| By growth, do you mean the price of stocks or actual earnings? Also, inflation rate is separate from the money supply. People have to be willing to spend and invest. If they're not willing to spend or invest then the prices of goods just stay the same or worse they begin to deflate. If you ever have a chance, then read about Japan's Lost Decades. Warning: you might get freaked out - https://en.m.wikipedia.org/wiki/Lost_Decades There are actually a lot of scenarios that COULD happen to the stock market with a growing money supply; however, it's really hard to say if those implications will happen until they actually happen. In general, the implication of a growing money supply just means that money becomes cheaper to borrow. When money becomes cheaper and you have the means to borrow it, then you have an advantage to take more risks. The implication on the market CAN be the overvaluation by investors if they are borrowing and investing the money into stocks on exchanges like NYSE and NASDAQ, and have nowhere else to invest. There is a lot of retail investors and institutional investors that are borrowing due to cheap money - https://www.barrons.com/amp/articles/people-keep-borrowing-m... Important thing to note though is the implication on those companies in the market. Some of them (not all of them) are able to borrow and invest the money to grow their businesses to makeup for what they borrowed. That in turn would increase the value of those companies, which in turn CAN increase the value of the market. It could also be that those same companies are borrowing just to pay off debts. They don't use the money to actually invest which in turn would not lead to any growth and never have enough earnings to give investors. Overall, it's really hard to know what the implications are until things actually happen. |