The Great Wealth Divide: Own The Right Assets... Or Fall Behind

Authored by Kelly Caro via Doug Casey's International Man,

Let's start with three assumptions that I consider rock-solid.

1. Government spending will continue to grow.

2. The government will need more currency debasement to finance that spending.

3. Wages will not keep up.

If I had to distill this into a single point, it would be:

You can't outrun the money printer by working harder. You need to own the right assets or fall behind.

Owning inflation-resistant assets matters more than income, though income still matters.

Let's zoom out and look at the big picture.

The following chart tracks gold, the S&P 500, the money supply (M2), median housing prices, wages, and the CPI over the past 62 years.

According to the rigged CPI, prices rose 977%, while wages rose 1,179%. The official numbers claim that wages have outpaced inflation since 1964.

Yet anyone with eyes to see and a functioning brain knows that claim is false. Reality lies in a different ballpark.

The government uses the CPI as misleading propaganda to conceal its atrocious currency debasement.

The growth in the money supply provides a better measure of the damage. It grew 5,775% over the same period.

In other words, wages kept pace with about 20% of the currency debasement. Relative to the money supply, wages lost about 80% of their value.

To me, this better reflects reality and provides a sound benchmark and hurdle rate.

If your wealth does not grow at least as fast as the money supply, you are losing ground and heading down the road to serfdom.

Median housing prices rose 2,070%. Housing outpaced wages but failed to keep pace with currency debasement.

Gold and the S&P 500 outran currency debasement.

Now let's look at the same chart starting in 1999.

This chart tells a similar story.

According to the CPI, prices doubled, rising 100%.

Wages rose 140%, outpacing the government's official inflation measure.

Housing rose 156%, beating wages but falling far short of the 427% increase in the money supply.

The money supply has grown to more than five times its 1999 level. That is why $1 million does not buy what it once did.

The S&P 500 rose 523%, with currency debasement driving much of that increase.

Gold won, rising 1,549%.

These charts illustrate the main implication of the currency debasement megatrend:

You can't outrun the money printer by working harder. You need to own the right assets or get left behind.

Housing has not kept pace, and I do not expect it to.

You need to own gold and the right stocks if you want to outpace currency debasement.

Remember, this process compounds. Year after year, asset prices and capital gains grow faster than wages. Over time, this dynamic has created a deep divide between asset owners and wage earners. I expect that divide to widen.

In this age of ever-increasing currency debasement, your top financial priority should be to join the asset-owning class, where your wealth grows and compounds with currency debasement. Otherwise, you remain a wage earner chasing fiat dollars that lose value each year.

In the fiat system, owning assets pays better than selling your labor.

And it's not even close.

The government can hide the effects of currency debasement behind manipulated statistics such as the CPI. But gold acts as a mirror of truth. In time, gold reflects the damage in its price.

Ever-increasing currency debasement has defined the financial system since the creation of the Federal Reserve 113 years ago.

It began on a small scale that few people noticed, then grew with each passing year.

The years 1933 and 1971 were inflection points. So were 2008 and 2020. Each episode ratcheted currency debasement higher. The long-term trend points toward more currency debasement, not less.

In this environment, gold is the clear winner.

Not only did its price outperform, but it did so with much less risk than stocks. Gold is money. It carries no company-specific or equity risk.

Gold is the best risk-adjusted asset to hold over the long term. That is why it should anchor any plan to outrun inflation.

Currency debasement will keep widening the divide between asset owners and wage earners. You can own assets that benefit from it - or watch it erode the rewards of a lifetime of work.