We’ve been ringing the alarm bells on inflation for the past year, and we have some new data to share with you.  In mid-December, the November 2021 consumer price index (CPI) growth figure for the U.S. was published: and came in at 6.8% year-over-year (this phrase refers to the comparison of one period with the same period of the previous year).  This is the highest inflation has been in four decades.

This chart from the Bureau of Labor Statistics shows the steep increase in the consumer price index from November 2001 to now.

You actually have to go all the way back to February 1982 to find a CPI year-over-year growth figure this high!  And as we have explained in some of our previous articles, the true inflation is actually much higher than the reported CPI figure.

We started writing articles warning our newsletter readers about inflation a while back, when the reported year-over-year CPI was only 1.8%.  That was at a time when the Fed, the Treasury, and most of the mainstream media were all saying that inflation was not a serious threat and should not be a concern.  By summer 2021, CPI growth was all the way up to the mid 4%s, but they continued to reaffirm that it was just “transitory.”  We kept writing that the inflation was more likely structural and would be persistent, and it turns out we were right.

Here’s a bit more context on how serious inflation is today.

The 6.8% reported CPI growth is the highest official inflation reading in 39 years.  That’s a long time.  However, it becomes even more extreme when you account for the changes in how CPI is measured these days.  If the CPI figure today was measured similarly to how it was decades ago (i.e., directly including house prices and not adjusting the basket of goods that make up the CPI), the year-over-year growth rate would be in the double digits, similar to the 1970s.

We share this information not to scare anyone, but to give you a chance to prepare and act against it.  It’s not a great time to keep your money in the bank; if you can find a way to deploy it and make it work for you during this inflationary period, you should.  The cost of keeping money in the bank today is higher than it has been in most people’s entire lifetime.

Why?  Today, the interest rate that the banks pay on deposits and money market accounts is essentially zero.  (We ran into this recently, which you can read about here.)  When adjusted for inflation, the real return on those funds is substantially negative.

Let’s say that the real inflation rate today is 15%.  That means every dollar kept in the bank loses its purchasing power by 15% per year.  To put that in context, $1 Million in the bank would be worth only $614K after 3 years, $444K after 5 years, and $197K after 10 years assuming true inflation remains at 15%.  In other words, if you enjoy lighting your hard-earned dollars on fire, go ahead and put them in the bank

(What should you do instead?  One thing we advise is to avoid paying off your properties, otherwise that money is just sitting in the bank—we call this Trapped Equity.  Learn more about freeing your Trapped Equity here.)

It wouldn’t be that unusual if the inflation we are experiencing right now persisted for as long as a decade or more.  That’s basically what happened in the 1940s and the 1970s.  But in some ways, the situation today is even worse than the 1970s.  At least back then, the banks were paying depositors around 5% on their money.  Depositors still received a negative return when adjusted for inflation, but it was likely a lot less negative than what we are experiencing today.

One of the best ways you can combat this is to invest your money into something with a higher return than the rate of inflation.  If you take a look at this site and calculate the rate from 2011 to 2021, you’ll find that the average rate amounts to 2.2%.  If you were to invest in, say, our Liquidity Account for that time frame, which has a return of 3.9% (versus a regular savings account like Chase that offers 0.01%), your return would be +1.7 versus -2.19 from the bankEven better would be something like our Buy and Hold Fund with an 8%+ return.

Don’t let your hard-earned money suffer at the hands of inflation.

I don’t say this only to promote our investment options (although I think they’re an awesome deal) — I recommend this because I hate the idea of anyone losing their hard-earned money.  I’ve been there.  Now I know better and the reason I even write articles like this is to share with others the knowledge I’ve gained from these difficult experiences.  Be sure to check out all your options before investing.  We’ve never lost a dollar of an investor’s principal, so I feel assured in suggesting us as a foremost option.  But the most valuable advice I can give is to do what’s best for you in order to protect your money.  Right now, keeping it in a bank is not it.

We hope this data helps you avoid your wealth being imploded by the inflation bubble, and we’ll share updates on this situation as we learn more.