Editor’s Note: Today, we share an essay from Dr. David ‘Doc’ Eifrig, editor of The Health and Wealth Bulletin and CEO of Wide Moat Research’s parent company, MarketWise. As Doc says, a great devaluation is underway… and has been for years. Too few know about it, but every investor should understand, and prepare, for what’s coming. Read on.
Your money is worth less than ever before.
Your labor is worth less.
Your health and well-being are worth less.
And the promises made to you over the years? The ones from employers… corporate America… and the U.S. government… are very likely not worth anything at all.
What we’re living through is a great national devaluation…
You know what this devaluation feels like – in big and small ways across American life.
The little surcharges on restaurant bills … the packages on store shelves that get gradually smaller for the same price…
It’s paying tens of thousands of dollars a year to a health insurer that will then fight you like a wolverine when you actually need it for a simple prescription or procedure… or heaven forbid the kind of accident or health scare you thought was the whole purpose of having insurance all along.
It’s the spectacle of a government taking a wrecking ball to cancer and Alzheimer’s research, national parks, the postal service, veterans benefits, and education in the name of so-called “fiscal responsibility” – while quietly adding nearly $3 trillion to the national deficit.
It’s difficult to say these things.
But I’m all but certain that somewhere inside yourself, you feel what I do, too.
We might be mad about different things. But we’ve all watched the systems we’re supposed to trust fail and betray us in previously unthinkable ways. Suddenly, American flights can’t get safely to their destinations… and disaster victims are left to fend for themselves.
It’s time to get serious about the fact that your pension, Social Security check, and even money in the bank probably aren’t safe either.
This great devaluation has been unfolding for decades.
It has played out like a slow drip. We all see higher living costs and lower expectations over time.
The most in-your-face examples are the “convenience fees” tacked onto your bills… and the screens asking you to tip for every transaction. But while they’re annoying and cost you real money, they’re not the main problem.
But they’re the extension of a much more serious devaluation of American life – one that should make you furious.
Our Broken Social Contract
It all started shortly after World War II.
For a while, the system worked. From 1948 to 1978, hourly compensation grew at nearly the exact same rate as productivity.
But in the 1970s – that all changed.
It isn’t hard to see where that happened on this chart:
Starting in the 1970s, worker pay began falling behind productivity growth. And for the past 50 years, the trend has shown no sign of reversing. It has gotten wider every year.
Your labor is quite simply worth less than it once was.
The same folks who pulled the rug on this rising middle class soon came to own all the levers of American policy.
And they’ve used them ever since to rig the system to their own benefit.
The very agreements and conditions that nurtured the prosperity and economic dominance of America in the second half of the 20th century have been stripped away.
You likely know that Social Security will be insolvent by 2033 barring a government rescue. At that time, you and an estimated 70 million other folks would see a 21% benefit cut, right off the bat.
In the short term, about 22 million people will see their health coverage costs skyrocket or lose coverage altogether next year.
Along the way, so-called “social mobility” – the once-cherished American dream of climbing the economic ladder – has gone straight backward. More than 90% of children born in 1940 went on to surpass their parents’ earnings. By the 1980s, it was a coin flip.
It amazes me that anyone can look at collapsing highways and airliners falling from the sky and believe this country is still going to keep its promises about money or retirement.
No matter how responsible you’ve been or how much you’ve managed to sock away, this whole reckless situation has left you poorer.
Because at the heart of all this is the devaluation of your money itself.
The dollar has lost 97% of its purchasing power since 1913… and an astonishing 20% just since 2020.
Even by the official metrics, inflation eats away at 2.5% of the dollar’s value every year. And as you well know… many costs are rising much faster than that.
I hope, of course, that as a country, we can fix these things and restore fiscal sanity, protect the value and role of the dollar, and uphold the agreements, large and small, that made America great in the 20th century.
But as we say in investing… hope is not a strategy. You need to protect yourself.
If any of what I’ve said rings true, then I’d encourage you to go right here. In this free presentation, I’ll lay out the tragedy I see unfolding, and the things investors can do about it today.
Again, you can learn more right here.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig
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