re: What keeps the stock market afloat?

quote:

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If there are twice as many dollars as they were 5 years ago and the Stock Market is the same that really means stocks fell by 50%.

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You are on to something, but no, that doesn’t follow. You are leaving out a major component, which is the supply of goods. If supply of goods kept pace with the money supply then the increase in money supply would not signal a drop in stock real value.

We have had a sudden and large expansion of the money supply, and there is no way the supply of goods kept pace, so there has been a decline in real value of stocks, but not by the ratio of the new money supply divided into the old.