What's Happening in America Today

My name is Dr. David Eifrig.

I'm a medical doctor and former Goldman Sachs banker.

And I'm sure that you've noticed that it seems like everything in America is getting more and more expensive...

But you have to understand what's REALLY happening in America today to have any chance of protecting and growing your money in the years to come.

So I want to say this as plainly and simply as I can:

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... into a collectivist nightmare I call:

FINANCIAL LOCKDOWN

This is what happens when people are trapped by their own collapsing currency 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 houses and art are NOT going up the way you think they are.

The truth is, prices are not going up – 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.

What Is Happening to the U.S. Dollar?

So, what is inflation and why should we care about it so much?

When an indebted government inflates a currency and makes it easier to pay what it owes, the lender suffers by receiving a payment worth less. As an investor, you are a lender when you put money into bonds in exchange for interest, or into stocks in exchange for an equity stake.

Low interest rates mean you don't get much income from your investments. And rising rates mean the value of income-paying assets will decline.

So how does inflation occur?

In basic terms, the combination of a hot economy and an abundance of money leads to inflation. If too much money is created in too short a time, prices will rise relative to the currency.

There are three sources of inflation, accommodative monetary policy, expansionary fiscal policy, and a strong economy.

Inflation typically arrives when the economy runs hot. Full employment leads to higher wages as businesses compete for workers. More people buying more goods drives up the price.

At the same time, inflation can be driven from the monetary side. More money in the system chases the same goods, services, and assets, and that drives up the price.

You can measure monetary policy by money supply, interest rates, or financial conditions. There's a lot of money out there. It's easy for corporations, banks, or homebuyers to borrow it, and that pushes asset prices higher.

Expanding money supply doesn't always mean inflation. Money growth in excess of money demand does. While money has grown dramatically in the past few years, since the financial crisis, banks have held extra reserves and corporations have beefed up their balance sheets. The money hadn't made it out "into the system" so to speak.

We can take some lessons from another time the world experienced a massive pandemic... a shift that actually helped create the modern economy.

The Black Death

In 1346, the Black Death swept Europe. In the immediate aftermath of the Black Death's outbreak, prices of all sorts of items fell. With so many people dying, there was less demand for staples of the European economy, like wheat and barley.

But soon after the height of the Death, prices doubled within a three-year period. After the initial decline in demand around 1347, the bigger problem for the European economy became the lack of available labor to work.

This led to a decline in available supplies and a rise in wages, both contributing to rapid inflation as the value of the items went up and the value of money went down.

Prior to this era, the dominant economic system in Europe was feudalism – a system of wealthy landowners employing serfs to work the land in exchange for a share of the output. It was an arrangement that provided enough for workers to subsist upon.

Rapid inflation signaled an end to feudalism, and that was a good thing. The dynamic had also been more succinctly described as "two masters running after one journeyman," to the great benefit of the journeyman (worker).

As the landlords offered higher wages, the return they earned on their land dropped anywhere from 50% to 75%.

It's often claimed that inflation only comes from the debasement of a currency through money printing or other vast increases in the money supply. And that can be true. However, we believe that the biggest factor in driving inflation is simply a strong economy.

Consumer demand bids up prices on goods, services, and commodities. A tight labor market leads to higher wages – raising costs to businesses along with the buying power of workers.

Why Does This Matter in the Aftermath of COVID-19?

In 2020, the world was struck with the COVID-19 pandemic and Congress soon approved multiple stimulus packages. Starting with the $2.2 trillion CARES Act that was passed in March 2020. This included $349 billion in Paycheck Protection Program forgivable loans to businesses, an additional $600 per week in unemployment benefits, and $1,200 checks for many taxpayers.

Second, in December, Congress passed an appropriations bill that funded the government and included roughly $900 billion in pandemic relief. That include $600 checks to most individuals, $600 weekly in extra unemployment benefits and $284 billion in forgivable small business loans.

In our pre-pandemic assessment, the central point in our inflation prediction was the extremely tight labor market and upward pressure on wages.

