really nothing more than a belated and old-fashioned purge of monetary inflation that had originated in the Great War, a process that the world at that time well understood and had experienced following previous conflicts dating back centuries. In short, the years 1929 to 1933 did not prove that capitalism had some kind of deflationary death wish or that gold-backed money inherently causes economic contraction, such that it can only be cured by central bankers astutely managing a fiat money supply.
Stockman is not yet finished. He also maintains that by abandoning sound money, Franklin Roosevelt spoiled the natural process of market healing:
But by then, the “natural” part of the Great Depression—the purge of World War I and roaring ’20s excesses—was over. In fact, industrial production bottomed in the second quarter of 1932 and began a normal rebound thereafter, one that finally brought national output back to its 1929 precrash level by the second quarter of 1935.
For Stockman, inflationary expansion is a supreme economic evil, one that was widely recognized “until the official adoption of 2 percent inflation targeting in 2012, though informally followed during the Bernanke-Greenspan years in the decade prior.” Before that, he says, “all inflation—of goods, services, and assets—was viewed as bad.”
Stockman argues that unsustainable asset inflation has occurred in many prominent companies, including Amazon, Microsoft, and Walmart, and he suggests that investments in them should be liquidated. This is the part of the book that I mentioned earlier that I’m unable to assess. Stockman is right that an inflationary boom cannot be sustained forever, but I have no idea when it will end or how investors should cope with asset inflation. I would think it a good idea for investors to pay heed to Stockman, but I cannot go beyond that. I can say with confidence that Stockman has made a devastating case against the macroeconomics of Keynes and Friedman.
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About the Author
David Gordon is Senior Fellow at the Mises Institute and editor of the Mises Review.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
