Tuesday , October 22 2019
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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

What We’ve Lost

2 days ago

This is only a partial list of what we’ve lost to globalism, cheap credit and the Tyranny of Price which generates the Landfill Economy.
A documentary on the decline of small farms and the rural economy in France highlights what we’ve lost in the decades-long rush to globalize and financialize everything on the planet— what we call Neoliberalism, the ideology of turning everything into a global market controlled by The Tyranny of Price and cheap credit issued to corporations and banks by central banks.
After Winter, Spring (2012) was made by an American who moved to a small village in the Dordogne region of France to recover something of her childhood on a small Pennsylvania farm.
The farmers–self-described as paysans, peasants in English, (a translation I don’t

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Welcome to the USSR: the United States of Suppression and Repression

4 days ago

We’re all against “fake news,” right? Until your content is deemed “fake news” in a “fake news” indictment without any evidence, trial or recourse.
When propaganda is cleverly engineered, people don’t even recognize it as propaganda: welcome to the USSR, the United States of Suppression and Repression. The propaganda in the U.S. has reached such a high state that the majority of people accept it as “pravda” (truth), even as their limbic system’s BS detector is sensing there is a great disturbance in the Force.
Inflation is a good example. The official (i.e. propaganda) inflation rate is increasingly detached from the real-world declines in the purchasing power of the bottom 80%, yet the jabbering talking heads on TV repeat the “low inflation” story with such

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Economic Decay Leads to Social and Political Decay

5 days ago

If we want to make real progress, we have to properly diagnose the structural sources of the rot that is spreading quickly into every nook and cranny of the society and culture.
It seems my rant yesterday (Let Me Know When It’s Over) upset a lot of people, many of whom felt I trivialized the differences between the parties and all the reforms that people believe will right wrongs and reduce suffering.
OK, I get it, there are differences, but if the “reform” doesn’t change the source of the suffering and injustice, it’s just window-dressing that makes the supporter feel virtuous. Want an example? Let’s take the the “cruel and unusual punishment” for drug-law offenders, many of whom are African-American males whose lives are effectively hobbled by felony convictions

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Let Me Know When It’s Over

6 days ago

Maybe it’s my cheap seat or my general exhaustion, but the whole staged spectacle is beyond tiresome; I’ve had my fill.
Let me me know when it’s over: yes, all of it: the impeachment, the trade dispute with China, U.S. involvement in Syria, the manic stock market rally and the 2020 election.
I’m not interested in following every twist and turn of the endless trauma-drama because none of it changes anything: Swapping Pence for Trump changes nothing, and then swapping Warren for Pence in 2020 doesn’t change anything, either: the rot is too deep for any one person to do much beyond feel-good virtue-signaling and symbolic gestures (tax the billionaires, etc.)
The entire political process has devolved to staged battles in the Bread and Circuses Coliseum, entertainment

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The Ultimate Heresy: Technology Can’t Fix What’s Broken

9 days ago

Technology can’t fix what’s broken, because what’s broken is our entire system..
The ultimate heresy in today’s world isn’t religious or political: it’s refusing to believe that technology can not only solve all our problems, it will do so painlessly and without any sacrifice. Anyone who dares to question this orthodoxy is instantly declared an anti-progress (gasp!) Luddite, i.e. a heretic in league with the Devil.
Even worse, if that’s possible, is declaring that technology is making our lives worse rather than better. There’s an entire industry devoted to cherry-picking data to support the One True Faith of Technology: a new miracle drug (never mind the side-effects or the fact that the drug only works on a relative handful of patients), a new energy source that

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Will the Clintons Destroy the Democratic Party?

