2024: The Year Where Every Asset Performs…


In an era of Quantitative Tightening and Rising Interest Rates, conventional thinking would lead one to believe that a risk-off environment is in play for investors… so why are all major asset classes performing positive returns in 2024?

Damning Inflation Statistics Shatter Rich Illusions

The Federal Reserve finds itself in a precarious predicament in 2024 as it grapples with the implications of soaring inflation across various asset classes. Traditional correlations have been shattered, blurring the lines between genuine demand and the erosion of purchasing power. This paper explores the alarming inflation statistics and the Fed’s commitment to the inflation route, highlighting the fundamental truth that in a world where everything is going up, individuals are not getting richer; rather, their currency is steadily losing its value.

Over 90% of the US Dollars Created Were Printed Since 2020

Rising Inflation and Asset Classes:

In 2024, virtually all asset classes have experienced significant appreciation, defying traditional correlations. Data and graphs reveal a staggering surge in prices across the board, encompassing safe-haven commodities and speculative cryptocurrencies alike. This phenomenon not only underscores the breadth of inflationary pressures but also challenges conventional economic models that fail to fully capture the complexities of today’s market dynamics.

YTD Returns on BTC, S&P, Gold & US10Y
YTD Returns on Stocks and Bonds

The Fed’s Dilemma

Amidst soaring inflation, the Federal Reserve has unwaveringly committed to pursuing an inflationary route, irrespective of the consequences for the U.S. dollar. Despite implementing higher interest rates and embarking on quantitative tightening measures, the Fed’s efforts have failed to tame inflationary pressures, raising concerns about the efficacy of its policies in addressing the root causes of the current economic turmoil.

Monetary Base Showing QT Has Ended Despite what the Fed is Telling the Public

Erosion of Purchasing Power

The fundamental premise underlying the surge in asset prices is the erosion of the purchasing power of the U.S. dollar. As prices spiral upward, individuals may perceive a false sense of prosperity; however, in reality, their wealth remains stagnant or diminishes in real terms. In essence, the apparent wealth accumulation is merely a reflection of the depreciating value of the currency, rather than genuine economic growth or prosperity.

Housing Prices Relative to Bitcoin and Gold Overtime

Conclusion

The confluence of unprecedented inflationary pressures and the Federal Reserve’s steadfast commitment to an inflationary route underscores the magnitude of the challenges facing the U.S. economy in 2024. As asset prices soar across various classes, it becomes increasingly evident that the underlying cause is the erosion of the purchasing power of the U.S. dollar. In this context, it is imperative for policymakers to reassess their strategies and adopt measures that address the root causes of inflation, lest the economy spiral further into turmoil. Ultimately, in a world where everything is rising, it is not a sign of prosperity, but rather a stark reminder of the depreciating value of the currency.

Related Articles

Responses

image-popup
image-icon
UPGRADE YOUR SUBSCRIPTION
UNLOCK THIS CONTENT & MORE WITH OUR FREE 7 DAY TRIAL
START MY FREE TRIAL
*Trial requires a credit or debit card and gives you 7 days free access to all features of our platform, then $250.00AUD per month until cancelled. Cancel any time.