Are we in a bubble?

In today's world, it's hard to ignore the rapid escalation in prices across nearly every category. From tangible assets to everyday commodities, everything seems to be surging to unprecedented levels. Real estate values are skyrocketing, stock markets are hitting peaks, cryptocurrencies like Bitcoin are soaring, and even precious metals such as gold and silver are commanding record highs. Gold, for instance, has recently surged past a prolonged period of sideways movement and is now valued at $3,759 per ounce. Silver isn't far behind, reaching over $46 per ounce—a level it has only touched a handful of times historically. Bitcoin is hovering near $110,000, while major stock indices are also testing their limits. The S&P 500 sits at 6,696, flirting with all-time records in recent sessions. The Nasdaq has crossed 24,700 its highest points ever. The Dow Jones Industrial Average stands at 46,247, and even the Russell 2000, which tracks smaller companies, is nearing highs it has only seen sporadically in recent years. When it comes to housing, the U.S. Case-Shiller Home Price Index is at its absolute peak. Alternatively, if you examine the median sale price of homes in the country, it's only marginally below its 2022 peak.

This Is Different From Normal Bubbles

Usually, bubbles are isolated. During the dot-com era, tech stocks exploded while other markets stayed flat. When Bitcoin shot to $20,000 in 2017, the broader stock market barely moved. These were clear bubbles—one thing inflated while everything else stayed normal.

Today is different. When stocks, real estate, gold, Bitcoin, rent, beef, electricity, tuition, and healthcare all hit record highs simultaneously, you can't compare them to find the bubble. They're all expensive relative to each other.

The Real Problem: The Dollar Devaluation

The common thread isn't that everything is in a bubble—it's the measuring stick. Everything is priced in dollars. If the dollar loses value, it looks like everything else is getting more expensive.

You might check dollar charts and see it hasn't crashed. The Dollar Index looks relatively stable since 2015. But here's the catch: it measures the dollar against other currencies like the euro and yen. If all central banks are printing money at similar rates, their relative values stay stable. It's a race to the bottom where everyone is sinking together.

Testing With Gold

To see if things are genuinely expensive or if the dollar is just weak, we can reprice everything in gold. Gold's purchasing power has stayed remarkably consistent for thousands of years. A Roman soldier's salary, a medieval haircut, or a Victorian suit all cost roughly the same in gold.

When you price the S&P 500 in gold instead of dollars, it doesn't look like a bubble. It's elevated but within normal historical ranges. The Nasdaq in gold shows similar patterns. The Dow looks balanced, not frothy.

Everyday costs tell an even clearer story. Yale tuition in gold is near historical lows, not highs. Median home prices in gold are at all-time lows, even though they're at peaks in dollars.

The verdict: things aren't actually more expensive. The dollar is just worth less.

Will This Continue?

The M2 money supply—all the dollars in circulation—typically grows 5-10% yearly. It spiked to 27% in 2021, briefly contracted in 2023, but is now growing again.

With Federal Reserve rate cuts expected, borrowing becomes cheaper. This creates more dollars through loans and credit. Lower rates encourage spending, inflating the money supply further.

For prices to stop rising in dollar terms, we'd need government spending cuts and tolerance for a depression-style deflationary spiral. History shows policymakers won't allow that.

What You Should Do

These aren't real bubbles—they're symptoms of dollar devaluation. This trend will likely continue.

To protect your wealth, diversify. Spread holdings across stocks, real estate, cryptocurrencies, and precious metals. Don't concentrate everything in cash or any single investment.

Holding too much in dollar savings means watching your purchasing power slowly disappear. What looks like everything getting expensive is actually the dollar getting weaker. Understanding this difference helps you make smarter money decisions.