In my scenario, the government would not have taken on all that debt — certainly not to prop up asset prices, which is totally unproductive and does nothing to grow the economy in a sustainable way. It was a choice that was made to benefit the few at the expense of many.
What ultimately matters is the purchasing power of those at the bottom of the economic pyramid. When wealth is concentrated at the top, everything crumbles.
The Fed/govt has only been addressing asset prices, increasing the purchasing power/control of resources of the most wealthy, while those at the bottom steadily lose more ground. The only reason Joe Sixpack isn’t taking on even more debt in order to maintain purchasing power (what the Fed has been trying to push) is because he can’t. All income is being spent, and there is nothing left over from which he can make new purchase or take on more debt. That’s why interest rates are so low right now — to make the debt burden a little lighter for J6 so that he can take on even more debt so he can spend more. This is not sustainable, and will end up making our problems much, much worse (which they already have, IMHO).
BTW, the only kind of inflation that makes payments less burdensome is wage inflation. We are not getting that outside of a few industries. Cost inflation, without wage inflation, is very, very destructive…far more destructive than deflation, IMO.
