FEBRUARY 24
Assets Rise, Workers Chase
What If the Asset Is Not Rising – Your Money Is Falling?
The Signal
Sometimes the asset is not racing ahead. The money measuring it is falling behind.
The Reading
Imagine a house that has not doubled in size. Same walls. Same land. Yet years later it may take far more dollars to buy it. Most people say, “The house went up.” A price is simply how many units of money are needed to buy something. If those units lose purchasing power, more are needed to buy the same scarce thing.
January taught us why scarcity matters. Gold is difficult to create quickly. Land cannot be printed. Businesses take time and capital to build. Compare that with today’s monetary system. When a bank approves a loan, it can create new money directly in the borrower’s account. It was not taken from another customer; it was newly created. When more spending power competes for scarce houses, land and other assets, prices can be pushed higher. Not every asset rises, and money creation is not the only reason prices change. But when money loses purchasing power, scarce assets can require more units to buy.
Now look at the worker. Their wage, savings and house deposit are measured in those same units. They work overtime. Skip the holiday. Keep the old car. Save another ten thousand dollars. Then the asset they are chasing rises by more than they saved.
They do what they were told: work, save, be patient. Their bank balance grows. Their pay may have increased. Yet the goal is moving further away. They see the asset running away from them. What if the money they are saving is losing ground?
What if the money in your pocket is moving backwards?
First Principles
Prices are measured in units of money.
When money loses purchasing power, more units may be needed to buy scarce assets.
If assets reprice faster than wages and savings, workers can fall behind while earning more dollars.
Today’s Challenge
Choose something you would like to own: a home, land, gold or a productive business.
Imagine your savings rise by 5 per cent, but its price rises by 10 per cent.
Your bank balance is larger.
Ask yourself:
Are you actually richer relative to the thing you are trying to buy?
Tomorrow’s Signal
The Wealth Gap Machine