The Rich are not spending enough and are investing most of their wealth into assets. Return on assets is generated by the middle-to-lower class spending, which has been propped up by stimulus checks. Take the stimulus checks away and there is a void. The wheels are falling off and if nothing changes, we could see a major correction even with low interest rates and asset purchases.
When mega caps are doing well due to one-off stimulus checks, equity strategists assume it's strong growth that will continue into the decade rather than a one-off good news. This assumption is dangerous because it fuels higher valuations and when the music (stimulus checks) stop, we'll realize that stock market (including blue chips) are overvalued by 30%-40%.
Perhaps the only way to stop a major correction in the short-term is to keep doling out stimulus checks – not infrastructure spending but stimulus checks to the middle-to-low class.
Jump To The Original Source