Buybacks don't inflate the market cap, in theory. What does happen, however, is that many modern buyback deals include a bid that gets more aggressive as the s

Buybacks don't inflate the market cap, in theory. What does happen, however, is that many modern buyback deals include a bid that gets more aggressive as the stock trades down. So in a selloff, the buyback actually supports the stock more than in a rally. This reduces downside volatility and prevents panic. The debt problem is a huge issue, but with interest rates as low as they are, it's not entirely crazy to say "we think we will return more in capital gains from buying our own stock than we will be charged in interest for the loan to do so."