10 radical revisions to rid America of Bubble Finance for good...

The IDEA that the American economy has recovered and is returning to an era of healthy prosperity is risible establishment propaganda, writes David Stockman, a two-term Congressman from Michigan and also director of the Office of Management and Budget under President Reagan, in Addison Wiggin's Daily Reckoning.

It's the present day equivalent of the Big Lie. It's the reason why Hillary Clinton's campaign to validate and extend the current malefic Wall Street/Washington regime was so reprehensible and failed.

In fact, the natural post-recession rebound of the nation's capitalist economy has already exhausted itself after 84 months of tepid advance. Now, the massive headwinds of towering public and private debts, faltering corporate investment and productivity, Washington-based regulatory and tax-barriers and the end of an unsustainable central bank fueled global credit, trade and investment boom are ushering in a prolonged era of global deflation and domestic recession.

Indeed, the only thing that has really recovered from the epochal breakdown of 2008 is the stock market averages, which are now at levels 3 times the March 2009 bottom. The market's current lofty valuation is an utterly artificial fiction of Bubble Finance.

In fact, the market would be heading for a hefty correction in any circumstance after being fueled for seven years with free money and massive liquidity injections by the central bank.

But at a nosebleed 25 times reported GAAP earnings, and after an 18% decline from the September 2014 peak already, the broad stock market is more over-valued than any time in history, including the peaks before 2008, 2000 and 1929.

So in the face of the fast oncoming domestic recession and deepening global deflation, Wall Street is set for the mother of all crashes. And what makes it so wicked is that the casino gamblers have been rescued by the Fed so many times since 1987 that they have no clue that the nation's monetary central planners are out of dry powder.

Suffice it to say that when the stampede for the exits gets underway this time, and there are no monetary firemen at the ready, sheer bedlam will quickly ensue on Wall Street.

Likewise, there will be no possibility of a fiscal rescue, either. That's because during 84 months of the weakest recovery in history Washington has whiffed entirely on the fiscal front. Not a single thing has been done about the structural deficit and the fast approaching insolvency of the nation's massive social insurance system.

But there is a sliver of hope. Now that Donald Trump has been elected, if he eschews a law and-order crusade and does not capitulate to the destructive policies of the Wall Street and Washington bicoastal establishment, there is a way forward.

The political outlaw who considers himself to be the world's greatest dealmaker would need to do just that.

To wit, President-elect Trump – if determined to rid the nation of its mutant regime of Bubble Finance at home and failed interventionism abroad – would need to make ten great deals.

A Peace Deal with Putin for dismantlement of NATO, cooperation in the Middle East, strangulation of ISIS by the Shiite Crescent, and a comprehensive worldwide agreement to end the arms trade and pave the way for general disarmament.

A Jobs Deal based on slashing taxes on business and workers and replacing them with taxes on consumption and imports.

A Sound-Money Deal to repeal Humphrey-Hawkins, end the Fed's war on savers and cash, abolish the FOMC and limit the Fed's remit to passively providing liquidity at a penalty spread over market interest rates based on sound commercial collateral.

A Glass-Steagall Deal to break up the giant financial conglomerates, limit the Fed's liquidity window to "narrow banks" that only take deposits and make loans and deny deposit insurance to any banking institution involved in Wall Street trading, derivatives and other forms of financial gambling.

A Federalist Deal to turn back most of Washington's domestic grant and welfare programs to the states and localities in return for a mega-block grant with a 30-year phase-out.

A Regulatory Deal based on an absolute four-year freeze on every single pending regulation, and then subjecting every existing statute to strict cost-benefit rules thereafter.

A Liberty Deal to get Washington out of the War on Drugs, criminal law enforcement and regulation of private conduct and morality.

A Health Care Deal based on the repeal of Obamacare and tax preferences for employer insurance plans and their replacement with wide open provider competition, consumer choice and individual health tax credits.

A Fiscal Deal to slash post-disarmament defense spending, devolve education and other domestic programs to local government and claw back unearned Social Security/Medicare entitlements benefits from the affluent elderly.

And a Governance Deal to amend the Constitution to rescind Citizens United, impose term limits, and establish public finance of all federal elections.