Inflation is not rising prices. Deflation is not falling prices.

The more production expands across a rising number of hands and machines, the lower the price. And vice versa. The Apple iPhone is an effect of production on six different continents around the world. Boeing jets are an effect of millions of different parts around the world. Global cooperation makes both increasingly affordable, not “monetary policy.”

Which is a reminder yet again that relentlessly falling prices are evidence of increasingly sophisticated and tessellated global production, not deflation. By contrast, evisceration of global cooperation during the coronavirus lockdowns logically resulted in higher prices borne of less sophisticated and less tessellated global production that, contra accepted wisdom, had little to do with inflation.

Inflation is a shrinkage of the unit of measure, in our case, the dollar. But it’s not necessarily a decline in the value of the dollar against foreign currencies anymore than deflation is necessarily a rise. Since the dollar floats (as do other foreign currencies), dollar movements upward can at times disguise inflation while a declining dollar can disguise deflation.

It brings us to gold. The reason it has long existed as the definer of money is exactly due to the fact that gold doesn’t move, but the currencies in which it’s priced do. Gold simply is. It tells the truth. When gold is rising against the dollar, that’s a sign of a shrinking dollar. When gold is falling, the dollar is rising.

Since presidents get the dollar they want, gold’s movements can be used to assess who has been better on dollar/inflation policy, Donald Trump or Joe Biden. About how it will be done for this write-up, markets are a look ahead. In which case, the dollar price of gold will be looked at from the time each was elected, not when they entered the White House.

In Trump’s case, gold closed at $1,273/ounce the day after his election in 2016. On election day in November of 2020, the price of gold had risen to $1,914. Against the objective constant of gold, the dollar lost 50 percent of its value during Trump’s first term.

The day after the 2020 presidential election won by Biden, gold closed at 1,904. Biden exited the race for a second term on July 21, 2024. As of Friday, July 19, gold was trading at $2,398. The dollar lost 25 percent against gold during Biden’s lone term.

Unknown is what markets knew after Biden’s exit. Did they start pricing in a Trump victory right away, and did they start pricing in a Trump victory ahead of Biden’s exit. There’s no way of knowing for sure, but it’s notable that gold rose 13 percent against the dollar between the time that Biden left the race, and Trump’s election.

On November 6, 2023, the day Trump’s election was made official, gold closed at, 2,721. As of this writing, it’s trading at 3,199/ounce, a 17 percent decline in the dollar measured against gold.

There’s no partisan statement here. Gold once again is. It just reports, and it signals more substantial dollar weakness under Trump. Meaning Trump was the more inflationary president.

No doubt this won’t show up in CPI and other government measures of prices, but prices go up and down for all sorts of reasons, most them having nothing to do with inflation or deflation. So, while Biden will enter the first draft of history as the president who caused inflation, more distant history may well tell a different story, including that it was Trump who presided over the biggest dollar devaluations, and it was a Trump who panicked about the coronavirus. And Trump’s panic brought on higher prices during Biden’s presidency that had nothing to do with inflation.