"Here's the beauty of
asset bubbles. How do you get trillions of dollars into households without
having to borrow the money? You inflate the assets owned by the households:
stocks and houses. This magically creates money out of nothing, money that the
households can borrow against or sell for cash.
Why not create and distribute
cash directly? Two reasons: 1) spreading around trillions of dollars in cash
could eventually spark inflation, which would kill the entire project by
pushing bond yields higher, and 2) politically, the only cohort the authorities
care about are the wealthy who fund the political Elite and the half of the
adult populace who votes."
"The problem with neutering the market to mask systemic dysfunction is that the return on the policy diminishes at the same time that risk is transferred to the entire system. Risk cannot be disappeared, it can only be transferred or hedged. Burying immense debts in the balance sheets of central banks doesn't make risks disappear, it simply transfers the risk to the entire system."