A Global Debasement Index
56 years. 30 countries. One formula that reveals how central banks quietly erode the value of every dollar, pound, yen, and yuan you hold.
In 1980, a thousand dollars meant something. A month of rent and utilities. A couple of plane tickets. Half a semester's tuition at a state college.
Today that same thousand buys you about $190 worth of what it could then. After accounting for the hidden gap. The bills look the same. The number hasn't changed. But the purchasing power has been quietly, steadily, bled away.
Things didn't get more expensive. Money got weaker.
Central banks expand the money supply every year. Some of that reflects genuine economic growth. The rest is dilution. Pure and simple.
When the money supply grows at 6% but the real economy only grows at 2%, that 4% gap is purchasing power that evaporated. No receipt. No notification. No vote.
This is the Kovacs Gap. The gap between what central banks print and what economies actually produce.
A 4% gap in one year doesn't sound catastrophic. You barely notice it. That's the whole trick.
But compound it over decades and the numbers become absurd. The US has racked up a cumulative Kovacs Gap of over 227% since 1970.
Real wealth, silently transferred from people who hold cash to people who hold assets.
The US is far from the worst offender. The UK is at 393%. South Korea at 429%. Australia at 266%.
Every country with a central bank and a fiat currency has been running the same playbook. The cumulative damage is staggering.
Debasement isn't smooth. It spikes during crises, when central banks flood the system with liquidity.
2008: financial crisis. 2020: pandemic. Each time the printing presses went into overdrive. The US gap hit 28% in 2020 alone.
Notice how each spike pushes the baseline higher. The money never gets taken back out.
The S&P 500 is up over 33,000% since 1970. Sounds like the greatest wealth machine ever built.
Now subtract the Kovacs Gap from each year's return. Watch the bars shrink. Many positive years barely break even. Some flip red entirely.
The nominal CAGR is 11.2%. Adjusted? Just 7.0%. Nearly four percentage points per year, vanishing into thin air.
Take any asset. Subtract the Kovacs Gap. What's left is your actual gain in purchasing power.
The shaded zone between the nominal and adjusted lines is the invisible tax. A big chunk of the "return" was just currency decay reflected back at you.
$36 an ounce in 1970. $3,435 in 2025. That's a 95x return. Sounds incredible.
Adjust for debasement and it's 11x. Still meaningful, but 88% of gold's nominal rise was just the unit of measurement getting weaker.
Watch how closely gold tracks M2 expansion. The correlation is arithmetic.
US homes: $23k to $414k. Canadian homes: C$24.5k to C$673k. Australian homes: A$18.7k to over A$1 million. UK homes: £4.5k to £270k.
Houses aren't worth 18–56 times more in any meaningful sense. The currencies just became weaker.
From heatmaps to dot plots. 30 countries, 56 years of data, every asset class adjusted.
Each cell is one year of one country's Kovacs Gap. Red means the money supply grew far faster than the real economy. The deeper the red, the worse the erosion.
Four major indices. Solid lines are nominal returns. Dashed red lines show what's left after subtracting the Kovacs Gap each year. The shaded area is the invisible tax.
Each line shows the gap between nominal CAGR and Kovacs Gap–adjusted CAGR. The longer the line, the bigger the invisible tax on your returns.
Everyone thinks property is the ultimate wealth builder. Adjust for debasement and most of the "gains" were just currency decay.
Fifty-five years of housing returns, before and after the debasement tax.
One formula. Three lenses. Each one tells you something different about what's happening to your money.
How much purchasing power is being lost this year. Green below 5%. Amber at 5-10%. Red above 10%.
The total damage since 1970. All those annual gaps, stacked on top of each other, compounding quietly.
The annual return your investments need to clear just to break even against debasement.
Search for any of 30 countries. See the annual gap, cumulative damage, and how M2 growth compares to GDP growth.
Solid line = M2 money supply growth. Dashed = real GDP growth. Shaded area = the Kovacs Gap.
Pick two countries and a start year. Watch their cumulative gaps diverge.
Economists argue that falling money velocity neutralised M2 expansion. But velocity fell because the money went into assets instead of the economy. The rebuttal is the mechanism.
Cyan = M2 velocity (left axis, falling). Amber = S&P 500 indexed to 100 (right axis, rising). Red shading = Kovacs Gap. When velocity drops and assets surge, the money moved from the economy into asset prices.