Nothing Stops This Train
Money is a Melting Ice Cube 🧊
TL;DR: You think your portfolio is going up. In reality, the measuring stick is just getting shorter. Here is why assets hitting “All-Time Highs” is often a warning sign, not a celebration.
This is a companion piece to Everything is a Ponzi Scheme. Read that one if you want the full picture.
I was five years old, clutching a cold 20-cent coin at my local Italian Eiscafé. I can still smell it – waffle cones and cinnamon. That single coin bought me a scoop of cinnamon ice cream (pure magic).
Today? That same scoop is over 2 €. A tenfold leap.
Time is relentless, sure. But inflation isn’t just “time.” It is a sly pickpocket standing right behind you.
But first, look at the crime scene:
BREAKING: Assets aren’t winning, money’s loosing.
Beat the Denominator
Here’s what central banks hope you never figure out.
Value is a fraction. Top number (Numerator): The price of the asset. Bottom number (Denominator): The value of the currency.
When the currency –the denominator– collapses, the price of the asset –the numerator– looks like it’s mooning.
You stare at your brokerage account, up 30% in two years. Your brain says genius. The denominator says sucker. Welcome to the shrinking ruler problem – where everything looks like growth because the measuring stick keeps getting shorter.
It’s less “beluga caviar on a yacht” and more “struggling to afford brand-name tuna.”
Stocks, real estate, and even croissants (the true golden ratio) have shot up. But is it growth? Or is it just the currency pulling a fast one?
When a central bank prints money like it’s a hobby, everything priced in that currency climbs. Your stocks aren’t more productive. Your apartment isn’t better insulated. Your money is just shrinking.
Think of it like a ruler. If you shrink the inches, the table looks “longer.” But the table hasn’t grown. The ruler is just lying to you.
Need a laugh to cope? This clip captures the inflation circus perfectly:
Inflation: The Hidden Tax
A weaker currency doesn’t just jack up the price of your imported iPhone – it poisons the well.
For countries hooked on imported oil, food, or tech, devaluation spikes costs like a stealth tax. It burns a hole in your budget before the paycheck even hits your account.
For countries hooked on imported oil, food, or tech, devaluation is a stealth tax – it raises your costs without ever appearing on a ballot.
Real estate is the textbook case. Construction materials, energy, and labor get pricier, so property values soar – on your screen, anyway. But that “gain”? That is just you treading water while the pool fills up.
The Asset Price Mirage
Those S&P 500 or DAX all-time highs got you feeling like a genius? Pause.
In countries with hyperinflation (like Venezuela or Turkey), the stock market goes up thousands of percent. Are those investors rich? No. They are starving. The stock market went up because the currency went to zero.
We aren’t Venezuela, but the mechanic is the same. Hard assets are a life raft. But a life raft in a rising flood doesn't mean you're gaining altitude – you're just not drowning yet.
Okay, So What Do I Actually Do?
I’ve told you the ruler is lying. I’ve shown you that your portfolio’s “all-time high” might just be your currency’s all-time low. But awareness without action is just anxiety fuel.
So what do you actually do about it?
Step 1: Measure in multiple rulers.
Stop looking at your portfolio only in dollars (or euros). Periodically, check your net worth in:
Gold (how many ounces could you buy?)
Bitcoin (if you’re into that)
Real goods (how many months of rent? How many plane tickets?)
This isn’t about becoming a gold bug or a Bitcoin maxi. It’s about breaking the spell of nominal gains. When your portfolio is “up 20%” but buys the same number of plane tickets as last year, you haven’t gained anything. You’ve just treaded water.
Step 2: Own assets that can outrun the denominator.
Not all assets are equal in an inflationary environment.
Cash and bonds get eaten alive – they’re denominated in the very thing that’s shrinking.
Real estate treads water or slightly outpaces inflation, but it’s illiquid and comes with carrying costs.
Equities –especially in sectors with pricing power– can outrun inflation because companies can raise prices. Tech, in particular, has near-zero marginal costs and global scale. That’s why my ETF bet is Nasdaq100, not the S&P.
Hard assets (gold, land, commodities) are the ultimate inflation hedge, but they don’t compound. They preserve; they don’t grow.
Bitcoin is the only asset explicitly designed to have a fixed supply in a world of infinite money printing. I’m not a maxi, but I understand the thesis.
Step 3: Think in purchasing power, not portfolio size.
The question isn’t “how big is my number?” It’s “what can my number buy?”
Every year, I do a gut check: Can I afford more or less of the life I want than last year? If my portfolio is up but my purchasing power is flat, I’m not winning. I’m just not losing as fast as cash holders.
Step 4: Don’t be the last one holding the bag.
This is the cynical part. If the system is a confidence game, timing matters. Not market timing (that’s a fool’s errand), but narrative timing.
When the story shifts – when “AI will change everything” becomes “AI is overhyped,” when “rates will stay low forever” becomes “rates are staying high” – be willing to rotate. The true believers hold through narrative shifts because they trust fundamentals. I don’t. I trust stories, and stories change.
I’m not telling you to sell everything and buy gold bars. I’m telling you to see clearly.
The train isn’t stopping. The money printer goes brrr. Your portfolio will probably keep hitting “all-time highs” for years to come.
But now you know: that’s not necessarily you winning. That might just be the ruler shrinking.
So next time you see that green number, ask yourself: “Am I actually richer? Or am I just inflated?”
If you can answer that honestly, you’re ahead of 90% of investors – including the ones with bigger portfolios than yours.
*BONUS*
If you made it this far, here’s a special treat. An explanation of the money problem (it’s Bitcoin-pilled, but the diagnosis is solid even if you don’t buy the prescription):
The inflation conundrum should actually be a basic concept, but unfortunately the average Joe does not understand it, which is why governments have been printing money freely for decades. A bonus lesson that could be drawn from here is that the real goal of investing is not getting rich, but minimizing your losses due to inflation. And if you're really good at it, maybe even getting some extra gains.