This article irks me. For a published author, professional financial analyst, and economics MS holder, the article's author sure has a shaky grasp on how mathematics and science work. I'm not arguing he gets his math wrong. He just doesn't seem to know what it means.
I cringe whenever I read something like:
In this formula, price (P) is determined by demand (D) divided by supply (S). The formula shows us that it is mathematically impossible for aggregate prices to rise by any means other than (1) increasing demand, or (2) decreasing supply
Models are used to describe a phenomenon observed in the real world. What the author calls 'mathematical impossibility' is actually the entire universe of relevant factors not considered in the model. He tries to explain a complex real world phenomenon using a model, which follows reality and was written to try and reflect some aspects of a phenomenon. Then, he bases his argument on the fact that reality follows the model -- and thus ignores things like irrationality, which he just explicitly acknowledged in the first paragraph but is now ignoring because it's not in the (reductive) model.
There are other ways the market could go higher, but their effects are temporary. For example, an increase in net savings involving less money spent on consumer goods and more invested in the stock market (resulting in lower prices of consumer goods) could send stock prices higher, but only by the specific extent of the new savings, assuming all of it is redirected to the stock market.
That doesn't demonstrate that changes are temporary. That demonstrates that changes are finite. There's a difference.
Then he brings in a quote by a presumably respected author that just makes a series of axiomatic statements, none of them supported by anything, and ending with a jaw-dropping
non sequitir supported by something that the article's author in his infinite brilliance has excluded with ellipses.
A rise on the securities market cannot last any length of time unless the public is both willing and able to make increased purchases.
Unless financial innovations like derivatives increase the supply of capital. Or business advances increase the efficiency with which businesses can exploit capital. Or investors' expectations of future earnings increase, causing them to accept higher prices. Or the nation's position in the global economy changes, causing it to trade with other nations at an advantage relative to its past position. Wouldn't all of these cause a rise on the securities market for any length of time? Perhaps the quoted author addressed some or all of these points elsewhere in his book. In the selection quoted, though, he just declares a handful of causes to be the only explanations for a handful of effects, without any of the logical support that would lead us to believe what he's saying.