The statement about the lack of inflation from QE and other stimulus programs from 2008 is pretty questionable. There's been little inflation as measured using usual consumer price indices, but the construction of those indices is typically fairly focused on consumer goods and underweights the assets that rich people tend to invest in (stocks, real estate, bonds, etc).
The QE and stimulus programs from 2008 were significantly more targeted toward the upper and upper-middle classes (arguably without that much trickle-down), and so there wouldn't be much significant inflation as measured by consumer price indices.
But if we look at the assets that rich people invest in (since it's mostly wealthier people who benefited from the 2008 stimulus programs), then I'd say there's been a significant amount of inflation - P/E ratios for stocks have been historically high in the last few years, real estate in desirable cities has gotten significantly more expensive, and bond yields have been low.
We seem to be already seeing some of the same, with the stock market being pushed up by the Fed's commitment to 4T+ in stimulus this time around and ever lower interest rates.
QE never really worked, bailed out a bunch of corrupt and broken companies that should have gone bankrupt, and kicked the can down the road. They were supposed to unwind QE1 but they never did. And $4T in toxic QE1 assets sat on the Fed's balance sheet going into this mess. The Fed is propping up the bond market and toying with the idea of buying equities. We just had 17 million people file for unemployment in 3 weeks and the Dow went up a few hundred points. Our markets have been completely decoupled from economic reality because the Fed is faking demand and not letting the markets crash like they should. Our fiscal deficit is already $3 trillion this year and it's only April. This is a recipe for disaster. How much of corporate America will the Fed own when this all comes crashing down? Will we have a nationalized economy by default?
The markets dropped because other countries already had similar issues.
The stock has it mostly priced in, but the rise of the stock is attributed to the fact that European countries are flattening, vaccines and ramped up testing in the US.
To paraphrase Luke Skywalker in The Last Jedi, everything in that sentence is wrong--or at least seriously questionable.
> The stock has it mostly priced in
It does? I've seen about the same number of analyses indicating that companies are doing dubious things to bolster their earnings on paper (and haven't priced in the full cost of the crisis) as I've seen supporting your argument.
> but the rise of the stock is attributed to the fact
Explanations for this abound. From basically every corner, qualified, popular, neither, and both. Post-Black-Swan shockwaves are usually accompanied by a lot of confusion and after-the-fact pseudorationalization, and this situation is no different.
> European countries are flattening
Sort of (recorded clusters/outbreaks keep getting reported),
partially (some countries are doing really well, some are not), and only according to really, really new data.
> vaccines
Presumably you mean vaccine research getting underway? This is happening, to be sure. Still has the attribution (after-the-fact potential for false correlation) problem mentioned above.
> ramped up testing in the US
There's not consensus on the effect of more testing on the markets either. Testing builds confidence/information on the one hand but, in many US states, it has revealed worse-than-expected (well, really worse-than-hoped) numbers of sick people on the other.
I guess the upshot of the above is: you make a very authoritative statement about why the markets have behaved in a certain way. That information isn't even beginning to be known, or, at this early phase, knowable, with any sort of confidence.
QE1 worked well and the banks are not corrupt. It's in the later years, while stocks and the economy were on a tear, that the Fed at. al. refused to raise interest rates ... this perpetuated the housing bubble among other things, which is the #1 source of inequality (hint, it's not between the billionaires and the rest of us, it's between the propertied and the unpropertied).
QE1 did not work at all. And the Fed's 0 percent interest rates have distorted capital markets causing corporate debt to skyrocket. That alone is propping up zombie companies and this overleverage is what will make the coming recession / depression even worse than 2008. Note: the Fed is violating the Federal Reserve Act by using BlackRock as a proxy for bond purchases. So please do not tell me they are not corrupt. They're beyond corrupt.
This. The 'race to the bottom', committed globally by central banks, to get to 0% interest rates, and keep them there for the sake of keeping the markets 'up', exacerbated by top level politicians' desires/directives.
If there's no cost to borrow, why not keep borrowing? And keep borrowing? And lending? Until things really unwind in a recession/depression that will de-lever everything/everyone.
The moral hazard? I try to maintain my own family finances, keep a budget, save for expensive things. And in the span of 3 weeks the US has spent $7,000 of every individual's future ($2T / 340M people).
> And in the span of 3 weeks the US has spent $7,000 of every individual's future ($2T / 340M people).
You can’t really claim that. The reality in the progressively taxed US is the higher tax brackets pay the overwhelming majority of the total tax bill.
In reality, the payback of that $2T will fall on the top taxpayers. So it’s more like $10 for most Americans and $100000+ for the top percentiles. Bezos types will pay tens of millions.
We're about to find out what global QE to infinity does.
I'd expect more events like the recent boom in stock prices in spite of massive global unemployment and the wave of unrest nicknamed the Arab spring which came after 2008 and had origins in economic disruption. Revolutions often come after the unbearable has passed.
Even if we quickly overcome the virus the global economic impact of the lockdown and QE will be severe and long lasting. It's quite possible that due to QE/stimulus none of that will show up in stock prices and they will shoot up, boosting inequality again.
Based on past experience post-dot-com-bust-bailout and post-2008-bailout:
Prepare for the $1.5M starter home financed by an 0.08% interest 90 year no money down mortgage, $800k student loans at 0% interest, and business lines of credit at 2% to any business that has shown any revenue at all in the last month and that can produce one mammal capable of fogging glass. Any mammal with provable respiration will be able to get a car loan and a credit card.
Go long on real estate, stocks, bonds, Bitcoin, Litecoin, Dogecoin, all the shitcoins that don't even work, gold, oil, cow farts, and pogo stick futures.
Expect more monstrously overfunded "unicorn" startups that lose massive amounts of money and produce very little. These are basically Ponzi schemes targeting the very rich and venture funds.
Wages however will continue to stagnate. Everything always goes up but wages.
As a result of wage stagnation in 2024 or 2028 another even more asinine Populist than Trump will be elected; whether they are "right-wing" or "left-wing" will depend on which side is able to produce a louder demagogue and better memes. Meanwhile the rich will build orbital bases and prepare to leave the planet.
You've put into words what I was thinking about the other day.
I always hear folks say "Weird there was no inflation after the 2008 stimulus" or even experts try to claim that there is none.
But it's not about inflation of everyday consumer goods, it's about the massive inflation in things that consumers don't purchase regularly (things like houses). And at this point, I think we've done a lot to essentially price regular consumers out of that market.
