What happens if you adjust the stock market for ALL the money printed by the Top 10 economies?

This really isn't true. Inflation has historically accounted for around a third of stock returns.

AI can also easily find the fallacies in the original post. I wrote a (non-AI) reply to the original post, but below is what ChatGPT has to say about this analysis. It's a pretty good takedown of the bad assumptions made in the post.

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There are several serious conceptual and methodological problems in this analysis. Some are subtle; some are fundamental enough that they largely invalidate the conclusion.

1. Treating money supply growth as a "0% growth baseline" is not economically justified

This is the biggest flaw.

The analysis assumes:

That isn't how money creation works.

Money supply can grow because:

• Real economic output grows
• Population grows
• Financial intermediation expands
• People hold larger cash balances
• Banking systems deepen
• Velocity of money changes

The equation often cited is:

MV=PQMV = PQMV=PQ

where:

• M = money supply
• V = velocity
• P = price level
• Q = real output

If M rises 3.58× while real output (Q) also rises substantially and velocity falls, prices and asset values do not need to rise 3.58×.

The analysis implicitly assumes:

• velocity is constant,
• output growth is irrelevant,
• all money creation dilutes existing money proportionally.

None of those assumptions are true.

2. It confuses monetary inflation with ownership dilution

When a company issues new shares, existing shareholders are diluted.

When a central bank expands the money supply, shareholders are not diluted in the same sense.

If a company owned:

• 10% of world productive assets in 2006

and still owns:

• 10% of world productive assets in 2026

then shareholders still own the same claim on productive capital.

Money supply growth changes the unit of account; it does not necessarily reduce ownership of productive assets.

The analysis borrows the intuition of dilution but applies it where it doesn't fit.

3. Using broad money aggregates from different countries and adding them together is questionable

The analysis literally sums:

• US M2
• Chinese broad money
• Eurozone money
• Japanese money
• etc.

into one giant USD figure.

This creates several problems:

Different definitions

"Broad money" is not measured identically across countries.

China's M2 is not directly comparable to US M2.

Japanese measures differ.

Eurozone measures differ.

Adding them assumes they are equivalent.

They are not.

Domestic money is not global money

A yuan deposited in a Chinese bank is not equivalent to a dollar circulating globally.

Many monetary aggregates are largely trapped within domestic banking systems.

The analysis assumes all money competes equally for global equities.

That is not true.

4. Exchange-rate conversion creates distortions

The analysis converts every country's money supply into USD using spot exchange rates.

This introduces unrelated currency effects.

For example:

Japan:

• 2006: 115 JPY/USD
• 2026: 150 JPY/USD

The yen weakened dramatically.

Using USD conversion makes Japanese money growth appear much smaller.

But Japanese investors transact primarily in yen.

The change in exchange rate tells us little about the amount of domestic liquidity available to buy Japanese assets.

The same issue affects:

• China
• India
• Brazil
• South Korea

and others.

5. Stock prices should be compared to corporate fundamentals, not money supply

If you want to know how much stock appreciation comes from real business performance, look at:

• earnings growth
• cash flow growth
• dividends
• book value growth
• return on invested capital

For example, the S&P 500's aggregate earnings today are dramatically higher than in 2006.

A large part of stock appreciation reflects:

• higher profits
• productivity gains
• globalization
• technology improvements

not merely monetary expansion.

The analysis largely ignores fundamentals.

6. It ignores dividends

The S&P figures use index levels.

But investors receive dividends.

A proper comparison would use:

• S&P 500 Total Return Index

not the price index.

Ignoring dividends understates actual shareholder returns.

The same issue affects the global index comparison.

7. The causation claim is unsupported

The argument moves from:

to

This is a classic correlation-versus-causation problem.

Many things increased between 2006 and 2026:

• global GDP
• corporate earnings
• technology adoption
• productivity
• population
• wealth

To show causation, you'd need evidence that stock returns were primarily explained by monetary expansion rather than these factors.

The analysis doesn't provide that evidence.

8. The "safe haven" claim is backwards in places

The author suggests equities rose because investors were escaping currency debasement.

Sometimes that's true.

But stocks are ultimately claims on productive businesses.

If nominal GDP doubles and corporate profits double, stock prices should rise even without any "flight from cash."

Equities aren't merely inflation hedges.

They are ownership stakes in productive enterprises.

9. The conclusion is inconsistent with valuation history

If most gains were purely monetary, you'd expect valuation multiples to have exploded.

But much of the long-run rise in the S&P came from:

• earnings growth
• buybacks
• dividends

Valuation multiples expanded at some periods and contracted at others.

The data do not support a simple story that "almost all gains are money printing."

10. The final 2% "real return" estimate has no economic meaning

The analysis concludes:

But this is not a recognized measure of real return.

Normally economists adjust returns using:

• CPI inflation
• PCE inflation
• GDP deflator
• consumption baskets

They do not adjust returns by worldwide money-supply growth.

So the resulting "2%" figure isn't measuring purchasing power, wealth creation, or investment performance in any standard sense.

It's simply:

which is an invented metric whose interpretation is unclear.

What the analysis gets right

Not everything is wrong.

There are two valid insights:

1. Monetary policy probably contributed to higher asset prices. Low interest rates and quantitative easing likely boosted equity valuations, especially after 2008 and 2020.
2. Nominal returns overstate real wealth creation. A 500% gain in an asset does not mean society became 500% richer. Some portion reflects inflation and monetary expansion.

Those are reasonable points.

The leap occurs when the author concludes that because money supply grew 3.58×, almost all stock gains should be attributed to money printing. The analysis does not demonstrate that. It assumes it at the outset, which makes the argument largely circular.

Can’t time the market.