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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

Doing 90 MPH on Deadman’s Curve: A Few Thoughts on Risk

2 days ago

When the wreck is recovered, witnesses will wonder why they took such heedless, foolish risks.You’re in the back seat wedged between tipsy revelers, the driver is drunk and heading into Deadman’s Curve at 90 miles per hour. Nobody’s worried because the driver has never crashed. Before they slid into euphoric incoherence, the other passengers answered your doubts with statistics and pretty charts showing that the driver had never had an accident, so there was nothing to worry about.
They also said that the driver’s Uncle Fed had rigged the vehicle with an anti-accident device, so a crash was impossible. One passenger blurted out that a fellow named Goldy Sacks said the driver could easily “melt up” and take Deadman’s Curve at 120 miles per hour without any

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America Is Now a Kleptocrapocracy

5 days ago

I hope everyone here is hungry because the banquet of consequences is being served.I’ve coined a new portmanteau word to describe America’s descent: kleptocrapocracy, a union of kleptocracy (a nation ruled by kleptocrats) and crapocracy, a nation drowning in a moral sewer of rampant self-interest in which the focus is cloaking all the skims, scams, rackets and bezzles in some virtuous-sounding garb, a nation choking on low-quality junk ceaselessly hawked by robocalls, spam, phishing and Big Tech manipulation.
It’s little wonder trust has collapsed in America: the only thing we can trust is whatever’s being pitched is deceptively packaged to mask the self-interest and profiteering of the perps.
The stench from the decomposing carcasses of once-trusted institutions

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Software Ate the World and Now Has Indigestion

9 days ago

As for all those automated systems we have to navigate–do any of them work so well that those profiting from them actually use them? Of course not.
In Marc Andreessen’s memorable phrase, “software is eating the world.” Unfortunately, it now has indigestion. Software is running into limits that (non-engineer) promoters either deny or downplay. Meanwhile, back in the real world, software has a limited role in filling structural scarcities of physical goods and many services.
Consider all those apps which are supposed to be the epitome of automated productivity: if software is so great, then why do the apps need thousdands of ghost workers to keep the kludgy mess semi-functional? Hidden behind the shiny happy facade of automated software wonderland, thousands of

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Everything Solid Melts into Air

12 days ago

That the neofeudal lords and their lackeys offer the debt-serfs “choices” of forced labor would be comic if the results weren’t so tragic.
We know we’re close to the moment when Everything Solid Melts into Air when extraordinary breakdowns are treated as ordinary and the “news” quickly reverts to gossip. So over 4 million American workers up and quit every month, month after month after month, and the reaction is ho-hum, labor shortage, blah, blah, blah, toy shortage for Christmas, oh, the horror, blah, blah, blah.
These are large numbers. Over 10 million job openings and 6 million hires and 6 million “separations,” i.e. layoffs and the 4.3 million voluntary quits.

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The happy story promoted by the corporate media is that this enormous churn is the result of

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America’s Bottom 50 percent Have Nowhere To Go But Down

14 days ago

One might anticipate that the bottom 50%’s meager share of the nation’s exploding wealth would have increased as smartly as the wealth of the billionaires, but alas, no.
America’s economy has changed in ways few of the winners seem to notice, as they’re too busy cheerleading their own brilliance and success. In the view of the winners, who just so happen to occupy all the seats at the media-punditry-Federal Reserve, etc. table–the rising tide of stock, bond and real estate bubbles are raising all boats. What’s left unsaid is except for the 50% of boats with gaping holes below the waterline, i.e. stagnant wages and a fast-rising cost of living.
The truth the self-satisfied winners don’t include in their self- congratulatory rah-rah is there’s no place for the

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Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense

20 days ago

The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization.
Global corporations didn’t go to all the effort to establish quasi-monopolies and cartels for our convenience–they did it to ensure reliably large profits from control and scarcity. Not all scarcities are artificial, i.e. the result of cartels limiting supply to keep prices high; many scarcities are real, and many of these scarcities can be traced back to the stripping out of redundancy / multiple suppliers of industrial essentials to streamline efficiency and eliminate competition.
Recall that competition and abundance are anathema to profits. Wide open competition and structural abundance are the least conducive setting for generating reliably

