"I remember lining up at 4 in the morning just to get $3 of gas."
That's what reader B.B. recently told us about experiencing the worst period of inflation in U.S. history. If you're a Baby Boomer, you're familiar with gas shortages in the 1970s.
In 1973, oil prices skyrocketed when OPEC raised the price of crude oil 70% and imposed a trade embargo on the U.S. But the factors leading to this incredible inflationary period began nearly a decade earlier...
From 1961 through 1965, annual U.S. inflation averaged just 1.28%.
Then in 1965, President Lyndon B. 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?
Back then, just like today, inflation was gradual at first. It climbed to 3.0% in 1966 and tacked on another 2.8% in 1967. And in large part because of the money illusion – focusing on the number of dollars you have rather than those dollars' buying power – people continued to feel richer and richer as the S&P 500 Index hit a then-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 topped 50%... In other words, the value of your savings was essentially cut by a third.
Their initial perception was that prices were going up – but what was really happening was just the opposite: Our currency was collapsing.
Few Americans today recall that the dollar nearly ceased to function as the world's reserve currency back in 1978. 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.
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.
I've been pounding the table on inflation concerns over the past year. And earlier this week, my colleague Dan Ferris issued his own warning...
According to Dan, we could be on the verge of an 80% crash in the overall market. But even if we don't see such a huge crash, it's already clear that inflation is eating away at your wealth.
In a just-released interviewed, Dan details the warning signs he's seeing in the market and the steps you can take to protect your wealth now.
Keep sending us your questions, comments, and suggestions. We read every e-mail... [email protected].
Q: What are your thoughts on avocado oil? – L.N.
A: Avocado oil has a good profile of healthy fats similar to olive oil, which we love. And it has a high smoke point, meaning it's better for cooking at higher temperatures (think frying and sautéing).
The problem with avocado oil is a lack of well-researched studies... There are two studies we found suggesting avocado oil may change how our livers function, which could lead to fatty liver disease. And there's a lone Indian study suggesting some avocado exposure might change the DNA in our lymph cells (yikes!).
Additionally, it's important to remember that some of the beneficial studies receive funding from "Big Avocado" – the Hass Avocado Board. That doesn't necessarily mean there aren't any benefits, but it's something to keep in mind.
Another big deterrent for avocado oil – the price. It's much more expensive than olive oil despite similar proven health benefits.
If you want to use avocado oil, we'd suggest only using it for high-heat cooking. Stick to olive oil for everything else. And no matter which oil you prefer, remember to avoid processed oils – anything that says, "partially hydrogenated." That's a sure way to ruin your health.
Q: Any suggestions for fighting eye strain for those of us who need to look at screens all day? – D.B.
A: Don't forget to blink...
People normally blink 15 to 20 times per minute. But it turns out, when people are reading or watching something on a digital screen, they blink 66% less. Humans blink less when they're focusing intently, but when you're staring at a smartphone, computer, or TV screen for too long, this leads to eyestrain.
Eyestrain leaves your eyes achy, sore, or tired. To avoid eyestrain while looking at a screen, give yourself a blinking rule – for example, every time you scroll down a page on your computer or phone, blink a few times. I also blink a few times every time I reach for my computer mouse. And take breaks from your screen according to the 20-20-20 rule: Every 20 minutes, look at something 20 feet away for 20 seconds.
Also, keep an arm's length between you and your screen at all times... 16 inches at the very minimum. Watching big TV screens up close can strain your eyes, too – the bigger the screen, the farther away you should sit. The ideal distance is at least five times the width of your screen.
What We're Reading...
- Did you miss it? The next bear market could hit at any time.
- Something different: SpaceX just lost 40 of its newly launched satellites.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
February 11, 2022