Eleven macro indicators that reveal a century of monetary expansion, debt accumulation, and structural economic signals — each one a piece of the same story.
What $1.00 in 1913 buys today — a 96% loss over 111 years. The Federal Reserve was created in 1913; so was the modern era of sustained dollar devaluation.
What €1.00 in 1999 (the year of EUR inception) buys today — a 41% loss in 25 years. The ECB's 2% inflation target has been systematically breached, especially since 2021 when the energy crisis and post-COVID stimulus compressed years of devaluation into just three years.
USD vs EUR — side by side
Over comparable periods, the USD has lost more in absolute terms (96% since 1913) but the EUR has devalued faster on an annualised basis: ~2.2%/yr vs ~3.1%/yr for USD since 1971. The 2021–2023 inflationary episode hit both similarly hard — the EUR lost ~16% of purchasing power in just 3 years, versus ~14% for the USD over the same window.
The US has now exceeded its WW2 debt peak — and unlike 1946, there is no obvious deleveraging path. Post-war growth, financial repression, and moderate inflation drove the prior decline. That playbook looks far harder to execute today.
The mechanical engine behind dollar devaluation. $6.3 trillion was created in roughly 24 months during COVID — more than was created in the entire prior century. Milton Friedman's "inflation is always and everywhere a monetary phenomenon" plays out literally here.
The bond market's recession oracle — 8 for 8 since 1976. Every single inversion of the 10Y–2Y spread has preceded a recession. The deep 2022–2023 inversion was the worst since 1981.
Fed Funds Rate minus CPI inflation — the true cost of money. Negative real rates are a hidden tax on savers and a subsidy for debtors. They also tend to inflate asset prices. The 2020–2022 period produced the most deeply negative real rates since the 1970s.
FINRA margin debt — money borrowed by investors to buy securities — has hit a record $1.25 trillion, growing 36% year-over-year. The S&P 500 overlay reveals the feedback loop: margin peaks tend to coincide with or slightly precede market peaks, and crashes are amplified by forced selling as margin calls cascade.
The feedback loop
When prices fall, brokers issue margin calls → investors are forced to sell → prices fall further → more margin calls. This self-reinforcing spiral amplified the 2000, 2008, and 2022 crashes. With YoY growth running at +48% in 2025 — matching the velocity seen before the 2000 and 2021 peaks — the potential energy stored in this mechanism is at historically dangerous levels.
Extended back to 1971 using a proxy real yield (10Y nominal Treasury minus trailing CPI) for 1971–2003, switching to actual TIPS market yields from 2004 onward. The proxy era is shown dashed; the TIPS era solid. Three defining episodes now visible: the 1974–1980 stagflation surge, the Volcker shock collapse, and the 2022–2026 breakdown of the inverse relationship.
The 2022–2026 anomaly
The classical model says gold at ~$4,762/oz with real yields at +2.0% makes no sense — you are being paid 2.0% above inflation to hold Treasuries instead. Yet gold has more than doubled since 2022 and is at all-time highs. The explanation: central bank buying has hit record levels (1,000+ tonnes/yr for three consecutive years), driven by de-dollarisation from China, Russia, India and Turkey. The relationship hasn't broken — a new structural buyer has entered who doesn't care about opportunity cost.
The cyclically adjusted P/E — stock prices divided by 10-year average inflation-adjusted earnings — is arguably the gold standard of long-run valuation. At 38.2, it sits at the 2nd highest level in 154 years, exceeded only by the December 1999 dot-com peak of 44.2. Historical evidence: CAPE above 30 has preceded every major bear market. The long-run median is 16.
The caveat
CAPE has been "elevated" since the mid-1990s. Structural changes — intangible capital, tech dominance, globalised profits — may justify a higher baseline. The signal matters most at the rate of change: CAPE at 38 after 3 years of rapid expansion is different from CAPE at 38 after 10 years of stability.
Total US stock market capitalisation (Wilshire 5000) divided by GDP. Warren Buffett called it "probably the best single measure of where valuations stand at any given moment." At 217%, it is near its all-time high. The structural uptrend since 1995 means the raw ratio should be compared to its trendline rather than its historical mean — on a de-trended basis, the market is approximately 2.0–2.4 standard deviations above trend.
The structural uptrend caveat
The ratio has trended upward since 1995, possibly because US multinationals earn profits globally that aren't captured by domestic GDP, and because technology companies carry high market values relative to their asset base. De-trended, the current reading is still approximately 2.0–2.4 standard deviations above the regression trendline — firmly in overvalued territory.
The earnings yield of the S&P 500 (1 ÷ trailing P/E) minus the 10-year Treasury yield. Measures what extra return stocks offer over risk-free bonds. The ERP has turned negative in 2023–2026 — the first sustained negative reading since the dot-com bubble. This means Treasuries are currently yielding more than the S&P 500's earnings yield, a rare condition that historically signals expensive equities.
The ERP and the free money era
From 2009 to 2021, near-zero rates made the ERP deeply positive — stocks were the only game in town. That was financial repression working as intended. Now, with the 10-year at ~4.4%, investors can earn real returns from bonds for the first time in 15 years. The negative ERP is not predicting a crash — but it removes one of the pillars that justified high equity valuations throughout the 2010s.