I am by no means an economic expert, far from it. To me it seems so, that there is way to much money flowing around, looking for an outlet. And with interest rates being all time lows since 2008 parking that money at a bank doesn't work anymore. Before 2007/8, the problem was too much money being made too easily. We solved that by creating more money. And we repeated that with Covid.
I have thought a lot about this. I am not sure that I have an answer because the way in which everyone (inc. myself) thinks about financial markets appears to be totally wrong (I am in the UK, we have had several rounds of QE since 2010...every time, the BoE gave a different explanation of how QE works).
But it is easier to comprehend that, most obviously in the EU, there is a shortage of risk-free assets. It is less that there is too much money and more that there is a mismatch between assets required by investors to match liabilities and what there actually is. My guess is that over the next ten years, we see a move to understand the demand for financial assets in more depth (and from this perspective, QE seems like financial vandalism). Framing purely in terms of supply doesn't really explain what is happening or why people are doing things that make no sense.
I also don't think 2007/08 was a function of too much money at all. It was a combination of structural issues, poor regulation, and a relatively normal financial cycle (people buying things because other people were buying them). What happened in 2008 was the market working effectively. It was after 2008 when the odd things started happening (one very interesting thing to me was Blackstone's property business...they were doing the most overvalued deals at the very top of the market in 2006/07...and they ended up making multiples, that really isn't normal, and the bailout in the view of the Fed was the market working...which is, ofc, totally backwards).
