<p>Most people define inflation as <a href="https://www.moneymetals.com/news/2025/07/01/inflation-accounts-for-virtually-the-entire-increase-in-retail-sales-since-the-pandemic-004161" rel="noreferrer">rising consumer prices</a>. Price inflation is part of the inflationary equation, but inflation also manifests in other ways, for instance, in asset inflation. </p>
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<p>Keep in mind that <a href="https://www.moneymetals.com/news/2024/01/12/common-definition-of-inflation-you-hear-today-is-wrong-government-propaganda-002925">inflation, properly defined</a>, isn’t about prices. It is an increase in the supply of money and credit. Rising prices are symptomatic of monetary inflation. </p>
<p>When the Federal Reserve slashed interest rates to zero and launched quantitative easing for the first time in the wake of the 2008 financial crisis, many predicted there would be a spike in consumer prices. That never happened, leading some Keynesian economists to declare that money printing is harmless.</p>
<p>However, the monetary inflation created during the Great Recession did manifest, just not in consumer prices. It fed a major surge in asset prices that was clearly visible in the stock market. The S&P 500 rose by over 130 percent between 2010 and 2019.</p>
<p>We can see the inflationary pressure on the stock market even more clearly when we price the Dow Jones in gold.</p>
<p>At its peak in 1929, before the crash, the Dow was 381.17, and the price of gold was $20 an ounce. Priced in gold, the Dow was around 19 ounces.</p>
<p>Today, the Dow is just over 46,300, while gold is around $3,800 an ounce. That means priced in gold, the Dow is just over 12 ounces.</p>
<p>That represents a 37 percent decline in the Dow in gold terms over the last 96 years.</p>
<p><img src="https://www.moneymetals.com/uploads/content/gold-to-Dow.png" width="600" alt="" style="display: block; margin-left: auto; margin-right: auto;" /></p>
<p>Since gold is real, stable money, pricing the Dow in the yellow metal reveals that the appreciation of the stock market over the last century was predominantly driven by inflation.</p>
<p>Don’t be fooled. Inflation is pernicious and ever-present.</p>
