It is appropriately said that to a repairman with only a hammer, every problem looks like a nail; and, by extension, to a Keynesian central banker with a printing press there can never be enough liquidity.
Alas, the Fed’s liquidity fire hose has no targeting mechanism and eventually that leads to big time trouble. As the very sensible Harris Kupperman noted this AM:
First, it went into equity markets, fueling an outright equity bubble. Then it overflowed into PE and VC, creating bubblicious demons there as well. Then it overflowed into meme stonks and shit-coins. Not content with the damage they wrought on the financial economy, the liquidity began overflowing into the real economy. There’s currently an epic housing bubble, leading to increasing wealth inequality and polarization.
Now, this liquidity is overflowing into the everyday economy—assuming you can even find the item you seek. In the past, only hard money weirdos complained about the gradual creep of inflation—now everyone feels it and has their own story. Everyone is painfully aware that inflation is present and is likely to stay.
Obviously, the hideously inflated asset trouble that has been long brewing in plain sight is now arriving in a rush. But the point is, throughout the global financial system there are countless instances of China’s Evergrande with it’s ticking time bomb of $300 billion of debts, payables and customer deposit liabilities. And like the case of publicly traded Evergrande, these bubbles have been long evident to anyone paying attention.