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Risk Was Never Low, It Was Only Hidden

23 days ago

The vast majority of market participants are about as ready for a semi-random “volatility event” as the dinosaurs were for the meteor strike that doomed them to oblivion.
Judging by euphoric gambler–oops I mean “investor”–sentiment and measures of volatility, risk of a market drop has been near-zero for the past 18 months. But risk was never actually low, it was only hidden. When it emerges, it’s a surprise only to those who mistakenly thought risk had vanished.
As Benoit Mandelbrot explained in his bookThe (Mis)behavior of Markets, crashes are an intrinsic feature of systems like stock markets. These risks are not generated by specific human actions or sentiment but by the system itself.
Just as humans make subconscious decisions and then conjure up

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The Market Crash Nobody Thinks Is Possible Is Coming

27 days ago

The banquet of consequences is being served, and risk-off crashes are, like revenge, best served cold.
The ideal setup for a crash is a consensus that a crash is impossible–in other words, just like the present: sure, there are carefully measured murmurings about a “correction” but nobody with anything to lose in the way of public credibility is calling for an honest-to-goodness crash, a real crash, not a wimpy, limp-wristed dip that will immediately be bought.
What I’m calling for is a rip your face off, weeping bitter tears over the grave of the speculative wealth that you thought was forever crash. All those buying the dip because the Fed will never let the market go down will be crushed like scurrying cockroaches and all those trying to rotate into the next

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What’s Really Going On in China

September 24, 2021

Losses will be taken and sacrifices enforced on those who don’t understand the Chinese state will no longer absorb the losses of speculative excess. Let’s start by stipulating that no one outside President Xi’s inner circle really knows what’s going on in China, and so my comments here are systemic observations, not claims of insider knowledge.Many western observers have noted the centrality of Marxist-Leninist-Maoist doctrine in President Xi’s writings. This is somewhat akin to invoking America’s Founding Fathers to support one’s current policies: if you’re trying to modify state policy in China, you have to explain it in the context of the Chinese Communist Party’s history and doctrines. Never mind if the ideals were not met; what’s important is establishing

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America 2021: Inequality is Now Baked In

September 23, 2021

This complete capture of all avenues of regulation and governance can only end one way, a kind of hyper-stagflation.
Zeus Y. and I go way back, and he has always had a knack for summarizing just how insane, disconnected from reality, manipulative and exploitive the status quo narrative has become. I’ve occasionally published his commentaries and essays here since 2008 Imaginary Worth, Empire of Debt: How Modern Finance Created Its Own Downfall (October 15, 2008), not coincidentally, in the midst of the previous debt-fueled speculative bubble popping.
Here is Zeus’s recent commentary on my opting out essay: “Regarding your excellent recent article: Now That the American Dream Is Reserved for the Wealthy, The Smart Crowd Is Opting Out:
1) The sock puppet theater

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Now That the American Dream Is Reserved for the Wealthy, The Smart Crowd Is Opting Out

September 22, 2021

The already-wealthy and their minions are unprepared for the Smart Crowd opting out.
Clueless economists are wringing their hands about the labor shortage without looking at the underlying causes, one of which is painfully obvious: the American economy now only works for the top 10%; the American Dream of turning labor into capital is now reserved for the already-wealthy.
As a result the Smart Crowd is opting out of the conventional workforce’s debt-overwork-deadend-treadmill. What clueless economists, pundits and politicos don’t dare acknowledge is that credentials and hard work are not a ticket to middle-class security; they’re a ticket to impossible workloads demanded by global corporations and high-cost lifestyles anchored by student-loan debt, high rents

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Ministry of Manipulation: No Wonder Trust and Credibility Have Been Lost

