This Threat Is Coming After Your Portfolio

In 1863, the Confederacy was desperate for capital...

The year before, it had lost control of the Mississippi River – the linchpin for its economic survival.

Wars take capital – and the Confederacy didn't have much. It didn't have the financial centers of the North or Great Britain. It didn't have a taxation system at the start of the war. Much of its wealth was tied up in the human beings its white citizens possessed as property, and no buyers outside of the American South considered slaveholding as anything but abhorrent.

The Confederacy tried to sell bonds, but winning the war looked like a long shot (and supporting the South was distasteful to many would-be bondholders), making it tough to raise money. If you were going to lend money to a nascent country headed toward failure with a currency likely to end up worthless... well, you wouldn't settle for a low interest rate.

Instead, the Confederacy offered cotton bonds – notes specifically backed by stores of cotton and redeemable at 6 British pence per pound. These found more buyers at comparatively modest interest rates of around 7% per year. That's because, ethical issues or not, English textile mills were relying on exported Southern cotton so they could keep churning out finished goods.

So the Confederacy blocked exports of its cotton through an embargo, starving the English textile industry. Prices soared, from 6 pence a pound to 27 pence. This drove the prices of bonds higher and put the Confederacy in a good position to sell cotton when it lifted the embargo.

But once the Confederates lost control of the Mississippi in New Orleans, they couldn't export cotton from a large swath of their territory. They couldn't pay their interest (also owed in cotton) or deliver the collateral.

As historian Niall Ferguson writes in The Ascent of Money...

The Confederacy had overplayed its hand. They had turned off the cotton tap, but then lost the ability to turn it back on. By 1863 the mills of Lancashire had found new sources of cotton in China, Egypt and India. And now investors were rapidly losing faith in the South's cotton-backed bonds. The consequences for the Confederate economy were disastrous.

The Confederacy lost the Civil War for many reasons... The Confederates were on the wrong side of the wicked institution of chattel slavery. And they were, in no uncertain terms, treasonous traitors against their own country.

But one of the more mundane reasons simply comes down to money. Without cotton exports, they couldn't raise enough money to continue the fight.

The Confederacy had money, to be clear. It just didn't have valuable money. There was no shortage of "greybacks," a currency unbacked by any assets other than a promise from the failing Confederate government.

As the war progressed, the South printed $1.7 billion worth of greybacks... and inflation soared.

The North printed paper money, too, known as greenbacks. But a Union dollar was worth about 50 times that of a greyback by 1864. Prices in the North rose about 60% – but those in the South soared by 4,000%.

The printing of Confederate currency led to runaway inflation.

Inflation of the Confederate greybacks wasn't just caused by excessive printing, however. The value of the currency was often determined by news of the war. While the Currency Reform Act reduced the money supply by one-third, it sent prices up only 9.8%. Meanwhile, the loss at Antietam sent the greyback down 15% in a day. Gettysburg led to a 20% hit.

You can see these occurrences on the following chart (this is the same data in logarithmic scale to make the line easier to see)...

Even bad war news wasn't always enough to generate inflation for the Confederacy. On top of that issue, all types of goods were in short supply due to blockades and diverted production. The monetary supply of greybacks mattered, but so did many other factors.

Taken together, the eventual result was a true episode of hyperinflation, and it dealt a crushing blow to the Confederacy.

Today, the threat of inflation is looming in the U.S. once again...

A recent poll found that 94% of Americans listed inflation as their top economic worry. And now President Donald Trump is publicly battling with Federal Reserve Chair Jerome Powell over Powell's refusal to lower interest rates at Trump's request.

Powell says he's keeping rates higher to mitigate inflation caused by Trump's tariffs. But Trump says lowering rates would boost the economy.

The truth is that no matter who's in charge, inflation isn't going anywhere anytime soon...

We're living through a great national devaluation.

Your money is worth less than ever before. Your labor is worth less.

You know what this devaluation feels like – in big and small ways across American life.

It's the little surcharges on restaurant bills... the packages on store shelves that get gradually smaller for the same price... and higher premiums for the same health insurance.

This devaluation has been happening for decades.

And while mainstream headlines focus on inflation and interest rates, we're experiencing a financial reset that erodes purchasing power and ruins traditional strategies like holding bonds and cash.

To help investors prepare, I'm introducing a new investment blueprint designed specifically for an era of currency devaluation.

Rather than rely on outdated approaches, this strategy centers on hard assets, select inflation-resistant companies, and a fully diversified portfolio to protect and grow wealth.

Don't sit still while your dollars lose value... Take action now. You can get all the details here.

Now, let's get to this week's Q&A... And as always, keep sending your comments, questions, and topic suggestions to feedback@healthandwealthbulletin.com. My team and I read every e-mail.

You Don't Need 10,000 Steps a Day

 Q: Always appreciate your health advice. What about the new advice on needing just 7,000 steps? – C.W.

A: Thanks for your readership, C.W. Earlier this week, The Lancet Public Health published a massive review of studies on the health benefits of walking. One of the doctors who led the review, Katherine Owen, said, "After 7,000 steps, benefits either plateaued or there were very small additional benefits."

I've said before that the magical ideal of 10,000 steps is made-up nonsense...

The number didn't come from medical science. It was a marketing gimmick. In 1964, a Japanese company created one of the first pedometers – machines that track how many steps you take. The company wanted an "auspicious" number to help sell it... And 10,000 felt right.

It wasn't based in science or any kind of research. It was nothing more than advertising psychology.

And whether the "goal" is 10,000 or 7,000, the number of steps isn't what really matters to your health. You can read about the more important factors here.

What We're Reading...

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Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 1, 2025