The stock market is constantly hitting all-time highs and everyone is feeling rich! You can see it in your retirement accounts and that same feeling goes for anyone who owns a house and see’s the “value” growing exponentially. The illusion of wealth is a direct result of a growing monetary supply. The flip side of this is everyone who doesn’t own assets such as a house or stocks are getting poorer. This is called income inequality aka “the rich get richer, and the poor get poorer.” The people who don’t own assets are falling further and further behind. The cost of a house is becoming unobtainable to most. This leads to an increase in crime, social unrest, homelessness, depression/suicide, you name it. THE ROOT OF THE PROBLEM IS THE PRINTING OF MONEY. LET’S DIG IN.
It’s all about math and scarcity. If the economy has $100 and you have $1 you have 1% of the total purchasing power. If we now double the money in the economy, $200 and you still have $1, your purchasing power has been reduced to 0.5% through no fault of your own. What happens to your purchasing power when they print trillions? If you’re wage doesn’t keep up with the money printer you are falling behind. It’s that simple.
Now let’s introduce a scarce asset like a stock or a house. There are a lot of houses out there but not an unlimited supply. To make this example simple we will say there are 100 houses. If the economy has $1,000 we could say each house costs $1 which allows room for other goods to be purchased. If we double the supply of money to $2,000 then we could conceive each house now costs $2. An economy with $4,000 now has a house costing $4. The value of each house isn’t growing but the cost is through the printing of money. You need more dollars to buy the same good.
The same goes for the stock market. More stocks can be issued for a company but it doesn’t happen often which gives stocks an element of scarcity. The S&P500 is an index that closely tracks 500 of the the largest corporations in the US. If we use the dollar as our measuring sticks the index is at all-time highs. This is because we have an infinite amount of dollars chasing a limited supply of stocks.
What happens if we denominate the S&P500 in gold? Something that also has an element of scarcity to it. Something that isn’t being created out of thin air. Take a look… it’s on par with levels from the 60s. Makes you question value.
Gold is old and antiquated so guess what happens when we value the S&P500 in Bitcoin, an absolutely scarce digital superior form of money. Take a look!
Conclusion
Money that has an element of scarcity to it allows for honest pricing of goods and services. Once you start manipulating the amount of money in the system you start to skew everyone’s perception of price. Price is the coordinator for all economic activity and without a constant money supply we cannot expect a stable economy.
The stock market is only hitting new all-time highs because we are manipulating the money with which we value it in. Everything around us is becoming more expensive and it is a direct result of debasing the currency (printing money). This would be fine if our wages were keeping up 1:1 with the cost of goods but they are not. Take a look at the chart below and it is pretty obvious our wages are not keeping up.
It’s simple, things are getting cheaper in Bitcoin and more expensive in dollars. That being said, where do you want to store your wealth? Start using Bitcoin as your unit of account and protect your purchasing power.
FIX THE MONEY, FIX THE WORLD.
Charts provided by macrotrends.net, inflationchart.com, and wtfhappenedin1971.com.