Think about that. We've priced regular folk out of things that build wealth. It's going to lead to something terrible down the road. Even more terrible than what we're already living in.
Every HN thread on economics has a bunch of comments like these that are earnestly misinformed about economics. When commenting on something outside of your wheelhouse, please recall Socrates from the Apology: "I observed that even the good artisans fell into the same error as the poets; because they were good workmen they thought that they also knew all sorts of high matters, and this defect in them overshadowed their wisdom."
I'll point out just two deficiencies in these threads and leave the rest to you. If P/E ratios in the US are "too high," then people would invest their money elsewhere for better return, right? Maybe international stocks or bonds or whatever. And why don't they, if they have every incentive to seek a better return? Because there are no better returns, even in countries with higher interest rates. So how could P/E ratios be too high? The more likely explanation is that this is the "new normal" - savings outpaces investment opportunities for many reasons (aging populations, growth in countries with stronger saving cultures, etc.), which pushes up the premium on assets.
Second, on the subject of interest rates and QE, a little international perspective would make you reconsider the effect on the overall economy. All other developed economies have lower interest rates, more QE, and slower growth than the US. Look at Europe, look at Japan. The issues of "why are asset prices rising" and "why is inflation low" are much larger than just US policy. We are talking global trade and demographic factors that influence these things. The current stance of fiscal and monetary policy is the symptom, not the cause. And in fact the US has been significantly more successful than our counterparts on that topic, as a fast and strong response in 2008 pre-empted the kind of drawn out economic malaise seen in Europe, where the ECB waited years before easing policy to the degree that we had. Now Europe has lower rates, more QE, lower inflation, a worse labor market, and less growth than the US. And that's before factoring in the coronavirus crisis. Policy may have increased inequality in some ways, but if you're going to make that claim you have to also answer the corresponding counter-factual: potentially the poor would have been even worse off (relative to the rich) if there were no policy interventions and the labor market collapsed. There have been some papers on the topic, and it is not at all obvious that inequality is worse now than it would have been if there was less policy intervention.
I never said that P/E ratios in the US are "too high". I said that they've been higher in recent years than in past history.
This is, as you said, because the amount of money chasing investment opportunities is increasing. I agree that the reasons for this are complex, but one significant reason that the amount of money chasing investment opportunities is increasing is central bank stimulus (not just in the US, but worldwide).
The rise of asset prices definitely is a much more complex issue than just US policy, but I'd still argue that stimulus by the US is one of the causes, not only a symptom.
I agree with you that the US has been more successful in managing the 2008 crisis than the ECB, and that part of that was because we recognized that we needed stimulus earlier on in the crisis. But this doesn't contradict anything else that I said.
I also never made the claim that the counterfactual of no stimulus would have been better - I personally believe it would have been worse, since the economy and labor market would have likely went through a longer and more serious collapse. But again, this does not contradict what I said about central bank stimulus being one of the significant causes in the rise of prices in financial assets.
I appreciate your response and think you're mostly on the right track. I didn't intend to call you out, more to point out a few mistakes in thinking that are common in these kinds of threads on HN (and indeed are more egregious elsewhere in the responses to this OP).
> I also never made the claim that the counterfactual of no stimulus would have been better
To be fair, that wasn't the only option. There was the debate in 2007/08 about how much of the stimulus should be monetary vs handouts directly to taxpayers vs infrastructure. There's some who believe that the "infrastructure" portion was too small of the pie, hence the stomach for things like "Infrastructure Week" from Trump or "Green New Deal" from the left wing of the Democrats.
In the abstract, I liked the idea of spending it on infrastructure, but over the ensuing decade I’ve become deeply skeptical of the ability of the US government to effectively spend more money. California high speed rail and the NY subway are exhibits a and b.
I agree with you (to your point) about California high speed rail: a solution looking for a problem. But NY subway is arguably something that could generate huge returns if the capex was committed to modernizing and automating the public transport of the biggest city in the USA and a major financial capital.
CAHSR is mostly proof of a few things that America gets wrong
- heavy reliance on consultants is not a financially prudent exercise compared to building up a competent civil service, particularly since consultants want to keep the gravy train running
- sustained funding for projects is the way to build up a civil service that can push out projects; conversely, "get a ballot measure passed first and ask questions later" is a very bad model.
Economics is a weird discipline where everyone becomes an expert on it at age 15. I've even seen people confidently expound on economics when it's clear they don't even understand the difference between revenue and profit.
In contrast, nobody is willing to argue with a physicist unless they are at least as educated in physics as their counterpart is.
It's really a shame that although we live in a market economy, there is no attempt whatsoever in K-12 to explain how markets, business, and accounting work. A high school graduate is unlikely to even grasp what compound interest is.
There are a number of subjects like this. I feel it has something to do with not making predictions about the future -- leaves no clear indication of good/bad decisions that are tied to skill.
The really interesting areas like this is something like fringe/doomsday religions, that do make predictions about the future. When these predictions inevitably fail to pass, the believers double down.
Because economics isn't a real science. As soon as someone starts talking about it like it is a science my bullshit alarm rings and I politely extract myself from the conversation.
This is basically my point. Didn't particularly mean to criticize davidxc, more the tendency for people on HN to assume that because they're good at programming they must also know a lot about economics, the stock market, and etc.
To be fair, there might not be anyone who can opine on economics and be correct. It's all either survivor/hindsight bias, or making indistinct, unverifiable predictions.
Economics happens to have high stakes, so people flock to it. Nobody really knows what's going on.
We do know a few things, such as attempts to repeal the law of Supply & Demand fails again and again. We also know there is no Free Lunch, as every effort to implement one has failed.
It's like I am no physicist, but I know that anyone who claims he's invented a Perpetual Motion machine is either a fraud or made a mistake.
"a bunch of comments like these that are earnestly misinformed about economics. "
" savings outpaces investment opportunities for many reasons (aging populations, growth in countries with stronger saving cultures, etc.), which pushes up the premium on assets."
The savings rate is not correlated with stock prices. [1]
"All other developed economies have lower interest rates, more QE, and slower growth than the US. "
No, they have similar rates per capita. US grows because it brings in more bodies [2]. Moving warm bodies from A->B implying a loss somewhere and again somewhere else isn't exactly growth. (I mean - yes, they probably can be more productive in America). But this is not an economic marvel.
The OPs statements concerning inflation of financial assets is very, very reasonable economics.
