Gold, silver, stocks, real estate, Bitcoin, baseball cards, fine art, Rolexes - everything is trading at or near their all time highs. The value of the US dollar is simply going down.
Fiat money is not going down as much as asset prices are going up, though.
So it's part of the story, money losing value in the real economy. That's been happening since moving off the gold standard at roughly similar rates.
There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows, and even when interest rates became positive again, the trend appears to have continued.
Perhaps all investors just believe ZIRP & Negative Real Interest Rate Policies are coming back, maybe to even more negative real rates than ever before.
I’m guessing what was meant is that the price of things that are to be invested in is growing wrt the price of things that are to be consumed. Which naively makes sense to me in an economy based on growth where the total consumption starts to stagnate—the surplus still has to go somewhere. Is it so or is reality more complicated than that?
> There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows
I’m not sure I follow. The USD is just a medium of exchange. 100% of the dollars commands 100% of the wealth of the economy. If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.
That’s not accurate for two reasons. First, the dollar isn’t just a medium of exchange, but a medium for storing value since it’s the reserve currency. Second, a dollar can get spent multiple times so there isn’t a direct relationship with the amount of economic activity as you suggest.
I don’t disagree with your first point, but your second point may have been a misunderstanding of what I said or I don’t understand what you’re saying. I’m not suggesting when you spend money it goes away and can’t be used again. I was more suggesting the M0/M1/M2 money supplies change in size which is distinct from GDP size, although I admit that is a simplification.
> If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.
Just looking the number of dollars, without looking at what they're doing, is like thinking you will gain weight because your fridge/pantry is stocked:
> But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy.
I fully admit what I said was simplistic and not meant to indicate the true complexity of the system. I agree with everything you’ve posted as inflation is not immediate merely because the money exists. I was presenting a rough zeroth order approximation because I didn’t understand how the value of money could be completely divorced from assets/the economy.
> I was presenting a rough zeroth order approximation because I didn’t understand how the value of money could be completely divorced from assets/the economy.
Money has no value except in what it can buy you, the most important of which are shelter, water, and food for survival. After that you get into what can help you achieve happiness / fulfillment.
As a percentage of household spending, food (even with recent risen prices) have never been lower:
We've never lived longer, with fewer diseases, and had an easier (and safer) time to travel.
Sadly shelter (especially if you want to buy) has gotten more expensive (at least in the Anglo-sphere), but that's more about things like zoning policy and such rather than money supply.
So what exactly has dropped in "value" in human life/lives with the increased amount of money that's supposedly bouncing around? When in human history have things been better? If you could jump in a time machine that goes 88 mph, what period of history would you rather be in to live your life?
> Fiat money is not going down as much as asset prices are going up, though.
I'm assuming you are referring to CPI, but that is just a single measure of inflation and serves a very specific purpose. One could argue that "real" inflation in fact is the US dollar's value relative to gold or other similar assets.
If one was not someone who lived in the real economy and spent most of their money on things in the real economy, and instead was a billionaire, and spent most of their money buying future cash-flows, then sure.
There are plenty of people in this economy who sit somewhere in between having to spend their entire paycheck on rent and groceries and deciding which one of their yachts to take on the next vacation. I'd wager most people reading this are in the middle category, and so deeper analysis on inflation and long-term stores of money is absolutely relevant.
This is an imprecise take, in particular due to one thing: Target return rate.
The rich people expect a return rate regardless of how expensive the asset was, and eventually the asset will have to give that. This transaltes into more expensive consumables, rents, etc. Ie, Asset prices are a part of the real economy.
Pretty long, given that the US had a fully-fiat currency for 50+ years, and many European countries had it for longer than that. Per CPI, your dollar is worth 8x less than what it was worth in 1970.
This, in itself, doesn't mean anything profound. There's nothing to "snap" if the expectation of stable, modest inflation is baked into the markets. Fiat currencies usually implode only when something else undermines the confidence in the issuing government.
> your dollar is worth 8x less than what it was worth in 1970.
A dollar in 2025 is not worth -7 (i.e. eight times one less than one) dollars from 1970; it is worth ⅛th of a dollar from 1970.
Yes, I know what you mean. But ‘×’ is multiplication, not division — and phrases like ‘¼ less than’ and ‘3 less than’ have clear meanings inconsistent with using ‘8× less than’ to mean ‘⅛th.’
For that matter, the US recovered from the inflation of the 80s and avoided a serious hyperinflationary spiral of the sort seen in many less stable regimes, and when the real-terms price of gold spiked in 2011 it wasn't even accompanied by unusual levels of inflation.
The issue is that we're seeing asset price inflation that is far greater than CPI
In other words, we have two different inflations happening at once, leading to people who happened to own the right assets getting richer and everyone else getting poorer. I don't think that's what an efficient market would do, which implies that efficiency will kick in at some point and BOOM
> In other words, we have two different inflations happening at once
CPI is just an index of consumer prices. It's like saying that we have two stock markets because Nvidia is going up faster than Costco.
> People who happened to own the right assets getting richer and everyone else getting poorer
It's not a zero-sum game. Almost everyone is more wealthy than their peers 30-40 years ago.
Wealth disparities widen, but the reasons for this are complex and go beyond inflation. And frankly, many of them are self-inflicted. Every single housing development in my neighborhood is thoroughly protested by everyone. And most of what my city officials do is inventing new rules and regulations. They're not working for big corporations or the federal government.
> I don't think that's what an efficient market would do
not really. Bitcoin is still around 10% from ATH. Art, wine and various collectibles are still down a lot from the highs. The dollar does not have anything to do with this. A falling dollar does not make Americans want to splurge or lead to speculation. Indeed, the dollar surged in 2008 and 2009, yet asset prices were falling. A falling dollar is only indicative of demand for other currencies. it has nothing to do with asset prices, as art and other prices are almost already quoted in dollars anyway. if people wanted to hedge the falling dollar, they would buy those currencies.
1) flight from USD assets given views that one cannot depend on US assets as safe havens
2) central banks increasing gold holdings
3) purchases by Chinese investors as they have few places to invest their money
4) concern around debt levels deficits and democratic process ability to fix this
5) concerns around central bank independence, and hence inflation targeting, being undermined for political motivations
I have personally bought a lot of gold after having been a long term US equities investor because of its risk-off and zero duration nature. In a world of stock bubbles, high valuations, and general economic uncertainty, leaning risk-off has been where I currently feel comfortable. In a world of inflation being in zero duration is a sensible place to be.
I think you're conflating between 2 different things: the USD and US stocks from US companies.
- The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view.
- That means it represents good investment opportunity as long as the fundamentals of those companies are not affected too much (e.g. AI companies not directly affected by workers' raid, or pay tarrifs). Nothing is contradictory here.
> - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view.
That's actually not quite right. You can only buy securities on US markets with US dollars. You'd have to buy dollars on the money market to make that trade. So to the extent that "cheaper dollars" are driving investment in dollar-valued securities, they're increasing the value of the dollar on the global market by the same amount.
