Andrew: A recurrent theme in the past few years has been the “everything bubble”: all assets have been propelled upwards by printed money. You’ve said we have all got so used to trillions being printed that we’ve lost track of the sheer magnitude of the sums. Go back a trillion seconds, after all, and we’re back in 30,000BC. Your view is that the everything bubble has barely begun to hiss air?
Alec: Yes, there still seems to be a vast amount of liquidity, and the enthusiasm that comes with it, sloshing round the system. Liquidity tends to find a home in financial assets. While we have had some quantitative tightening, the banking crisis in the US led to a further injection of liquidity via an emergency facility. Money has been pouring into the next big exciting thing, AI stocks.
Remember that when it comes to overall stimulus, the federal government has stepped in. In the years before the pandemic, the US Federal Reserve encouraged the
