Via Andy Xie recently and by popular request:
Since the global financial crisis of 2008, all major economies have kept interest rates at or close to zero and maintained large fiscal deficits. A decade of massive, synchronised monetary and fiscal stimulus has led to the greatest asset bubble in history, to the tune of about US$100 trillion, nearly 1.5 times the world’s GDP.
Even though the US stock market is more expensive than in 1929 or 2000, and China’s property valuation higher than Japan’s a quarter of a century ago, fear-driven sell-offs have been rare and brief, leading to the belief that high asset prices are the new normal. Massive amounts of financial and business activities, especially in tech, are predicated on high asset prices going higher.
