SP500 versus Gold chart

To understand the basics. The peak of the markets purchasing power was in 2000. When gold was $275 oz and the SP500 was at 1587. You’ll notice not only have we been in a consistent free fall in purchasing power, but we’ve actually fallen below the March 2009 lows of the SP500 when its NOMINAL value was 666. The rally we’ve experienced in the Nominal value from March 2009 to April 2010, the interim high which I discussed on Radio/TV/Print in April 2010 as well as my book which was written in early 2009, has held true and now we are below lows and falling faster and faster.

To understand the difference between Nominal and inflation-adjusted, Nominal is just the pure number. For instance the SP500 was 1580 in October 2007 and today it is around 1300. In nominal terms it as fallen about 20%. Looking at the chart you’ll see that in inflation-adjusted terms we’ve already fallen about 65% in purchasing power since then and there is no end in sight.

Not understanding that you need to keep up with inflation and not nominal terms is vital for long term financial stability in ones retirement. $5000 per month today might seem like a great retirement pension, but if it does not grow to $10,000 per month over the next 10 years, you’ll have to adjust your standard of living down.

Welcome to the new reality of living with a Federal Reserve which feels massive inflation in an environment of stagnant wages is a good solution. Actually they really don’t care, their only concern is dealing with the massive debts of governments around the world and the best way to deal with it is to inflate the debt away. If I owe $1 5Trillion like the US and can pay it back with a role of toilet paper