Money, Gold, and Time – Fat Tail Daily

‘By the sweat of your face you shall eat bread, till you return to the ground, for out of it you were taken; for you are dust, and to dust you shall return.’

Genesis, 3:19

The doctrine in philosophy is known as ‘eternal return.’ Everything goes back whence it comes. For us, it is our new Law of Conservation of Value. It is why — despite the evidence of our own eyes — we put the growth in value of the entire US stock market for the last 100 years…at zero.

Dear reader, we are ploughing the almost-virgin earth…at least it is virgin enough. Besides, a well brought up young man knows better than to ask.

But let us begin by looking at the news:

The dots don’t connect. Mr. Trump and Mr. Musk…are they really on the same team? A real WTF moment came on Tuesday. The Hill:

‘Musk on Ron Paul as Fed chair: ‘Great idea’

‘Elon Musk in a post on his social platform X appeared to back conservative commentator Charlie Kirk’s suggestion that former Rep. Ron Paul (Texas) replace Jerome Powell as chair of the Federal Reserve.

‘In a reply to Sen. Mike Lee (R-Utah) on X, Musk wrote “that would be amazing” when Lee said he would like to see Paul as chair. Lee replied: “Ron Paul for Fed Chair!”’

Makes no sense. Trump is a big spender… big borrower… big speculator… and one of the biggest beneficiaries of the Fed’s policies over the last 30 years. He’s a ‘low interest’ guy. His real estate empire was built on low interest rates. Ron Paul — a ‘hard money’ guy — is the last person he would want at the head of the Fed.

What’s going on? Who’s in charge?

Is Mr. Trump just distracting the world with outrageous proposals while Elon Musk and his musketeers take a chainsaw to the federal government? The Scotsman:

‘How Donald Trump is making it clear the world faces four years of “constant chaos”

‘After just three weeks in office, Donald Trump has spent much of the time almost casually throwing the world into turmoil

‘“This is the next four years. Shifting goalposts and constant chaos, putting our economy at risk,” wrote centre-right Canadian politician Doug Ford, after Donald Trump mentioned he would impose 25 per cent tariffs on “any steel coming into the United States” while travelling to watch the American football Super Bowl.

‘Meanwhile, the people of Gaza learned, via a Fox News interview, that they “wouldn’t” have a right to return to their homes under Trump’s plan to “buy and own” the territory, remove its entire population and rehouse them “a little bit away from where they are”. It’s not quite clear who will be living in Trump’s “Riviera of the Middle East”, but it won’t be them.’

Or is Musk the real Bozo… leading his youth brigades like the Red Guards during the Cultural Revolution in China, causing bedlam everywhere they go… while that wily old Trumpster consolidates his own power? The Daily Beast:

‘Edward Coristine, 19, [known as ‘Big Balls’ on the internet] is now works as a “senior adviser” in the State Department’s Bureau of Diplomatic Technology, The Washington Post reported. Musk and others in MAGA have defended the youth of the DOGE team, claiming the whiz kids’ ages should not disqualify them from doing good work.’

MuskWatch.com adds detail:

‘In early 2021, Corisitine, then 16, activated the tesla.sexy website. An analysis of URL traffic to tesla.sexy between April 2021 and September 2021 shows that numerous noxious URLs redirected to Coristine’s site, including, “children-sex.party,” “child-porn.store,” “kkk-is-cool.club,” “nigga.rentals,” “nigga-sex.download,” “owns-a-slave.shop,” “raping-women.club,” “ketamine-rape.date,” “rape.business,” and “rapes-wo.men.” Internet archives of the URLs show they redirected traffic to tesla.sexy but any content they may have linked to has disappeared.’

Meanwhile, in all the disorienting swirl of dust…somewhere betwixt Heaven and Hell… gold shines more brightly than ever. It closed yesterday at $2,914 an ounce.

Which brings us back to values. Gold is inert…as brain-dead as a Congressman. How could it be ‘worth’ more? Or, is it just goin’ ‘roun’ de track…in an eternal return?

In 1925, the average house sold for $6,000. Today, it’s $510,000. Whoa…that’s an 85-times increase. But in 1925, you could buy an average house for 300 ounces of gold. Today, it will take only 175 ounces. In gold terms, the price of a house has fallen 41%.

Stocks, meanwhile, began the year at 120 on the Dow. Today, they’re over 44,000. That’s a 366-times increase…in dollars. But in gold, the stock market was worth six ounces of gold in 1925. Now, it’s worth 16.

Let’s look at vehicles. Ford launched its Model TT truck in 1925 at $505. Today, the workhorse Ford F-150 is priced around $42,000 – an 83-times increase. But in gold terms, the price fell from 25 ounces to just 14.

Sticking with gold, prices for ‘things’ have generally gone down. But not prices for stocks, which are up about two and a half times.

On the evidence, you were better off in gold than dollars…and best served in stocks.

But wait…a more serious kvetch:

‘You can’t compare a car from 1925 to one from 2025’, comes the objection from George Gilder and the ‘time prices’ set.

‘Of course, cars are more expensive’, they say. ‘You get a lot more for your money today than you did back then.’

Hmmm…

Tomorrow, we’ll look at why that objection is faulty… and how to ‘connect the dots’ on so many conflicting numbers. Some numbers are more real than others.

Stay tuned…

Regards,

Bill Bonner,
For Fat Tail Daily

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.