All markets seek toward efficiency. The situation you posit would be subject to a money-printing arbitrage loop if it actually existed.
This really feels like the original sin to me (I am not remotely an economist). Perhaps it can just be fixed with taxes to take money out of circulation.
Central bank money printing is morally bad given it's largely used to bail out either irresponsible government spending, or irresponsible private sector actors.
Central banks could reduce their balance sheets significantly more (and until recently the pace was pretty quick), but given where things are today it will undoubtedly be pretty politically unpalatable to do so (bond markets puking, making deficits even worse in the face of an inability to cut spending).
I assume you are labelling trump the authoritarian. He has very little ability to impact on the majority of US spending, whilst a true authoritarian should be able to. The system has been corrupted to such an extent that it is basically impossible to change.
The price of gold fluctuated significantly in 1979 due to concerns over whether inflation could be brought under control. It started the year at ~$250.00 per ounce and ended the year at ~$850.00 per ounce.
It was a presidential election year and consumers were getting squeezed hard by rising energy prices. Russia invaded Afghanistan, Carter suspended participation in the Olympics, and there was a general feeling of concern.
Using Wolfram Alpha to compute gold's price in 1979 relative to 2025, "850.00 1979 dollars in 2025", the result is $3,663.84
Gold closed today at $3,858.60.
Just like 1979, 2025 has a long list of international concerns making investors nervous.
Of course, adjusted for inflation the dollar has done much, much worse than gold!
Not that one should put all of one’s portfolio into gold. That would be pretty insane. But a certain fixed allocation within a balanced portfolio? I think that makes sense.
That's a gross misrepresentation of reality. It gives the false impression that gold prices always increase, which is not the case. Gold is a volatile asset, i.e., it's a relatively risky investment.
It took 8 years for gold to recover from circa 2012 drop. 8 years is twice as long as S&P 500 took to recover from 2008 financial crisis. More importantly, see the 1980 high. It took 26 years to get back to the same point. Anyone considering investment should adjust their expectations accordingly.
That’s because no one prints headlines that read “Gold has been in a trading pattern for the past six months, 15% below its ATH”, or at least that headline didn’t stick in your mind like “ATH!!!” does.
As a sibling comments outlines, gold is actually quite volatile and risky versus returns, and your returns will very much depend on when you bought it.
If it appears to you that "gold is pretty much always appreciating", that's a function of your perspective, similar to the phenomenon where, sometimes, when you're standing on railroad tracks, a faraway train looks bigger and bigger and bigger if you just stand there and watch. In this case what is happening is that the value of whatever you're using to measure the gold's value, probably dollars, is depreciating.
Gold's value is pretty volatile in the short term, though, so in fact most of the time gold is not at an all-time high, even measured in dollars. If you look at https://en.wikipedia.org/wiki/Gold_as_an_investment#/media/F..., for example, you'll see that gold didn't reach its high of 02011 again for about 9 years, and didn't reach its high of 01980 again for 27 years, until the subprime mortgage crisis in 02007. To me it looks like the recent periods that gold has reached a nominal all-time price are roughly 01968–01975, 01979–01980, 02008–02011, the first half of 02020 when nobody knew what was going to happen with covid, and since Trump got elected. 13 out of the last 60 or so years.
The following plot on that page shows what I mean about inflation; adjusted for the BLS CPI, gold hadn't exceeded its 01980 peak until the last few months, not even in the subprime mortgage crisis.
kmeisthax's shadowbanned graph of oil barrels per gold ounce is also pretty thought-provoking: stable within the 10–35 range from 01946 until 02023, with the stunning exception of 02020 ("The peak in 2020 was driven by COVID-19, which boosted gold prices as a safe haven while oil demand and prices plummeted due to global lockdowns.") https://elements.visualcapitalist.com/visualizing-the-gold-t...
And if you look at the inflation-adjusted graph, you'll see that it was up to 2600 dollars if you adjust for inflation ("2024 dollars"), which was already a pretty fancy suit, and within three years it had dropped by 40% before gradually settling to a low of 400–600 "2024 dollars" from 01998 to 02004. As I said, there's a lot of short-term volatility, though not as much as Bitcoin: https://en.wikipedia.org/wiki/Gold_as_an_investment#/media/F...
One of the eminently attackable facets of that claim is the varying availability of goods over the millennia, making it impossible to have a really stable and precise measure of value against which to measure gold's purchasing power. You can't buy silphium or Roman concrete today for any price, for example, nor a ticket to a gladiatorial match, and, from a certain point of view, most of the functions fulfilled by handmade Roman togas are today fulfilled by mass-produced machine-stitched US$200 wool suits, or even a cheap sports coat, jeans, and T-shirt. And no amount of gold would have bought you penicillin 100 years ago, much less in Roman times.
Sure, and the greatest thing about modernity is that during the Roman Empire you would have been executed for wearing Tyrian purple, while now anyone who cares to spend the money is entitled.
The problem with the "nice suit" metaphor is that the cost of clothing has actually plummeted since the height of the Roman Empire. Also, they didn't wear suits.
The reason why money printing doesn't immediately translate into lowered dollar value (and thus, higher gold prices) is that other goods and services are getting cheaper around it. If supply is flexible then the price of some goods won't change much, while things with fixed supply will skyrocket in price. That's why we basically didn't see much inflation in the 2010s despite printing shittons of money and having a zero-interest rate policy for most of it. All that money went straight into equities and real estate.
Likewise, there are also goods like oil that are part of basically every supply chain, so when the price of oil goes up, the price of everything goes up. Owning gold will not hedge against this kind of inflation. "BuT tHe SuPpLy Of GoLd Is FiXeD!" you say. Yes, but oil has something stronger than a fixed supply: centralized supply. Every oil producing nation in the world is part of a large supply-restricting cartel that has proven to be frustratingly resilient to all the usual things that are supposed to break cartels. They even managed to bring American shale oil producers to heel (because fracking is too expensive to be economic in a cheap oil environment).
As a result, the ratio of gold to oil prices is very volatile[0], way moreso than you'd expect from something sold as an inflation hedge. Because, with few exceptions, everything in the economy runs off oil, you'd expect to see either a fixed line (if oil is as fixed as gold) or a rising line (if oil grows like dollars). Instead we see ups and downs everywhere.
it's so half-assed, why just tack a zero onto the Christian year? in the Yoruba calendar it's 10,067 -- use that and it puts things in a real perspective. We're ten thousand years from the beginning of civilization, not two thousand. Now THAT gives some perspective on the "long now"
Maybe more like twelve thousand years from the beginning: https://en.wikipedia.org/wiki/G%C3%B6bekli_Tepe. The real crucial question is whether we're two years from the end of civilization or two trillion.
Most of that is some digital system saying you are owed gold without independent audit of actual bullion reserves. More worrying: many central banks are buying actual physical gold and absorbing the extra price for moving it and custody.
