The twofold effect of expansionary monetary policies on share prices

Expansionary monetary policies in OECD countries have a twofold positive effect on stock market indices: These expansionary monetary policies have led to long-term interest rates being lower than the growth rate; this has led to the discounted sum of future dividends tending towards infinity, regardless of the chronic nature of these dividends. In other words, there is no longer any actuarial calculation possible (unless an abnormally high and unfounded equity risk premium is assumed), and there is no longer any usable concept of fundamental equity value. Any share price, however high it may be, becomes acceptable; These expansionary monetary policies have also led to very rapid growth in the money supply. This triggers "portfolio rebalancing": the excess money held is reinvested in other asset classes, including equities, and drives up the prices of these assets until the proportion of money in wealth returns to a normal level. So we see the twofold effect of the expansionary monetary policy: the abundance of liquidity drives up share prices via the portfolio rebalancing mechanism, and this move is not slowed down by the fundamental level of share prices, since this fundamental level does not exist or is infinite.