12 days ago

History is full of ironies, and perhaps it will suit the irony gods for The Donald to take down the Republican Party and the Clinton dynasty to destroy the Democratic Party.
Let’s start by stipulating my bias: I would cheer the collapse of both self-serving, venal political parties, which have stood by for decades as the rich have become immeasurably richer and the politically powerful few have disempowered the many. The transparent “populist” bleatings of both parties–“we serve the people!”–sound increasingly like stale, pathetically disconnected from reality Soviet-era propaganda.
Let’s say I’m a relatively disinterested observer other than my fervent wish that both corrupt, self-serving parties slide into the dustbin of history, the sooner the better.
The

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Our Time/Labor Is Finite, But Money Is Infinite

13 days ago

Once we understand this mechanism, we understand that labor can never get ahead.
I’ve been pondering a comment longtime correspondent Drew P. emailed me in response to my post, What’s Holding Up the Market?: “Our time/labor is finite, but money is infinite.” Drew explained that creating new fiat currency and injecting it into a closed system (our financial system) controls and restrains the value of our time and labor, past, present and future.
This is a profound insight into why our financial system is inherently exploitive and why it is unsustainable.
As citizens of Venezuela and other nations have discovered, the power to create infinite sums of currency devalues the fruits of our labor in the past, present and future. As new currency is injected into a

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What’s Holding Up the Market?

15 days ago

The Fed’s nearly free money for financiers policies in support of the Super-Rich do not exist in a vacuum–the disastrous consequences are already baked in.
What’s holding up the U.S. stock market? The facile answer is the Federal Reserve (“the Fed has our back,” “don’t fight the Fed,” etc.) but this doesn’t actually describe the mechanisms in play or the consequences of a market that levitates ever higher on the promise of more Fed money-for-nothing injected into the diseased veins of the financial system.
As Gordon T.
Long and I discuss in our latest half-hour video program, What’s Holding the Market Up? (34 minutes), the primary prop under stock valuations are corporate buybacks, which total in the trillions of dollars since the 2008-09 Global Financial

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Could Pricey Urban Meccas become Crime-Ridden Ghost Towns?

21 days ago

As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay.
If there is any trend that’s viewed as permanent, it’s the enduring attraction of coastal urban meccas: despite the insane rents and housing costs, that’s where the jobs, the opportunities and the desirable urban culture are.
Nice, but like many other things the status quo considers permanent, this could reverse very quickly, and all those pricey urban meccas could become crime-ridden ghost towns. How could such a reversal occur?
1. Those in the top 10% who can leave reach an inflection point and decide to leave. The top 1% who live in enclaves filled with politicians, celebrities and the uber-wealthy see no reason to leave, as the police make sure no human feces land

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Pets Are Now as Unaffordable As College, Housing and Healthcare

25 days ago

Like so many other things that were once affordable, owning pets is increasingly pricey.
One of the few joys still available to the average household is a pet. At least this is what I thought until I read 5 money-saving tips people hate, which included the lifetime costs of caring for a pet.
It turns out Poochie and Kittie are as unaffordable as college, housing and healthcare (and pretty much everything else). Over the course of 15 years, small-dog Poochie will set the owner back an eye-watering $17,560 to $93,520, while big-dog Fido costs $22,025 to $82,929 over 12 years.
Kittie is a relative bargain at $16,800 over 15 years.
Some estimates of responsible pet ownership are considerably lower, but non-pet owners may be surprised by 1) how many options for the

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Here’s How We Are Silenced by Big Tech

26 days ago

This is how they silence us: your content has been secretly flagged as being “unsafe,” i.e. “guilty of anti-Soviet thoughts;” poof, you’re gone.
Big Tech claims it isn’t silencing skeptics, dissenters and critics of the status quo, but it is silencing us. Here’s how it’s done. Let’s start with Twitter. Twitter claims it doesn’t shadow ban (Setting the record straight on shadow banning), which it defines as deliberately making someone’s content undiscoverable to everyone except the person who posted it, unbeknownst to the original poster.
Nice, but what do we call labeling legitimate websites “unsafe” and banning Twitter users from retweeting links to posts on those sites? This is what’s happening to oftwominds.com– Twitter has labeled this site “unsafe” due to

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Financial Storm Clouds Gather

28 days ago

The price of this “solution”–the undermining of the financial system–will eventually be paid in full.
The financial storm clouds are gathering, and no, I’m not talking about impeachment or the Fed and repo troubles–I’m talking about much more serious structural issues, issues that cannot possibly be fixed within the existing financial system.
Yes, I’m talking about the cost structure of our society: earned income has stagnated while costs have soared, and households have filled the widening gap with debt they cannot afford to service once the long-delayed recession grabs the economy by the throat.