What is it about gold, anyways? None of its useful properties were known until recently (and mostly overhyped and upsold tbh, at least as far as those stupid cables go). Are we really just instinctively attracted to shiny metals? Or do people like it as a status symbol?
(not to act like im above it all, i still have my gold-plated pokemon jigglypuff trading card from burger king in 1999 and i often use golden paint on model kits).
What is it about Bitcoin over the thousands of other altcoins that have the exact same properties? A large enough group of people picked Bitcoin and said "this is the one". That's basically it. Same thing happened with gold at some point in human history and we just stuck to it.
Who is Satoshi Nakamoto? How come his Bitcoin holdings - now worth more than $100 billion dollars - have remained untouched since 2010? How can any one human resist that kind of temptation? I would be digging landfill sites if I lost my wallet worth $100 billion. The launch of Bitcoin also coincided with the 2008 financial crisis. The first block had the text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" embedded, etc.
None of the altcoins have this level of myths and legend. You need this kind of supernatural story to start a new fiat, digital gold, religion, and whatever collective fiction you can think of.
I imagine Satoshi Nakamoto has much less name recognition than Bitcoin? A simpler theory is that the first popular cryptocurrency became more and more famous due to a snowball effect, and nothing else is able to catch up.
Apparently the first popular stablecoin can't be beat either, despite its sketchy origins and a lot of bad press.
If beyond a certain point, only fame matters, it's kind of depressing from a technological innovation point of view.
The short version is that its in limited supply, it has luxury value (think jewelry or artisan crafting), and its doesn't corrode. So it's a supply and demand issue. There is basically always the same amount, kings want it, and it doesn't ever disappear.
It s superior to currency because while (for example) the US dollar will always have value as long as you pay taxes with it, there is not a limited supply
It is superior to bartering because while (for example) a chicken has value due to its utility as food, it naturally disappears (because you ate it or it died).
Gold and other precious metals sort of sit in the middle ground as the "next best thing" to almost everything that humans want. So it remains a useful means of preserving and communicating value.
Gold has always had value to humans because it is very non-reactive and doesn't corred, and it was easy to smelt and work with since prehistoric times. It is also one of very few metals that is not boring gray/silver. It therefore has always been part of ornamentation and religion. In last century it became useful due to its great conductivity, and so it's used in semiconductors. If you have a gilded book at home, also gold.
The true value of gold is quite stable over time (since new gold is mined at a slow rate). Fiat currencies are constantly being debased. Hard assets fluctuate up and down relative to gold.
Historically, gold was too expensive to use for everyday transactions (and still is) and most people (who were peasants) would never see it. So it seems like the sort of thing where prices are set by the rich, who can afford it.
Longest lasting mass psychosis... So at point when everything else looks even more irrational it probably is not worst move. At least there will most likely be some real believers you can pawn it off for something...
Basically, the chemical composition of the earth's crust isn't going to change any time soon. That means that the supply of gold is going to increase only slowly.
In contrast, Trump has been making noises about wanting to replace Powell as chair of the Fed, because Powell won't dance to Trump's tune. I do not want a world where Trump can determine (even if indirectly) the value of the dollar, or the interest rate, or anything in that vicinity.
So I trust the dollar a lot less than I did six months ago. In contrast, gold doesn't care what Trump's policy is.
The problem with this is that if you live in the US and Trump does something that stupid then owning a bunch of gold will not save you, because you still live in this society (assuming you live in the US of course!)
All the Germans who had great gold reserves in 1930 still ended up fighting in WW2. Hell, many of them were Jewish and had that gold stolen and sent to the Swiss for safekeeping by the Nazi state. The danger to their society was not hyperinflation, it was a hostile government sending them to die for stupid reasons, and literally like a hundred people, or fewer, choosing out of utter stupidity and an insane ideology based purely on ignorance, forcing everyone into a bad situation.
There is no safety, of any kind, under authoritarianism. Gold will not save you.
Originally there was no such thing as property. Some of the first property we had was animals. That's inconvenient enough thanks to lack of portability, but the bigger issue is atomicity. Metals were the intuitive solution to both problems, they can be cut into convenient denominations and also can be melted back into larger ones.
That useful property was well known (and notably, other currencies such as shells and precious stones lacked this). In addition as others have said, gold was both scarce and had a low melting point. However, other metals had these properties too, and sure enough, some cultures did anchor their currencies on metals other than gold.
We are not "just instinctively attracted to shiny metals". FHN.
For anyone else who read this headline and thought that seemed unremarkable since gold does tend to slowly increase in value year over year meaning it’s almost always at or near its all time high - it’s up 43% over the past year.
I like making young bros' heads spin by explaining how little intrinsic value gold actually has.
They all start out with "if the shit comes down, gold will --" and I cut them off by saying "-- still have almost zero intrinsic value."
Can't eat it. Can't burn it. Can't really make shelter or a weapon out of it. Useful for tiny microcircuits, but that's not something the preppers will be doing in Montanam
"Well, it'll always be valuable, because people think --"
Aha, dudebro, now you're in the realm of "perceieved value." Whole different game in the end times...
Explained by weakening USD and the potential for a US/global recession is a Sword of Damocles being plucked at and played with by a mostly unwise and unhelpful regulatory environment.
Considering how our fiscal conservatives are trying to switch the money printer to turbo, I would say it's probably inflationary combined with a lack of confidence in the stock market.
That is what he means... Inflation of all assets caused by bad fiscal policy and both deregulation and regulation causing most of the money to only move around in the upper echelons of society
this really can't keep going on forever. the weekly "ATH" and everything going up is like a pressure bomb that keeps getting pressurized more and more each day.
And because this is all assets, the more assets you already have, the more you gain. And the central banks/etc. will make sure the party keeps on going for you.
Question from experts: I have been itching to buy silver and hodl it for a year or two.. Maybe more..should I buy it? Will there be more consumption in coming years?
It is about certain regimes nearing their end and folks converting assets into something fungible they can use and enjoy while exiled in Geneva, Dubai, Phnom Penh, etc.
As just one example (of many) of why its not about the USD - most global debt is dollar denominated and settled in dollars. Even if they don't reside or transact in the US, most large financial transactions settle (or are hedged) in USD. Again, just one example.
Also, understand export economies like China cannot avoid dollar settlement for goods exported to the US. They can settle in USD and covert to another asset, but only as a secondary step.
I could go on about this, but Carnegie Endowment Prof Michael Pettis explains this and more much better than I can.
Good time to remind everybody that the Fed, the US central bank, prices gold at $42.22 for some reason and nobody questions it ever. And all those dignified educated respectable board members and econ PhDs give speeches about science-based market economy, maintaining credibility and staying away from politics while caring about the wellbeing of households and families.
Well, please show me any mainstream finance media that questions it. The Fed has a monthly press conference, I don't think they were asked even once in the last 10 years at least... Most of the buying now is from Asia supposedly.
