The pundits and "policy" folks still live in the 1930s. But, the world has changed since then in ways that they cannot possibly understand. These folks don't compete day-to-day in the free market. They have no idea how different things are today for small businesses and ordinary folks.
We now live in a tangled web of an over-reaching government bureaucracy at all levels. That single fact is more important than the Fed, than tax rates, than international trade, than the stock market, than any other single fact.
If people are not free to pursue their own interests, which includes the right to make mistakes, then there is no possibility of real economic growth. The kind of economy that we have experienced since early 2009 is as good as it gets. This means the living standards of the average American are on a downward trajectory and no macro-economic maneuverings will matter.
What is needed is a major regulatory rollback. Absent that, the US growth story is past history. The Trump narrative of "making America great again" would require a painstaking unraveling of the regulatory monster that has been created by a plethora of well-intentioned laws and regulations that have shut down the American economic engine.
The implications for common stocks are stark. It is not so much that the stock market is going to collapse, but more the likely the stock market will no longer continue its one hundred year pattern of double digit returns for the average investor. An economy that can't grow, cannot produce profits for shareholders. The future, then, for the stock market is for much, much lower annual returns than American investors have become accustomed to.
Not only will the middle class and the poor suffer in this new economy, but stagnation problems filter up as well. While the political class -- the Clintons, Gores, Obamas and their allies -- the Buffetts, Gates and others -- will maintain their position at the top of the economic pile, even they will soon look in envy at the Chinese, where the wealth trajectory of the Chinese society will continue to power forward.
China has what one might call the "optimal corruption" model. Once you have paid off the local province leader, there are not many more palms to grease. Not so in the modern USA. The corruption in America, defined by the perplexing levels of bureaucracy and regulatory bodies that businesses have to deal with on a daily basis, suggests that American businesses now spend at least as much time complying (think: paying off) with the bureaucracy than running their businesses.
The elite colleges now feed the personnel that staffs this new bureaucracy. Former Treasury SecretaryTim Geithner and his successor Jack Lew are modern examples of the new bureaucracy. With zero experience in the private sector, Lew and Geithner have very strong opinions about how business in the financial sector ought to proceed. Their complete lack of experience or knowledge of the financial sector has not deterred them from issuing sweeping orders that have forced the financial sector to shrink back into a state of contraction. Those with no knowledge or background can be overbearing and ambitious -- Geither and Lew are poster children for this type of modern bureaucrat.
The average American has less and less choice over everyday decisions as the Geithner-Lew mob take over. The pundits and "policy" folks can't see this, because they don't experience it. They still live in the simple world of the 1930s, where tweaking macro policies was the simple ticket to economic growth. Such views are nothing more than an illusion, based upon ignorance.