Personal income is actually higher than its pre-pandemic levels. As of November 2020, wages had declined only about $43 billion, but the government filled it in with nearly $1 trillion in personal income transfers.

It looks like the economy declined about 3.5% after inflation.

The biggest player here is the Federal Reserve. The Federal Reserve now says it's not concerned with inflation at 2%. While its target is 2% inflation, it's now describing that as a midpoint not a ceiling. The Fed will be happy with inflation at 4% – with 2% as its target.

The Fed will not make a brash move to stem inflation. And the move from 2% to 4% can do a lot for asset prices.

In 2019, we did predict that inflation would start to creep in. We were right again, as expected-inflation levels almost broke 2%. But when the COVID-19 pandemic struck, the economic calamity pushed expectations almost toward deflation.

A set of measures known as "breakevens" evaluates how much inflation the market expects. In the depths of the crisis, markets saw five-year inflations at just 0.16%. But rather quickly, expectations have risen to crack 2%.

The difference between 1% inflation and 4% inflation is significant. Due to the power of compounding, a $100 weekly grocery bill turns into $110 over 10 years at 1% inflation... or $148 at 4%. If you spread that across all of your daily costs, retirement gets a lot more expensive.

Inflation Affects All Sectors

I'm sure you've noticed that prices for almost everything are absolutely soaring... while at the same time we are running out of... well... practically everything from computer chips to appliances to building supplies.

When people see prices rising... and hear stories about how everyone around them is getting rich, no one is quite sure what is happening or why... but they instinctively know holding cash is not the answer.

Americans are pouring money into the markets and other wild speculations in record numbers. Americans opened more than 10 million new brokerage accounts last year, a record.

What's more, the expectations for inflation will drive investment returns. When you expect inflation, you position yourself differently than you would if you expect deflation.

Low interest rates mean you don't get much income from your investments. And rising rates mean the value of income-paying assets will decline. In other words, investors get less interest but face the same amount of inflation.

Another sign of the speculative frenzy taking place is a flood of new companies going public. 480 new IPOs took place in 2020, the highest amount since 1999.

Credit card giant Visa (V) released data that shows 52% of consumers spent more money in May of 2021 than they did pre-pandemic in May of 2019. People can spend more because things cost more.

Consumer-staples company Clorox (CLX) will be announcing price hikes because of cost inflation, while demand for products is moderating. We've also recently seen reports and social media posts that major coffee retailer Starbucks (SBUX) is having trouble getting cups, syrup... and basically everything for their drinks.

Members-only retailer Costco Wholesale (COST) – a bellwether of so many things throughout this pandemic – is seeing inflation in items ranging from meat to aluminum foil. There is a pent-up demand for goods which has the potential to drive up prices. And there has been massive supply-chain disruptions which can impact supply.

It started with microchips, one of the most in-demand goods in the world, and even things like paint cans are being disrupted. Because microchips are in such high demand – and still were, even with so many people at home throughout 2020 – their shortage was actually the forerunner of the widespread supply-chain issues we have seen more recently.

Taking a look at the Institute for Supply Management ("ISM") Price Index which tracks price trends across 18 different U.S. manufacturing industries. The survey brought to light that there was continued economic growth. But it also painted a picture of continued shortages of raw materials and labor in the U.S. manufacturing.

Manufacturing can't find people to work for them, supply chains are tight, and the ISM survey shows that raw materials keep rising in price and dropping in supply. We're talking about basically everything – cardboard, aluminum, plastic, and stainless steel.

Oil prices are up more than 200% since mid-2020.

Lumber prices are up 300% since 2020 and are at all-time highs. Paper prices are up 40%. Copper prices are at an all-time high.

Today, our economy doesn't have enough people to work – especially in skilled roles.

The National Federation of Independent Business tracks small-business sentiment. It asks business owners "their single most important business problem." Today over 25% of those surveyed say their most important problem is finding qualified workers. They also said that over 40% of small-business owners said they had job openings that they could not fill – a record high.

According to Indeed there are over 19% more job openings than before the pandemic. There is a massive demand for employees in many different sectors. From Factory workers, to teachers, to health care workers, and even in the professional business world.

