Of particular concern is how many people own stocks and are afflicted with this euphoric feeling of wealth. With the rapid expansion of 401k's, stock options, and mutual funds stocks are more widely held than ever. I know that sounds like a good thing and it is, unless it tricks people into thinking they are better off than they are. Many people are enjoying large paper profits. Not only does this artificially hype the economy and inflation, it is risky.
Markets can and do drop in value.
Paper profits can shrink rapidly. If the psychology of optimism changes to panic with the speed of a market plunge, the economy will get pummeled and many people will get hurt. Many experts believe stocks will double or triple during the current decade. At this point of this long economic cycle, inflation is still amazingly tame. I think we will all agree war is a lousy alternative to good economic policy.