We Can't Escape the Next Recession... But We Can Do This

In today's Masters Series, originally from the March 7, 2022 Digest, Mike explains why today's high inflation is poised to drag on much longer... discusses the likelihood of the economy entering a recession in 2024... and talks about how investors can protect their wealth amid this ongoing market uncertainty... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: You can still find ways to profit during the coming recession... Most investors don't consider exploring the bond market – even in times of heightened volatility like we're seeing today. But according to Stansberry's Credit Opportunities editor Mike DiBiase, we're already in the early stages of a credit crisis... one that will lead to some of the best distressed-debt opportunities you've ever seen. That's why he stresses it's crucial for investors to start taking advantage of these discounted prices in an effort to avoid missing out on massive gains. In today's Masters Series, originally from the March 7, 2022 Digest, Mike explains why today's high inflation is poised to drag on much longer... discusses the likelihood of the economy entering a recession in 2024... and talks about how investors can protect their wealth amid this ongoing market uncertainty... --------------------------------------------------------------- We Can't Escape the Next Recession... But We Can Do This By Mike DiBiase, editor, Stansberry's Credit Opportunities It's the dreaded "I" word... Inflation, that is. The general rise in prices across the economy. It has been the Federal Reserve's biggest concern over the past two and a half years. While inflation has cooled, it's still playing a huge role in today's economy. As editor of the corporate bond newsletter Stansberry's Credit Opportunities, I pay attention to inflation. That's because inflation influences another "I" word... interest... Changes in interest rates move bond prices. They are a big part of how much you can expect to earn from a bond. Today, I want to share with you why I think high inflation isn't going away anytime soon... And I'll share my predictions for what's coming next in the markets. To cut to the chase, it's not a pretty picture... Before I get started, let me say that not all Stansberry Research editors and analysts will agree with these predictions... But it's my duty to give you my honest views. The more viewpoints you are exposed to, the better an investor you'll be... I've been worried about inflation much longer than most folks. In April 2021, I wrote a Digest essay that was all about inflation... I called it the biggest threat to the markets. Back then, inflation was just 1.7%, as measured by the consumer price index ("CPI"). Because of the unprecedented post-pandemic monetary stimulus by the Fed, I knew inflation was headed much higher. And despite what Fed Chair Jerome Powell was saying at the time, I knew it wasn't "transitory." And now... he does, too. Since then, inflation skyrocketed... Today, inflation is around 3.2%. And if you strip out volatile food and energy prices, inflation is 4%, still way above the Fed's 2% target. And remember, that's another 4% increase on the massive price increases over the past two years. This is a big deal... It has caused interest rates to soar too. Average Americans have been choking on these higher prices and interest rates for more than two years now. Their savings have been exhausted and they've turned to credit cards just to pay the bills. Credit-card debt and credit-card interest rates are now at record levels. Investors are betting that inflation will soon be back down to 2%, allowing the Fed to cut interest rates once again. That's not going to happen. Inflation isn't going back to 2% anytime soon... --------------------------------------------------------------- Recommended Link: # [A Special Holiday Invitation for You]( In this season of giving, a fellow Stansberry Research subscriber wanted us to rush this urgent Thanksgiving message to you. There's a big update to his unique story of how he retired early at 52 years old thanks to ONE single idea that anyone can use. He sees 18%-plus annual returns with legal protections. And he never has to worry about a market crash again. [He explains everything from his living room here](. --------------------------------------------------------------- High inflation is here to stay. Get used to it. Why do I believe that? All you have to do is follow the money supply... Despite what you read in the mainstream financial media or what Powell says, the money supply is the primary driver of inflation... In economics, it's called the quantity theory of money... This isn't some complicated new theory that Powell has never heard of. It was first developed by astronomer and mathematician Nicolaus Copernicus more than 500 years ago... He's the guy who figured out that the Earth revolved around the sun... and not the other way around. Inflation is always caused by one thing and one thing only... a more rapid increase in the money supply than in the output of goods and services. It's as simple as that. The U.S. money supply has increased by around 6.5% a year since 1960. And our country's output – as measured by real gross domestic product ("GDP") – has grown by an average of around 3%. It's not a coincidence that inflation has averaged 3.5% per year since 1960, the difference between money supply growth and GDP growth. As long as the money supply growth doesn't get too far ahead of GDP, inflation isn't a problem. And that had been the case from the 1970s until early 2020. But everything changed following the COVID-19 pandemic. The money supply exploded 40% higher in a little more than two years. Never before in history have we seen that kind of explosive growth. Not during World War II... not during the Vietnam War and the expansion of social programs during the 1960s and 1970s... and not following the 2008 financial crisis. Sometimes a chart tells the story best. The chart below shows the U.S. "M2" money supply (black line) ‒ which is the cash, checking, savings, and money-market mutual fund accounts held by households and businesses ‒ since 2010. This is how I was able to predict inflation was going to soar before nearly anyone else. You may have read headlines that inflation is under control now thanks to a contracting money supply. But as you can see in the chart, the money supply still has a long way to go before it gets close to its long-term historical 6.5% growth rate (blue line). This tells me we're much more likely to see another spike in inflation like we did in the 1970s than see inflation anywhere near the Fed's 2% target. And that means interest rates aren't going lower anytime soon. This leads me to my last prediction... A recession is coming in 2024. We simply have too much debt to afford today's higher interest rates. Corporate and household debt grew to record levels on the belief that interest rates would always stay near zero. Those days are over. Inflation and higher interest rates have been eroding profit margins. Corporate profits have fallen in the last three quarters. They will continue eating up more and more of every American's budget. Growth will slow. Unemployment will rise. So buckle up... A recession is coming. It will set off the first credit crisis since 2008 and send the stock and bond markets much lower. But that doesn't mean you should suffer. You should be preparing now to profit. There are lots of ways to protect your portfolio from inflation, including allocating a portion of your portfolio to gold and gold stocks and buying only the highest-quality companies. But there's another strategy you've probably never considered... investing in distressed corporate bonds. It's a strategy that the world's best investors use in times of crisis to make a fortune. When the next credit crisis unfolds ‒ and I predict it will be in 2024 ‒ bond prices are going to plummet. Even bonds that are safe are going to trade for pennies on the dollar. That's when you can earn massive, stock-like returns with investments that are much safer than stocks... Corporate bonds have legal protections that stocks don't have. Companies must pay you or they go bankrupt. Regards, Mike DiBiase --------------------------------------------------------------- Editor's note: This unrelenting inflation is setting the stage for a crisis that will cause catastrophic losses for investors who aren't prepared. But Mike has been waiting for this exact moment... Mike believes this credit crisis will give investors the chance to buy world-class bonds at a discount – earning massive gains with legal protections. [Get the full story here](... --------------------------------------------------------------- Recommended Link: # [Prepare Now: A Massive Wave of Bankruptcies Is Coming]( In 2009, Joel Litman warned investors about 57 different companies that were about to go bankrupt – 50 collapsed within days. Now he is stepping forward with another big bankruptcy warning. If you own a single share of stock – much less a business... a mortgage... or a loan of any kind – this will affect you. 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