That's wildly misunderstanding things. The fed doesn't trade, regulate, hold or sell gold. That price you're quoting is for a historical artifact called a Gold Certificate. These things have a value set by law (not by the fed) of 42 and 2/9th dollars. They don't sell them anymore, but if you happen to have one they're required to buy it from you (IIRC) at that rate.
It's a little bit broader than this. In the Fed there is the so called "statutory price for gold" and it's not limited to gold certificates. Any gold in the Fed would be priced at $42 by law. The fact that they don't technically own any gold and work around the issue only makes it so much more amusing. It only serves to tell people they can fix prices and make outrageous course-correction changes overnight and people will still argue "it's fine and it's legal" afterwards.
Again, that's all just conspiracy nonsense. Yes, there are old laws. No, they don't effect macroeconomic policy and to claim they do is silly. This is of a piece with the Trillion Dollar Coin nonsense[1] being hawked in equally silly circles on the other side of the aisle.
Real world economic policy works by virtue of steady hands and rigorously applied norms, not goofball trickery around edge cases of ancient laws.
[1] The idea that the Treasury's statutory authority to mint coinage could be exploited to mint a single illiquid-by-virtue-of-size asset that could then be borrowed against without increasing the debt ceiling.
Yes you are making my point exactly, I just gave you a link to the official federal reserve website that values gold at $42 and you still refer to it as a conspiracy theory. Surely they could have fixed this by now if it was a typo or a conspiracy.
The fact they they kept the price fixed should serve as a reminder they can do this at any time. There is no conspiracy theory, they've literally done this and nobody challenged them and no laws have changed since then (thus the "ancient law" that is somehow still in effect). The sophisticated economists that study "real world economic policy works by virtue of steady hands and rigorously applied norms" can make another "ancient law" any time they want.
Citing the completely-unused ancient law in support of a claim that the fed is somehow "fixing prices" or "making outrageous course corrections overnight" or that they can "make another law any time they want" is the conspiracy. They aren't doing that. And they never have. And you know it. Which is why you're making noise about ancient unused laws.
Gold, silver, stocks, real estate, Bitcoin, baseball cards, fine art, Rolexes - everything is trading at or near their all time highs. The value of the US dollar is simply going down.
The art market doesn't seem to be doing well at all:
https://news.ycombinator.com/item?id=45175628
Rolexes hit their all-time high in 2022:
* https://watchcharts.ca/watches/price_index
* https://watchcharts.ca/watches/brand_index/rolex
* https://www.hodinkee.com/articles/used-watch-market-prices-e...
>> The value of the US dollar is simply going down.
I wonder what could be causing nervousness in the USD regime…
Fiat money is not going down as much as asset prices are going up, though.
So it's part of the story, money losing value in the real economy. That's been happening since moving off the gold standard at roughly similar rates.
There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows, and even when interest rates became positive again, the trend appears to have continued.
Perhaps all investors just believe ZIRP & Negative Real Interest Rate Policies are coming back, maybe to even more negative real rates than ever before.
> Fiat money is not going down as much as asset prices are going up, though.
How do you measure this? What is this claim founded in?
You could indeed say that inflation should be defined by the asset prices. This would couple fiat and asset prices definatorically.
Because normal people mainly use money to pay rent and utilities and taxes and buy corn from the grocery store, not to buy future cash flows.
At any given time, most of the money isn't in the hands of "normal people", though. It's in the hands of banks, states, and large companies.
The amount of money isn't relevant. Money is fake.
The real economy isn't.
I’m guessing what was meant is that the price of things that are to be invested in is growing wrt the price of things that are to be consumed. Which naively makes sense to me in an economy based on growth where the total consumption starts to stagnate—the surplus still has to go somewhere. Is it so or is reality more complicated than that?
I think this is a key observation.
Apparently consumables have become incredibly cheap.
But then again, consumables will like start to rise in price now people need more money to buy a house, etc.
You could also say that real salaries have gone down a lot, which is probably also true.
These effects have to go through very complex value chains.
It makes more sense or is more plausible to say that asset prices are rising to hedge or tracking inflation, versus a falling dollar. I
> There's something that happened during ZIRP & Negative Real Interest Rate Policies that completely divorced the value of money in the real economy from the value of assets & future cash flows
I’m not sure I follow. The USD is just a medium of exchange. 100% of the dollars commands 100% of the wealth of the economy. If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.
That’s not accurate for two reasons. First, the dollar isn’t just a medium of exchange, but a medium for storing value since it’s the reserve currency. Second, a dollar can get spent multiple times so there isn’t a direct relationship with the amount of economic activity as you suggest.
I don’t disagree with your first point, but your second point may have been a misunderstanding of what I said or I don’t understand what you’re saying. I’m not suggesting when you spend money it goes away and can’t be used again. I was more suggesting the M0/M1/M2 money supplies change in size which is distinct from GDP size, although I admit that is a simplification.
Gotcha. I thought you meant it was a 1:1 correlation. My mistake.
> If you increase the number of dollars but the size of the economy itself doesn’t increase then the underlying prices would go up and the value of individual dollars would go down.
Just looking the number of dollars, without looking at what they're doing, is like thinking you will gain weight because your fridge/pantry is stocked:
> But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy.
* https://www.pragcap.com/three-things-i-think-i-think-i-see-d...
Japan had an ever increasing money supply for decades and experience not just low inflation, but at times deflation:
* https://fred.stlouisfed.org/graph/?g=1680i
See also US:
* https://fred.stlouisfed.org/graph/?g=1MG9e
Besides the quantity of money, you have to actually look at what the money is doing (velocity), which in recent years is 'not much':
* https://en.wikipedia.org/wiki/Velocity_of_money
* https://fred.stlouisfed.org/series/M2V
As it stands there's just a growing pile of US money doing a whole lot of nothing in money market funds:
* https://www.cnbc.com/2025/09/12/7-trillion-cash-money-market...
* https://www.apolloacademy.com/6-trillion-on-the-sidelines-in...
I fully admit what I said was simplistic and not meant to indicate the true complexity of the system. I agree with everything you’ve posted as inflation is not immediate merely because the money exists. I was presenting a rough zeroth order approximation because I didn’t understand how the value of money could be completely divorced from assets/the economy.
> I was presenting a rough zeroth order approximation because I didn’t understand how the value of money could be completely divorced from assets/the economy.
Money has no value except in what it can buy you, the most important of which are shelter, water, and food for survival. After that you get into what can help you achieve happiness / fulfillment.
As a percentage of household spending, food (even with recent risen prices) have never been lower:
* https://www.npr.org/sections/thesalt/2015/03/02/389578089/yo...
and clothing:
* https://www.bls.gov/opub/ted/2006/may/wk5/art02.htm
* https://www.aei.org/carpe-diem/as-a-share-of-household-spend...
We've never lived longer, with fewer diseases, and had an easier (and safer) time to travel.
