Tuesday , April 25 2017
Home / Charles Hugh Smith
Charles Hugh Smith

Charles Hugh Smith

At readers' request, I've prepared a biography. I am not confident this is the right length or has the desired information; the whole project veers uncomfortably close to PR. On the other hand, who wants to read a boring bio? I am reminded of the "Peanuts" comic character Lucy, who once issued this terse biographical summary: "A man was born, he lived, he died." All undoubtedly true, but somewhat lacking in narrative.

Articles by Charles Hugh Smith

Marx, Orwell and State-Cartel Socialism

2 days ago

When “socialist” states have to impose finance-capital extremes that even exceed the financialization of nominally capitalist economies, it gives the lie to their claims of “socialism.”
OK, so our collective eyes start glazing over when we see Marx and Orwell in the subject line, but refill your beverage and stay with me on this. We’re going to explore the premise that what’s called “socialism”–yes, Scandinavian-style socialism and its variants–is really nothing more than finance-capital state-cartel elitism that has done a better job of co-opting its debt-serfs than its state-cartel “capitalist” cronies.
We have to start with the question “what is socialism”? The standard definition is: a political and economic

Read More »

Our Intellectual Bankruptcy: The “Religion” of Economics, UBI and Medicare For All

2 days ago

1. Mainstream neo-classical/ Keynesian economics. As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science–it is a religion.
It demands a peculiar faith in nonsense: for example, the environment–Nature– is merely a subset of the economy. When we’ve stripped the seas of wild fish (and totally destroyed the ecology of the oceans), no problem–we’ll substitute farmed fish, which are in economic terms, entirely equal to wild fish.
In other words, the natural world cannot be valued in our current mock-science religion of economics.
Other absurdities abound. Stripping the seas of wild fish adds to GDP, so it’s all good, right? Dismantling newly

Read More »

The Left’s Descent to Fascism

6 days ago

The Left is morally and fiscally bankrupt, devoid of coherent solutions, and corrupted by its embrace of the Corporatocracy.
History often surprises us with unexpected ironies. For the past century, the slide to fascism could be found on the Right (conservative, populist, nationalist political parties).
But now it’s the Left that’s descending into fascism, and few seem to even notice this remarkable development. By Left I mean socialist-leaning, progressive, internationalist/globalist political parties.
What is fascism? There is no one tidy definition, but it has three essential elements:
1) State and corporate elites govern society and the economy as one unified class.
2) This status quo (i.e. The Establishment)

Read More »

Millennials Are Abandoning the Postwar Engines of Growth: Suburbs and Autos

11 days ago

Where’s the growth going to come from as the dominant generation makes less, borrows less, spends less, saves more and turns away from long commutes, malls and suburban living and abandons the worship of private vehicles?
If anything defined the postwar economy between 1946 and 1999, it was the exodus of the middle class from cities to suburbs and the glorification of what Jim Kunstler calls Happy Motoring: freeways, cars and trucks, ten lanes of private vehicles, the vast majority of which are transporting one person.
Ol’ 55 (freeway cars and trucks) (written by Tom Waits, performed by The Eagles)
The build-out of suburbia drove growth for decades: millions of new suburban homes, miles of new freeways, sprawling

Read More »

Who’s Playing The Long Game–and What’s Their Game Plan?

12 days ago

Take a moment to consider the Neocon camp’s over-reaction to the inchoate challenge to its dominance posed by the Trump administration.
When we speak of The Long Game, we speak of national/alliance policies that continue on regardless of what political party or individual is in office. The Long Game is always about the basics of national survival: control of and access to resources, and jockeying to diminish the power and influence of potential adversaries while strengthening one’s own power and influence.
As I have been discussing for years, there are inevitable conflicts within the inner circle that executes The Long Game within each nation/alliance. In periods of active confrontation, the various factions tend to

Read More »

When the “Solutions” Become the Problems

21 days ago

Those benefiting from these destructive “solutions” may think the system can go on forever, but it cannot go on when every “solution” becomes a self-reinforcing problem that amplifies all the other systemic problems.
We are living in an interesting but by no means unique dynamic in which the solutions to problems such as slow growth and inequality have become the problems. This is a dynamic I have often discussed in various contexts. In essence, a solution that was optimized for an earlier era and situation is repeatedly applied to the present–but the present is unlike the past, and the old solution is no longer optimized to current conditions.
The old solution isn’t just a less-than-optimal solution; it actively

Read More »

Do the Roots of Rising Inequality Go All the Way Back to the 1980s?