Everywhere we look, we find households, enterprises and local governments barely able to keep their heads above water–in the longest expansion in recent history. This

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Automation and the Crisis of Work

September 23, 2019

Technology, like natural selection, has no goal.
When it comes to the impact of automation (robots, AI, etc.) on jobs, there are two schools of thought: one holds that technology has always created more and better jobs than it destroys, and this will continue to be the case. The other holds that the current wave of automation will destroy far more jobs than it creates, but the solution is to tax the robots and use these revenues to distribute the wealth to everyone who no longer has a livelihood.
In either case, we’ll get richer: if technology generates more high-quality jobs, replacing lower-quality jobs lost to automation, we’ll collectively get richer, and if technology destroys jobs but creates immense profits that can be distributed to everyone as Universal

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The New Orthodoxy: Blasphemy, Heresy and the New Inquisition

September 20, 2019

A corrupt Orthodoxy devoid of new ideas, an Orthodoxy devoted to maintaining the wealth, status and power of insiders regardless of cost, is a brittle, fragile, unstable system.
When the ruling Elites sense their control of the populace is waning, they seek to regain full control via the imposition of a strict Orthodoxy, enforced by an Inquisition. We are living in just such an era. Everywhere we turn, a New Orthodoxy reigns. Dissent is blasphemy, and any narratives outside the approved Orthodoxy are heretical and subject to suppression and punishment.
New Orthodoxies abound, and woe to those who fail to signal their virtue publicly. One New Orthodoxy is that one’s sexual and ethnic characteristics are all-important signifiers of identity. This orthodoxy is

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Markets That Live by the Fed, Die by the Fed

September 19, 2019

The “everything bubble” is not permanent.
All eyes are again on the Federal Reserve, as everyone understands that the Fed is the market— the stock market, the bond market, the art market, the housing market, etc. All markets have been driven higher by one force: central bank money creation and distribution to the financial sector of financiers and corporations, the richest of the rich.
What few seem to grasp (because they’re paid not to?) is the Fed is powerless over what actually matters in a healthy economy:
1. The Fed is powerless to create productive, profitable ventures for capital to invest in. Productivity has gone nowhere in the Fed’s reign while speculative profits leveraged by the Fed’s free money for financiers have soared.
2. The Fed is powerless to

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The Black Swan Is a Drone

September 16, 2019

What was “possible” yesterday is now a low-cost proven capability, and the consequences are far from predictable.
Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly. The obvious goal is to placate global markets fearful of an energy disruption that could tip a precarious global economy into recession.
The real impact isn’t on short-term oil prices, it’s on asymmetric warfare: the coordinated drone attack on Saudi oil facilities is a Black Swan event that is reverberating around the world, awakening copycats and exposing the impossibility of defending against low-cost drones of the sort anyone can buy.
(Some published estimates place

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What a Relief that the U.S. and Global Economies Are Booming

September 16, 2019

Doing more of what’s failed for ten years will finally fail spectacularly..
It was a huge relief to see the charts of the Baltic Dry Index (BDI) and the U.S. retail sector ETF (RTH): both have soared to the moon, signaling that both the U.S. and global economies are booming: the BDI is widely regarded as a proxy for global shipping, which is a proxy for global trade and economic activity.

Batic Dry Index, 2018-2019 – Click to enlarge
Amazon is 18% of the RTH basket of retail stocks, but the rest are conventional bricks and mortar chains with online sales: Walmart, Home Depot, Lowes, Costco, CVS, etc.
The American consumer must be ready, willing and able to spend freely since the retail sector is hitting new heights.

U.S. Consumer Spending, 2019 – Click to

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The Inevitable Bursting of Our Bubble Economy

September 15, 2019

All of America’s bubbles will pop, and sooner rather than later.
Financial bubbles manifest three dynamics: the one we’re most familiar with is human greed, the desire to exploit a windfall and catch a work-free ride to riches.
The second dynamic gets much less attention: financial manias arise when there is no other more productive, profitable use for capital, and these periods occur when there is an abundance of credit available to inflate the bubbles.
Humans respond to the incentives the system presents: if dealing illegal drugs can net $20,000 a month compared to $2,000 a month from a regular job, then a certain percentage of the work force is going to pursue that asymmetry.
In our current economy, corporations have sunk $2.5 trillion in buying back their own