September 20, 2021

Now that every financial game in America has been rigged to benefit the few at the expense of the many, trust and credibility has evaporated like an ice cube on a summer day in Death Valley.
Here is America in a nutshell: we no longer solve problems, we manipulate the narrative and then declare the problem has been solved. Actually solving problems is difficult and generally requires sacrifices that are proportionate to one’s wealth and power. But since America’s elite are no longer willing to sacrifice any of their vast power for the common good, sacrifice is out in America unless it can be dumped on wage earners.
But unfortunately for America’s elite, four decades of hidden-by-manipulation sacrifices have stripmined average wage earners, and so they no longer

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Ministry of Manipulation: No Wonder Trust and Credibility Have Been Lost

September 20, 2021

Now that every financial game in America has been rigged to benefit the few at the expense of the many, trust and credibility has evaporated like an ice cube on a summer day in Death Valley.
Here is America in a nutshell: we no longer solve problems, we manipulate the narrative and then declare the problem has been solved. Actually solving problems is difficult and generally requires sacrifices that are proportionate to one’s wealth and power. But since America’s elite are no longer willing to sacrifice any of their vast power for the common good, sacrifice is out in America unless it can be dumped on wage earners.
But unfortunately for America’s elite, four decades of hidden-by-manipulation sacrifices have stripmined average wage earners, and so they no longer

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The Illusion of Getting Rich While Producing Nothing

September 16, 2021

By incentivizing speculation and corruption, reducing the rewards for productive work and sucking wages dry with inflation, America has greased the skids to collapse.Of all the mass delusions running rampant in the culture, none is more spectacularly delusional than the conviction that we can all get fabulously rich from speculation while producing nothing. The key characteristic of speculation is that it produces nothing: it doesn’t generate any new goods or services, boost productivity or increase the functionality of real-world essentials.
Like all mass delusions, the greater the disconnect from reality, the greater the appeal. Mass delusions gain their escape velocity by leaving any ties to real-world limitations behind, and by igniting the most powerful

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The Illusion of Getting Rich While Producing Nothing

September 16, 2021

By incentivizing speculation and corruption, reducing the rewards for productive work and sucking wages dry with inflation, America has greased the skids to collapse.Of all the mass delusions running rampant in the culture, none is more spectacularly delusional than the conviction that we can all get fabulously rich from speculation while producing nothing. The key characteristic of speculation is that it produces nothing: it doesn’t generate any new goods or services, boost productivity or increase the functionality of real-world essentials.
Like all mass delusions, the greater the disconnect from reality, the greater the appeal. Mass delusions gain their escape velocity by leaving any ties to real-world limitations behind, and by igniting the most powerful

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The U.S. Economy In a Nutshell: When Critical Parts Are On “Indefinite Back Order,” the Machine Grinds to a Halt

September 15, 2021

A great many essential components in America are on ‘indefinite back order’, including the lifestyle of endless globally sourced goodies at low, low prices.Setting aside the “transitory inflation” parlor game for a moment, let’s look at what happens when critical parts are unavailable for whatever reason, for example, they’re on back order or indefinite back order, i.e. the supplier has no visibility on when the parts will be available.
If the part that blew out is .01% of the entire machine, and the other 99.9% still works perfectly, the entire machine is still dead in the water without that critical component. That is a pretty good definition of systemic vulnerability and fragility, a fragility that becomes much, much worse if there are two or three components

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The U.S. Economy In a Nutshell: When Critical Parts Are On “Indefinite Back Order,” the Machine Grinds to a Halt

September 15, 2021

A great many essential components in America are on ‘indefinite back order’, including the lifestyle of endless globally sourced goodies at low, low prices.Setting aside the “transitory inflation” parlor game for a moment, let’s look at what happens when critical parts are unavailable for whatever reason, for example, they’re on back order or indefinite back order, i.e. the supplier has no visibility on when the parts will be available.
If the part that blew out is .01% of the entire machine, and the other 99.9% still works perfectly, the entire machine is still dead in the water without that critical component. That is a pretty good definition of systemic vulnerability and fragility, a fragility that becomes much, much worse if there are two or three components

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The Banality of (Financial) Evil

September 13, 2021

The financialized American economy and State are now totally dependent on a steady flow of lies and propaganda for their very survival. Were the truth told, the status quo would collapse in a putrid heap.Go ahead and be evil, because everyone else is evil, too, because being evil serves everyone’s interests far better than maintaining integrity, for integrity will cost you more than you can afford.
In other words, lying, fraud, embezzlement, misrepresentation of risk, material misrepresentation of facts, half-truths, the replacement of statements of fact with propaganda and spin: these are not the work of a scattered handful of sociopaths: they represent the very essence and heart of America’s economic status quo.
Hannah Arendt coined the phrase the banality of

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Please Don’t Pop Our Precious Bubble!

