Imagine that you were a weakling who kept his cash under his mattress, and you lived in a bad neighborhood that was dominated by the Mafia. Every year or two, Mafia thugs would come by and threaten to beat you to death, and demand: “Half for us and half for you.” That is a bit like what it is like to live in an era of mass inflation. But with inflation, the cash extractions are gradual, and almost invisible. No thugs. Just melting purchasing power. Perhaps I chose a poor analogy, but bear with me, while I explain:
As a preface to reading this essay, I’d suggest taking the time to read these four recent news articles:
Yes, without some major changes, the Social Security Trust Fund will probably be insolvent by 2032. Restoring the Trust Fund’s solvency would require either a 29-percent payroll tax increase or a 22-percent across-the-board benefit cut, today. And if Federal legislators wait until 2032, it would require a 33.5-percent payroll tax increase or a 25.6 percent across-the-board benefit cut. The political backlash to either of those solutions would be tremendous. I predict that the elected politicians in the Federal government will dawdle until 2030 and then print their way out of that problem. When they need trillions of dollars, they will simply create trillions of dollars out of thin air. Any “austerity” alternative would be political suicide, at least for the party in power. This explains why this decision keeps getting delayed.
If the funds required are simply created out of this air, it would be largest quantitative easing in history. It would prove to be very inflationary. But even without the Social Security funding crisis, with the U.S. government’s ongoing deficit spending, a resurgence of high consumer price inflation is almost inevitable.
The Rule of 72 Works Both Ways
The oft-touted “Rule of 72” for investors on the power of compounding interest works in reverse with inflation. Instead of estimating how quickly you’ll double your money, the Rule of 72 can be used as a gauge of how quickly your purchasing power will be cut in half by chronic inflation.
Consider the following:
A 2% inflation rate reduces the purchasing power of a currency by one-half after 36 years. (With inflation’s ups and downs, over the last 30 years the U.S. dollar has lost 53% of its purchasing power.) For many years, the Federal Reserve and the U.S. Treasury have had a “target” inflation rate of 2%. Even if that were achieved, it would still be just robbery in slow motion.
Face it, folks: Inflation is a hidden form of taxation. Most people don’t even recognize that this is happening. They just shrug and say: “Prices have gone up since I was a kid.” What they should be saying is: “I’ve been robbed!” They should be grabbing pitchforks and torches and heading to the District of Criminals. But instead, they grab their smartphones and scroll through funny cat videos.
Presently, the official rate of inflation is just over 2%. But what happens when inflation again ratchets upward? The Rule of 72 gets increasingly vicious, to wit:
A 3% inflation rate reduces purchasing power by one-half after 24 years.
A 6% inflation rate reduces purchasing power by one-half after 12 years.
A 10% inflation rate reduces purchasing power by half after 7.2 years.
A 15% inflation rate reduces purchasing power by half after 4.8 years.
A 20% inflation rate reduces purchasing power by half after 3.6 years.
A 30% inflation rate reduces purchasing power by half after 2.4 years.
A 50% inflation rate reduces purchasing power by half after 1.44 years.
A 75% inflation rate reduces purchasing power by half after 0.96 years. (11 and a half months.)
And a 100% inflation rate reduces purchasing power by half after 0.72 years. (Just 8 and a half months.)
In May of 2022, during the height of Bidenflation, the official U.S. Dollar inflation rate was 8.6%. If inflation had carried on at an average of 8.2% (which was likely if Kommie Harris had been elected), then the value of our dollar-denominated savings would be cut in half in just over eight and a half years.
Can you imagine what life must be like in Venezuela, where the annual inflation rate is estimated at 682%, for the remainder of 2026? (And it was a staggering 300,000% there, when inflation spiked in 2019.)
Who is Behind This?
You may be wondering, who are the masterminds behind chronic inflation? I’ll be both blunt and terse: In essence, the malefactors are the banking elites, and their bought-and-paid-for minions in the Federal government. I don’t want to veer off into detailed conspiracy theories in this piece, so do your own research, and get confirmation from multiple sources. Look closely at the family ties of the banking cabal. Some of these blood ties date back centuries. Blood is thicker than water. I suggest reading the book The Creature From Jekyll Island, if you’d like to take a deep dive.
I believe that the long-term goal of the elites is to subjugate all of the world’s population under a tyrannical One World Government, using a universal electronic currency, AI, and social credit scores. They want to extract the vast majority of the world’s wealth, resources, and human labor. It is all about control. I could go into the details, but I’d end up sounding very End Times preachy. (I promised to be terse.)
Hedging Against Inflation
Even those who have socked away several million dollars for retirement may find themselves in for a rude awakening, when inflation spikes. All of their years of diligent and conscientious saving could see their savings wiped out with just a couple of years of 75% inflation, or within a couple of months of Zimbabwean-scale or Venezuelan-scale hyperinflation. Even if there is only a small chance of a major inflation spike or a formal currency revaluation, it still makes sense to hedge a good portion of your retirement savings. And your best bet hedges will be tangible assets. These are assets that always hold intrinsic value, regardless of the number of zeros in ledger books, or printed on paper currency.
Diversify!
Because desperate governments have a tendency to tax heavily, to inflate heavily, and just outright confiscate things, it is important to diversify your tangible hedges. There could be another 1933-style gold confiscation. But I really doubt that we will experience a gold confiscation and a silver confiscation, a stored fuel confiscation, a black rifle confiscation, an antique gun confiscation, an ammunition confiscation, a farmland confiscation, a stored fuel confiscation, and a classic car confiscation. Surely, somehow, you’ll be able to retain a good portion of your tangible wealth, for decades. But to be certain of this you must have a diverse portfolio of tangibles. As I’ve mentioned many times before, the ultimate protection from inflation and social unrest is to live year-round at a rural self-sufficient farm or ranch that is far from major population centers.
in conclusion
To get back to my title of this essay, it is probable that there is more inflation ahead, in the United States in the early 21st Century. Inflation will deeply degrade the purchasing power of savings, annuities, stocks, mutual funds, CDs, bonds, ETFs, pension funds, and Social Security payments. Even the best contrarian hedge fund won’t fully protect you when the dollar itself is wiped out. Day-to-day living will soon become very expensive. So, at best, we need to plan on semi-retirement in the latter decades of our lives. And even if you plan, invest, and hedge almost perfectly, there will still probably be lots of your close friends and family members who do not invest wisely. They will get blindsided by mass inflation when it comes. Therefore, you will need to have a liquid excess on hand so that you can be charitable, as your Christian conscience dictates.
Pray hard, plan, and invest accordingly. – JWR
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