2022 New Era Playbook

I N F L A T I O N R O A D M A P

NEW ERA 2022 P L A Y B O O K

• S P E C I A L R E P O R T •

E D I T O R ’ S N O T E

We first published our playbook to handle the “New Era” of inflation in June 2021 (though we had warned about inflation many times before that). In the short time since then, so much has happened. Inflation went from a prediction to an immediate threat. And we needed to publish an update. While the historical evidence we presented hasn’t changed, the situation has. So we’ve revised our figures and reviewed our recommendations to provide for you an updated playbook for 2022.

I’m sure you’ve noticed that prices for almost everything are absolutely soaring.

At the same time, we’re running out of... well... practically everything from computer chips to appliances to building supplies. Maybe you’ve heard the stories of crazy bidding wars for houses ... Like a simple three-bedroom house in Covina, California, selling for $650,000, which had 126 showings and 50 offers in four days. One bid was even $100,000 over the asking price. In the most desirable parts of Texas, real estate agents now bring in food trucks and coffee vendors to make the lines more bearable at open houses. This scenario is playing out all over the country. Vacation rentals are going through the roof as well. As hard as this is to imagine, a home in the Hamptons just rented for the summer for a whopping $2 million. Rental prices across the board are up 100% or more. In resort towns nationwide, rentals are completely booked. The more you dig into the numbers, you see soaring prices and shortages for practically everything we need and value in our society. Oil prices are up more than 90% in the past year. Food prices are up 5.5%. Paper prices are up 20%. Copper prices are at an all-time high. Car prices are sky-high, too. The average price of a new car topped $45,000 for the first time earlier this year, and the average used car now costs more than $26,000. The Kaiser Family Foundation reports the average cost for employer- based family health coverage is now a whopping $21,342 per year.

1

2022 NEW ERA Playbook

Prices for food, health care, commodities, shipping, electricity... it’s all rocketing higher. Why? There are many reasons for the soaring prices of all these things. The economy is returning to normal. People want to live in bigger houses. The supply chain is a mess. And people want to get out and spend again. But there’s something else really happening here. Here’s what you need to know... It doesn’t matter how the White House, the U.S. Treasury, or the Federal Reserve are creating new money and new credit. It doesn’t matter what tricks they are using or how they spin it. America is about to experience one of the greatest inflationary periods in our nation’s history. And make no mistake about it: Inflation will push millions of Americans down... out of the middle class, out of private retirement, out of private health care, and out of a decent life based on independence and privacy. When a currency collapses, people are trapped by their own dollars and their own deeply indebted government. I know you probably think this sounds outlandish. You probably think this is all just temporary. Most Americans, I’m sure, are feeling pretty good. Home values are sky-high. So are stocks. Your brokerage account may have never looked better. But here’s the truth no politician will bother sharing: Prices for all of these goods and services... prices for stocks and

2

Retirement Millionaire

houses and art are NOT going up the way you think they are. Instead, it’s the value of our money going down. This is what ALWAYS happens at the start of a period of massive inflation and a collapsing currency. Economists call it the “MONEY ILLUSION.” It’s what happens when people start to measure their wealth in simple numeric terms instead of real terms – in other words, how many dollars you have instead of what your dollars can buy. This is what happens when people don’t take into account money- printing, increased debt, and inflation, and wrongly believe a dollar today is worth the same as it was last year, even after the Fed has pumped trillions and trillions of new dollars into the system. Think of anything of significance you’ve bought recently... a washing machine or refrigerator... tires... furniture... it’s all soaring in price – and that’s if you can find it, because supply shortages are rampant. Inflation causes huge economic distortions, which is one of the reasons why, as Bloomberg recently reported, we are “suddenly running low on everything.” And while you may have more money in your bank or stock account, it’s definitely not worth anything close to what it was just a year or so ago. I estimate that more than 90% of the American public is falling for the Money Illusion today... Most folks are in complete denial about what is really happening in our financial system . But when you look back at financial history, you realize this is nothing new... Massive inflations are always incredibly confusing to the general public. Look at Germany’s Weimar Republic in the early 1900s, for example...

3

2022 NEW ERA Playbook

...the most famous case of inflation and currency collapse in history. Over a period of about 10 years, the German mark eventually became worth 1 million-millionth of its former self, surging from an exchange rate of 4.2 marks per U.S. dollar in 1919 to 4.2 trillion marks per U.S. dollar just four years later.

