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Jose,
This is indeed a good PROXY to measure strength in
economy and "real" wealth.
Truth is goverments have done everything they could so
at to cover the real picture. The name of the game is:
Debt. This is the currency for the new century. Not
having debt means you cannot exist. And yes, I
completely agree with you that currencies are fiat.
All. Every sunrise, an invisible "machine" adds wealth
to the capital centers, in the form of interest. To me
it looks like this "virtual" wealth has surpassed in
magnitude the true wealth of the planet. And that is a
"crital condition" as chaos-oriented scolars would put
it.
Your effort is genuinely clever, although
statistitians may argue that such analysis would
further need to be refined with some "correlation" and
"autocorrelation" filters. And even then, it would
just be a statistical model, open to interpretation
and propability.
Thank for your idea.
AlexAtreides
P.S.: I trade debt for a living. We call it "fixed
income" (sic). I am certified asset manager.
--- Jose Silva <josesilva22@xxxxxxxxx> wrote:
> So, the markets are in a raging bull mode, and
> stories abound of +10%
> profits for this year. Time to put things into some
> perspective.
>
> US$ purchasing power, as measured against a basket
> of commodities:
>
> since Jan 1st 2006: -11.5% (!)
> since Jan 1st 2000: -49.2%
> annualized: -7.9%pa
>
>
> From:
> http://www.metastocktools.com/#USindex
>
> The US dollar is universally considered an absolute
> yardstick - most
> of the world's wealth is measured against it.
>
> Yet, the mighty US$ is a fiat currency, a
> paper-based measurement of
> wealth with nothing but good faith to back its
> perceived value. The
> US$ is only worth as much as any other promissory
> note, and its worth
> is being continually diluted and devalued as the US
> Federal Reserve
> Bank continues to print more notes at an alarmingly
> accelerating pace.
>
> The true value of the US$ cannot be measured against
> other currencies,
> as these are also likely to originate from
> overworked government
> printing presses. A true and objective measurement
> of the US$'s real
> value would be its purchasing power at any given
> time.
>
> The US$ value index above is basically a measurement
> of the
> greenback's (decreasing) purchasing power. The index
> measure the US$'s
> rate of change (RoC) against a small but essential
> basket of
> commodities:
>
> Gold: putting aside temporary fluctuations, it is as
> close to an
> absolute and constant measurement of wealth as can
> be found. An ounce
> of gold took as many working hours to purchase 80
> years ago, as it
> does today with an average wage.
>
> Oil: currently a most essential source of energy -
> civilization as we
> know it would cease to exist without it.
>
> Wheat: one of the major sources of food for an
> increasingly hungry
> world.
>
> US$ value index:
> (RoC(US$/Gold)+RoC(US$/Oil)+RoC(US$/Wheat))/3
>
>
>
> So, what does the US$ value index mean in real
> terms?
>
> � Since the start of year 2000, the US$'s
purchasing
> power has halved.
> $1,000 saved in Jan 2000, now buys around $500 worth
> of goods.
>
> � US's real inflation is being massively
> under-reported, and in
> reality is closer to 8%pa.
>
> � The US stock market's true worth is much lower
> than generally
> perceived by the public.
>
> The bottom line is that storing one's wealth in US$
> (or any other
> paper currency) is a recipe for diminishing returns.
>
> Keep an eye on the US$ value index, for a true
> measure of the world's
> default currency and all that is measured against
> it.
>
>
> jose '-)
> http://www.metastocktools.com/#USindex
>
>
>
>
>
>
>
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