Investors once knew: Focusing on assets without understanding monetary matters can get you into trouble. They have since forgotten this. Ironically, then, there’s great value in remembering it. As “Vermont Ruminator”, Humphrey B. Neill, wrote in The Art of Contrary Thinking:
[Money] is a study in itself and one which still confuses the great minds of the world...
...because monetary problems are not comprehended by the public or by the average businessman, “money management” will continually cross up public opinions concerning economic trends...
...If you make it a point to become posted on some of the more common practices of monetary management you will …be able to discern trends that are opposite to those commonly discussed...
This addogram [4] delves into the evolution of the two most prominent reserve currencies of the past 350 years: The pound sterling and the dollar.
It features visualizations of a collection of extremely rare (if not entirely unique) data-sets. The Bank of England’s assets and liabilities since Robert Peel’s Bank Act of 1844 (monthly). And the Federal Reserve System’s assets and liabilities since shortly after its creation (weekly). The yield, equity index and gold price section goes back as far as 1840. This pairing of comprehensive monetary and asset price data gives the addogram an intensely practical feel.
Click chart below for huge version...
[5]
Click here [6] for zoomable super hi-res version
Put this on your wall and you’ll soon be operating from a 400-year context of price and monetary history.
Chart courtesy of Addogram [4]