The Most Important Graph You’ll Ever See About Money

According to One of the Best Money Podcasts in the World

Source: ChatGPT

The other day, while training, I put on one of those podcasts you can’t just have in the background. The kind that makes you stop and think. It was the What is Money Show, probably the best content out there today for anyone wanting to understand the monetary system without the sugarcoating.

The guest was talking about one of those eternal debates: is gold better, is Bitcoin better, or is there another asset that takes the crown? This wasn’t a superficial social media fight. It was about understanding the essence of each asset and its role in a world that, like it or not, runs on a monetary system that is constantly losing value.

They spoke about gold as money tested over millennia, accepted and resistant to political manipulation, but too slow for the demands of the digital age. Bitcoin, on the other hand, is uncensorable digital property, with a closed and predictable monetary system, but without the history and universal acceptance of physical gold. Other assets, like land or productive businesses, play different roles, but none are quite the same.

In the middle of that conversation, the guest said something that grabbed me: “If I could only use one chart for the rest of my life as an investor, it would be this one.” He was talking about the one published by the Federal Reserve Bank of St. Louis: Purchasing Power of the Consumer Dollar.It’s a devastating chart. A line that, since 1913, has done nothing but fall. Not slowly, but steadily, decade after decade. Every dollar in your pocket is worth less year after year, no matter what you do.

This isn’t a conspiracy theory. It’s official statistics. It’s basic monetary math. In a system where the money supply grows faster than real production of goods and services, your purchasing power erodes. Always. Without exception.

And here’s where the second chart comes in the one comparing wage growth in the U.S. with the S&P 500 since 1980. The picture becomes even clearer: while the index has multiplied in value more than five times, wages have barely moved.

If you’ve lived on a salary, even a good one, and never bought assets, the gap between you and those who did has widened dramatically. It’s a growing chasm.

This is a reality screaming at us: we are getting poorer in real terms if our only income is from work. The only way to prosper in this system is to own assets that appreciate faster than the currency they’re measured in.

But there’s an angle that’s rarely discussed and, once I understood it, it changed the way I see money: taxation. Income from work, especially at higher levels, can be taxed at effective rates of 40% to 50% depending on the country. Meanwhile, gains from investment assets, in most jurisdictions, are taxed far less, sometimes around 20%.

And if you’re creative enough and understand the rules well, you can use debt and tax benefits to bring that percentage down to almost 0%.

This means that not only do your assets work for you, but most of the money they generate stays in your hands. Over time, the compounding effect is brutal.

When I truly understood this, it blew my mind. I had never stopped to think that the tax system, as it’s designed, pushes asset owners to play a completely different game than those who live only on wages.

One accumulates, reinvests, and pays less. The other spends, barely saves, and pays more. And when you see it in those two charts, there’s no going back.

In upcoming pieces, we’ll revisit (though we’ve touched on it before The Secret to Liquidity Without Taxes) how to generate income while paying practically no taxes, just like we’ve done with Bitcoin, how the wealthy do it, and how anyone today, with a little knowledge, can do the same.