Sadly shelter (especially if you want to buy) has gotten more expensive (at least in the Anglo-sphere), but that's more about things like zoning policy and such rather than money supply.
So what exactly has dropped in "value" in human life/lives with the increased amount of money that's supposedly bouncing around? When in human history have things been better? If you could jump in a time machine that goes 88 mph, what period of history would you rather be in to live your life?
> Fiat money is not going down as much as asset prices are going up, though.
I'm assuming you are referring to CPI, but that is just a single measure of inflation and serves a very specific purpose. One could argue that "real" inflation in fact is the US dollar's value relative to gold or other similar assets.
If one was not someone who lived in the real economy and spent most of their money on things in the real economy, and instead was a billionaire, and spent most of their money buying future cash-flows, then sure.
There are plenty of people in this economy who sit somewhere in between having to spend their entire paycheck on rent and groceries and deciding which one of their yachts to take on the next vacation. I'd wager most people reading this are in the middle category, and so deeper analysis on inflation and long-term stores of money is absolutely relevant.
This is an imprecise take, in particular due to one thing: Target return rate.
The rich people expect a return rate regardless of how expensive the asset was, and eventually the asset will have to give that. This transaltes into more expensive consumables, rents, etc. Ie, Asset prices are a part of the real economy.
As expected. This is why we don't use nominal dollars for measuring changes in prices over long time periods. It's meaningless.
Assets like gold are also reaching new highs in real terms, which is giving people reason to be skeptical of the adjustments made for inflation.
But really none of it is as objective as it tries to pretend to be.
Those things are trading high relative to basic goods like food and clothing, so you can't explain it away as inflation.
Bingo
So then the question is - how long can this continue before something snaps
Pretty long, given that the US had a fully-fiat currency for 50+ years, and many European countries had it for longer than that. Per CPI, your dollar is worth 8x less than what it was worth in 1970.
This, in itself, doesn't mean anything profound. There's nothing to "snap" if the expectation of stable, modest inflation is baked into the markets. Fiat currencies usually implode only when something else undermines the confidence in the issuing government.
> your dollar is worth 8x less than what it was worth in 1970.
A dollar in 2025 is not worth -7 (i.e. eight times one less than one) dollars from 1970; it is worth ⅛th of a dollar from 1970.
Yes, I know what you mean. But ‘×’ is multiplication, not division — and phrases like ‘¼ less than’ and ‘3 less than’ have clear meanings inconsistent with using ‘8× less than’ to mean ‘⅛th.’
For that matter, the US recovered from the inflation of the 80s and avoided a serious hyperinflationary spiral of the sort seen in many less stable regimes, and when the real-terms price of gold spiked in 2011 it wasn't even accompanied by unusual levels of inflation.
The issue is that we're seeing asset price inflation that is far greater than CPI
In other words, we have two different inflations happening at once, leading to people who happened to own the right assets getting richer and everyone else getting poorer. I don't think that's what an efficient market would do, which implies that efficiency will kick in at some point and BOOM
> we're seeing asset price inflation that is far greater than CPI
Have a look at the CPI-adjusted gold chart, and think back to how awful things were (or weren't) in 2011.
> In other words, we have two different inflations happening at once
CPI is just an index of consumer prices. It's like saying that we have two stock markets because Nvidia is going up faster than Costco.
> People who happened to own the right assets getting richer and everyone else getting poorer
It's not a zero-sum game. Almost everyone is more wealthy than their peers 30-40 years ago.
Wealth disparities widen, but the reasons for this are complex and go beyond inflation. And frankly, many of them are self-inflicted. Every single housing development in my neighborhood is thoroughly protested by everyone. And most of what my city officials do is inventing new rules and regulations. They're not working for big corporations or the federal government.
> I don't think that's what an efficient market would do
Sounds like you spotted an arbitrage opportunity?
not really. Bitcoin is still around 10% from ATH. Art, wine and various collectibles are still down a lot from the highs. The dollar does not have anything to do with this. A falling dollar does not make Americans want to splurge or lead to speculation. Indeed, the dollar surged in 2008 and 2009, yet asset prices were falling. A falling dollar is only indicative of demand for other currencies. it has nothing to do with asset prices, as art and other prices are almost already quoted in dollars anyway. if people wanted to hedge the falling dollar, they would buy those currencies.
The drivers of this in my view are:
1) flight from USD assets given views that one cannot depend on US assets as safe havens
2) central banks increasing gold holdings
3) purchases by Chinese investors as they have few places to invest their money
4) concern around debt levels deficits and democratic process ability to fix this
5) concerns around central bank independence, and hence inflation targeting, being undermined for political motivations
I have personally bought a lot of gold after having been a long term US equities investor because of its risk-off and zero duration nature. In a world of stock bubbles, high valuations, and general economic uncertainty, leaning risk-off has been where I currently feel comfortable. In a world of inflation being in zero duration is a sensible place to be.
>flight from USD assets given views that one cannot depend on US assets as safe havens
I keep seeing this but then I also keep seeing the opposite: https://finance.yahoo.com/news/foreigners-buying-us-stocks-r...
I think you're conflating between 2 different things: the USD and US stocks from US companies.
- The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view.
- That means it represents good investment opportunity as long as the fundamentals of those companies are not affected too much (e.g. AI companies not directly affected by workers' raid, or pay tarrifs). Nothing is contradictory here.
I understand what you're saying but I don't think I'm conflating. OP specifically said "USD assets", which I took to mean things like stocks.
> - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view.
That's actually not quite right. You can only buy securities on US markets with US dollars. You'd have to buy dollars on the money market to make that trade. So to the extent that "cheaper dollars" are driving investment in dollar-valued securities, they're increasing the value of the dollar on the global market by the same amount.
All markets seek toward efficiency. The situation you posit would be subject to a money-printing arbitrage loop if it actually existed.
We've also had four big rounds of Quantitative Easing from the Fed since the financial crisis, with the most recent coming right after the pandemic.
https://www.wikipedia.org/wiki/Quantitative_easing
This really feels like the original sin to me (I am not remotely an economist). Perhaps it can just be fixed with taxes to take money out of circulation.
Central bank money printing is morally bad given it's largely used to bail out either irresponsible government spending, or irresponsible private sector actors.
Central banks could reduce their balance sheets significantly more (and until recently the pace was pretty quick), but given where things are today it will undoubtedly be pretty politically unpalatable to do so (bond markets puking, making deficits even worse in the face of an inability to cut spending).
“We’re going to increase taxes!” “To spend on better public services?” “Nah, we’re just gonna burn it”
Easier said than done, I think.
Is it possible that a fair amount of government expenditures are just a fancy way of burning money? E.g. cowboy poetry festivals.
Smartest thing to do but politically radioactive...
The significant post-pandemic inflation came during a period of Quantitative Tightening.
> and democratic process ability to fix this
Actually we’ve shifted into authoritarianism and confidence has only worsened.
