> Returns it has to find, otherwise you lose out due to inflation.

That's my concern really. Money is running out of places to go.

* stocks (overbought)

* real estate (still recovering from the last failure; already overbought in major markets)

* auto loans (I hear murmurs we're in a subprime auto lending bubble)

* oil (obvious!)

If you're chasing returns, and you can't beat inflation (because you can't find those returns), your cash is slowly becoming worthless. Note my concern isn't because I have cash to invest: its because of the damage that rush of money has as it races into new "investment opportunities".

So if you can't find a better return, you just drop everything into physical possession of precious metals, as the "inflation" there is limited to the amount of additional metal that mining can extract from the Earth. Paper money inflation is limited only by the number of bytes you can fit in your central banks' computers.

You still lose purchasing power in a relative sense over time, but limited to about a -1.5% per year for inflation-adjusted gold.

But really, it isn't that difficult to find an inflation-adjusted return better than -1.5%. Even a local family-owned restaurant could probably manage to eke out +0.1% or better just by hiring a part-time professional food-service manager to overhaul the formerly ad-hoc business strategy of mom and pop.

The problem is that many large investors don't even want to bother with thousands of small businesses, because you need to invest in a lot to average out their risk factors, and each of them would require a lot of individual attention to become more profitable. Large-scale investors don't even want to deal with just a single chain restaurant brand like Olive Garden or KFC, so they buy Darden or Yum! instead, because food service is such a low-margin sector overall that you literally need thousands of restaurants in your portfolio in order to be a worthwhile investment to someone that is hands-off.

Small business discovers it is more difficult to find investors with both the money to burn and the time to spend babysitting a relatively small investment. VCs don't want to invest $100k in a small business, restructure it, and then get $200k of value back; they want to invest $10M in a small business, restructure it, and get $100M back. Even if you could somehow bundle up all the locally owned single-location restaurants in the US, divide them up into grades and classes, and resell to investors, it would still be an unpopular place to park money. But if you could instead convince all those restaurants to take out small business loans, and you resell those, you're suddenly rolling in money. Lending is just a better, safer business to invest in than small-time food service.

This can only become a systemtic concern if the growth of money and velocity exceeds GDP growth. In such a case, you would expect inflation (or huge asset bubbles) and relatively there is little in the US.

Real estate prices are well in historical norms compared to rents (http://www.economist.com/blogs/graphicdetail/2015/11/daily-c...)

By what measure are stocks overbought? If we blindly look at earnings, stocks have an earnings yield of about 3% over a 10 year Treasury note, well within accepted ranges (http://www.investopedia.com/terms/e/equityriskpremium.asp)

Could you give more detail about how capital gains taxed at a lower percentage than salary/profit has far-reaching consequences?

Well, it simply makes people favour capital gain/growth over other sources of income.

So, for example, CEO's would prefer their compensation in stocks rather than getting a salary.

It contributes to skew in terms of buying property or capital that'll "appreciate" or get speculated on. Rather than investing in creating a business that'll pay dividends.

Most investment these days is speculation, or the expectation of "increase" in the capital value of the investment. Dividends are practically non-existent, and are a tiny fraction of the "return" you get simple from increased capital value. This, I would argue, gives companies/organizations/corporations the wrong signal. It tells them to optimize for "capital growth" of the stock, because that's what investors want/expect. So that means pumping profits back into the company itself (which requires reducing dividends to token amounts) and aiming for "growth".

To be honest, it'd be difficult to quantify exactly how much the different tax-rates skew the markets. And you have to take it along with the rest of the market distortions. E.g. Retirement annuity tax benefits, or property-ownership tax benefits.