Yes there is too much capital, after all the US printed over a trillion dollars to avoid the collapse of the financial industry. None of those banks except for two went bankrupt, which means that now you have an extra trillion dollars that will eventually funnel through the system.
Well, look we are nearly a decade later from that moment so that money has gone through the system, aggregated usually with the 1% and then dispersed.
Additionally the world continues to become more global. If you look at some of the main residential markets in America like NYC and Miami, you will see that a significant percentage of purchases aren't from US citizens, but instead, international buyers that are moving their money into a more secure asset offshore and away from their government.
In Miami there is a lot of money from Russia and South America. In NYC it is a lot of money from China.
Then consider that after the housing bubble popped it would only be natural that money would look for another asset class to invest in so it shifted to the stock market.
Certainly there is speculation there, that's the nature of the stock market but the largest companies that have the majority of the growth are simply larger due to higher revenues. What made them successful five years ago are macro trends that are still playing out.
As massive as Amazon is it's only a small percentage of overall sales, which still occur at retailers, however the macro trend of more sales happening online hasn't stopped so you are seeing that continuation.
Apple could be argued is under valued, not over valued.
Google is still continuing to grow.
Sure, Tesla could be considered a bubble, but eventually it grows into the valuation or the irrational exuberance stops and the stock will decrease to it's real valuation. Similar to what happened to LinkedIn. But again, that is too small to really matter on the global scale.
The question of reducing taxes to spur more demand, well that won't really work. Think of it this way, if you reduce taxes even 10% that isn't going to lead to more cars being bought. Sure things that you need like groceries and maybe making your rent, but you aren't going to be making massive purchases.
That tax cuts would benefit the rich the most, because 10% of a $10MM salary means an extra $1MM of cash after you already have enough for savings, so that really does become discretionary spending money. But those people would again purchase the most expensive assets and drive up real estate prices.
Also very unlikely that you could push through a tax cut for a single class or even two classes without a tax cut for the rich, otherwise it would be called socialism, which is misunderstood, but still hated and feared in America.
These are just normal shifts of money moving depending on the barriers that it encounters. We all are exposed to inflation so money needs to be shifted as inflation is it's own version of having limited timeline. Leave the cash under a mattress and 50 years later be surprised by how much spending power you lost.
If you look at the American economy manufacturing is only 10% of salaried positions and 80% is the service sector. So you are seeing how this plays out over time.
The reality is that the world was never equal, and unless you want to move to communism where everyone has the same stuff, it will never be equal. As such there will be some winners and some losers.
Now if you really want to reset this imbalance, it isn't about tax cuts for the poor, but instead massive taxes on the rich. That would then move those funds back to the government, they could focus on more infrastructure which is sorely needed, and it would be coming from the very class that can afford to lose that money.
This would decrease some of the real estate prices, but that could lead to problems in building as well, which means that sector will lose jobs.
The reality is that everything is interconnected, you can't change one thing without affecting everything else.
But certainly if you want to tax those that have the most you could move forward.
Plus, check out what the highest tax rate was on the largest income earners 80 years ago and be surprised by how high it was.
