The Daily Equity by @DinariGlobal--The Rollup

The Daily Equity by @DinariGlobal

Eric Balchunas says the US stock market has arguably become too big and too important to fail.

In 2008, banks were too big to fail. The government bailed them out. Bitcoin was created in response.

Now Balchunas is applying that same logic to the stock market itself.

America's retirement fund. Possibly the only remaining backstop for Social Security is expected to run out in under 10 years. 55% of Americans own stocks, the highest in the world.

Trump accounts bring in 28 million more. When the vast majority of voters across all income levels have direct financial exposure to the stock market, preventing a prolonged bear market becomes a political imperative, not just an economic preference.

The conclusion: good chance the Fed buys equity ETFs in the next major downturn. China and Japan already do this. They target specific sectors. Three-quarters of Americans surveyed believe the Fed will bail out markets.

@robbieklages's pushback: Kevin Warsh wants a smaller balance sheet. Direct contradiction. But the systemic importance may override the Fed chair's preference.

Nothing Stops This Train. At this point it feels irreversible.