24 days ago

Unless we change the fundamental structure of the economy so that actually producing goods and services and hiring people is more profitable than playing financial games with phantom assets, the end-game of financialization is financial collapse.

I presented this chart of rising wealth inequality a number of times over the past year. Do you notice something peculiar about the inflection points in the 1980s?

US Household Wealth, 1917 – 2017(see more posts on U.S. Household Debt, ) – Click to enlarge

Correspondent W.S. noted that the inflection point for the top .1% (late 1970s) preceded the inflection point of the bottom 90% (around 1986): both increased their share of household wealth from 1978 to 1986,

Read More »

Forget ObamaCare, RyanCare, and any Future ReformCare-the Healthcare System Is Completely Broken

29 days ago

It’s time to start planning for what we’ll do when the current healthcare system implodes.
As with many other complex, opaque systems in the U.S., only those toiling in the murky depths of the healthcare system know just how broken the entire system is. Only those dealing daily with the perverse incentives, the Kafkaesque procedures, the endlessly negative unintended consequences, the soul-deadening paper-shuffling, the myriad forms of fraud, the recalcitrant patients who don’t follow recommendations but demand to be magically returned to health anyway, and of course the hopelessness of the financial future of a system with runaway costs, a rapidly aging populace and profiteering cartels focused on maintaining their

Read More »

The Deep State’s Dominant Narratives and Authority Are Crumbling

March 26, 2017

This is why the Deep State is fracturing: its narratives no longer align with the evidence.
As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I’ve been writing about the Deep State, and specifically, the fractures in the Deep State, for years.
[embedded content]
Amusingly, now that “Progressives” have prostituted themselves to the Security Agencies and the Neocons/Neoliberals, they are busy denying the Deep State exists. For example, There is No Deep State (The New Yorker).
In this risible view, there is no Deep State “conspiracy” (the media’s favorite term of dismissal/ridicule),

Read More »

The Deep State’s Dominant Narratives and Authority Are Crumbling

March 24, 2017

This is why the Deep State is fracturing: its narratives no longer align with the evidence.
As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I’ve been writing about the Deep State, and specifically, the fractures in the Deep State, for years.
[embedded content]
Amusingly, now that “Progressives” have prostituted themselves to the Security Agencies and the Neocons/Neoliberals, they are busy denying the Deep State exists. For example, There is No Deep State (The New Yorker).
In this risible view, there is no Deep State “conspiracy” (the media’s favorite term of dismissal/ridicule),

Read More »

Solutions Abound–on the Local Level

March 20, 2017

Rather than bemoan the inevitable failure of centralized “fixes,” let’s turn our attention and efforts to the real solutions: decentralized, networked, localized.
Those looking for centralized solutions to healthcare, jobs and other “macro-problems” will suffer inevitable disappointment. The era in which further centralization provided the “solution” has passed: additional centralization (Medicare for All, No Child Left Behind, federal job training, Universal Basic Income, central banking “free money for financiers”, etc.) have all entered Diminishing Returns.
The systemic costs of centralization–corruption, cronyism, soaring prices, declining quality, over-reach, insider rackets, regulatory capture by corporations

Read More »

Now That Everyone’s Been Pushed into Risky Assets…

March 16, 2017

A funny thing happened on the way to a low-risk environment: loans in default (non-performing loans) didn’t suddenly become performing loans.
If we had to summarize what’s happened in eight years of “recovery,” we could start with this: everyone’s been pushed into risky assets while being told risk has been transformed from something to avoid (by buying risk-off assets) to something you chase to score essentially guaranteed gains (by buying risk-on assets).