The argument is not that the US savings rate pushes up the value of financial assets in the US, I'm talking about globally (i.e. the global savings glut hypothesis). Countries like China, Saudi Arabia, and Germany have significant capital account surpluses which continue to get invested in assets in the US, particularly the stock market.
This is a fair point. But the Fed has been playing funny money during all this time, backing dollars with garbage real-estate, so I don't think it's fair to say this is just a regular 'new normal' as in asset prices were marked properly.
'New Funny Money Normal' - maybe, but the massive Fed balance sheet first enables those with assets, not those who don't i.e. 'the rich'.
This is unlikely to be read given how late it is -- but one major flaw in your argument is the statement "people would invest their money elsewhere". It is very clear that the largest investors are not using "their money" but borrowed money. Ultra-cheap debt has enabled hedge funds and companies to leverage up and purchase far more stock than they could otherwise afford, massively driving up demand and pumping up equity prices to the high P/E ratios that you dismiss -- and low interest rates are the enabler.
Stock Buybacks By Corporations The Largest Share of U.S. Equity Demand
you can't make such a grandiose condemnation of "earnest misinformation" and then not make perfectly defensible arguemnts, lest you make the exact same mistake you condemn.
p/e ratios at historical highs is a statement that they've disconnected from their fundamentals, i.e., the price of a share of a company is (often much) more than the expected present value of all future cash flow for that share.
that there are no better alternative investments just strengthens the case that those p/e ratios are irrationally high for those assets, not that the strategy of investing in the best available alternative is irrational.
I don't understand what you're trying to say. You can't easily say that asset prices are "disconnected from their fundamentals" - the price is what people are willing to pay for the future earnings of those companies. People are willing to pay a higher premium for those earnings now than they have in the past. Instead of the comparison to historical highs, try looking at developing countries, with lower P/E's and higher interest rates. Yet investors are still willing to pay a premium for US stocks. If you're going to say that the price is wrong, you need to account for that discrepancy. It seems that the argument you want to make is that people buy overvalued US companies because they think everyone else will continue to buy overvalued US companies?
i'm saying the premium you mention is the additional willingness-to-pay for those equities being the best available, not something intrinsic to the underlying business. it's on top of the value of the cash flows.
in a hypothetical market with 2 relatively correlated (similar beta) stocks, one that historically returns 10% and one that returns 2% and an expectation that those returns continue in the near future, you'd put all your money on the first stock, regardless of the price and regardless of systemic conditions.
in that scenario, you'd expect to be making your most rational choice even if you overpay severely. in the case that the market crashes, you'd lose less money than the opposite scenario. the price says nothing about the value of the underlying cash flows (the fundamentals).
Edit: is this not a fair question? Putting one's own money on the line is a reasonable test of what one's convictions are. For example, I'm optimistic about the market, and have put my money where my mouth is. Of course, that doesn't mean I'm right, but I have a level of confidence that I am.
that's mostly a gamble about timing, not the validity of the p/e ratio--that you can both get into and get out of a short position with sufficiently precise timing.
I think your question is riding the edge of what might be considered too confrontational on HN.
the overall sentiment is reasonable, of course. you shouldn't listen to people who say the sky is about to fall while they continue buying $SPY every other friday.
yes, basic consumer goods didn’t see much inflation. But what about housing, education, even stuff like cars and travel. Of course, other factors are at play too, but abundant “cheap” money certainly increase prices of those
It's American consumerism fueled by available credit.
What's really fascinating is that what you said applies to McMansions, and ... private aircraft too.
Cessna cancelled their basic $300,000 new 172 because people were only ordering the $400,000 glass panel model. The price is so high they took it off the website for the first time. (And older pilots were expecting it come in at $80,000. lol.)
Cubcrafters makes composite Cubs(!) that are priced starting in the $190,000 range for LSA and $317,000 for Part 23, and again, mainly sell the maxed out versions.
The increasing volatility of future economic prosperity in most places, as well as concentration of burgeoning businesses into a few select cities is not factored into the CPI, and is probably not able to be factored.
The difference in probabilities of future life outcomes for living in certain prosperous neighborhoods and cities and the compound effect of children growing up in those is very material nowadays. This especially effects how much more housing and land costs in certain cities, and how much people are willing to gamble on it by leveraging more to "buy in" to those probabilities of future success.
Not only are they included they account for almost a third of CPI. Thing is it is measuring nationwide housing costs which may not be moving in sync with Bay Area rents
If we look at inflation for consumer goods (not oil, healthcare, housing etc.) there may be another, non-fiscal policy aspect coming into play shortly.
Formerly Chinese (and sometimes subsidized I suspect) dirt cheap items might become a lot more expensive. Non stick frying pans and pool swim noodles type things. I can't believe that returns exactly to how it has been.
Another way of looking at it: consumer goods (as measured by CPI) have radically dropped in price relative to non-CPI goods over the past few years (perhaps driven by automation and optimization of global supply chains) while, at the same time, the general price level has risen as we've exploded the money supply.
Well, not really: bailouts punish people and business who incurred costs to operate in a way that would allow them to pause their economic activity for months (cancellable supply/rent/employment contracts, cash reserves, etc.), and favors those who did not do so.
In general, a society where it is possible to pause all economic activity at any time is going to be much more robust than one that doesn't, and is going to reduce the impact of an apocalyptic event that the government cannot bail the society out of, possibly avoiding human extinction in the most severe cases.
For instance, if everyone stores several years worth of food and water at home, then even the most catastrophic events are much less likely to kill the vast majority of people in the world.
So, there is a moral hazard, and it may be wise to either minimize the bailouts or to make such resilience mandatory.
I agree with the general principle here (that moral hazard is bad; that we should construct an economy in which it's possible to hit "pause" for any number of reasons), but that's not the economy we have. The one we have seems to reward financial engineering, cost-optimized supply chains that are highly vulnerable to even the most minor disruptions, and a general mindset that freaks out at the first sign of trouble.
So, how to we get out of this trap? Most obvious answer to me is more localism. I.e., relying on local supply chains for goods (both consumables and foods) instead of a global one. This lockdown has been pretty miserable for a lot of my friends, but my one hope for a silver lining here is that after we're out of it there might be a return to prioritizing your local community over the bottom line. You don't freak out in a Pandemic if you know that your supply chains for all of this stuff are local, and unaffected by problems on the other side of the planet.