I assume you are labelling trump the authoritarian. He has very little ability to impact on the majority of US spending, whilst a true authoritarian should be able to. The system has been corrupted to such an extent that it is basically impossible to change.
The price of gold fluctuated significantly in 1979 due to concerns over whether inflation could be brought under control. It started the year at ~$250.00 per ounce and ended the year at ~$850.00 per ounce.
It was a presidential election year and consumers were getting squeezed hard by rising energy prices. Russia invaded Afghanistan, Carter suspended participation in the Olympics, and there was a general feeling of concern.
Using Wolfram Alpha to compute gold's price in 1979 relative to 2025, "850.00 1979 dollars in 2025", the result is $3,663.84
Gold closed today at $3,858.60.
Just like 1979, 2025 has a long list of international concerns making investors nervous.
Yes, adjusted for inflation, gold has done much worse than the media hype would suggest.
Of course, adjusted for inflation the dollar has done much, much worse than gold!
Not that one should put all of one’s portfolio into gold. That would be pretty insane. But a certain fixed allocation within a balanced portfolio? I think that makes sense.
Regardless, it's been a good winter trawling for nuggets on the W.Australian goldfields, not for much longer now the sun is starting to bite.
Other than for few years in mid 2010s gold seemed to be at ATH most of the time
That's a gross misrepresentation of reality. It gives the false impression that gold prices always increase, which is not the case. Gold is a volatile asset, i.e., it's a relatively risky investment.
It took 8 years for gold to recover from circa 2012 drop. 8 years is twice as long as S&P 500 took to recover from 2008 financial crisis. More importantly, see the 1980 high. It took 26 years to get back to the same point. Anyone considering investment should adjust their expectations accordingly.
That’s because no one prints headlines that read “Gold has been in a trading pattern for the past six months, 15% below its ATH”, or at least that headline didn’t stick in your mind like “ATH!!!” does.
As a sibling comments outlines, gold is actually quite volatile and risky versus returns, and your returns will very much depend on when you bought it.
Yeah I do not see why this is worthy of interest. Gold is pretty much always appreciating.
What is unusual is for gold to perform better than stock indexes, which it has been doing by a significant margin in the past year.
Gold has a pretty stable value over long periods of time; the famous quote is:
> an ounce of gold in Roman times bought a nice suit, and today, an ounce of gold buys a nice suit.
Consequently it's the standard safe store of value investors flee to when the world is in upheaval, a role it has played since well before Roman times. Its price being high is a standard indicator of investors fearing miserable times ahead. See, for example, https://www.investopedia.com/terms/s/safe-haven.asp or https://www.investopedia.com/terms/f/flighttoquality.asp.
If it appears to you that "gold is pretty much always appreciating", that's a function of your perspective, similar to the phenomenon where, sometimes, when you're standing on railroad tracks, a faraway train looks bigger and bigger and bigger if you just stand there and watch. In this case what is happening is that the value of whatever you're using to measure the gold's value, probably dollars, is depreciating.
Gold's value is pretty volatile in the short term, though, so in fact most of the time gold is not at an all-time high, even measured in dollars. If you look at https://en.wikipedia.org/wiki/Gold_as_an_investment#/media/F..., for example, you'll see that gold didn't reach its high of 02011 again for about 9 years, and didn't reach its high of 01980 again for 27 years, until the subprime mortgage crisis in 02007. To me it looks like the recent periods that gold has reached a nominal all-time price are roughly 01968–01975, 01979–01980, 02008–02011, the first half of 02020 when nobody knew what was going to happen with covid, and since Trump got elected. 13 out of the last 60 or so years.
The following plot on that page shows what I mean about inflation; adjusted for the BLS CPI, gold hadn't exceeded its 01980 peak until the last few months, not even in the subprime mortgage crisis.
kmeisthax's shadowbanned graph of oil barrels per gold ounce is also pretty thought-provoking: stable within the 10–35 range from 01946 until 02023, with the stunning exception of 02020 ("The peak in 2020 was driven by COVID-19, which boosted gold prices as a safe haven while oil demand and prices plummeted due to global lockdowns.") https://elements.visualcapitalist.com/visualizing-the-gold-t...
An ounce is what -- 3800 USD now? That is indeed a nice suit.
And if you look at the inflation-adjusted graph, you'll see that it was up to 2600 dollars if you adjust for inflation ("2024 dollars"), which was already a pretty fancy suit, and within three years it had dropped by 40% before gradually settling to a low of 400–600 "2024 dollars" from 01998 to 02004. As I said, there's a lot of short-term volatility, though not as much as Bitcoin: https://en.wikipedia.org/wiki/Gold_as_an_investment#/media/F...
Not very far off: https://www.brioni.com/en/us/ca/suits
A high quality realistic gorilla suit costs $4,500.00!
https://onlydinosaurs.com/realistic-gorilla-animal-costume-f...
A hand made suit would fit better in this case.
One of the eminently attackable facets of that claim is the varying availability of goods over the millennia, making it impossible to have a really stable and precise measure of value against which to measure gold's purchasing power. You can't buy silphium or Roman concrete today for any price, for example, nor a ticket to a gladiatorial match, and, from a certain point of view, most of the functions fulfilled by handmade Roman togas are today fulfilled by mass-produced machine-stitched US$200 wool suits, or even a cheap sports coat, jeans, and T-shirt. And no amount of gold would have bought you penicillin 100 years ago, much less in Roman times.
Dying a kilo of fabric with real Tyrian purple is still an expensive process today.
Knock off purple is cheap, as are machine stitched fabrics .. neither pass the eye of those who judge such things though.
Sure, and the greatest thing about modernity is that during the Roman Empire you would have been executed for wearing Tyrian purple, while now anyone who cares to spend the money is entitled.
The problem with the "nice suit" metaphor is that the cost of clothing has actually plummeted since the height of the Roman Empire. Also, they didn't wear suits.
The reason why money printing doesn't immediately translate into lowered dollar value (and thus, higher gold prices) is that other goods and services are getting cheaper around it. If supply is flexible then the price of some goods won't change much, while things with fixed supply will skyrocket in price. That's why we basically didn't see much inflation in the 2010s despite printing shittons of money and having a zero-interest rate policy for most of it. All that money went straight into equities and real estate.
Likewise, there are also goods like oil that are part of basically every supply chain, so when the price of oil goes up, the price of everything goes up. Owning gold will not hedge against this kind of inflation. "BuT tHe SuPpLy Of GoLd Is FiXeD!" you say. Yes, but oil has something stronger than a fixed supply: centralized supply. Every oil producing nation in the world is part of a large supply-restricting cartel that has proven to be frustratingly resilient to all the usual things that are supposed to break cartels. They even managed to bring American shale oil producers to heel (because fracking is too expensive to be economic in a cheap oil environment).
As a result, the ratio of gold to oil prices is very volatile[0], way moreso than you'd expect from something sold as an inflation hedge. Because, with few exceptions, everything in the economy runs off oil, you'd expect to see either a fixed line (if oil is as fixed as gold) or a rising line (if oil grows like dollars). Instead we see ups and downs everywhere.
