I don’t see any “bubble” being created here. I see the Federal government pouring money into a financial system where the activity has already collapsed.
You hit the nail on the head. The money creation is on the heels of money destruction. It’s not inflationary, it’s anti-disinflationary.
I don’t even have a problem with the big infrastructure spend. Assuming it is directed at things that will provide a return to society and economy. Fiber optic last mile investment would be really good for growth, and 5G is NOT it.
I don’t see any “bubble” being created here. I see the Federal government pouring money into a financial system where the activity has already collapsed.
US GDP is (was) roughly 22 trillion, and shutting down the US economy, even by 1/3 or by half, is horribly deflationary. Any bubble had burst to begin with.
IIRC dropping $1000 bills from helicopters was suggested as a classroom exercise by Milton Friedman in 1969:
"Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated" [Friedman 1969].
As I read it, in a 0% (or subzero%) real interest rate environment, the quantity of money is suboptimal, and dropping money from helicopters (or printing money by the Fed) during this once-in-a-lifetime event will not lead to inflation or an economic bubble.
Hi.
“...where the activity has already collapsed.”
As has total asset values (almost all market sectors).
Bubble? There is simply not enough liquidity at the moment.
5.56mm