Let it hurt. Unless investors feel it (and they only feel via the value of their investment), nothing will change, ever. Of course, you'll get plenty of people saying that it's unfair that this time they really have to live with the consequences of their risk management and that we should totally do that, starting tomorrow. But then you'll get the next cries next week when they've done it again.
Mind you, I'm not talking about some restaurant that's more or less getting by without generating large profits, but every company that spent their money on stock buybacks will now have to do the reverse: issue more shares to recapitalize.
I think that I agree with this ideologically, but the reason nobody lets that happen is because cumulatively, "retirement accounts" are the single largest "investor" on the stock markets.
So in this case "screwing investors" basically amounts to destroying the life savings of the elderly.
I don't know whether they're also the most risk-seeking investors, but they'd likely be (strongly) affected, yeah.
I don't see an alternative short of massive regulation (that essentially removes them from the stock market completely and move them into a government service; that'll still be done when they've burned down), because I see it more like a slow moving infection that starts in a toe. We've missed the right moment to amputate and only lose that toe, we've missed the moments for all the other toes on that foot as well, and the whole foot is beyond saving now.
It sucks to lose a foot, but waiting and consuming massive amounts of pain killers to be able to hobble along just means that it's going to be the whole leg next year. The best time to interfere was on the first try to socialize the losses. The second best time is now.
Oh, I thought we were in search of a solution that obviates the need to socialize the losses. Socializing the losses is what we're doing now. I mean, sure, we could move them all to a government program, or we could just keep letting the government do what it's doing, as post-QE, the stock market basically is a federal program.
I guess my sincere question here would be whether or not you'd be opposed to bailing out social security if it were in the same boat for whatever reason.
I understand your point but it feels like it's not addressing the actual issue: Why did the elderly put their life savings into the S&P 500? And why does everybody encourage pumping all your life savings into stocks?
A possible answer is that people still believe risk-free 5%+ YoY returns is perfectly normal because of purely historical reasons and disregarding the current economic realities (growth rates) of the world. Considering the current demographics in many developed economies it's just not going to happen! How about bailing out their pensions instead of the companies?
> So in this case "screwing investors" basically amounts to destroying the life savings of the elderly.
Equity markets are not supposed to be so timid that they hide behind the skirts of grandma and cling to grandpa's legs. The picture is more like they're holding a gun to your grandparents' heads. I'd look into a one-time stimulus program that recaps just those elderly's retirement accounts to decouple equity markets' hostage-taking of a vulnerable section of the population, move the interest rate to a level that re-kindles the bond market's retirement linkage, and let the capitalists sort out a real capital market.
I'm done with so many companies boasting they're uber-capitalists, but multiple times in my life they avail themselves of taxpayer-backed funding for loan terms I'd never in my dreams get as a private individual or small business. And they just did it again.
Localism is the opposite of the right thing to do. Small, local businesses are the ones that are going under. Large, geographically distributed companies are the most able to survive long-term shutdowns.
What we need is more globalization and more redundancy of supply chains, not less. When the virus hits a region we need to be able to shift production of essential goods to other regions, so we need to have manufacturing capacity in many places.
Globalism doesn't really encourage redundant regions – it encourages all production of a certain type of good to be done in a single region and then traded with other regions for maximum efficiency.
Globalism encourages production of goods in multiple regions which are efficient at the production of a particular product.
For example, globalization is why Toyota manufactures cars and car parts in 18 countries, rather than just in Japan. Under localism, Toyota would only manufacture in Japan.
> globalization is why Toyota manufactures cars and car parts in 18 countries,
Definitely not. It is because of tax incentives under protectionist policies. A perfect free-market globalized world would actually see cars being manufactured in just one place for maximal efficiency.
Incorrect. A free-market globalized world (I shudder at calling such a world "perfect") would see cars manufactured at wherever gives maximal marginal gains. Which is what we've been seeing...
Resources are finite no matter how much capitalism pretends otherwise.
Businesses were never expected to be able to totally shut down for months at a time. It’s not reasonable to suggest that businesses who can’t handle that have been irresponsible or are less deserving of help.
Wimbledon took out a pandemic policy year after year. Turns out they were stupid to do so, they could have invested the insurance premium in the stock market and waited for their bailout.
Think in risk terms. When they were assessing the risk to their business posed by a pandemic then they could not foresee the govt response. An insurance policy is (almost) certain to pay out. Risk assessed and mitigated. "turns out" is not a method I use for business planning.
I'm not sure what sort of bailout they would get either. My firm does not expect a loss of earnings style bailout. I would venture that they did the right thing.
Insurance is most certainly NOT certain to pay out. Case in point Star Cinema Grill; albeit this is an egregious case where the insurer is blatantly arguing and bluffing a lawsuit. Insurance will fight tooth and nail to not pay out.
Wimbledon is a one time (well annual...) event. I doubt anyone would insure a company making billions in revenue against a pandemic -- an inevitable outcome in a lot of ways.
If it happens once every 20 years then the money earned by investing 20 years of premiums just have to pay for it. Alternatively the company could spend 20 years socking away money instead of issuing large bonuses.
Not reasonable, and also not useful. That's probably 90% or 95% of businesses that were not able to pause like that. We're going to want a lot of those businesses.
And the ones that are able, some are by luck or circumstance rather than wise design. Should we reward the luck as well as the design?
"Don't help them" seems like throwing out ten babies with the bathwater.
I mean, that logic is applied to individuals that for example get sick or simple exist in bad economy. They dont get bailout while consequences on them are disastrous. I think that anger over companies being bailed out with no conditions placed on those money is pretty much about that.
Individual get homeless, but the company wont even have to go through bankruptcy and restructuralization. It gets free money instead.
Therefore they should be compensated too, and they are going to be. They get unemployment benefits and Federal money. The income tax due date was moved out, and many states have allowed people to stop paying rent and prevented evictions. There will probably be more help for people in the next relief bill the government passes.
People aren't being helped enough, but neither are businesses.
On the plus side, helping businesses can help people keep their jobs, so if you help businesses you also help their employees. People are focused on stock buybacks, but what we really ought to do is prevent businesses that receive aid from laying people off. (Of course, that does create the incentive for businesses to lay people off before they get the aid, but a smartly written law could require companies to hire those people back as a condition of aid, etc.)
If you help businesses you may be helping their employees. Or they may just take the money and lay everybody else off for the duration anyway.
