One of my principal market concerns is that monetary policy has shouldered the responsibility of catalyzing domestic economic growth, as our leaders in Washington have grown increasingly partisan and inert and loath to consider structural issues.
But with monetary policy becoming more of a blunt tool, we face increasingly strong structural headwinds, as ideology has replaced compromise and practical solutions to our problems.
There is a need for structural reforms and fiscal policy solutions.
Neither party has been willing to compromise, so policy apparatus is arthritic.The current administration is occupied by an ideologue who believes that a larger government and income distribution should dominate policy actions. The Republican Party is diametrically opposed to this and equally extreme in view. Both parties are inappropriately dominated by influence peddlers on K Street. As a result Washington is doing nothing to resolve the inevitable entitlement bomb that is approaching us, owing to an aging population and healthcare inflation. Our tax code is a mess, and a restructuring of the corporate tax code ( to negate the loopholes) is urgently needed. Our education policy is wasteful, nonproductive and fails to address the skills, needs and mismatches present today. But, again, there is no appetite by republicans or democrats to address this. The low-income family unit in our country is disintegrating with a large rise in pregnancies of single women. The government, of course, is doing nothing in this arena, in turn dooming children/teens to a life of struggle and crime. Finally, the screwflation of the middle class (the subject close to my heart and the object of an op-ed I did in Barron's back in 2011) is the 600-pound gorilla in the room. Trickle-down monetary policy has inflated fat cats' net worth while the average Joe has seen the costs of the necessities of life rise while his wages have stagnated. Every week that goes by when these issues are not addressed makes the solution ever more difficult. A do-nothing Congress is certainly further supported by the proximity to the November 2014 elections. There will be serious economic, stock market and social consequences of this inaction. Be forewarned.
This column originally appeared on Real Money Pro at 7:54 a.m. EDT on April 24..