Why Monetary Policy Will Not Work

It is not an original thought to say that asset prices are simply too high.  They are.  Nor is it original to ask why. When you make increasing amounts of free money available by forcing it into the economy through asset purchases, the price of assets are bound to go up.  

The original thought I bring to the table today is why this additional inflow of money has not created "inflation".  The reality is that it has created inflation.  A lot of it.  But the inflation it has created is in assets, not necessarily in goods, as they are traditionally measured.   

Why is this?  Wealth inequality.  Think about it.  If you have a billion dollars, how much crap do you actually need?  I suspect for billionaires even though the toys get bigger, they do not necessarily buy more toys.  

So...follow this logic:

IF

inflation is caused by too much money chasing too few goods,

AND

The Monetary transmission mechanism is putting money exclusively in the hands of wealthy people who are not buying goods, but investable assets

AND 

The same monetary transmission mechanism is starving the larger mass of people who are buying progressively fewer goods and services (in favor of higher rent, higher health care, and higher education costs)

THEN

Developing sustainable price inflation is nearly impossible, because the market of people who are willing and able to buy products is shrinking.  To those who are finding that money is being sprayed on them like a fire hose, they have no choice but to buy ever inflating assets with their excess funds because they do not need another iPhone.

The problem is, that like a company that buys back its stock at stupidly high prices, the moment that the Leaning Tower of Pisa tips over, all of this wealth evaporates.  Meaning them no malice, if I could buy puts on billionaires net worth, I would.  This imbalance is reaching the tipping point.