If you want to put strings on the help to businesses (that they have to take care of their people if they get the help), I'm fine with that. If you want instead to just help the employees, and give the businesses a vacation on paying rent, utilities, and taxes, I'm fine with that, too. (But then you have to figure out how to help the landlords and utility companies. The landlords you can give a vacation on their mortgages, but then you have to help the mortgage holders...)
Government did not made virus. It merely failed to act on it - party because of trying to keep stocks up. American government (whether federal or local) was not exactly fast in giving out orders to close businesses or forcing restrictions or forcing people wear masks. It seems like for the most if United States and most of last months time, it was individuals, organizations and very local levels of government deciding to avoid contact (or pressuring each other to avoid contact).
The ones that are closed by government directly are restaurants and entertainment.
Individual health insurance being too expensive is also because of government. The levels of homelessness or how severe consequences of loosing job are is also something that is because of what government does.
To say that those who can't handle it are not less responsible, is to say that those in the same industry who can handle it are not more responsible.
I understand your point, that this is a major extreme that people don't tend to plan for, and for small businesses, I don't fault them at all.
There is less sympathy for larger organizations like airlines who have (or should have) at least one full time team of people who prepare for all kinds of logistical scenarios: War/hostilities between nations, fuel shortages, pandemics, a broken supply chain of repair parts, green new deal legislation, the list goes on.
So not only should larger organizations have been mindful that this kind of thing could happen, their cavalier use of cash on hand to inflate their imaginary value (stock price) should mean any help they get is tied to government stock in the company, a ban on stock buybacks, etc.
Me and two others started a small business in 2000. After a year or two we developed a rule of keeping about three months of turn over in the bank at all times. It was designed to deal with say VAT and Corp tax turning up with payroll and no or late payments from a few big accounts in a perfect storm of cash flow fuck ups.
No we did not factor in a global pandemic in our plans but it seems that avoiding credit to bailout your cash flow is a strategy to consider for the future. With the measures like furlough etc in the UK we have a plan for six months that leaves money in the bank and all 20 employees still on the books.
I'll just be damn glad to get out the other side of this with my business and staff all in one piece. Losing the contents of the war chest for a while is the least of my worries if we are still solvent as a business and earning/paying personal incomes.
> For instance, if everyone stores several years worth of food and water at home, then even the most catastrophic events are much less likely to kill the vast majority of people in the world.
I see a lot of resistance to your suggestion based upon the supposed economic feasibility.
However, one angle I haven't seen discussed is: if vast swaths of the labor force did become functionally independent for up to 5 years for example, it would dramatically alter the extant leverage in the job market. Instead of a centralized union negotiating mechanism, a de-centralized negotiation mechanism runs. Wage earners decide on a case-by-case basis whether or not to accept a job offer, secure in that they can last for up to 5 years of nothing before they are in a "must-get-job" state. At scale, it might become a de-centralized lightweight form of UBI, unionizing, and general strike.
This doesn't even have to be prepper-style decentralization. If enough people work towards FIRE at the same time, then it functionally accomplishes exerting the same market pressures, except on an even longer timescale.
There's a balance between everything being JIT to everyone living in a self-sufficient bunker their whole life. More agility is better for developing the economy and technology and efficiency and all sorts of good things while more preparedness is better for surviving freak events. I think we need some of both. The JITters might not survive a disaster and the survivors might not produce much value, but both keep civilization going.
You see the conflict between these two directions with agricultural protectionism. Countries often pay to keep their agriculture industries local however inefficient they are. That's bad for the economy but good for resilience against disaster.
You have to keep in mind that a business in a competitive market would have to trade off investing in surviving a disruption against investing in growth, lowering prices, or increasing returns to shareholders. Absent some kind of coordination a business that plowed its profits into the former would probably not survive against others (investing in the latter) long enough to even experience such a disruption.
Unregulated markets encourage firms to engage in a sort of recklessness arms race. And IMO that’s one of the reasons why we need strong non-market-based safety nets for this type of disruption.
Storage requires economic activity though. Storing frozen food requires an economy to generate electricity and maintain power lines. Storing dry goods requires electricity to process those goods into something useful or a fossil fuel supply chain or a wood cutting insustry.
Also, food production requires year round economic activity. Pausing for one week would mean mass starvation even if everyone had food stores.
People keep talking about disrupted supply chains but nothing could be further from the truth. Food is widely available as are all needed consumer goods. In my city, restaurant supply companies have shifted to producing direct to consumer boxes in a matter of days. I love to garden and am attempting to grow a lot of my own food because I'm a bit of a prepped, but even I can see that we are not anywhere close to a true SHTF moment. For the most part the economy is operating as normal for necessary goods. Most people can still go to the same store they always do and get everything needed or go o line and have it delivered.
If the farm workers strike, there will be others willing to work. I don't think it's worth asking if the 'braceros' can't get across the border. The American government and ICE has proven for the past 2 decades that it is completely incapable of policing the American southern border in any meaningful way.
Storing several years of food is hugely expensive and a waste of resources. Companies should not be stocking capital and supplies for 1 in 100 years Black Swans.
We could end up in a several years long pandemic or war. Should every family have a bunker, 5 years of non-perishables, weapons, bio gear, medicine, generator, generator parts etc?
It's much more efficient to have a smart restructuring program for when calamity hits and to smartly reallocate resources, capital for the new re-alignment.
Because of the system-wide effects, we are facing - even insurance is not the best product.
The 'moral hazard' is not in the bailouts themselves, but the terms of them and how exactly the bailouts are enacted.
For system-wide events that are impossible to predict, what we need is dynamic leadership (policy, action, financing).
Some parts of the system need more resiliency than others which is why we have regulations, strategic investment, reserves. And after this event those will be adjusted as well hopefully.
> For instance, if everyone stores several years worth of food and water at home
1. That wouldn't allow us to pause all economic activity. Not even close. Not even remotely close. Notice that 0% of the economic damage caused by coronavirus could have been prevented by stockpiling food and water.
2. Lots of economic activity is not possible to pause. Think about e.g., large construction projects or any manufacturing process. There's an enormous amount of economic activity that just can't easily be paused, at varying timescales. At the short timescale, for example, you can't simply stop pouring a foundation and come back to it later. On a longer timescale, you simply can't restart an oil well at $0 cost. These facts aren't due to bad planning. They're due to the fundamental laws of physics. And for any given type of disaster scenario, even the most resilient and localized supply chains might be disrupted. In fact, it's not really clear that localized or even redundant supply chains/processes would make you more resilient in any given scenario. There are likely fundamental tradeoffs and, even if not, individuals and small firms simply can't plan for every possible apocalypse.
