Ben Bernanke has studied and written [0] extensively about this topic; a copy of a speech he delivered at Washington and Lee University in 2004 can be found at [1] for those interested.
0: https://www.nber.org/system/files/chapters/c11482/c11482.pdf
0: https://www.nber.org/system/files/chapters/c11482/c11482.pdf
I believe the implementation of this concept via the Fed (bank of banks) is the real issue. Basically, liquidity goes to the banks. Anyone having a relationship with banks gets access to this liquidity and benefits. Of course, we plow these "gains" back into assets (hard or stock market), this drives up prices, and we get asset inflation. For the person renting an apartment, leasing a car, and with credit card debt ... well, they lose. The trickle down doesn't work. You can interpolate and extrapolate from this brief comment, and I believe that this is the fundamental source of the expanding rich/poor divide.
Ding ding ding. This is a key issue. If you want to bail out the economy, you need to do it to increase aggregate demand, and therefore the best way to do this is to give money directly to the people. The programs in place since 2008 (1) benefit people with capital (2) leave the poor and the working class in the dust, and (3) are paid for by milking the taxpayers directly, or indirectly through inflation.
Banks are leacherous middleman in normal operation. Theoretically they are providing a valuable service of evaluating risk and allocating capitable to the most profitable ventures. But in practice the incentives are totally misaligned, since they do not get accurately punished/rewarded for doing a shit job. Not to mention old-fashioned corruption, understood as giving undue benefit to a party/parties due to their personal connections.
A lot of people don't know this, but the main reason Calvin Coolidge suddenly, and without warning, decided not to seek reelection in 1928 was that he couldn't find any helicopters. Hoover was set up.
As for so-called "asset inflation", I like Cullen Roche's take:
> In any case, I would argue that most of the asset price appreciation of the last 10+ years appears largely rational in the sense that it is supported by corporate fundamentals (record profits, record GDP, etc) and other robust economic data that is consistent with a growing economy. It isn’t just a fictitious boom as many “asset price inflation” narratives like to imply.
> As for inequality – asset price inflation would tend to exacerbate inequality since it will disproportionately benefit those who own assets. This makes sense. But as I like to always point out, inequality is a policy failure, not a market failure. After all, a capitalist economy will always veer towards monopolistic behavior if we allow it to. The extent to which we allow that to happen is not a failure of capitalism, it is a failure of policy makers to contain capitalism.
* https://www.pragcap.com/lets-talk-some-more-about-assflation...
Exactly. All those people talking about money printing don't understand that money doesn't exist in a vaccum. Every dollar created is backed by one dollar of debt which ads up to a net worth of $0.
So the Fed cannot helicopter money for the obvious reason that they cannot ever pay that money back. The government can borrow and spend money into the economy because it can tax its citizens. The money will come back one day.
The PE ratio for the S&P 500 is currently ~28X, which is roughly double it's historical average and ~50% more than the average from 2010-2020. Is it really supported by corporate fundamentals?