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These Are Not Signs of a Healthy Market

September 8, 2019

If these three charts reflect a “normal” “healthy” Bull market, then why are they so uncommon?
The implicit narrative of the latest rally in stocks is that this is just another normal rally in the ongoing 10-year long Bull market. Nice, but do these three charts look “normal” to you? Let’s take a quick glance at a daily chart of the S&P 500 (SPX), a weekly chart of TLT, the exchange-traded fund of the US Treasury 20-year bond, and silver.
In other words, let’s look at three different assets: stocks, bonds and one of the precious metals.
Even the most cursory glance reveals there is nothing normal about any of these charts. The recent action in the SPX is anything but normal: yet another announcement of yet another (low-level nothing-burger) trade meeting opens a

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Will Everything Change in 2020-2025 or Will Nothing Change?

September 6, 2019

Any domino-like expanding crisis will unfold in a status quo lacking any coherent response.
Longtime readers know I’ve often referenced The Fourth Turning, the book that makes the case for an 80-year cycle of existential crisis in U.S. history.
The first crisis was the constitutional process (1781) following the end of the Revolutionary War, whether the states could agree on a federal structure; the 2nd crisis was the Civil War (1861) and the 3rd crisis was global war– World War II (1941).
According to this proposition, we’re fast approaching an existential crisis that could upend the status quo in a fundamental fashion.
While there is a great deal of historical evidence for cycles, predicting a major transition based on previous cycles is obviously a guess

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Labor Day Reflections on Retirement and Working for 49 Years

September 2, 2019

What happens when these monstrous speculative bubbles pop?
Let’s start by stipulating that if I’d taken a gummit job right out of college, I could have retired 19 years ago. Instead, I’ve been self-employed for most of the 49 years I’ve been working, and I’m still grinding it out at 65.
By the standards of the FIRE movement (financial independence, retire early), I’ve blown it. The basic idea of FIRE is to live frugally and save up a hefty nestegg to fund an early comfortable retirement. As near as I can make out, the nestegg should be around $2.6 million–or if inflation kicks in, maybe it’ll be $26 million. Let’s just say it’s a lot.
You’ve probably seen articles discussing how much money you’ll need to “retire comfortably.” The trick of course is the definition

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Dear Trump Advisors: Prop the Market Up Now and Lose in 2020, or Let the Market Crash and Win in 2020

August 31, 2019

The Everything Bubble has topped out, and trying to push it higher for the next 14 months is a sure way to increase the damage next year.
One of the more reliable truisms is that Americans vote their pocketbook: if their wallets are being thinned (by recession, stock market declines, high inflation/stagnant wages, etc.), they throw the incumbent out, even if they loved him the previous year when their wallets were getting fatter. (Think Bush I, who maintained high approval ratings but ended up losing the 1992 election due to a dismal economic mood.)
As a result, politicians try to time the economy to align with elections. Get any economic pain over with early in the election cycle, then prime the fiscal pump in Year 3 to boost the economy in Year 4 (election

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The Fantasy of Central Bank “Growth” Is Finally Imploding

August 30, 2019

Having destroyed discipline, central banks have no way out of the corner they’ve painted us into.
It was such a wonderful fantasy: just give a handful of bankers, financiers and corporations trillions of dollars at near-zero rates of interest, and this flood of credit and cash into the apex of the wealth-power pyramid would magically generate a new round of investments in productivity-improving infrastructure and equipment, which would trickle down to the masses in the form of higher wages, enabling the masses to borrow and spend more on consumption, powering the Nirvana of modern economics: a self-sustaining, self-reinforcing expansion of growth.
But alas, there is no self-sustaining, self-reinforcing expansion of growth; there are only massive, increasingly

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The Benefits of a Profoundly Shattering Recession

August 26, 2019

Does anyone really think The Everything Bubble can just keep inflating forever?
What do I mean by a profoundly shattering recession? I mean, a systemic, crushing recession that can’t be reversed with central bank magic, a recession that only deepens with time. The last real recession was roughly two generations ago in 1981; younger generations have no experience of a profound recession, and perhaps older folks have forgotten the shock, angst and bitterness.
A profoundly shattering recession leaves tremendous damage and pain in its wake. Millions of people who reckoned their position was secure get laid off, businesses that looked solid melt into air, large corporations flip from hiring thousands to firing thousands, and everyone on the edge of insolvency gets a

