by stayyfr0styy
I’ve been ignorant and regarded for too long about money. Dad always told me that the stock market averages 7-8% return, and if inflation is only 2-4%, then you are making 4-5% of real value over time.
Well he was wrong, and the government and state run media have been working together to lie to the people. The consumer price index is not a real measure if inflation, it is a propaganda index.
Here’s my evidence:
According to historical analysis of M2 money supply, in 1970, the dollar had a total supply of about $589billion. As of today, the total supply of M2 dollars is roughly $20.8 trillion! See below:
As shown above, the average rate of increase of new M2 money per year is 7.1%.
So you’re probably wondering how it’s possible that the dollar supply has been expanding at over 7% for the past 52 years, but inflation has only been 3% on average. The answer is that CPI data is designed to underreport inflation.
If the above is true about the 7.1% average annual increase in M2, then we should expect to see some data that reflects this, correct? See below for the average rate of appreciation of Gold, S&P500, and average house price since 1970:
It must be a coincidence that the average annual rate of appreciation of gold, stocks, and average houses has appreciated at roughly the same rate that the supply of money has increased on average per year. Remember, that prior to 1970, the stock market was fairly flat against the dollar, representing that the value of the dollar to stocks remained fairly stable. And same for gold of course, since this was gold standard era.
Now before people accuse me of cherry picking, there is a very specific reason I chose the year 1970. This was the last year of the gold standard. The following year, Nixon depegged the dollar from gold, effectively declaring bankruptcy against all the debt borrowed against gold and that America had no intent of paying it back and will instead proceed with a fiat standard monetary policy.
There has of course been periods where houses would rise and fall, gold would rise and fall, and stocks would rise and fall. But on average over 52 years, they all were within a 1% difference of average rate of appreciation compared to the average increase in monetary policy.
In just the recent years from 3/2020 to 4/2022, the money supply increased 35% from $16trillion dollars in 2020 to 21.6trillion dollars in 2022. But they only reported 5-7% inflation over that period, which is of course a lie.
What does this mean for me? It means that dad was wrong. Making a 7-8% return in the stock market does not translate to gaining any real value, it translates into maintaining your value while the dollar supply also increases at 7.1% per year.
The consequences of a soft monetary standard means that the government can create money as much as they want, therefore robbing from anyone who is holding it as savings.
TLDR; Actual Inflation has been 7.1% over the past 50 years
Update: Fun fact, average cheeseburger price in 1970 was $0.18. In 2021, average cheeseburger price is $7.87.
Gold was $38 per ounce in 1970, so one ounce of gold back then could buy you roughly 211 average cheeseburgers.
In 2021, gold was 1750 per ounce. So one ounce of gold in 2021 could buy you roughly 220 cheeseburgers.
Gold has maintained its buying power against cheeseburgers almost perfectly over 52 years.