Fix America's markets

These Five Steps Can Fix America's Markets for Everyone in 2017

Every new year is ripe with promise, and 2017 seems to hold more promise than most - at least for some people.

But I've got a few simple ideas that could make it a great year - many great years - for all of us.

And I mean one of the best, most prosperous years in American history...

We Won't Get Anywhere with the Same-Old, Same-Old

Fix America's markets

If it seems like most of America has been, well, down in the dumps psychologically (and financially) since the 2008 credit crisis and Great Recession, there's a good reason.

For lots of people, not much seems to have changed for the better.

Sure, if you're a One-Percenter, your wealth has significantly increased because you not only had money in the market and stayed in it after the crash, but you also probably bought more stocks as the market kept going up.

And with interest rates so low for so long, if you had good credit, it was easy to borrow to buy more financial assets. And those assets kept going up and up, because companies could borrow cheaply to buy back their own shares as never before.

That made management rich, along with shareholders, but it didn't do a damn bit of good for hundreds of millions of Americans.

Those Americans got crushed, almost to death; the cheap-as-free cash that made some even wealthier ruined millions of savers, who barely earned a cent on their savings. What's more, plenty of people who got sucked out by the 2008 crash didn't get back in.

One reason, besides fear, was that aging Baby Boomers were following Outdated Financial Lesson No. 1: As you get older, you shift out of more risky equities and move your portfolio into fixed income, so you can live out your life knowing just what your retirement income will be and you won't be exposed to stock market crashes.

That rule worked okay... when people earned a decent return on their fixed-income holdings. There's that cheap-as-free money again, destroying retirees with a return far, far less than the rate of inflation.

But wait - according to the Federal Reserve, there's barely been any inflation for years, despite throwing everything but the kitchen sink at the economy to stimulate inflation, of course.

I've got just one word (which can't be printed), so I'll say: "Rubbish."

We see the prices rise at grocery stores. We see house prices rising, we see how rents have gone through the roof. We see how, in the real world, things actually cost more every year.

There has been inflation. There's no denying it. Only in the Fed's make-believe world has it been manifestly offset by low interest rates.

I've got an unprintable word for that one, too.

But we don't have to sit here and accept what's happened and keep trying what hasn't worked for most Americans.

Here's what I think needs to happen - now.

The First Five Things Trump Should Tackle on Jan. 20

It's getting easier now to see redistributive America giving way to a business-friendlier, more pro-entrepreneurial America. And that deserves a chance. After all, it was President Coolidge who said, "the principal business of the American people... is business."

Look, I know it's not easy to like Donald Trump, and some of his Cabinet picks. He's a businessman, they're largely businesspeople - wealthy businesspeople.

But if we put our emotions aside and absorb what Trump is telegraphing with some of these nominees, we can see there's huge potential for a lot of good to come out of this administration.

There are a lot of dealmakers in the mix here. Politicians are blowhards, but dealmakers are doers, and that bodes well for giving this country the shot in the arm it needs...

...if Trump gets to implement his tax and regulatory agenda - in a fair and smart way.

Of course, "fair" and "smart" are open to interpretation, depending on who the beneficiaries are, but here's what this might mean for all of us...

We need a simplified tax code and tax cuts. And I mean badly. They're both critical.

If the Trump Administration gets taxes right, we're off to the races, for years to come.

But here's where that "smart and fair" part comes in. Fair means: Don't favor the rich with a tax cut and expect the rest of America to wait for trickle-down crumbs.

Smart means: simplify the tax code by having only a few progressive tax brackets, for both individuals and businesses, phase them in, and at the same time reduce, eventually to only a handful, all the deductions the wealthy and businesses use to cut their tax liabilities down to crumbs.

What's more, we need smart deregulation. Fair and smart means: Don't let banks... polluters... or anyone who would gladly compromise America for self-interest and greed run wild.

Regulations should be simple for everyone to understand so everyone benefits by less obstructionism, flexible enough to allow quick adaption and innovation, and black-and-white enough so that stiff penalties - including jail time, of course - are easily and quickly meted out to violators.

Then we need to fix the "playing field."

Free, and I mean really free, capital markets are imperative. Here, fair and smart means dismantling and eliminating the planned economy the Federal Reserve has imposed on us.

We should replace the Fed with something more mathematical and less political, like the Taylor Rule. Get the central bankers out of the markets, once and for all. Eliminate high-frequency trading, and fix the mechanical and ethical problems with "packaged products" like exchange-traded funds (ETFs) and mutual funds.

The capital markets need to be made free again to properly serve capital formation and transparent risk transfer.

Make middle-class America great again. Policies that inspire and enrich the middle class in America will reduce the huge wealth and opportunity gaps that currently are built into our "system." Clearing the pathway for lower-income citizens to aspire and earn their way into the middle class will increase the middle class and generate more consumption and production across the entire economy. America's middle class is what made all of America great; all boats in America rise with the middle class.

I'd like to see macro-global issues addressed head-on. No more dancing around the problems.

We'd all like to see global debt reduced, "populism" result in fairer, more inclusive governments, and, frankly, a frontal assault on terrorism.

If that's what it's going to take for us all to have a happy and prosperous new year, the work is clearly cut out for Trump, his Cabinet, and the rest of us.

Shah is already looking at all the opportunities for us to make money in 2017, including one in particular that's ready to play right now.Click here to get in on one of the New Year's biggest plays, and you'll get his Insights & Indictments service, with all of his recommendations, twice each week. There's never a charge for this, either.

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