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Our Wile E. Coyote Federal Reserve

August 23, 2019

Whatever the Fed chooses to do, it’s already failed..
Wile E. Coyote has gotten a bad rap: in all fairness, his schemes are ingenious, if overly complicated, and it’s not his fault that the Acme detonator misfires or the Road Runner doesn’t respond as predicted. Every set-up to nail the Road Runner should work. That it fails and leaves him suspended over the cliff for a woefully brief second to intuit his impending doom really isn’t his fault.
Wile E. Coyote and the Federal Reserve share a lot of similarities. Just as Wile is always trying to catch the Road Runner, the Federal Reserve and other central banks have been trying for 10 years to trigger a self-sustaining economic expansion, i.e. an expansion based on the self-reinforcing dynamics of increasing

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The Internal War in the Deep State Claims Its High Profile Casualty: Jeffrey Epstein

August 12, 2019

The “traditionalist” Neocons are going to have to decide to fish or cut bait.
I’ve been writing about the fracturing Deep State for the past five years:
The conflict has now reached the hot-war stage where bodies are turning up, explained away by the usual laughable covers: “suicide,” “accident” and “heart attack.” That Jeffrey Epstein’s death in a secure cell is being labeled “suicide” tells us quite a lot about the desperation of the faction trying to protect the self-serving predators that have wormed their way into control of many Deep State nodes of power.
Here’s the basic structure of the Deep State conflict as I see it. For context: The Deep State exploded in size and power during World War II. At the war’s

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The Gulag of the Mind

August 8, 2019

Befuddled and blind, we wander toward the cliff without even seeing it, focusing on our little screens of entertainment and self-absorption.
There are no physical barriers in the Gulag of the Mind–we imprison ourselves, and love our servitude. Indeed, we fear the world outside our internalized gulag, because we’ve absorbed the narrative that the gulag is secure and permanent.
We’ve also absorbed the understanding that escape will be punished. Dissent will quickly be suppressed or vilified, and the dissenter socially and economically marginalized.
In a peculiarly human pathology, we now believe the exact opposite of reality:our abuser is our savior, we’re getting wealthier when in fact we’re getting poorer, the

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Nothing Is Guaranteed

August 6, 2019

There are no guarantees, no matter how monumental the hubris and confidence.
The American lifestyle and economy depend on a vast number of implicit guarantees— systemic forms of entitlement that we implicitly feel are our birthright.
Chief among these implicit entitlements is the Federal Reserve can always “save the day”: the Fed has the tools to escape either an inflationary spiral or a deflationary collapse.
But there are no guarantees this is actually true. In either an inflationary spiral or deflationary collapse of self-reinforcing defaults, the Fed’s “save” would destroy the economy, which is now so fragile that any increase in interest rates (to rescue us from an inflationary spiral) would destroy our

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Main Street Small Business on the Precipice

July 31, 2019

Small businesses on the precipice need only one small shove to go over the edge, and there won’t be replacements filling the fast-multiplying empty storefronts.
As a generality, the average employee (including financial pundits) has no real experience or understanding of what it takes to start and operate a small business in the U.S. Government employees in the agencies that oversee and enforce regulations on small businesses also generally lack any experience in the businesses they regulate.
A third generality is the endlessly promoted ethos of entrepreneurism cultivates the illusion that there is an essentially endless supply of entrepreneurs who are itching to start businesses and throw everything they have into

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Why Is What Was Once Affordable to Many Now Only Affordable to the Wealthy?

July 29, 2019

With these speculative and risk management skills accessible only to the wealthy, no wonder only the wealthy have gained purchasing power in the 21st century.
Let’s start with an excerpt from a recent personal account by the insightful energy/systems analyst Ugo Bardi, who is Italian but writes his blog Cassandra’s Legacy in English: Becoming Poor in Italy. The Effects of the Twilight of the Age of Oil.
“I am not poor. As a middle class, state employee in Italy, I am probably richer than some 90% of the people living on this planet. But wealth and poverty are mainly relative perceptions and the feeling I have is that I am becoming poorer every year, just like the majority of Italians, nowadays.
I know that the

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