I don’t believe pure monetary policy by itself can produce a great economy. I do think there are things you’ve said that are important. Certainly velocity is important.
One question I think is whether you can drive the economy in the direction you suggest. For instance in the Reagan era you suggest that simply lowering interest rates could have accomplished the same thing. At the time if you remember inflation was running at 14% a year sometimes. The fed couldn’t lower interest rates for fear of driving the US into hyperinflation and 100% inflation a year. Inflation had to be broken first. The only way to do that it turns out was a sharp recession followed by a powerful recovery.
Of course once we had broken inflation and the economy was in recession it was easy to lower interest rates. My issue is that purely using monetary policy would have resulted in far different results in the end.
I totally disagree with the idea that tax cuts end up benefiting the rich primarily. You’re right that this is way too complicated to discuss in this forum but what I tried to do was explain more of a microeconomics level of understanding of how you drive an economy with repeatable growable businesses rather than economic policy.
In the end an economy consists of people and workers and productivity. The people can produce X value. It is only possible in the long run to distribute what the people can produce thus fundamental things like what businesses we have, what growth rate of those businesses and the basic talents and skills of the workers are crucial to understand how an economy performs more than monetary policy.
If we look at a country like Russia. This is a country that is composed of extremely smart and generally well educated people. During the Soviet era the country couldn’t produce enough toilet paper for its citizens. While this is a simplistic view of the soviet economy and accomplishments the fact is the soviet economy dramatically underperformed what it could and should have been able to produce with the workforce it had because of the political / economic system, incentives, etc… Similar problems beset many third world countries where fundamental oligarchies control and restrict innovation and change.
So, economics is a complicated beast. To some extent you need to have all the ducks lined up and each one of the ducks is important.
I am more and more influenced by the idea of oligarchic control. I believe I have seen that countries major economic changes are driven by disruption of oligarchies.
Many examples come to mind but Japan is one. They seemed to be in a position to kill the US economically in the 70s. They were. However, they hit a wall. One economic analysis was more compelling to me than others for why this happened. The Japanese allow change in some areas of their society but some other areas they would not allow change. For instance banking and retail were off-limits. These are huge parts of an economy and Japan refused to allow changes in the way these businesses operated. There were no Costcos in Japan. The inability to increase productivity in other areas of their economy eventually resulted in stagnation which then crushed the economic expectations and high stock market etc… The rest is history.
I believe the US needs to break up oligarchic control of certain areas to free the economy to grow again. Trump is the smasher of current power. That is crucial. I really believe monetary policy can’t be stupid but it isn’t the reason we will succeed ultimately.