— and What Comes Next

I’ve watched for years as the Federal Reserve’s easy-money policies distorted nearly every corner of our economy, but the real tragedy is how it quietly dismantled the foundation of American industry. David Stockman laid out the numbers in his recent essay, and they’re hard to ignore: despite nearly $6 trillion in freshly printed money since 2008, U.S. manufacturing output is still below where it was 18 years ago. Think about that—almost two decades of “stimulus,” yet less real production.

This isn’t just an abstract data point. It’s a reflection of what happens when monetary policy inflates asset prices instead of supporting productivity. While Wall Street has thrived on cheap credit, Main Street has been left behind. The Fed’s obsession with maintaining “aggregate demand” has come at the expense of long-term competitiveness. They pumped liquidity into the system when what we truly needed was discipline, savings, and productivity-driven growth.

The wage data Stockman shared tells the story clearly. The average U.S. manufacturing wage in 2024 was $44.25 per hour, compared with $3.50 in Vietnam and $6.00 in China. Once you adjust for inflation, American factory workers haven’t gained much real income in over 30 years—but the nominal wage increases have priced U.S. industry out of global markets. Our inflated domestic cost structure, built on decades of “just a little more inflation,” has become the very thing hollowing us out.

As an advisor, I see the same pattern playing out in capital markets. The Fed’s policies have rewarded speculation over investment. It’s easier to make money buying stocks back or speculating on tech multiples than it is to build factories, train workers, or innovate in manufacturing. The culture of easy credit has replaced the ethic of earned growth.

Stockman makes a strong point: had the U.S. held prices steady or even allowed a period of deflation after the early 1990s, we might have kept our industrial base competitive. Instead, the dollar’s purchasing power has fallen roughly 700% since 1971, the year Nixon severed its link to gold. That single act opened the floodgates for perpetual monetary manipulation—and we’re still paying the price.

Inflation, contrary to what policymakers claim, is not a path to prosperity. It’s a hidden tax on savings, wages, and discipline. It erodes the foundation of real capital formation. The Fed’s “2% target” may sound modest, but compounded over decades, it has destroyed purchasing power and distorted investment decisions beyond recognition.

So what comes next? The answer, I believe, lies in a return to value—real assets, real production, real discipline. Investors who cling to the illusion that the Fed can print prosperity may find the coming years difficult. But those who understand cycles, who position capital in tangible assets and well-managed value strategies, will have opportunities that only appear when the old system is breaking down.