3. That level of food/water stockpiling would be enormously expensive. Stockpiling would become a nontrivial drag on GDP, not only through unproductive resource allocation but also due to new frictions (e.g., moving 2 states over now becomes a five figure investment).
4. Like it or not, most folks simply don't have the means to stockpile at that scale. A waitress working 80 hours a week will never be able to afford the space and continuous investment necessary to maintain a multi-year food and water stockpile. Heck, even the largest firms with the best margins have to take on some existential risk in order to operate. At some point, the choice is between extreme resilience and having a given sector of the economy.
5. I can't find the problem you're trying to solve with multi-year food/water stockpiling. I'm having trouble figuring out what scenario would only last a few years, and would result in substantial destruction/disruption of the agricultural sector, but would not result in either a) also damage stockpiled food/water or b) trigger extinctions/mass-deaths that aren't possible to prevent through stockpiling. Literally no massive natural disaster or attack I can think of fits that bill. Not blight. Not super volcanoes. Not pandemics. Not nuclear war. Not bioterror. In none of those scenarios would stockpiling likely be particularly helpful at a multi-year timescale. Maybe in some of those scenarios stockpiling buys you a full growing season, if all of the other stars perfectly align.
> “Colonel Cargill was so awful a marketing executive that his services were much sought after by firms eager to establish losses for tax purposes. His prices were high, for failure often did not come easily. He had to start at the top and work his way down, and with sympathetic friends in Washington, losing money was no simple matter. It took months of hard work and careful misplanning. A person misplaced, disorganized, miscalculated, overlooked everything and open every loophole, and just when he thought he had it made, the government gave him a lake or a forest or an oilfield and spoiled everything. Even with such handicaps, Colonel Cargill could be relied on to run the most prosperous enterprise into the ground. He was a self-made man who owed his lack of success to nobody.”
Looks like these reporters have missed the entirety of reddit, there is plenty of criticism there, from what I’m assuming amounts to thousands or millions of people.
The article seems to be about how the political response from conservatives seems to be muted, making the point that all their talk about small government, no regulation, and the evils of socialism appear to vanish the moment the people who need government assistance are millionaires and not common folk.
It's always fun to imagine how partisan people would react if the other side was in power, said the same things and did the same things in the same situation. Their reaction would be very different.
While I definitely don't make a habit of defending conservatives, when they were concerned about the fed "picking winnners" the winners the fed picked were generally the millionaires.
The moral hazard overlooked here is the fact US govt policy being dictated by congressmen, hedge fund managers and "investment" bankers who see it terms how they can profit from a long bull run, and profits to made from shares in the companies who have quasi-monopolies on the the products that will eventually "save" us from coronavirus.
And the fact that you can't expect a health system run for profit to prepare properly for a pandemic which may never happen.
By the time the products ordered for the crisis have been delivered the crisis will be over, and whether they will be stored in preparation for another pandemic is questionable.
People are undertaking sacrifices for the common good. We need to make them whole. To the extent we have the ability to make them whole we should be doing that as a society,” Powell said. “They didn’t cause this. Their business isn’t closed because of anything they did wrong. They didn’t lose their job because of anything they did wrong.”
Why is it important if anyone did anything wrong or not? The world is experiencing a massive calamity and a lot of wealth is being destroyed. It's not obvious that you can make everyone whole without causing unintended consequences.
It matters because after this crisis, in a few months time, we want them to go back to doing what they did before. You want people to go right back to opening businesses and getting jobs and buying houses, as quickly and enthusiastically as possible. More so if we can manage it. That's what prevents a crisis from becoming a depression.
I'd argue that's in part because of the protection racket that's partially at the heart of the moral hazard: the poor regulation of healthcare services, at least in the US.
What this should be laying bare is the failure of federal regulation, how this got in the way at a critical moment, and when it was too late, things only got better when they got out of the way. Or what about a healthcare system oriented toward protecting the hospitals, those at the top of a hierarchy, the rent seeking, and so forth, rather than oriented toward public health? What about an artificial reduction in the number of providers to increase their salaries, a lack of competition in provider models and delivery of services?
There was a Slate article about how one side-effect of the pandemic is how much it has exposed bullshit everywhere, how easily so many rules are set aside when the cards are on the table. Some of this is happening now with healthcare, but few are asking what else could have been different, other than single payer care.
To me this all feels like some kind of abuser-victim relationship, where people are subject to some broken system, and then when things go wrong and are failed, they're made to be dependent on their broken system and start cheering it on.
I realize this all sounds bleak but to me there are so many things that could have been avoided, from the highest levels of the government all the way down, and there seems to be little introspection about this. Instead we just blame the virus, rather than what caused our systems to be so vulnerable in the first place.
I agree with criticism of governments in these instances but in order to be more thoughtful we should be critical of _how_ the governments ended up in this state. In other words: I do not think that the government (as a concept) is the issue here. I think that the current (and decades past) American government is the issue. They are 100% corrupt and culpable but it is not inherent to every government.
Note: I am NOT saying you are ignoring what I've said above. I have just seen many people make poor generalizations about government because of their experience with the American government's inability to prioritize citizens over the networth of the elite.
The biggest moral hazard is in colleges. The boards of colleges justified higher expense structures in the name of trying to win a zero sum rankings game.
The best case for them is a lot of people wondering why they are paying $30k a year to watch online lectures while inflation wipes out the debt.
The worst case for schools is a total restructure due to lower revenue and donations due to students unwilling to overpay to sit at home and alumni not having the funds.
> The biggest moral hazard is in colleges. The boards of colleges justified higher expense structures in the name of trying to win a zero sum rankings game.
“In economics, moral hazard occurs when an individual has an incentive to increase their exposure to risk because they do not bear the full costs of that risk”
In this case, the risk is the increased cost structure in order to get the benefit of accolades from winning the zero sum rankings game.
If it were their money instead of the universities’ money, they likely wouldn’t have increased the cost structure
I think the future is a series of online courses that have objective pass-fail, and somebody with recognized authority to issue degrees in X if you pass X's set of courses. And it's cheap - maybe $100 per class. And there's different classes competing to be in the set for X, and there's competing outfits with the authority to issue degrees.
Everything that you just listed is basically how our current system works.
