My Stocks Are Up, But Am I Wealthier?
Sorry, it may just be an illusion.
While stock prices may climb in nominal dollar terms, the real (inflation-adjusted) returns may be lower or may even be negative.
People tend to focus on the rising dollar value of their portfolios without fully accounting for the simultaneous decrease in the purchasing power of each dollar.
Money Printing Gone Too Far
Sophisticated individuals, families, and institutions recognize that record-high global debt levels accompanied by historically declining GDP growth rates represent a fractured financial system, whose global debt-to-income ratio is currently 3 to 1.
Such a disconnect between rising debt levels and stagnating GDP can only be sustained by equally record-high levels of global fiat currency creation (i.e., Quantitative Easing, or “money printing”).
Masking Reality with Fake Paper Money
Fabricated paper/electronic money rather than actual income from robust trade, manufacturing, and sound corporate and political governance has been abusively used to mask these otherwise broken economic realities.
Global policy makers are effectively buying their own sovereign and corporate debt with money created from nothing.
A Dangerous Game
This is a dangerous game played throughout history, and one which, without exception, always ends badly for those who lack the foresight to hold physical gold and silver as insurance against the declining purchasing power of their respective currency.
Too many pundits focus on a currency’s “relative” strength yet overlook the real question—namely its inherent purchasing power. Using the Euro and US Dollar as key examples, the decline of their purchasing power as measured against gold is not only self-evident, but
increasing.
Extreme Currency Creation Results in Extreme Currency Devaluation
The staggering level of fiat money creation and zero-to-negative interest rate policies (effectively using debt to solve a debt crisis) that emerged after the Great Financial Crisis of 2008 is now beyond dispute. The direct impact such policies have had upon declining global currencies is, again, both self-evident and deeply concerning, despite interim efforts (beginning in 2022) by the US Fed to raise rates and strengthen the USD.
These policies (along with a weaponized USD following the Ukraine War) have only encouraged the BRICS and numerous other nations to slowly but steadily de-dollarize in a global financial and currency setting increasingly marked by competing trade and currency blocks.
In the end, of course, ALL fiat currencies, throughout history, ultimately go to zero, which explains why central banks, since 2010, have been net-buyers of gold. In 2022, central banks in general, and eastern central banks in particular, bought physical gold at levels never seen before in the five decades of central bank gold reporting. The implications of this inevitable, as well as predictable, trend are beyond dispute.
