What's Really Happening in America
Ignore stocks for a day... The 'Net Worth Index'... The only people getting richer... What's really happening in America... We could go on... Our founder Porter Stansberry's next warning... How to prepare...
Let's ignore the stock market for a day...
Today, we're not talking about investing in stocks, using the stock market as a wealth-generating tool, or tracking indicators like the 200-day moving average of the S&P 500, which I (Corey McLaughlin) just wrote about yesterday...
We're ignoring the benchmark U.S. index, the Dow Jones Industrial Average, and the Nasdaq Composite Index to tell the true story about our nation's economic health.
You see, America's financial reality is not what it might seem – despite the S&P 500 being up 17% since last October.
Think about what else you see in the economy today...
What's actually happening...
We're seeing record amounts of consumer debt and credit-card delinquencies rising at higher interest rates than we've seen in 15 years...
We're seeing a phenomenon called "inventory shrink," which is corporate speak for more people stealing from stores because they feel like they can't afford things... or aren't held responsible for swiping things for free.
We're seeing a U.S. government paralyzed, most notably when Congress was unable to make any decisions for three weeks without a speaker of the House – until this afternoon. Now, one of the first orders of business will likely be more spending that ups the national debt higher than the $33 trillion it already sits at.
And we're still seeing high inflation, largely the result of pandemic stimulus efforts and monetary policies that are only now ending... and warped financial reality to new distorted levels... And we could go on.
Sorry to be a downer, but I'm only reporting what's happening.
So, instead of looking at stock prices and the latest earnings reports coming out this week, what if the financial media, politicians, corporations, Wall Street asset managers, and I used another, more grounded number to measure economic health?
This number shows what's really going on for most Americans...
Think of it as the 'Net Worth Index'...
Before I go any further, this idea might sound familiar to longtime readers...
I wrote about it back in the summer of 2020, when a Federal Reserve-juiced market was on its way up to new all-time highs while more than half of Americans didn't have jobs, people were rioting in the streets, and our leaders fumbled around Washington.
It's a message that our founder Porter Stansberry has been trying to get across to everyday Americans for more than a decade. Some of the details have changed over the years, but the climate remains the same, and is radically worse in some cases...
You could calculate a measurement like this in a lot of different ways. But today, let's do it by comparing the share of net worth held by the richest 1%, 10%, the middle class, and the poorest 50% in the U.S. for the past few decades.
I want to draw your attention most to the trend among the richest 1% and the group that makes up the top 50% to 90th percentile, which is roughly the middle class. The richest of the rich are the only group that has gotten richer in the past 30 or so years... and most everyone else has gotten relatively poorer, especially the middle class.
The big point is the richest people in this country have been increasingly getting a larger share of our wealth pie for decades... while most Americans have been largely unable to keep pace.
It's also interesting to note that as I put this chart together, I found out the Fed stopped reporting the share for the "richest 1%" in the first quarter of 2022. So we did the simple math based on the other three sets of data to figure out the numbers.
You've probably seen this wealth gap in your community and don't need data to back it up. But here's where I'm going with all this...
At times like these, the frustrations of the American public have tended to boil over...
I'm going to repeat much of what I wrote three years ago because it hasn't changed... It's still important, and the problems remain – and are even bigger.
When the gap between the rich and the poor is large and continuing to grow, an unexpected, panic-inducing event – like say, a pandemic – can spark major age-old stories and trends of violence, political and financial upheaval, or even war.
For instance, it started with the creation of the Federal Reserve in 1913, in the wake of the Panic of 1907... After that, most Americans saw their wages fall in half.
It happened in 1933 after newly elected President Franklin D. Roosevelt passed an executive order to restrict gold ownership. Almost every American saw the value of their savings and wages fall immediately by around 30% – setting off the worst aspects of the Great Depression and leading to violent insurrections in Washington.
It also happened in 1971, when the U.S. dollar came off the gold standard. This began the financial crisis of the 1970s, which lasted a decade and spawned domestic terrorism across the country. It's also when wage growth began to seriously lag productivity gains.
Most recently, it happened with a pandemic and the government response...
The solution of the Federal Reserve, the Department of the Treasury, and Congress to our country's ills is always massive money-printing. And each round of stimulus "creation" has been more unprecedented than the previous one.
Over 10 days in March 2020, the Fed created trillions of dollars of free "fake money"... more than it had created in the previous 30 years before the financial crisis of 2008 and 2009.
Even after trimming its balance sheet by about 15% since early 2022 to supposedly fight the inflation it created, the Fed still has nearly $8 trillion of assets on its books, double the number before the pandemic.
Congress also passed trillions more in stimulus and spending bills in 2020 and 2021 while interest rates were near zero.
Stimulus checks and debit cards from Uncle Sam, extended unemployment benefits, and a pause on student-loan payments may have eased some panic in the short term. But they don't help the financial health of our country in the long term...
