The U.S. stock market is becoming “too big to fail”

The American equities market is increasingly seen as a systemically important asset — so deeply woven into pension savings, consumer spending, and the financial system that the authorities, in practice, cannot allow it to fall for long.

The logic is the same as with Too Big to Fail banks: the more households hold assets in stocks, the harder a market collapse hits consumption and GDP — and the higher the political pressure on the Fed and the Treasury to step in. This changes the risk asymmetry for investors: government support becomes an implicit insurance against prolonged bear markets.

The flip side is rising moral hazard and valuation distortions: if the market is convinced of support from below, the risk premium shrinks, and bubbles inflate more easily.
$GOOGLG ‌$NVDAG ‌$SPCX ‌