September 9, 2021

It’s a peculiarity of the human psyche that it’s remarkably easy to be swept up in bubble mania and remarkably difficult to be swept up in the same way by the bubble’s inevitable collapse.
Allow me to summarize the dominant zeitgeist in America at this juncture of history: Grab yourself a big gooey hunk of happiness by turning a few thousand bucks into millions– anyone can do it as long as they visualize abundance and join the crowd minting millions.
Beneath the bravado and euphoric confidence in our God-given right to mint millions out of chump change, a secret plea lurks unspoken: please don’t pop our precious bubble!

The big gooey hunk of happiness available to all depends on one special form of magic spell: If we don’t call the bubble a bubble, it won’t

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The Upside of a Stock Market Crash

August 24, 2021

[unable to retrieve full-text content]A drought-stricken forest choked with dry brush and deadfall is an apt analogy. While a stock market crash that stairsteps lower for months or years is generally about as welcome as a trip to the guillotine in Revolutionary France, there is some major upside to a crash.

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The Smart Money Has Already Sold

August 19, 2021

Generations of punters have learned the hard way that their unwary greed is the tool the ‘Smart Money’ uses to separate them from their cash and capital. The game is as old as the stock market: the Smart Money recognizes the top is in, and in order to sell all their shares, they need to recruit bagholders to buy their shares and hold them all the way down. Once the catastrophic losses have been taken by the bagholders, then the Smart Money slowly builds up positions amidst the wreckage.
It’s easy to become a bagholder; all you need is greed. Been there, done that, for the siren songs luring bagholders to their ruin are compelling and numerous. The Smart Money doesn’t have to mislead anyone; all they do is let the strident super-Bulls talk up the riches to be had

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Why the Global Economy Is Unraveling

August 17, 2021

Global supply chain logjams and global credit/financial crises aren’t bugs, they’re intrinsic features of Neoliberalism’s fully financialized global economy. To understand why the global economy is unraveling, we have to look past the headlines to the primary dynamic of globalization: Neoliberalism, the ideological orthodoxy which holds that introducing market dynamics to sectors that were closed to global markets generates prosperity for all.
This is known as Neoliberalism, as liberalizing markets means opening up sectors that had previously been restricted. Neoliberalism holds that global market forces introduce efficiencies and opportunities that then pave the way for growth. Global market forces include not just new buyers and sellers of goods and services but

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Dear Fed: Are You Insane?

August 12, 2021

So sorry, America, but your central bank is certifiably insane, and it’s not going to magically work out.
History definitively shows that speculative bubbles always pop–always. Every speculative bubble mania, regardless of its supposed uniqueness–“it’s different this time”–pops. No speculative bubble has ever “reached a permanently high plateau” and then remained on the plateau for years.
So what does the Federal Reserve do? It inflates the biggest speculative bubble in modern history and then implicitly promises it will never pop. Dear Fed, are you insane?

You might as well make a public pronouncement that stocks have “reached a permanently high plateau” that will be followed by a permanent ascent to ever-higher plateaus, as that is the implicit message

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The End of Global Tourism?

