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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

The Long Cycles Have All Turned: Look Out Below

3 days ago

But alas, humans do not possess god-like powers, they only possess hubris, and so all bubbles pop: the more extreme the bubble, the more devastating the pop.
Long cycles operate at such a glacial pace they’re easily dismissed as either figments of fevered imagination or this time it’s different.
But since Nature and human nature remain stubbornly grounded by the same old dynamics, cycles eventually turn and the world changes dramatically. Nobody thinks the cyclical turn is possible until it’s already well underway.
Multiple long cycles are turning in unison:
1. The cycle of interest rates: down for 40+ years (last turn, 1981), now up for an unknown but consequential period of time.
2. The cycle of inflation / deflation: the 40-year period of low real-world

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Why Inflation Is a Runaway Freight Train

6 days ago

The value of these super-abundant follies will trend rapidly to zero once margin calls and other bits of reality drastically reduce demand.
Inflation, deflation, stagflation–they’ve all got proponents. But who’s going to be right? The difficulty here is that supply and demand are dynamic and so there are always things going up in price that haven’t changed materially (and are therefore not worth the higher cost) and other things dropping in price even though they haven’t changed materially.
So proponents of inflation and deflation can always offer examples supporting their case. The stagflationist camp is delighted to offer a compromise case: yes, there are both deflationary and inflationary dynamics, and what we have is the worst of both worlds: stagnant growth

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When Risk and Opportunity Become Personal

11 days ago

The opportunity to lower our exposure to risk is always present in some fashion, but embracing this opportunity becomes critical when precarity and change-points rise like restless seas.
The Chinese characters that comprise the equivalent of “crisis” are famously–and incorrectly–translated as “danger” and “opportunity.”
This mis-translation has reached the peculiar prominence of being repeated often enough to be taken as accurate, but according to Wikipedia and other sources, the more accurate translation is “precarious” plus “change point.” (Chinese speakers may be able to shed even more light on the characters’ shades of meaning.)
The American attachment to “crisis” equaling “danger” and “opportunity” is easy to understand: the American “can do” culture is

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When Everything Is Artifice and PR, Collapse Beckons

13 days ago

The notion that consequence can be as easily managed as PR is the ultimate artifice and the ultimate delusion.
The consequences of the drip-drip-drip of moral decay is difficult to discern in day-to-day life. It’s easy to dismiss the ubiquity of artifice, PR, spin, corruption, racketeering, fraud, collusion and narrative manipulation (a.k.a. propaganda) as nothing more than human nature, but this dismissal of moral decay is nothing more than rationalizing the rot to protect insiders from the sobering reality that the entire system is unraveling and heading for its final reckoning: collapse.
We’ve become so accustomed to the excesses of marketing that we’ve lost the ability to recognize the difference between “science” that’s been carefully designed to reach a

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The Fed’s Moral Hazard Monster Is About to Lay Waste to “Wealth”

14 days ago

If the Fed set out to destroy the financial system, they’re very close to finishing the job.
If you set out to destroy markets and the financial system, your most important weapon is moral hazard, the disconnection of risk and consequence. You disconnect risk from consequence by rewarding those making the riskiest bets and bailing out gamblers whose bets went bad.
You reward those making the riskiest bets by pushing markets higher regardless of any other factors. Nothing matters except your support of ever higher markets.
This implicit guarantee that any bet on markets lofting higher will be a winning gamble rewards those making the riskiest bets. The punters who played small with cash made a few bucks, but the punters who borrowed heavily and then leveraged

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Top 1% Gains More Wealth Than the Combined GDPs of Japan, Germany, UK, France, India and Italy, Bottom 50%–You Get Nothing

18 days ago

Given that political power in America is a pay-to-play auction in which the highest bidder wins, how this incomprehensibly lopsided ownership of wealth plays out is an open question.
Wealth inequality easily falls into an abstraction unless we contextualize it in meaningful ways. I’ve annotated two St. Louis Federal Reserve (FRED) charts–the net worth of America’s top 1% and the net worth of America’s bottom 50% of households, roughly 66 million households–to show their net worth and their share of all household net worth, and put this in the context of inflation and GDP (gross domestic product) of the U.S. and other nations.
These charts may look complicated but the idea is actually pretty simple: I’ve noted how each group (the top 1% and the bottom 50%) did at

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Paging Isaac Newton: Time to Buy the Top of This Bubble

20 days ago

Despite Newton’s tremendous intelligence and experience, he fell victim to the bubble along with the vast herd of credulous greedy punters.
One of the most famous examples of smart people being sucked into a bubble and losing a packet as a result is Isaac Newton’s forays in and out of the 1720 South Seas Bubble that is estimated to have sucked in between 80% and 90% of the entire pool of investors in England.
Some have claimed that Newton did not buy early in 1711, sell in April 1720 for a nice profit, then sink the majority of his substantial fortune in the bubble as it peaked in summer, and then suffering heavy losses as the bubble popped in September, but evidence supports this chain of events: Isaac Newton and the perils of the financial South Sea (Physics

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Look Out Below: Why a Rug-Pull Flash Crash Makes Perfect Sense

21 days ago

It makes perfect financial sense to crash the market and no sense to reward the retail options marks by pushing it higher. An extraordinary opportunity to scoop up mega-millions in profits has arisen, and grabbing all this free money makes perfect financial sense. Now the question is: will those who have the means to grab the dough have the guts to do so?
Here’s the opportunity: retail punters have gone wild for call options, churning $2.6 trillion in mostly short-term calls–bets on gains now, not later. This expansion of retail options exposure is unprecedented not just in its volume but in its concentration in short-term bets (options that expire in a few days) and in mega-cap tech companies that are commanding rich premiums for options. Goldman Stunned By The

