Editor's note: Don't underestimate this factor...

With geopolitical conflict weighing on the markets, many folks are looking at inflation as nothing more than another macroeconomic factor to monitor.

But Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – says history shows high inflation can lead to huge consequences for your long-term wealth.

In today's Masters Series, adapted from the September 23 issue of the Chaikin PowerFeed daily e-letter, Marc talks about a real incident that demonstrates how inflation harms you in the long run... 

Rampant Inflation Leaves Long-Term Scars

By Marc Chaikin, founder, Chaikin Analytics

Leasi could hardly believe how much she ended up paying for a coat on credit...

She lived in Brazil. And she worked as a secretary for the CEO of a Brazilian company. But she didn't make much money.

Leasi's house didn't have a heater. And in her city, it got cold in the winter.

At one point when she needed a new coat, Leasi couldn't afford to pay for it all at once. So she bought it with a credit card. And she paid it off over six months.

By the end, after totaling all her previous payments, Leasi was shocked to find out she had spent more than 6 times the original price of the coat.

You see, hyperinflation had been crushing Leasi and her fellow Brazilians...

Inflation in the country had been rising in the 1980s. But the government failed to contain it. And in 1987, all hell broke loose...

By the end of the year, prices of goods as measured by the Consumer Price Index more than tripled. And it just kept getting worse.

In 1988, inflation jumped to 629%. Then it hit nearly 1,431% the next year. And it peaked at a staggering 2,948% in 1990.

So the moment she got her paycheck, Leasi went shopping. She had to spend as much of it as she possibly could... because waiting another day meant having to pay a lot more tomorrow.

Along with millions of other Brazilians, the value of Leasi's money was melting away...

Leasi bought as many nonperishable or long-shelf-life goods as she could. She tried to fill the pantry with vegetable oil, grains, canned goods, and toilet paper – just like everyone else.

Of course, that kind of panic-buying fueled more inflation. Eventually, Brazil's government put a freeze on account withdrawals more than the equivalent of $1,200.

But 90% of Brazilian savers had less than $1,200 in the bank. So the withdrawal freeze didn't have a lasting effect on inflation.

The inflation rate dipped to 433% in 1991. But by 1994, it had soared back above 2,000%. People were getting desperate.

On the other hand, banks found a way to take advantage of the situation...

They took deposits from customers' checking accounts and invested that "float" in high-yield government bonds. At one point amid the hyperinflation, some of these bonds paid interest rates of more than 40% each month.

In 1993, interest income from the inflation float was so high that it made up as much as 40% of banks' revenues.

So it's no surprise that the banks got addicted to the easy, "risk free" money...

One of these was Banco Bamerindus – one of Brazil's largest retail banks at the time. It operated more than 1,200 branches in the country. And it held deposits for millions of people.

But things started to change in mid-1994...

That July, the Brazilian government launched the Real Plan. This introduced a new currency – the Brazilian real – that was loosely linked to the U.S. dollar.

The plan also included a series of deep government spending cuts.

Eventually, the Real Plan brought down inflation. In 1995, inflation dropped to 66%. And it fell to about 16% in 1996.

Falling inflation was great for everyday Brazilians like Leasi. But it ended Banco Bamerindus' gravy train. In 1995, the bank's annual profits fell nearly 11%.

In March 1997, British banking giant HSBC ended up buying most of the struggling bank. It was one of almost 50 banks that either went bankrupt or required state intervention in the wake of the inflation mess.

Millions of regular folks lost money as these banks fell, while their deposits stayed locked up. It took decades for some of those depositors to be made whole again.

It created a society distrustful of traditional banks. Even as late as 2011, nearly half of Brazilian adults didn't have a formal financial account.

That's despite Brazil being one of the world's largest economies – and among the richest in natural resources.

Folks, I hope it's obvious...

Inflation is more than just a macroeconomic term.

It changes people's lives. And it eats away at their wealth.

What happened in Brazil is a nightmarish example of that. The country's hyperinflation left long-term scars.

Remember that the next time you wonder if you should be putting your cash to work for you... or letting it all sit in the bank.

Good investing,

Marc Chaikin

Editor's note: Protecting your wealth requires you to be aware of everything happening in the markets.

That's why Marc stresses inflation isn't the only factor you need to focus on right now. In fact, he recently went on camera to reveal a strange force influencing the markets that most investors aren't paying attention to today.

He believes if you're aware of this force – and exactly how to shift your money to best take advantage of it – you could double the return of the S&P 500 Index by the end of 2025. Click here to catch up on the full details...