In 2024, the price of gold has hit new record highs; U.S. stock indices have repeatedly reached new peaks; Bitcoin has set a new all-time high; and global real estate prices (except for commercial real estate and the Chinese market) are still growing at a rapid pace. Most asset classes are appreciating, but that’s only half the story.
When looking at global liquidity, the total money supply has nearly doubled in just 10 years (2014-2024), reaching a record of $106 trillion USD. In just 10 years, central banks and governments have printed an amount of new money equivalent to the entire money supply accumulated over several previous decades combined.
The nominal M2 money supply (which includes cash, short-term deposits, money market funds, certificates of deposit, etc.) has grown at an average rate of 6.5% per year over the past 10 years, while inflation has averaged only 2.5% annually. This further supports the argument that the world is in a phase of “asset inflation.” Much of the new money supply in recent years seems to have been funneled into investment sectors rather than consumption.
While this might appear positive, as goods and services have not seen excessive price hikes that would negatively affect people’s lives, there is a downside. Asset inflation is inflating the value of assets such as real estate, stocks, gold, and Bitcoin, making those who own assets increasingly wealthy. Conversely, those who do not own assets are becoming poorer, to the point where many people, even if they work their whole lives, can no longer afford to own property as they once could.
Given the current levels of average income, asset prices, inflation, and living standards, it’s almost impossible for anyone working a regular job to afford a home, own a single Bitcoin, or have enough gold or a solid stock portfolio to secure retirement.
Whether it’s good or bad, this is how the world’s financial system operates, and there’s little we can do to change it. If you don’t invest, you will fall further behind the rest of the world. If you can’t find investment sectors with exceptional growth, you will never catch up with the wealthy.