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U.S. Money Supply vs Stocks & Gold
When the pandemic shocked markets in 2020, the Fed quickly printed trillions of dollars (while purchasing bonds to support corporations and the government). As the U.S central bank’s balance sheet surged, so did the broad money supply in close parallel with stock markets and gold prices.
Unlike the Fed’s intervention during the Great Financial Crisis — plus a similarly unprecedented fiscal expansion — consumer prices spiked at the fastest pace since the 1970’s. Since 2019 (and even as far back as 1971 when the U.S. broke the dollar’s tie to gold), both gold and especially the S&P 500 have been reliable “stores of value.”
Since around 1970, both gold and the S&P 500 (which looks even more impressive accounting for dividends) are up nearly 7,000% versus a dollar designed to lose value every year. Granted there have also been several harrowing drawdowns for both the S&P 500 and gold. Meanwhile, consumer prices are up *only* 700% since the dollar lost its golden luster.
