That Masquerades as Policy

It’s not often that a former Director of the Office of Management and Budget calls out the entire American economic system as a rigged casino—but that’s exactly what David Stockman does in his latest scorcher. In “American Capitalism’s Worst Nightmare,” he paints a chilling picture of a once-vibrant free-market economy now suffocating under the weight of central bank distortion, fiscal recklessness, and politically driven malinvestment. This isn’t just a rant—it’s a forensic autopsy of how American capitalism has been systematically sabotaged.

Stockman begins by zeroing in on the Federal Reserve. He argues that the Fed has turned into a central planning committee for Wall Street, abandoning its once-narrow focus on monetary stability. With over a decade of zero interest rates and trillions in QE (quantitative easing), the Fed didn’t stimulate healthy growth—it created a bubble economy. Stockman calls this “false prosperity,” inflated by debt, buybacks, and asset speculation, not real productivity or wage gains.

One of the article’s most sobering points is how the Fed’s money-printing binge has divorced markets from fundamentals. The result? Asset prices bear no relation to the real economy. A company can be losing money quarter after quarter, yet its stock still soars—so long as the Fed keeps pumping liquidity into the system. It’s capitalism without consequences. Risk has been neutered, and speculation has been rewarded like never before.

But the Fed isn’t the only culprit. Stockman levels his sights at Washington’s fiscal madness, where trillion-dollar deficits have become routine—even in so-called “peace and prosperity” times. Instead of investing in real infrastructure or balancing the budget, Congress has chosen to fund endless entitlements, military adventurism, and vote-buying giveaways. The result is a nation addicted to debt, incapable of discipline.

Perhaps Stockman’s most biting critique is aimed at what he calls the “monetization of politics.” As Wall Street and corporate elites learned to play the Fed's game, they also figured out how to buy Washington. With lobbying, campaign cash, and backdoor influence, the market is no longer a free arena—it’s a playground for cronies. The American Dream has been hijacked by what Stockman calls a new oligarchy of finance, tech, and political operatives.

This rigged system has profound implications. Stockman warns that the next crisis won’t just be a market correction—it will be a reckoning. The artificial boom built on debt and central bank largesse cannot go on forever. Eventually, gravity wins. When it does, we won’t just see a 2008-style downturn—we’ll see a systemic reset. And unlike in the past, we may not have the fiscal or monetary tools left to soften the blow.

For investors and retirees, this should be a loud wake-up call. It’s no longer enough to rely on the old 60/40 portfolio or to trust that “the market always comes back.” We’re in uncharted territory, with bubbles in stocks, real estate, and bonds all at once. Stockman’s warning is clear: the next phase of the cycle could be catastrophic for those who aren’t prepared.

At Bailey Financial Services, we believe preparation is the antidote to panic. We’ve built systems to weather the correction we believe is coming—and to take advantage of the rebound that will follow. Unlike the Fed, we don’t believe in bailing out bad behavior or chasing fads. We believe in sound strategy, risk management, and historical perspective.