Asset Ratio Cycles

Compare assets over decades to find relative value. Everything measured in real money, not bank notes.

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Deep Dive: Understanding This Ratio

Two perspectives on what this chart reveals

The Real Size of the US Economy

GDP / Gold = US GDP (in Federal Reserve Notes) ÷ FRN/Gold exchange rate = GDP measured in money (gold ounces)

This chart shows the actual size of US economic output, measured in money (gold) rather than Federal Reserve Notes whose quantity can be expanded at will.

Gold is money. Federal Reserve Notes are bank notes whose value fluctuates.

When GDP/Gold is HIGH: The US economy is genuinely large and productive. One year of American output equals many ounces of money.

When GDP/Gold is LOW: The US economy is smaller than the FRN-denominated numbers suggest. Despite nominal “growth,” actual productive capacity has shrunk when measured honestly.

When GDP/Gold is FALLING: The FRN-denominated GDP is an illusion. The Federal Reserve is expanding the note supply, inflating nominal figures while real output stagnates.

The Conventional View

Federal Reserve Notes as money, gold as commodity

Most people treat FRN (dollars) as money and gold as just another asset. From this view, GDP growth of 3-5% annually represents real expansion.

What they believe:

Nominal GDP grows every year—economy is expanding
Savings earn interest and compound over time
The Fed manages inflation to ~2% per year
Gold is volatile, pays no yield, a “barbarous relic”

The blind spot: If the Fed issues $5 trillion in new notes, nominal GDP rises even if no additional goods are produced. A 5% raise feels like progress even if prices rose 7%. When FRN is the measuring stick, how would you notice the stick is shrinking?

The Reality

Gold is money, FRN are circulating bank notes

Gold is money—a fixed measuring stick that cannot be printed. Federal Reserve Notes are bank notes whose value is determined by how much money (gold) they can purchase.

What this chart reveals:

The real size of US productive capacity, measured honestly
How much of “GDP growth” is real vs. monetary illusion
Whether the economy is actually growing or just the note supply
The invisible dilution of wages, savings, and pensions

Key insight: Gold doesn't “go up”—the FRN goes down. When the FRN/gold exchange rate rises from 300 to 3,000, the note lost 90% of its value. This chart measures the economy with an honest yardstick.

Same Data, Different Interpretation

Event	Conventional View	Reality (Gold as Money)
Nominal GDP rises 5%	“Economy is growing”	Check the chart—did real output grow?
FRN/Gold rate rises 20%	“Gold is in a bubble”	FRN lost 20% of its value
GDP/Gold is falling	“Temporary distortion”	Real economy is contracting
GDP/Gold is rising	“System working”	Real economy is expanding

Reading the Chart

HIGH GDP/Gold: The US economy is genuinely large and productive. American output, measured in money, is substantial. Real innovation, efficiency gains, and genuine wealth creation.

LOW GDP/Gold: The economy is smaller than the FRN-denominated numbers suggest. Despite impressive nominal figures, actual productive capacity—measured in money—is smaller than it appears. The gap represents monetary illusion.

FALLING GDP/Gold: This is the critical signal. Despite nominal “growth,” the real economy is contracting. The Federal Reserve is expanding the note supply faster than the economy is growing, creating the illusion of prosperity.

This chart answers a simple question: Is the US economy actually growing, or is the Federal Reserve just issuing more notes?