Why Your Dollars Lose Value While Assets Go Up (And What to Do About It)

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Every Friday I track the same list of numbers so you can see, over time, what holding dollars actually costs you. In this one I do it visually: charts of the Dow, the S&P 500, gold and Bitcoin going up and to the right, with the value of the dollar overlaid in red going the other direction.

I also give you the warning half of the story — the part most "get rich" videos skip — including why you never want to be forced to sell an asset when it's down, and what the 2-year/10-year Treasury inversion has historically come before.

What you'll learn

• Why $100 in the bank can still be $100 and still be a loss
• Why the 2021–2023 inflation spike never "went away" — and why prices stayed high
• The actual numbers I track weekly: savings rates, CDs, Treasuries, gold, silver, Bitcoin, Ethereum, Dow, S&P
• The easy way to get exposure to assets using ETFs instead of buying things directly
• The warning: dips, valuations, and the yield curve inversion

The dollar goes down while assets go up

I put four charts on the screen: the Dow Jones (30 stocks) since the 1980s, the S&P 500 (500 stocks), Bitcoin, and gold representing commodities. All four are going up and to the right. None of them are dollars. Then I overlay the value of the dollar in red, and it goes the other way.

Here's what that means in real life. You put $100 in the bank three years ago. You come back, you got a little interest, you still have basically $100. You didn't lose dollars — you lost purchasing power. A couple years ago the average car was around $30,000; now it's closer to $40,000. A house was maybe $380,000; now $460,000. Eggs were about a dollar a dozen; now three or four. Same dollars, less stuff.

Why the inflation pain didn't go away

When inflation runs 2–3% a year and your pay goes up about the same, it's roughly a wash. What happened in 2021 through 2023 was different — inflation ran way above normal for a long stretch. Even though the yearly number has come down, that chunk of price increases never reversed. For it to reverse, we'd need near-zero inflation or actual deflation. That's why housing, cars and food still feel expensive.

The weekly numbers

From February to mid-December on my tracking sheet: savings around 0.43%, a 3-month CD around 1.52%, a 3-month Treasury around 4.64%. Compare that to gold going from about $2,000 to $2,600, silver from about $22 to $30, Bitcoin from $43,000 to $100,000, Ethereum from $2,200 to $3,918, the Dow from 38,000 to 43,000 and the S&P from 4,900 to 6,000. One more chart: since 1900 the dollar lost 98.2% of its purchasing power while gold went up roughly 53 times.

The easy way in: ETFs

You don't have to go buy physical metal or learn a crypto wallet. Spot ETFs let you buy shares through a regular brokerage and the fund buys the underlying asset — gold, silver, Bitcoin, Ethereum. There are also ETFs that track the S&P 500 and the Dow 30, so you're not picking 500 stocks. Many studies show most professional managers can't beat the S&P over time.

The warning

Assets go up over time, but look at the dips on the Dow chart — some lasted a year or two. If you're forced to sell while something is down, you eat that loss. That's why people diversify and why you need an emergency fund of three to six months of expenses in cash first. At the time I recorded this, the S&P's Shiller PE hit 38, something that's only happened twice before. The 2-year/10-year Treasury inversion had also happened, and historically an inversion has shown up six months to a year before rough economic periods. My personal opinion: housing looks overpriced and I expect a meaningful correction, so I'm holding a bit more cash than usual. It's up to you to take control of your financial future — nobody else will.

Key steps

1. Build a cash emergency fund first — three to six months of expenses, whatever lets you sleep.
2. Clear the high-rate debt that's guaranteed to cost you more than any asset is likely to pay. Run it in the credit card payoff calculator.
3. For money you don't need short term, consider broad, easy exposure through ETFs instead of picking individual assets.
4. Diversify so you're not forced to sell the one thing that's down.
5. Track the same numbers weekly — inflation, savings rates, Treasuries, the 2/10 spread — so you're not surprised.

FAQ

If my money is safe in the bank, how am I losing anything?

Because the dollar count stays the same while prices rise. When savings pays under half a percent and prices went up 8–9% in a stretch, your balance didn't shrink but what it buys did. That's the whole point of the chart I show every week.

Should I invest before I pay off my credit cards?

A credit card at 20%+ is a guaranteed cost. No asset guarantees you a return. Get an emergency fund so you don't add new debt, then attack the high-rate balances — see pay off debt or invest first and the Avalanche Debt Eliminator.

What does the 2-year/10-year inversion mean?

Normally a 10-year Treasury pays more than a 2-year because your money is locked up longer. When the 2-year pays more, that's an inversion. Historically an inversion has shown up in the months before recessions. It's a signal to keep more cash and be ready, not a prediction.