The price of
As measured in
What is this?
📈 This chart shows 🟢the absolutely price (like the price you see in the real world) vs. 🔴the inflation-adjusted price of the stock market (or another market indicator you select). You can inflation-adjust it by the U.S.-dollar money supply M1, M2 or MB (the money base), CPI, Big Mac, Gold, BTC, ETH or many other adjusters.
📉 Combining data sets we can adjust the stock market, or home prices, or food prices, for inflation and find that even if it looks like stock markets and home prices are going up, they may actually be going down in real value.
Explain like I'm 5 years old?
💣 TL;DR your money is getting worth less over time, and recently faster than before and this site provides evidence for it.
👶 Let's start: select [S&P500] and [M3: All Money] in [all time] on the top of this page. S&P500 is the most important stock market index of 500 big American companies. M3 is all US money in circulation. Make sure [S&P500], [M3], and [S&P500 / M3] is enabled in the top left legend.
The 🟢green line is the actual price of the S&P500 throughout history up to today. The 🔵blue line is the M3 money in circulation. The 🔴red line is the S&P500 divided by the M3.
The decrease in real value is visible in the chart at specific moments. Look at the 🔴red line in 2008, when there was the Financial Crisis and at 2020 when the COVID-19 Pandemic started. That's moments when the Federal Reserve and other central banks started printing lots of money from thin air. You don't see that in the 🟢green line as that's the official prices and it looks like prices have never been so high. But if you look at the 🔴red line the S&P500 has barely recovered since 2007. That doesn't mean it's some conspiracy. It just means the nominal/official prices of stock markets and stocks don't tell the whole story of the economy and if it is actually growing or not.
There's more indicators you can adjust by. Try a few by clicking on the select box top left and changing it. You can also change what you'd like to adjust by, by clicking the right select box. And you can change the time view with the third box. Happy researching!
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What data you use?
🇺🇸 S&P500, Dow Jones (DJI) and NASDAQ are the most common stock market indices, representing the performance of the United States, but in a way are so important they're quite benchmark of the West and the entire globe. Investors use these indices (plural of index) as a benchmark of the overall market conditions. The NASDAQ index especially is heavily weighted towards tech.
🇨🇳 China SSE is the Shanghai Stock Exchange Composite Index, a.k.a. the main stock market of China. It's converted to USD with the CNY:USD rate of the historical date of each data point.
🌏 Asia is the MSCI Asia (ex-Japan) index (in USD), which is a benchmark of over 1,000+ of the most important public companies all over Asia.
💰 US GDP is the gross domestic product of the U.S..
💰 Avg US Income is the annual median U.S. household income.
🏆 Gold price (aka XAU) is from IndexMundi.
🥇 BTC/ETH and $TSLA prices are from Google Finance.
🛒 CPI is the consumer price index, a basket of goods (like milk, bread, meat etc.) that's commonly used as the official inflation number. It's heavily criticized though for underreporting actual inflation.
🍔 Big Mac measures the average price of a Big Mac at McDonald's in the United States and is famously used in the Economist's Big Mac Index to measure inflation.
🥩 Food represents the Food Price Index (FPI) by the United Nations, a measure of the international prices of a basket of 5 food commodities which are: sugar, cereals, vegetable oils, meat and dairy.
🥩 Food + Avg US Home is a combination I made of the (global) Food Price Index (FPI) and the median U.S. single-family home price. Used as a benchmark of how much it costs to live. Caveat here is that while the food prices are worldwide, the home price is U.S.
👩💻 Pop. is the world population from World Bank. Population is in billions.
🖨 As the Federal Reserve is printing money, it's expected that the real value of each US dollar decreases (called inflation). To estimate how much money is printed, I use the Fed's M1, M2 and MB money supply data. M1 is a measure of the money supply that includes physical currency and bank accounts. M2 is the same but also includes savings accounts (heavily simplified). The money base (MB) is the total amount of a currency that is either in general circulation in the hands of the public or in the commercial bank deposits held in the central bank's reserves. MB, M1 and M2 is in billions.
❌ Caveats: this isn't financial advice and MB, M1 and M2 are limited measures of the money supply. That there's growing inflation due to printing of money I think we can all agree on though. I hope this site helps to visualize this a bit.
🧨 "The end game of rampant inflation is always war and/or revolution. Show me a regime change, and I will show you inflation. When you work your ass off only to stand still or get poorer, any “ism” that promises affordable food and shelter for the unwashed masses will reign supreme. If you are starving to death, nothing else matters except feeding your family. The symptoms of inflation are populism, social strife, food riots, high and rising financial asset prices, and income inequality. (..) Invest wisely and you can maintain or increase your standard of life against the rising fiat cost of energy. Invest poorly and the road to serfdom is real. You will find yourself working harder for a declining standard of living, and your fiat earnings and assets will not be able to keep up with the rising fiat cost of energy." — Arthur Hayes
💬 Hacker News has opinions about this site
✨ Last updated: 2021-06-28.
🧠 The database behind this is an open Google Sheet you can view. If you see any problems/bugs/errors with it, please let me know on Twitter below!