[bamboozled]

What I don't understand is, what are the consequences are? If there is no, why didn't this just always happen and we'd all be rich?

I've read other articles which say that essentially we're losing the ability to really valuate equities because of all this free money being injected into junk bonds etc hides the true valuation.

As far as I can tell, stocks are more valuable, but only numerically, they're actually more worthless than before because the company and the economy as a whole has stopped.

[amykyta]

The real value of the currency is supposed to (at least theoretically) be hurt by this. Printing money to solve problems either leads to hyperinflation in the extreme, a deflationary trap that Japan has been in or some new thing we are creating. Maybe because the whole world is doing it all at once it’ll be ok?

[bamboozled]

Maybe most equities are so hopelessly valuated and there is just so much funny money in the stock market that it hasn't made sense for a long time and this just demonstrates how useless it is except for those who know how to game it?

I'm not saying I believe this entirely, but there needs to be some better explanation for Lyft is up > 2% today after that news?

[pbourke]

> What I don't understand is, what are the consequences are?

The consequences of the 2008-2009 financial crisis were the defacto nationalization of large US banks as Systemically Important Financial Institutions (SIFIs). Basically in exchange for taking on more stringent regulation and capital controls, and the separation of prop trading and deposit banking through Dodd-Frank's Volcker Rule, large US banks were declared too big to fail and would be backstopped by the Fed going forward.

I think what you're seeing now is perhaps something similar for all large US corporations. The Fed is essentially declaring the S&P500 as TBTF by opening the trough to all of them. The Fed maybe doesn't want to do this (they are economists after all, and they know this isn't a good path to start heading down), but they're also the only governmental entity capable of direct action without political blowback in this crisis.

I think the market sees this as the Fed setting a floor for equity prices, and maybe it's right?

In the end, the music can only keep playing for so long while chairs are slowly removed from the room. The market can stay irrational for a long time, but it must eventually face reality. The Fed can print money so that companies have working capital (which they will hoard) but can't print a vaccine or your mortgage payment or the customers your neighbourhood restaurant needs.