While it is difficult or impossible to prove that QE has created the Everything Bubble, look at it the other way around. Don’t look at the consequences, but look at what’s changed in the financial world.
Rates are near zero in the rest of the world. US has raised rates a little since crisis and considers stopping or even lowering.
Investors have heavily invested into real estate since crisis. Europe which has negative or near zero rates has rapid increases of property prices.
A larger proportion of the general population is investing into stocks, and convinced it’s the right thing to do. Stocks have been only going up since crisis (at least in US). The general public is fed the lesson that the share market is the place to invest and put your money if you want any return for the future.
This has fed social investing apps like BUX, Robinhood, eToro etc. Investing in general helped by Internet 3.0 has exploded. Margin Trading is en vogue.
This scenario shares some similarity to the financial crisis from the 1920‘s.
Back then the officials even were promising a golden age of wealth through shares. People were borrowing money to buy shares posting the shares in return as collateral.
More specifically QE directly increases money supply, thereby devaluing the USD. The route taken by Europe was different — lower rates and debt buyback and pushing rates lower on long terms. Devaluing the USD and increasing money supply had to have created some kind of asset inflation. That’s just simply economics. Now why it is not noticeable in common inflation numbers is not known and open to debate. Some argue that the way the CPI figures for instance are calculated is skewed and not calculated correctly to represent inflation. Also CPI is only one subset of everything. It’s a fact that real estate is getting too expensive for the regular workers, people are getting priced out of the market, and rents are rising too fast compared to wages. There is inflation there for sure!
Yes. It is very likely this is the Everything Bubble.
In which way this will burst and what will be the trigger — no one is able to say yet. Most likely candidate is corporate credit, since low rates have fueled a corporate credit expansion unlike any time before (think Netflix, Tesla and unicorns).