August 10, 2021

August 9, 2021Viewed as a complex non-linear system, the pandemic varinants can only be controlled by drastically pruning the physical connections between disparate global groups, which means effectively ending the unrestricted flow of individuals around the planet.
Just a few days after the official acknowledgement of the pandemic in late January, 2020, Joseph Norman, Yaneer Bar-Yam, and Nassim Taleb published a short paper, Systemic Risk of Pandemic Via Novel Pathogens which considered pandemics as complex systems.
Viewed through the lens of complex systems, two features of pathogens are consequential: 1) whether asymptomatic individuals can carry and transmit the pathogen, and 2) the contagiousness of the pathogen, i.e., its rate of spreading, which is

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While the Herd Slumbers, Risk Is Rocketing Higher

August 5, 2021

This wholesale transfer of risk from elites to the workers is finally becoming consequential as wealth / income / security inequality is reaching extremes that are destabilizing society and the economy.
One of the most consequential financial trends of the past 50 years has been ignored to the point of invisibility. I’m referring to the transfer of risk from the top tier to the middle and working classes. This transfer of risk has been broad-based, covering the entire economic spectrum:
1. Employment has shifted from secure (low risk of uneven / unpredictable incomes for workers) to insecure / precariat (high risk of uneven / unpredictable incomes). Gig workers are classified as contract workers so they receive no benefits.

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2. Healthcare has been shifted

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The Moment Wall Street Has Been Waiting For: Retail Is All In

July 29, 2021

[unable to retrieve full-text content]The ideal bagholder is one who
adds more on every downturn (buy the dip) and who refuses to sell (diamond hands), holding
on for the inevitable Fed-fueled rally to new highs.

Old hands on Wall Street have been wary of being bearish for one reason, and no, it’s not
the Federal Reserve: the old hands have been waiting for retail–the individual investor–
to go all-in stocks. After 13 long years, this moment has finally arrived:
retail is all in.
If you doubt this, just look at record highs in investor sentiment, margin debt and the
Buffett Indicator (see chart below). Current valuations are so extreme that the previous
extreme in the 2000 dot-com bubble now looks modest in comparison.
I have my own sure-fire indicators for when retail is all-in. One

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America Is a Moral Cesspool, and Student Loans Prove It

July 26, 2021

[unable to retrieve full-text content]If America somehow managed to educate millions of college students without burdening them with $2 trillion in debt in 1993, why is it now "impossible" to do so, even as America’s wealth and gross national product (GDP) have both rocketed higher over the past 27 years?

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Have We Reached “Peak Self-Glorifying Billionaire”?

July 22, 2021

Perhaps we should update Marie Antoinette’s famous quip of cluelessness to: “Let them eat space tourism.”
As billionaires squander immense resources on self-glorifying space flights, the corporate media is nothing short of worshipful. Millions of average citizens, on the other hand, wish the self-glorifying billionaires had taken themselves and all the other parasitic, tax-avoiding, predatory billionaires with them on a one-way trip into space.
Have we reached Peak Self-Glorifying Billionaire? If so, where does the downhill slide take us? Let’s start with a bit of history. Correspondent Jim B. summarized historian Arnold Toynbee’s study of the rise and fall of civilizations thusly: “Civilizations fail when their elites change from an admired dynamic creative class

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Big Tech: “Our Terms Have Changed”

July 21, 2021

So go ahead and say whatever you want around all your networked devices, but don’t be surprised if bad things start happening.
I received another “Our Terms Have Changed” email from a Big Tech quasi-monopoly, and for a change I actually read this one. It was a revelation on multiple fronts. I’m reprinting it here for your reading pleasure: We wanted to let you know that we recently updated our Conditions of Use.
What hasn’t changed: Your use constitutes your agreement to our Conditions of Use.
We own all the content you create on our platform, devices and networks, and are free to monetize it by any means we choose.
We own all the data we collect on you, your devices, purchases, social networks, views, associations, beliefs and illicit viewing, your location

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How Breakdown Cascades Into Collapse

July 19, 2021

Maintaining the illusion of confidence, permanence and stability serves the interests of those benefiting from the bubbles and those who prefer the safety of the herd, even as the herd thunders toward the precipice.
The misconception that collapse is an all or nothing phenomenon is common: Either the system rights itself with a bit of money-printing and rah-rah or it collapses into post-industrial ruin and gangs are battling over the last stash of canned beans.
Neither scenario considers the fragility and resilience of the socio-economic system as a whole. It is both far more fragile than the believers in the permanence of the waste is growth model grasp and more resilient than the complete collapse prognosticators grasp.
The recent relatively mild logjams in

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