A telltale sign of a tight labor market is people voluntarily quitting their job. Voluntary resignations are trending higher while layoffs are trending lower.

The Money Illusion

But the real reason why you should be concerned today is that prices are not going up – at least not in the way that you think they are. Instead, it's the value of our money going down.

This happens when people start to measure their wealth in simple numeric terms... instead of real terms – in other words, what your money 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 this time last year – even after the Fed has pumped trillion and trillions of new dollars into the system.

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 ago.

Most Americans have never experienced this type of inflationary environment – nearly half the U.S. population was born AFTER 1981. They don't understand how the U.S. treasury and the Federal Reserve are purposefully devaluing our money in a way we have never seen before.

We are at the beginning of a new inflationary era.

Have We Ever Seen Such Inflation in the U.S. Before?

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 1/3.

The initial perception was that prices were going up – but what was really happening was just the opposite. Our currency was collapsing. The dollar nearly ceased to function as the world's reserve currency back in 1978.

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.

And even the "best" and supposedly "safest" companies in America were collapsing.

What so many people fail to realize is this: Inflation causes huge distortions to the economy.

Meanwhile, inflation is starting to wreak havoc on our economy and the markets – just look at the shortages, soaring prices, lengthened delivery times, huge pay increases businesses must offer to keep valuable employees, and hoarding of critical supplies.

The government is already talking about price controls, the amount of money people are borrowing to buy stocks (leverage) has hit an all-time high. There are incredible shortages for basic goods (like cars and appliances) while high-end goods like Rolex watches are now impossible to find.

Why Can't the Government Stop Inflation?

First, because there's simply no one on the federal level willing to do what Paul Volcker did in 1981 when he jacked up the federal funds rate to more than 22%.

While Volcker's move was absolutely right in the long term (it set us up for two decades of prosperity), it was extremely painful and controversial in the short term. The 1981-1982 recession was the worst economic downturn since the Great Depression. Unemployment hit nearly 11%.

The sad truth is, Americans are no longer willing to suffer any short-term economic pain, so there will be huge calls for even more bailouts, more debt and stimulus, which will only make the problem worse.

The Fed Chairman Powell stated recent price increases are just "transitory."

Which is a fancy way for economists to say "not permanent," and it's what "experts" often say at the beginning of inflationary cycles.

Let's be clear: The Fed does not exist to protect you and your money. The Fed is there to protect banks and the government.

This Crisis Will Tear Our Nation Apart

While there are many similarities between the inflation unfolding today and what happened in America in the 1970s, the inflationary script for the next few years in America will look quite different than it has in the past.

We are on a dangerous path in America. Our government has set us on the road to currency devaluation and a new era of inflation.

Some assets are going to suffer, big time. Others will skyrocket in value. The wealth gap will get wider than ever before. But you can potentially grow and protect your wealth in the years to come.

And today, you can be among the few who understand exactly what's happening in our financial system – and the critical steps you must take.

Sadly, this crisis is all going to tear our country apart over the next few years...

On one side will be those who understand what's happening, who take the necessary steps. These folks will continue to get richer and richer.

On the other side... well... unfortunately, that's most Americans... who won't understand what's going on... and will cling to a collapsing currency and get trapped by the Lockdown, while falling further and further behind.

For yourself, and your family, get the facts. Learn how to take advantage of this trend so you are not left behind.

Consider this your final wake-up call...

Billionaires including Warren Buffett, Stanley Druckenmiller, Paul Tudor-Jones, Bill Ackman, and more have stated publicly that Americans aren't paying enough attention to this development.

That's why I've gone public with what I believe is the most important and useful analysis on this situation in the financial world today. You can access my report by clicking right here.

There's no doubt we are in for huge changes to our financial system in the next few years.

If you are counting on IRAs, 401(k)s, insurance policies, annuities, pension plans, stocks, or bonds, this information is critical.

I've posted my brand-new, full analysis, including my FOUR recommended steps, on my website...

You can access it free of charge today – click here to view.