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The Contrarian Trade of the Decade: The Dollar Refuses to Die

22 days ago

Which is more valuable: Wall Street’s debt/asset bubbles or the global empire? You can’t have both, so choose wisely. The consensus makes sense: the U.S. dollar is doomed because the Federal Reserve and the Treasury will conjure trillions of new dollars out of thin air to prop up the status quo entitlements, monopolies, cartels and debt/asset bubbles, and since little of this issuance actually increases productivity, all it will accomplish is the dilution / devaluation of the currency.
Put simply, the dollar will lose its purchasing power as the inevitable result of the need to print and borrow ever-increasing sums to pay interest on existing debts, fund Bread and Circuses to keep the masses placated and keep inflating the asset bubbles in stocks, housing, bat

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Eight Reasons Scarcities Will Increase Rather Than Evaporate

27 days ago

Who knew it would be so easy? All we have to do is collect urine and we’ll be flying our electric air taxi tomorrow!
While the private-jet crowd is busy selling a future of 1 billion electric vehicles, 1 billion windmills, 1 billion solar arrays, hundreds of thousands of electric aircraft, thousands of new nuclear power plants and trillions more in “wealth” accumulating in their bloated ledgers, reality is intruding on their technocratic fantasies.
The primary assumption of the private-jet crowd is that the developed world will continue to have a free pass to strip developing-world nations of their mineral wealth at the low, low cost of a bribe to the current kleptocrats in power and low, low wages paid to local workers. The profits will naturally flow to the

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One Solution to Soaring Food Prices: Start Your 2022 Garden Now

28 days ago

There is a great deal of joy and satisfaction in gardening; benefits include saving money, eating healthier, sharing the bounty with others and reducing the derealization / derangement of modern life.
There are few reasons to expect food prices to drop and many reasons to expect even higher prices ahead. Headlines like this are now standard: Global Food Prices Hit Fresh Decade High In October, and there is little evidence that the drivers of higher food prices–rising fertilizer costs, supply chain disruptions, poor harvests, California’s water woes, to name a few–will suddenly reverse.

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Rather, as I have often noted, the world’s run of extraordinarily good luck on weather and harvests may have ended.One solution–a garden–is within reach of many of us, and

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Whistleblowers Torpedo Facebook and Pfizer: Who’s Next?

29 days ago

If America’s total dependence on corporate profits and stock market/housing bubbles is just fine because the bubbles just keep inflating, there’s nothing left but rot.
It’s becoming a routine story: a whistleblower emerges with copious documentation, revealing the ethical / managerial rot at the very top of Corporate America icons. Recently it was Facebook that was revealed as devoting far more resources to masking corporate guile than to actually improving longstanding ethical and quality issues.
Now it’s Pfizer’s fast and loose treatment of supposedly rigorous protocols that’s been heavily documented.The prestigious British Medical Journal (BMJ) stated that the whistleblower provided “The BMJ with dozens of internal company documents, photos, audio recordings,

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Revenge of the Real World

November 4, 2021

The status quo response would be amusing if the consequences weren’t so dire.
Rather than stare at empty shelves, you have two options for distraction: you can don a virtual-reality headset and cavort with dolphins in the metaverse, or you can trade various forms of phantom wealth that always go up (happy happy!) because the Fed.
Neither distraction actually solves any real-world problems, a reality we can call the Revenge of the Real World We’ve entered a peculiar phase in American history in which illusions of wealth and control are the favored distractions from the unraveling of the real world economy and social order.
Printing trillions of currency units can’t restore the global supply chain or social cohesion, Rather, jacking phantom wealth to the moon is

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Will China Pop the Global Everything Bubble? Yes

November 2, 2021

The line of dominoes that is already toppling extends around the entire global economy and financial system. Plan accordingly.
That China faces structural problems is well-recognized. The list of articles in the August issue of Foreign Affairs dedicated to China reflects this:
Xi’s Gamble: the Race to Consolidate Power and Stave Off Disaster
China’s Economic Reckoning: The Price of Failed Reforms
The Robber Barons of Beijing: Can China Survive its Gilded Age?
Life of the Party: How Secure Is the CCP? (Chinese Communist Party)
These are thorny, difficult issues: a demographic cliff resulting from the one-child policy, soaring wealth-income inequality, pervasive corruption, public health issues (diabesity, etc.), environmental damage and a slowing economy.
What

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Santa’s Revenge: Everyone Front-Running My Rally, You Get Nothing

October 30, 2021

Santa is generally a jolly fellow, but that doesn’t mean he doesn’t take pleasure in meting our well-deserved punishment to the greedy. Nothing is more predictable than a stock market rally starting in early November and running into mid-January–Santa’s rally. And since it’s so predictable, why not front-run the rally by loading up on stocks in October?
Here’s the problem: Santa doesn’t take kindly to punters front-running his rally. It’s like opening your presents in October, and that’s the equivalent of sucker-punching Santa. Santa’s revenge will be served cold: no rally for you, front-runners. And nothing in your stocking or under your tree, either.
Rather than give front-runners a lump of coal (that’s been bought up by China), Santa will deliver trillions of

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

October 26, 2021

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

October 23, 2021

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

October 19, 2021

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

October 16, 2021

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

October 14, 2021

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

October 8, 2021

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

October 5, 2021

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

October 1, 2021

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

Read More »

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

Read More »