The U.S. debt to GDP ratio is at 120% and spiked to its highest level since World War II amid the pandemic spending. And the U.S. dollar has lost 95% of its value since 1913, when Congress passed the Federal Reserve Act and "modern" central-bank policy began. Since then, the Fed has only increased its interventions over time.
Those with fewer dollars to their name get relatively poorer every time a new one is created... and more frustrated whether they know it or not.
Even before we all started living in a pandemic economy, the gap between America's richest and poorest families had more than doubled from 1989 to 2016. As I showed above, middle-class incomes have grown at a slower rate than those of the rich for the past 50 years.
All someone needs to do is drive around or take public transportation and look at what's happening on the streets in cities and towns all over this country to see what this translates to in real life.
If we're honest, our society is in chaos...
Trust in our institutions is badly broken.
America may still be "the best house in a bad neighborhood" in the context of the world, but that still doesn't mean everything is OK. Not even close. Real people are feeling real pain...
You can look at all kinds of examples... The number of drug overdoses, the increased reports of stealing from stores, or the political polarization that makes rational discussion nearly impossible.
Porter and many of our editors have been writing about the financial and cultural dangers of an ever-increasing wealth gap for years and warning about the potential consequences, which appear to be playing out in real time now...
While the "easy money" policies of the past may have been good for the portfolios of folks with access to Wall Street, the American economy we have today is largely unsustainable... and facing a cost of money the nation hasn't seen since before the last financial crisis.
The problems that Porter has described over the years and that we've touched on today will catch up with everyone's wealth eventually, no matter how well off you are or where you live, rich or poor. If you ask Porter, they're coming to a head right now...
Porter has written books and long talked about this idea...
In the book America 2020, Porter wrote about how 2020 would mark a pivotal time for America... when it would truly face the consequences of decades of debt creation and misplaced government interventions.
He noted that these periods of crisis and converging financial, societal, and political factors have happened roughly every 30 to 40 years – with the last one coming in the 1970s.
Throughout history – almost on a schedule – times of zero percent interest rates, seemingly endless money-printing, and populist pushes for change have eventually had unintended second-order economic consequences...
That's why it's so critical to think ahead...
You can prepare for the inevitable fallout...
Porter has been urging subscribers to prepare for years, just like he did in advance of the financial crisis in 2008 and 2009... including the blowups of Fannie Mae, Freddie Mac, and General Motors. As our publisher Brett Aitken wrote in an e-mail message today...
A decade ago, our founder, Porter Stansberry, predicted the end of America as we know it.
Do you think he was right?
In a documentary now watched by millions, he warned we would eventually see riots on our streets because of the wild mismanagement of our monetary system.
Many called him outlandish... even irresponsible.
They did the same when Porter said the world's largest mortgage bankers – Fannie Mae and Freddie Mac – were going to zero...
And when he predicted the demise of the world's largest car manufacturer, General Motors...
Then once again, with America's biggest mall owner, General Growth Properties.
So, it doesn't surprise me how revered Porter is by our readers.
And it's not just his uncanny knack for being right – it's his willingness to put his neck on the line to get these controversial warnings in front of regular Americans.
Porter is stepping forward with another warning tomorrow...
For those who are already familiar with him, yes, Porter is back after three years away from our business... and for those that haven't heard a presentation from him before, I urge you to listen to what he has to say...
Porter will sit down for a special, free video event at 3:30 p.m. Eastern time on Thursday at his 130-acre farm just outside of Baltimore. The latest message is so important and time sensitive that we rushed a film crew to record it.
Porter plans to talk about these issues we've discussed here, and much more about his view on what's really happening in America, as the latest "monetary insanity," as Porter calls it, ramps up to a dangerous crescendo.
He'll also give an update on where he has been and why he left. But, most importantly, he wants to explain why a looming crisis in the financial markets is getting closer by the day and shares steps you can take to protect and grow your wealth in this climate.
The event is free to watch. We just ask that you register in advance so you don't miss anything. Again, the event begins at 3:30 p.m. Eastern time tomorrow. You can sign up here.
New 52-week highs (as of 10/24/23): Structure Therapeutics (GPCR).
In today's mailbag, a question about our Stansberry Conference... As always, send your questions and comments to feedback@stansberryresearch.com.
"Hey, Is the Vegas conference somewhere on your site and available to listen to?" – Subscriber Chris C.
Corey McLaughlin comment: Chris, Thanks for the note. The conference replays are not available yet. They should be in a week or two. Stansberry Alliance members and those who had livestream access will get an e-mail when they are with the details.
For anyone else who is interested, you can sign up here to get notified when the replays are available and find more information about our biggest event of the year.
This year's conference featured presentations from more than a dozen Stansberry Research editors and analysts and invited guests like Morgan Housel, Josh Brown, Danielle DiMartino Booth, Ben Mezrich, and Lance Armstrong, who sat down for a wide-ranging interview with Retirement Millionaire editor Dr. David "Doc" Eifrig.
All the best,
Corey McLaughlin
Baltimore, Maryland
October 25, 2023