The successful strategy for eight years has been buy the dips because risk-on assets always recover and hit new highs: housing, stocks, bonds, bat guano futures–you name it.
Those who bought the dip in hot housing markets have seen spectacular gains since 2011.

Read More »

The Next Domino to Fall: Commercial Real Estate

March 12, 2017

Unless the Federal Reserve intends to buy up every dead and dying mall in America, this is one crisis that the Fed can’t bail out with a few digital keystrokes.
Just as generals prepare to fight the last war, central banks prepare to battle the last financial crisis–which in the present context means a big-bank liquidity meltdown like the one that nearly toppled thr global financial system in 2008-09.
Planning to win the next war by assuming it will be a copy of the last confict is an excellent strategy for losing the next war. The same holds true for the next financial crisis: reckoning that it will be a repeat of 2008 is an excellent way to be caught completely off-guard.
Crises may rhyme, but they don’t

Read More »

Are Central Banks Losing Control?

March 11, 2017

Eight years after the crisis of 2008-09, central banks are still injecting $200 billion a month into the global financial system to keep it from imploding.
If you want a central banker to choke on his croissant, read him this quote from socio-historian Immanuel Wallerstein: “Countries (have lost the ability) to control what happens to them in the ongoing life of the modern world-system.”
Stated another way, Wallerstein is asking: what do central banks no longer control?
The quote is from Wallerstein’s recent meditation on China: China is Confident: How Realistic?
“The question is how realistic is this self-assessment of China? There are two premises embedded in China’s self-confidence, whose validity need to be

Read More »

Are Central Banks Losing Control?

March 11, 2017

Eight years after the crisis of 2008-09, central banks are still injecting $200 billion a month into the global financial system to keep it from imploding.
If you want a central banker to choke on his croissant, read him this quote from socio-historian Immanuel Wallerstein: “Countries (have lost the ability) to control what happens to them in the ongoing life of the modern world-system.”
Stated another way, Wallerstein is asking: what do central banks no longer control?
The quote is from Wallerstein’s recent meditation on China: China is Confident: How Realistic?
“The question is how realistic is this self-assessment of China? There are two premises embedded in China’s self-confidence, whose validity need to be

Read More »

Why Is the Cost of Living so Unaffordable?

March 3, 2017

Strip away the centralized power that protects and funds cartels, and prices would plummet.
The mainstream narrative is “the problem is low wages.” Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher education and government services were as cheap as they once were, a wage of $10 or $12 an hour would be more than enough to maintain a decent everyday life.
Here are some examples from the real world. In 1952, it cost $30 to have a baby in an excellent hospital. If we adjust that by official inflation as measured by the Bureau of Labor Statistic’s inflation calculator to 2017, the cost would be $275. ($1 in 1952 = $9.16 in 2017).
What does it cost to have a baby

Read More »

Virtue-Signaling the Decline of the Empire

February 28, 2017

Virtue-signaling doesn’t signal virtue–it signals decline and collapse.
There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, the status quo seeks to mask its self-serving rot behind high-minded “virtue-signaling” appeals to past glories and cost-free idealism.
Virtue signaling is defined as “the conspicuous expression of moral values by an individual done primarily with the intent of enhancing that person’s standing within a social group,” “the practice of publicly expressing opinions or sentiments intended to demonstrate

Read More »

There’s a Difference: Fake News and Junk News

February 25, 2017

Media junkies on the tragic path to extinction believe the junk news, non-junkies see through the manipulation.
The mainstream media continues peddling its “fake news” narrative like a desperate pusher whose junkies are dying from his toxic dope. It’s slowly dawning on the media-consuming public that the MSM is the primary purveyor of “fake news”– self-referential narratives that support a blatantly slanted agenda with unsupported accusations and suitably anonymous sources.
Many of these Fake News Narratives are laughably, painfully bogus: that President Trump is a Russian tool, to take a current example. (That President Obama was a tool of the neocon Deep State–no mention of that. According to the MSM, America