[0] Apologies for the infographic spam, but this was the easiest chart to find: https://elements.visualcapitalist.com/visualizing-the-gold-t...
Most of this is not correct, but some of it is.
> 02020
Funny how this "long now" date format will stop working in 99999, but the normal way of writing years as integers will keep working just fine.
it's so half-assed, why just tack a zero onto the Christian year? in the Yoruba calendar it's 10,067 -- use that and it puts things in a real perspective. We're ten thousand years from the beginning of civilization, not two thousand. Now THAT gives some perspective on the "long now"
TIL: https://en.wikipedia.org/wiki/Yoruba_calendar
Maybe more like twelve thousand years from the beginning: https://en.wikipedia.org/wiki/G%C3%B6bekli_Tepe. The real crucial question is whether we're two years from the end of civilization or two trillion.
Seriously, they could have stuck a '1' on the front instead of a '0' and it would have been a) more accurate, b) less weird, and c) more perspective.
[dead]
Most of that is some digital system saying you are owed gold without independent audit of actual bullion reserves. More worrying: many central banks are buying actual physical gold and absorbing the extra price for moving it and custody.
https://www.theguardian.com/business/2025/sep/28/bullion-bon...
That is insane. What happens when that house of cards comes falling down?
I would bet something like EO6102 + Corralito. All Watched Over by Machines of Loving Grace ("brought to you by Palantir (tm)" with digital ID).
[1] https://en.wikipedia.org/wiki/Executive_Order_6102
[2] https://en.wikipedia.org/wiki/Corralito
What is it about gold, anyways? None of its useful properties were known until recently (and mostly overhyped and upsold tbh, at least as far as those stupid cables go). Are we really just instinctively attracted to shiny metals? Or do people like it as a status symbol?
(not to act like im above it all, i still have my gold-plated pokemon jigglypuff trading card from burger king in 1999 and i often use golden paint on model kits).
What is it about Bitcoin over the thousands of other altcoins that have the exact same properties? A large enough group of people picked Bitcoin and said "this is the one". That's basically it. Same thing happened with gold at some point in human history and we just stuck to it.
Bitcoin is different.
Who is Satoshi Nakamoto? How come his Bitcoin holdings - now worth more than $100 billion dollars - have remained untouched since 2010? How can any one human resist that kind of temptation? I would be digging landfill sites if I lost my wallet worth $100 billion. The launch of Bitcoin also coincided with the 2008 financial crisis. The first block had the text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" embedded, etc.
None of the altcoins have this level of myths and legend. You need this kind of supernatural story to start a new fiat, digital gold, religion, and whatever collective fiction you can think of.
I imagine Satoshi Nakamoto has much less name recognition than Bitcoin? A simpler theory is that the first popular cryptocurrency became more and more famous due to a snowball effect, and nothing else is able to catch up.
Apparently the first popular stablecoin can't be beat either, despite its sketchy origins and a lot of bad press.
If beyond a certain point, only fame matters, it's kind of depressing from a technological innovation point of view.
Both gold and bitcoin also ostensibly have no real founder / owner. Most other alt coins are run by a particular organization with its own interests.
The short version is that its in limited supply, it has luxury value (think jewelry or artisan crafting), and its doesn't corrode. So it's a supply and demand issue. There is basically always the same amount, kings want it, and it doesn't ever disappear.
It s superior to currency because while (for example) the US dollar will always have value as long as you pay taxes with it, there is not a limited supply
It is superior to bartering because while (for example) a chicken has value due to its utility as food, it naturally disappears (because you ate it or it died).
Gold and other precious metals sort of sit in the middle ground as the "next best thing" to almost everything that humans want. So it remains a useful means of preserving and communicating value.
>Are we really just instinctively attracted to shiny metals?
Probably. https://www.desertusa.com/animals/packrats.html
Gold has always had value to humans because it is very non-reactive and doesn't corred, and it was easy to smelt and work with since prehistoric times. It is also one of very few metals that is not boring gray/silver. It therefore has always been part of ornamentation and religion. In last century it became useful due to its great conductivity, and so it's used in semiconductors. If you have a gilded book at home, also gold.
Here's an interesting way to understand it:
https://pricedingold.com
The true value of gold is quite stable over time (since new gold is mined at a slow rate). Fiat currencies are constantly being debased. Hard assets fluctuate up and down relative to gold.
Historically, gold was too expensive to use for everyday transactions (and still is) and most people (who were peasants) would never see it. So it seems like the sort of thing where prices are set by the rich, who can afford it.
Longest lasting mass psychosis... So at point when everything else looks even more irrational it probably is not worst move. At least there will most likely be some real believers you can pawn it off for something...
Scarcity
Things are worth exactly how much someone else is willing to pay for it...
Basically, the chemical composition of the earth's crust isn't going to change any time soon. That means that the supply of gold is going to increase only slowly.
In contrast, Trump has been making noises about wanting to replace Powell as chair of the Fed, because Powell won't dance to Trump's tune. I do not want a world where Trump can determine (even if indirectly) the value of the dollar, or the interest rate, or anything in that vicinity.
So I trust the dollar a lot less than I did six months ago. In contrast, gold doesn't care what Trump's policy is.
>That means that the supply of gold is going to increase only slowly.
https://www.space.com/astronomy/earth/earths-next-mini-moon-...
The problem with this is that if you live in the US and Trump does something that stupid then owning a bunch of gold will not save you, because you still live in this society (assuming you live in the US of course!)
All the Germans who had great gold reserves in 1930 still ended up fighting in WW2. Hell, many of them were Jewish and had that gold stolen and sent to the Swiss for safekeeping by the Nazi state. The danger to their society was not hyperinflation, it was a hostile government sending them to die for stupid reasons, and literally like a hundred people, or fewer, choosing out of utter stupidity and an insane ideology based purely on ignorance, forcing everyone into a bad situation.
There is no safety, of any kind, under authoritarianism. Gold will not save you.
Well, it will save you from inflation. From bullets? Not so much.
Originally there was no such thing as property. Some of the first property we had was animals. That's inconvenient enough thanks to lack of portability, but the bigger issue is atomicity. Metals were the intuitive solution to both problems, they can be cut into convenient denominations and also can be melted back into larger ones.
That useful property was well known (and notably, other currencies such as shells and precious stones lacked this). In addition as others have said, gold was both scarce and had a low melting point. However, other metals had these properties too, and sure enough, some cultures did anchor their currencies on metals other than gold.
We are not "just instinctively attracted to shiny metals". FHN.
If you want to understand what's going on, I strongly recommend reading Principles for Navigating Big Debt Crises by Ray Dalio.
The book is highly researched and explains the pattern we're in, and what we'll see next.
https://www.amazon.com/Principles-Navigating-Big-Debt-Crises...
