Monetary Inflation And The Stock Market

Concerning bull markets; what is the prime mover driving share prices higher over the decades:
Economic Growth? Compelling Value? Rising Earning? Skilled Management? I wouldn’t dismiss the importance of any of these factors to investors when considering where to invest their money in the stock market. But the one factor that has impacted share prices more than any other is usually ignored: monetary inflation flowing from the Federal Reserve.
Below is a chart plotting US Currency in Circulation (CinC) since 1920. From 1920 to 1931, CinC never exceeded five billion dollars. Today, in any room where Warren Buffet and Bill Gates are sitting, five billion dollars is chump change as the Federal Reserve has expanded US CinC to an obscene 1.3 trillion dollars over the past nine decades.

This post was published at Gold-Eagle on September 21, 2014.