(This important question - or something like it - was posed by William Wildblood in the comments to the previous post on Screwtape and Wormwood - here is my attempt to answer it concisely.)
The difficulty I am having in responding to your question may be related to the several assumptions embedded in it - for example, about our nature as Men and God's potential powers, and the purpose of mortal life.
If we accept that these in The West are the most evil times in history - in the sense that more (numerically and proportionately) people would reject salvation than ever before, due to the prevalence of value-inversion; then the first thing that strikes me is exactly that Men do not want to be saved from their current situation - indeed they want more of the same.
The situation resembles that of loving parents whose child has left home to live with an exploitative brainwashing cult to which she has become devoted. The parents know where she is, and could go and get her - but they also know that she would strongly resist being rescued (let's say she is devoted to the cult leader who abuses and enslaves her), and if rescued would be utterly miserable and try to return to her captors.
The parents may write to her, may send all kinds of messages to assure their daughter of their continued love, but she will not read the messages.
God is in this situation with the added aspects that the cultists and their victims and the weeping parents are all equally his beloved children; and the children are able to deny God's existence and assume that they arise spontaneously and accidentally and have no responsibility to anybody else.
In such a situation God cannot do much more than stand ready to respond to individuals if and when he is acknowledged and asked. Or else the whole scenario can be wound-up - which is the end of this earth, and the trajectory of humanity in it arcing to a conclusion; the end of the 'experiment' of mortal life.
The prophecies are that - sooner or later - this point will be reached, and the earth and all the people on it will be ended (and a New Jerusalem arise) - and it seems that we are now in the End Times, or Latter Days as it becomes clear that the point approaches and can only be delayed but not averted.
But why does God allow the demons to work? Well, the demons are his children too; and the demons are at one end of a continuum of goodness and evil in which everyone is mixed (in Mormon theology, Satan and demons are pre-mortal spirit children who have chosen the wrong side, and are forbidden to incarnate).
I think that God's tolerance of the continued existence of demons indicates that they cannot be beyond hope of reform - across the vast timescale of eternity. God could not 'kill' demons, but they could be stripped of their powers or confined if or when they were beyond possibility of repentance - and perhaps this has indeed happened to some of them (we would not know) but the ones we do experience presumably have not reached that point.
(A microcosm of the problem God faces can be imagined if a loving Father had many children among whom there was one in particular of great ability who preyed upon, tormented and corrupted the other children; and others who were themselves similarly wicked and had chosen to side-with the one most-wicked child. There comes a point at which a loving Father will feel that he must 'write-off' (e.g. dis-able, exile, imprison, 'kill') the one worst, and perhaps some more of his more-wicked children - for the sake of the less-wicked ones. But that is a last resort, and would probably lead to an eternity of irreconcilable fear, resentment and hatred from the written-off children - and may also have a terrorizing and paralysing effect on the less-wicked children who are, after-all, themselves all somewhat wicked, and who have experienced in themselves exactly the same kind of wickedness as was more extreme in some of their siblings.)
Why are the demons not sequestered from good people? If we consider the problem from a spiritual level - I think that demons are like vampires, and can only spiritually-harm those who 'invite them in' - so the demons remain present and active in human affairs because humanity has invited them to stay and continues to want them as guests.
The earth and mortal life are partly what we need, and partly what we make of them - a mixed picture. The reasons why bad things happen are therefore manyfold and must be understood in an individualised way and from an eternal perspective of soul.
I don't think humans are cognitively capable of understanding why everything happens everywhere and to everyone, and how it all interacts. But I do believe that we can learn by revelation why this particular thing has happened to us here-and-now; if we are open to accepting the true answer when God gives it, which may not be the answer we wanted to hear.