If you don't mind PDF, you can also get it free from the author here: https://www.principles.com/big-debt-crises
And if you don’t have time to read it Ray was on Odds Lots in the spring and laid out the gist. https://pca.st/episode/c2eae258-c051-4cd1-87f6-0410e2eb926c
For anyone else who read this headline and thought that seemed unremarkable since gold does tend to slowly increase in value year over year meaning it’s almost always at or near its all time high - it’s up 43% over the past year.
Related: Lyn Alden has several good pieces on fiscal dominance. This is one: https://www.lynalden.com/full-steam-ahead-all-aboard-fiscal-...
I like making young bros' heads spin by explaining how little intrinsic value gold actually has.
They all start out with "if the shit comes down, gold will --" and I cut them off by saying "-- still have almost zero intrinsic value."
Can't eat it. Can't burn it. Can't really make shelter or a weapon out of it. Useful for tiny microcircuits, but that's not something the preppers will be doing in Montanam
"Well, it'll always be valuable, because people think --"
Aha, dudebro, now you're in the realm of "perceieved value." Whole different game in the end times...
Explained by weakening USD and the potential for a US/global recession is a Sword of Damocles being plucked at and played with by a mostly unwise and unhelpful regulatory environment.
Is that nominal or inflation-adjusted?
Inflation adjusted chart for the GLD ETF:
https://totalrealreturns.com/s/GLD
(Not quite the same due to the compounding 0.40%/year expense ratio of the ETF, but probably close enough for this conversation.)
The number you are seeing is the (USD) price you would pay for one ounce of gold right now. (Not taking spread into account.)
Considering how our fiscal conservatives are trying to switch the money printer to turbo, I would say it's probably inflationary combined with a lack of confidence in the stock market.
> lack of confidence in the stock market.
Considering most stocks have been equally increasing/at ATH, I’m not sure that’s the reason.
Exactly - when equities, commodities, prices of goods, crypto, .... are all up, this tells us that the real situation is that currency is down.
Or that rich people need to pay more taxes. Cc: Gary's economics @ youtube
That is what he means... Inflation of all assets caused by bad fiscal policy and both deregulation and regulation causing most of the money to only move around in the upper echelons of society
this really can't keep going on forever. the weekly "ATH" and everything going up is like a pressure bomb that keeps getting pressurized more and more each day.
And because this is all assets, the more assets you already have, the more you gain. And the central banks/etc. will make sure the party keeps on going for you.
On average, global reserve currencies last about 100 years [0].
[0] https://www.researchgate.net/figure/Global-reserve-currencie...
Question from experts: I have been itching to buy silver and hodl it for a year or two.. Maybe more..should I buy it? Will there be more consumption in coming years?
Its not about the USD.
It is about certain regimes nearing their end and folks converting assets into something fungible they can use and enjoy while exiled in Geneva, Dubai, Phnom Penh, etc.
As just one example (of many) of why its not about the USD - most global debt is dollar denominated and settled in dollars. Even if they don't reside or transact in the US, most large financial transactions settle (or are hedged) in USD. Again, just one example.
Also, understand export economies like China cannot avoid dollar settlement for goods exported to the US. They can settle in USD and covert to another asset, but only as a secondary step.
I could go on about this, but Carnegie Endowment Prof Michael Pettis explains this and more much better than I can.
Almost a world turned upside down. From what I remember, usually it is when the democrats are in power when this happens.
question is if they're quant easing those gold papers to :)
Good time to remind everybody that the Fed, the US central bank, prices gold at $42.22 for some reason and nobody questions it ever. And all those dignified educated respectable board members and econ PhDs give speeches about science-based market economy, maintaining credibility and staying away from politics while caring about the wellbeing of households and families.
> nobody questions it ever
Seems like anyone who buys or sells gold at any other price is questioning it.
Well, please show me any mainstream finance media that questions it. The Fed has a monthly press conference, I don't think they were asked even once in the last 10 years at least... Most of the buying now is from Asia supposedly.
That's wildly misunderstanding things. The fed doesn't trade, regulate, hold or sell gold. That price you're quoting is for a historical artifact called a Gold Certificate. These things have a value set by law (not by the fed) of 42 and 2/9th dollars. They don't sell them anymore, but if you happen to have one they're required to buy it from you (IIRC) at that rate.
As always, Wikipedia: https://en.wikipedia.org/wiki/Gold_certificate_(United_State...
It's a little bit broader than this. In the Fed there is the so called "statutory price for gold" and it's not limited to gold certificates. Any gold in the Fed would be priced at $42 by law. The fact that they don't technically own any gold and work around the issue only makes it so much more amusing. It only serves to tell people they can fix prices and make outrageous course-correction changes overnight and people will still argue "it's fine and it's legal" afterwards.
https://www.federalreserve.gov/data/intlsumm/current.htm
Again, that's all just conspiracy nonsense. Yes, there are old laws. No, they don't effect macroeconomic policy and to claim they do is silly. This is of a piece with the Trillion Dollar Coin nonsense[1] being hawked in equally silly circles on the other side of the aisle.
Real world economic policy works by virtue of steady hands and rigorously applied norms, not goofball trickery around edge cases of ancient laws.
[1] The idea that the Treasury's statutory authority to mint coinage could be exploited to mint a single illiquid-by-virtue-of-size asset that could then be borrowed against without increasing the debt ceiling.
Yes you are making my point exactly, I just gave you a link to the official federal reserve website that values gold at $42 and you still refer to it as a conspiracy theory. Surely they could have fixed this by now if it was a typo or a conspiracy.
The fact they they kept the price fixed should serve as a reminder they can do this at any time. There is no conspiracy theory, they've literally done this and nobody challenged them and no laws have changed since then (thus the "ancient law" that is somehow still in effect). The sophisticated economists that study "real world economic policy works by virtue of steady hands and rigorously applied norms" can make another "ancient law" any time they want.
Citing the completely-unused ancient law in support of a claim that the fed is somehow "fixing prices" or "making outrageous course corrections overnight" or that they can "make another law any time they want" is the conspiracy. They aren't doing that. And they never have. And you know it. Which is why you're making noise about ancient unused laws.
We're done, this will be my last comment.
*Greed hits all time high (greedprice.org)
When gold goes down is it generosity?
I thought gold being high is a "fear" indicator
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'Greed!' as the answer to all questions is kind of lazy though.
I hear this in housing politics: prices are high because of 'greed!'.
Seems weird that people in San Francisco are so much greedier than people in Houston.
I would take greedy as sort of a constant and try and think about why greedy people are having more or less success in a given place and time.
It's an indicator that they think they'll be able to feed more of their greed with $1 of gold than $1 of something else.
Nothing fundamental about gold that links it to greed, just it's value and return.
So yes, it tells you something more than "Amount Of Greed". And that may well be "Fear of losses (or even just reduced gains) in the market"
I never claimed gold is the fundamental indicator of greed. It's just one of many greed indicators. And greed is at all time high. Including gold.