Read More »

The Problem with Gold-Backed Currencies

February 23, 2017

Any currency is only truly “backed by gold” if it is convertible to gold.
There is something intuitively appealing about the idea of a gold-backed currency -money backed by the tangible value of gold, i.e. “the gold standard.”
Instead of intrinsically worthless paper money (fiat currency), gold-backed money would have real, enduring value-it would be “hard currency”, i.e. sound money, because it would be convertible to gold itself.
Many proponents of sound money identify President Nixon’s ending of the U.S. dollar’s gold standard in 1971 as the cause of the nation’s financial decline. If our currency was still convertible to gold, the thinking goes, the system would never have allowed the vast pile of debt to

Read More »

The Criminalization of Financial Independence

February 22, 2017

Independent enterprises are a source of political and financial independence–and any independent class is dangerous to the ruling elites.
Just as the “war on drugs” criminalized and destroyed large swaths of African-American and Latino communities, the “war on cash” will further criminalize the few remaining avenues to financial independence and freedom. The introduction of “entitlement” welfare in the 1960s generated a toxic dependency on the state that institutionalized worklessness, a one-two punch that undermined marriage and family in America’s working class of all ethnicities.
The “war on drugs” launched in the 1970s turned millions of American males into felons with severely restricted rights and opportunities

Read More »

This Is How the Status Quo Unravels: As the Pie Shrinks, Everybody Demands Their Piece Should Get Bigger

February 17, 2017

Fragmentation, discord, discontent, class war: this is the inevitable result of a shrinking pie.
The politics of the past 70 years was all about horsetrading who got what share of the growing pie: the “pie” being cheap energy, government revenues and consumption, sales and profits.
Horsetrading over a growing pie is basically fun. There’s always a little increase left for the losers, so there is a reason for everyone to cooperate in a broad political consensus.
Horsetrading over a shrinking pie is not fun. Everybody is shrilly demanding their piece of the pie should either grow or be left untouched; any cuts must come out of someone else’s slice.
Everyone turns on their most compelling emotion-based defense: “we wuz

Read More »

Want to Bring Back Jobs? It’s Impossible Unless We Fix these Four Things

February 14, 2017

It’s your choice, America–you can keep your cartels and the captured government that enables and protects them, or you can fix what’s broken and unaffordable.
If there is any goal that might attract support from across the political spectrum, it’s creating more fulltime jobs in the U.S. But this laudable goal is dead-on-arrival (DOA) unless we first fix these four things. Why is job growth stagnating? Many point to automation, and yes, that is a systemic dynamic that will only expand going forward.
But much of the stagnation is the direct result of the high costs and structural failures in these four inputs to the job market. U.S. healthcare costs more than twice as much per person as healthcare per person in our

Read More »

The Colonization of Local-Business Main Street by Corporate America

February 9, 2017

This is what our mode of production optimizes: ugliness, debt-serfdom, and servitude to politically dominant corporations.
An insightful correspondent recently remarked on the striking transition of American neighborhoods from commercial districts dominated by locally owned businesses to streets lined with look-alike outlets of Corporate America. This transition is so obvious that few even comment on it, much less ask if this wholesale replacement is in the best interests of residents and consumers.

I have long suggested starting any inquiry with a simple question: cui bono— to whose benefit? Let’s add a second essential question: what does the system optimize?
By this I mean: what is optimized by the

Read More »

The Central Banks Pull Back: Now It’s Up to Fiscal Policy to “Save the World”

February 8, 2017

Another problem is the rise of social discord, for reasons that extend beyond the reach of tax reductions and increased infrastructure spending.
Have you noticed that the breathless anticipation of the next central bank “save” has diminished? Remember when the financial media was in a tizzy of excitement, speculating on what new central bank expansion would send the global markets higher in paroxysms of risk-on joy?
Those days are gone. Nowadays, central banks cautiously continue the bond buying programs they’ve had in place for years, but their policy initiatives are tepid at best: they talk about expanding asset-buying programs to include more stocks, or discuss notching interest rates higher in some cases; but

Read More »

Expropriation and Impoverishment: “Capitalist” Greece and “Socialist” Venezuela

February 7, 2017

Neocolonial “capitalist paradise” or crony “socialist paradise”: the net result is the same: expropriation and impoverishment.