To outsiders, it was obvious Germany was destroying its currency. But locals simply held on, in a state of confusion and denial... even as inflation exploded exponentially. As a German woman told Nobel and Pulitzer Prize-winning writer Pearl Buck: We used to say, “The dollar is going up again,” while in reality the dollar remained stable but our mark was falling. But... we could hardly say our mark was falling since in figures it was constantly going up – and so were the prices – and this was much more visible than the realization that the value of our money was going down... It all seemed just madness, and it made the people mad.

4

Retirement Millionaire

Economic Historian Adam Ferguson explained why in his book When Money Dies : It was the natural reaction of most Germans, or Austrians, or Hungarians – indeed, as for any victims of inflation – to assume not so much that their money was falling in value as that the goods which it bought were becoming more expensive in absolute terms. And this is exactly what’s happening in America right now. Unfortunately, the sad truth is most Americans will do the exact same thing Germans, Hungarians, and Austrians did with their soon-to-be-worthless currencies, even after they’d been devalued for the umpteenth time... They will cling to their increasingly worthless money. You see, the Money Illusion inevitably creates a frenzy... encouraging massive gambling, hoarding, and speculation... as everyone attempts to keep up with the “get rich quick” stories reported in the press. I’m sure you know what I’m talking about in our country today...

What Happened 50 Years Ago Is About to Happen Again

From 1961 through 1965, annual U.S. inflation averaged just 1.28%. Then in 1965, President Lyndon Johnson began massive spending and took on huge budget deficits for the Vietnam war and his “Great Society” benefits... which included Medicare, Medicaid, Head Start, urban renewal, environmental initiatives, new immigration policies, and more. It sure sounds a lot like the new programs being proposed today, doesn’t it?

5

2022 NEW ERA Playbook

Back then, just like today, inflation was gradual at first. It climbed to 3.0% in 1966 and 2.8% in 1967. And in large part because of the Money Illusion, people continued to feel richer and richer as the S&P 500 Index hit an all-time high in late 1968. Then things began to spin out of control... Inflation reached 5.97% in 1970. By 1974, inflation hit more than 11%, and the stock market had lost 35% of its value. Inflation finally peaked at 13.5% in 1980. In one incredible five-year stretch from 1977 to 1981, cumulative inflation was over 50%... In other words, the value of your savings was essentially cut by a third. Even so, U.S. citizens during this period made the same analytical mistake Germans, Austrians, and Hungarians made in the 1920s. Their initial perception was that prices were going up – but what was really happening was just the opposite: Our currency was collapsing. As currency expert Jim Rickards says, “Higher prices are the symptom, not the cause, of currency collapse.” Few Americans today recall that the dollar nearly ceased to function as the world’s reserve currency back in 1978. In fact, that year, the U.S. Treasury was forced to issue government bonds denominated in Swiss francs. The point here is that inflation always gains substantial momentum before the general public notices, and before politicians act – and that’s exactly what’s happening right now in America. The last time we saw serious inflation, it was not until 1974 – nine years after the inflationary cycle began – that it became a big political issue and prominent public policy concern.

6

Retirement Millionaire

Millions of Americans lost a fortune in stocks. Their savings were worth just a fraction of their previous values. That’s why you need to learn about inflation, how it works, and how it may happen in the coming years. And you also need to know just how it may change our politics and society. Money is important. If the value of everyone’s cash is changing drastically, there are winners and losers... and people get agitated. First, we’re going to walk through how we see inflation happening. Then we’ll talk about what changes it may wreak on our society. And finally, we’ll introduce you to some steps and strategies to keep yourself protected and prepared... How Inflation Can Destroy an Empire Crowned king of Macedonia at a young age, Alexander the Great, looked unstoppable. He controlled the most elite military power in the region, launching an invasion that swept through Asia Minor, Syria, Egypt, Mesopotamia, and Persia. He added each conquered land to his expanding kingdom... and plundered its treasury. But as his empire stretched from Greece to the edges of what is now India, his soldiers refused to continue fighting. They were tired and longed to return home. With little choice, Alexander headed back to the interior to start the businesses of organizing and governing. He stopped for a time in the city of Babylon in the former Persian empire... toting a mountain of captured silver with him. Then, still in his 30s, he died suddenly.

7

2022 NEW ERA Playbook

This is where our focus today begins... Not with Alexander the Great’s conquests, but with what happened to his empire after he died. Rather than rejoice in plundered riches, Babylon’s market economy was crippled. Babylonian scribes maintained a record of clay tablets, mostly for tracking astronomical >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44

orders.stansberryresearch.com

Made with FlippingBook - professional solution for displaying marketing and sales documents online