Why does the stock market keep going up when the economy feels so bad? It’s the question we probably get the most and, quite frankly, it’s not a bad one. The primary reason equities seem invincible is because of the dramatic increase in the money supply over the past four decades. That explains the supply side of the equation at least. But a lot had to happen behind the scenes to allow for the money supply to be absorbed into the financial system and ultimately benefit a fraction of the population.

Resources

MacroMicro: US - M1 & M2 Money Supply

Wikipedia: Buffett indicator

CFI: Shiller P/E

Civiqs: Donald Trump: Job Approval, Second Term

Wall Street Journal: More Americans Than Ever Own Stocks

Brookings: Rising inequality: A major issue of our time

The Review of Economic Studies: Stock Market Participation, Inequality, and Monetary Policy

Roosevelt Institute: Our New Report: Defining Financialization

Levy Economics Institute: Have We Been Here Before? Phases of Financialization within the 20th Century in the United States

The Fed: 3. Leverage in the Financial Sector

UNFTR Resources

Stock Buybacks Surge: Another Red Flag for the U.S. Economy.

Video: Why is the stock market so good when the economy is so bad?

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