Yesterday I noted that not all assets will make it through the inevitable financial re-set. ( Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?)
Those that are easy to expropriate will be expropriated, and those assets vulnerable to soaring taxes, inflation and currency devaluation will also be hollowed out.
There are two real-time examples of these dynamics we can profitably study: “capitalist” Greece and “socialist” Venezuela. Both nations have impoverished their citizenry to preserve an oligarchy and its cronies.
I hope it won’t be too great a shock

Read More »

Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?

February 6, 2017

Your skills, knowledge and and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not.

Longtime correspondent C.A. recently asked a question every American household should be asking: which assets are most likely to survive the “system re-set” that is now inevitable? It’s a question of great import because not all assets are equal in terms of survivability in crisis, when the rules change without advance notice.
If you doubt the inevitability of a system implosion/re-set, please read Is America In A Bubble (And Can It Ever Return To “Normal”)? This brief essay presents charts that reveal a sobering economic reality:

Read More »

The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality, Failed to Generate “Growth”

February 5, 2017

Rather than be seen to be further enriching the rich, I think central banks will start closing the “free money for financiers” spigots.
Take a quick glance at these charts of the Federal Reserve balance sheet and bank credit in the U.S. Notice what happened to bank credit after the Fed “tapered” and stopped expanding its balance sheet?

U.S. Fed Summary – Click to enlarge

Bank credit exploded higher:

U.S. Bank Credit – Click to enlarge

Now look at corporate profits:
Once the Fed ended its $3.7 trillion “experiment” of vastly expanding its money-creation and bond-buying in early 2014, what happened to bank credit? Bank credit had expanded by a bit over $1 trillion in the early years of the Fed’s

Read More »

What Would a Labor-Centered Economy Look Like?

February 4, 2017

How about moving the power to create money from the apex of the pyramid down to its lowest level?
Let’s spend a moment deconstructing the word “capitalism.” Note it contains the word Capital. So far so good. Obviously the key concept here is capital.
So what is “capital”? It turns out there are multiple kinds of capital. The most familiar kinds are tangible: cash, orchards, factories, water rights, tools, and so on.
Then there’s credit. If you have unlimited credit at very low rates of interest, you can buy all the tangible capital you want, as long as it produces enough income to cover the costs of production and the interest you owe on the borrowed money you used to buy the factories, orchards, etc.
Some types of

Read More »

Why Our System Is Broken: Cheap Credit Is King

February 2, 2017

You want to fix the economic system, reduce political bribery and reduce rising income inequality? Shut off the cheap unlimited credit spigot to banks, financiers and corporations.
Cheap credit–newly issued money that can be borrowed at low rates of interest–is presented as the savior of our economic system, but in reality, it’s why our system is broken. The conventional economic pitch goes like this: cheap credit enables consumers to buy more goods and services (and since the system needs growth or it implodes, that’s good).
Cheap credit also enables companies to invest in new productive assets (capital).
Last but not least, low rates of interest enables the government at all levels to borrow money at relatively low

Read More »

The Collapse of the Left

January 23, 2017

The Left is not just in disarray–it is in complete collapse because the working class has awakened to the Left’s betrayal and abandonment of the working class in favor of building personal wealth and power.
The source of the angry angst rippling through the Democratic Party’s progressive camp is not President Trump–it’s the complete collapse of the Left globally. To understand this collapse, we turn (once again) to Marx’s profound understanding of the state and capitalism.
We turn not to the cultural Marxism that is passingly familiar to Americans, but to Marx’s core economic analysis, which as Sartre noted, is only taught to discredit it.
Cultural Marxism draws as much from Engels as Marx. In today’s use, cultural

Read More »