Accredited institutions can issue degrees if you pass their courses. There are various "grades" that bucket people, but as far as getting the degree goes, you just need to pass. Grading is at least ostensibly objective. Admissions to accredited institutions is selective, and colleges compete with one another for students.
The only two differences are price per class and "objective grading".
The former amounts to "what if we had our current system, except everything were cheaper". Which, I guess I have to admit, would indeed be nice. It'd be nice if healthcare and cars and real estate were cheaper as well. Not sure how to actually do it, though.
And for the latter, we've done that in K12 (standardized tests). Almost everyone seems to agree it's a terrible system.
I'm the accrediting institution. For my degree in physics, you have to pass this online class on electrodynamics from MIT, because it's the best one there is. And you have to pass this other online class from Caltech on special relativity, because it's the best there is on that. And so on.
The "accrediting institution" doesn't need to own any of the course content. It can take the best of the online courses that are available. And the online stuff that's available tends to be the best of the available lecturers.
That's why it could be less expensive. You don't have to have classrooms. You don't have to pay the lecturers' salaries (though you do have to pay license fees on the video). You have to have a very small amount of administration, and you have to write and administer tests that show whether the student actually knows the material.
Western Governors University already runs on something like this model, except that I believe that they use their own content instead of the best available online content, and they only have a limited set of majors.
And, I didn't say "standardized tests". The tests would probably belong to the accrediting institution. But there need to be tests, so that they can tell that you actually learned something, instead of just sitting through the videos watching something else on your phone.
Okay. So, everyone needs to be able to pass MIT's electrodynamics course if they get a degree that requires and electrodynamics course. And without intensive one-on-one and in person tutoring.
I'll risk sounding like an asshole or making an ass of myself and just straight up ask: Have you ever taught before? Somewhere other than a top ten CS or ivy league university?
What you're proposing sounds way more expensive than the status quo.
In The Netherlands, our government reserved a special € 100 million for startups, because they are not eligible for the normal relief program because these startups have no revenue and "their succes is measured differently".
In the grand scheme of things, € 100 million is peanuts of course. Still I found it baffling. I should also mention these are loans, but if the startups fail the government is still holding the bag.
I see so much talk here on about how companies should be left to go bankrupt because of their "shitty decisions", that "the weakest companies should be allowed to fail", and "shareholders have to hold the bag" (all from comments here).
This fundamentally misunderstands how businesses work.
If your business has a 5% profit margin, and you're supposed to have enough savings to weather, say, six months of essentially full fixed costs but zero revenue... that means you would need to save a full ten years of profits before ever returning them to shareholders, and if your company is less than ten years old, goodbye.
That's ludicrous.
It's also against the "accumulated earnings tax", where the IRS virtually requires companies to return their earnings to shareholders (via dividends/buybacks) yearly, because they're financially penalized otherwise.
Good management teams aren't supposed to save for pandemics. It's not normal business. Companies in general are unable to buy insurance against it (because there's no insurance company with enough money to pay out). Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
Letting swathes of companies go bankrupt through zero fault of their own is economic disaster, and neither is there anything remotely fair or capitalistic about it whatsoever.
I find your implied assumption that starting a company should in normal circumstances be seen as a get rich scheme that pays out in under 10 years as completely toxic, but that's an aside.
The point is large companies shouldn't be hurting for money, they have two big options on the table to generate money right now: issue stock or bonds. However, there are a lot of really stupid large companies that decided to max out their credit cards in the good times to pump up their stock price via buy backs. They can't issue bonds, but they could still issue stock. However, that would cause the price to crash, and Trumperino in Chief can't allow that to happen.
Of course, the Fed is implicitly at fault here too for keeping interest rates too low for too long. They tacitly encouraged borrowing with low rates. If rates had been higher, companies would be thrilled about lowering rates due to covid and would start to issue bonds.
> Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
For the definition of better or worse implied by your above statements that is... almost entirely untrue. Given the entirety of the history of capitalism (and definition of capitalism) the only purpose of capitalism is to accumulate more capital within an existing system.
In fact we've seen many companies arbitrarily sink or swim -- and many successful business people will say as much. Otherwise there would be many more repeatable successes for businesses. Capitalism is not God.
This article is no way reflects reality. There's a reason the "money printer go brrr" meme is blowing up. There is already significant outrage about the moral hazard of what's being done by the fed, and the sentiment is growing. This article reeks so badly of blantently trying to control the narrative to the advantage of the elite that it's disgusting. Rather than let companies that made shitty decisions die and let capitalism operate, we're creating a horde of zombie companies that are going to plague our economy for decades.
Welcome to the beginning of the lost decades. With these policies, it's going to decades before we see any true economic growth in the US.
100% agree with everything except that this is the "beginning" - I think we're a couple iterations in already. It's just so widespread and deeper than before that people are seeing it more.
0% interest rates are purely to encourage consumption now instead of later. But unfortunately, the bill always - usually? - comes due. Unfortunately, most of the common indicators, signs, and metrics are detached from each other. Maybe they always were (Keynes vs Hayek) but now they're going opposite of where "common sense" says they should.
In a sense if we can collectively agree that the future will be better... we're all fine. We are in a crisis but there is really no reason that if the world stopped improving _today_ we would not be fine as a species. Good, even, if we redistributed wealth from hoarders.
Alas, said hoarders are the ones who make everyone else believe that The Line means more than anything else.
I don’t understand this stuff. Politicians have directly ordered closures. If your bottom falls out from under you because you were playing fast and loose that seems inherently different than being told from above “you just cease your main method of generating revenue until we tell you otherwise.”
You're asking me,(general tax payer) to give you money to ride out the storm, but you get all the private gains in the future while I take the risk now.
There is a much more fair way to do this. Firms simply issue new stock and sell it to the market. Firms get the capital they need, the general tax payer isn't holding the bag.
This is the solution. Have the firms issue stock and the government purchase the stock. Obviously make it ultra-preferred with no one else getting preference before the government gets paid.
If firms don't like that deal, they can either get their own funding from the private markets or go out of business.
I don't want my tax dollars supporting million dollar executive salaries and bonuses for executives and management that I think are doing a questionable job. Are we going to have the government dictate salary and bonus reductions and maximums too?
If a business is in a liquidity crunch because they’re shut down and may go bankrupt, their stock is....basically worthless. I don’t think you’ve thought this one through.
If they're worthless, then after the government bails them out, the government should own them. If the government doesn't want to keep ownership, then redistribute the shares to taxpayers (aka "the people") as helicopter money.
Actually you’re right, that should work for businesses with shares. If people are willing to invest. But how would this work in a liquidity crunch? That was the situation we were in. Everyone was moving to cash.
What about non-incorporated businesses? That’s the bulk of small business ordered to shut down.
I find it interesting that this entire thread seems to be about fairness. Whether something is fair to corporations/people really shouldn't be the point. It should be about keeping people alive and having a functioning/prosperous economy. I'd much rather have that than a "fair" economy.
The problem is that during good times, the narrative switches to not regulating "private" enterprise. The financial schemers extract wealth under the guise of "earning" it, while it's all justified by saying that the market will regulate itself.
Yes, not doing a bailout would be imprudent. But this is apparently the only time we get any say. When we don't get to reform irresponsible business/fiscal practices in good times, but they have us over the barrel in bad times, the predictable outcome is spite.
The question is who is making sacrifices, and who will be prospering, and who will be dying.
A 2.2 trillion dollar check was just signed with the american tax payer's name on it. That is money could have gone to retirements, heath-care, and schools. It is reasonable to be concerned that it go to an equal or better purpose, and not to buy a second yachts for bankers.
Nothing about raising capital prevents a functioning economy.
The point is that people have been conditioned to believe we must use public money to save private interests.
If you want long term functioning markets, shareholders have to hold the bag. Otherwise the Bernie Sanders crowd will get bigger and bigger...and rightfully so. And eventually the system will topple via revolution (political or otherwise).
GP is making the point that in this case, the government caused the insolvency of these businesses in significant part through authoritarian closures, not through the irresponsibility of those running the business. Therefore the government (taxpayers) owe them recompense to make them whole.
The shutdown is the government’s fault, period. The damage it is causing is far worse than what would have happened if the government had started taking action in January and ramped up testing capacity. Instead the government did close to nothing and now the lockdowns are the last resort.
Other countries handled this better. South Korea and Taiwan are good examples of countries that ramped up testing and did not need to shut down society.
Shutdowns are not inevitable. They are a result of government failure, and the government should compensate businesses that it orders to shut down.
Disagree. There’s no guarantee earlier government action would have eliminated the need to shut down businesses or ban gatherings. I do think more should be done to support workers. $1200 single payments are not even peanuts.
We know for a fact that some countries didn't need to shut down. Again, South Korea and Taiwan are examples. They are also denser than the United States, and less wealthy, and closer to the source of the virus outbreak. Yet they handled it much better.
By contrast, the United States is less dense than those countries, significantly farther away from China, the richest country in the world, and had months to prepare.
I find it unconvincing that the United States could not have rolled out broad testing and tracing if it had started back in January when the virus was known to be a threat. Even if you're right and all it did was buy time before an inevitable shutdown, shortening the shutdown would have hugely helped to limit the economic damage.
I don’t agree with this perspective. The cost of keeping bars open, for instance, is much higher on society as a whole because of how it would lead to the virus spreading. I don’t see how that makes the public responsible to help these businesses.
When your business does well, you reap the benefits, not me. The belief is you’re entitled to it, because you’re the one who took the risk. So how is it now that we allow you to risk public safety or otherwise we take on the risk and give you grants or cheap loans?
This was incredibly frustrating to read because, intentionally or not, it perpetuates and normalizes the actual moral hazard of this crisis. It conflates the correct notion that if the government is forcing people not to work, it should make sure they don't starve to death, with the false notion that, in a capitalist society, businesses who were so balance sheet reckless that they couldn't last a month without government loans ought to be bailed out simply because it's "not their fault" that an economic crisis exposed their irresponsible planning.
That's not how capitalism works; the weakest companies should be allowed to fail. The government can still lend to keep their workers alive, but what it's really doing in this crisis is keeping their stock price alive, which overwhelmingly benefits corporate insiders and rich people who own stocks. That's the opposite of how the corporate form is supposed to work—equityholders get all of the upside on a sunny day, so they're entitled to ZERO protection on a rainy day. It's risky to buy stock. Buy bonds if you don't want to shoulder risk.
The most frustrating thing to me is that the same companies who are asking for buyouts could have simply held excess cash, or raised their employees' wages, or invested in profitable assets—all things you expect companies to do under capitalism! But instead, they invested in stock buybacks, which means literally spending retained earnings on inflating their own stock price. Apple is a classic example: earnings has actually been flat since like 2015, but earnings per share has gone up because Apple has bought back $250B of its own stock in the last eight years or so. But at least Apple is solvent! The airlines, for example, are asking for a bailout in almost exactly the same amount that they have spent on stock buybacks in the last several years. It frustrates.
I don’t think the problem is “a month” of inactivity, although clearly there are no shortage of people and businesses who can’t survive even that.
The real problem is that we’re a month in and there’s no genuine end in sight, optimistic politicians notwithstanding. The actual end of the crisis could be two months away or two years.
That's a fair point. It doesn't make me feel any differently about the proposition that, in a society that preaches values like rugged individualism and fiscal responsibility to its poorest members, it's strange to me that 99% of the government's per capita expenditures are going to places other than the people. Literally 99%. And by blindly subsidizing every single business, including like hedge funds and other speculators who partially caused the liquidity crisis, the government in sowing the seeds for the next meltdown and disguising insolvent firms as economically viable ones. All of which is bad for society and the economy.
Yeah, I've definitely been in the UBI camp for a while, and I'm hopeful that if nothing else positive comes out of this that we'll rethink how we're structured as a society in that regard.
So it's safe to say I think more of the money should be going directly to the most vulnerable, but I'm also sympathetic to the point that, at least as far as the way we've structured our economy, public companies aren't allowed to prepare for a 100% loss of business for months at a time. How much grief did Apple get for sitting on a pile of cash when it could be "better spent elsewhere"?
The QE and stimulus programs from 2008 were significantly more targeted toward the upper and upper-middle classes (arguably without that much trickle-down), and so there wouldn't be much significant inflation as measured by consumer price indices.
But if we look at the assets that rich people invest in (since it's mostly wealthier people who benefited from the 2008 stimulus programs), then I'd say there's been a significant amount of inflation - P/E ratios for stocks have been historically high in the last few years, real estate in desirable cities has gotten significantly more expensive, and bond yields have been low.
We seem to be already seeing some of the same, with the stock market being pushed up by the Fed's commitment to 4T+ in stimulus this time around and ever lower interest rates.