Friday , October 30 2020
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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

How Systems Collapse: Reaping What We’ve Sown

3 days ago

Don’t expect healthcare or any other hollowed-out, heavily optimized system to function as it once did.
A great many Americans will be shocked when our healthcare systems start failing because they believed the PR that “we have the finest healthcare system in the world.” The ability to deliver the finest care to a few does not translate into an ability to deliver the finest care to the many, nor does it mean the system is robust enough to withstand a tsunami.
As I have endeavored to explain in recent posts, systems optimized for narrow envelopes fail when they slip outside that envelope. One analogy is an airliner that is optimized in terms of fuel efficiency to fly above 30,000 feet at around 540 miles per hour.
The optimized envelope allows for somewhat

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Next Up: Global Depression

4 days ago

The belief that central banks printing currency can “buy/fix” everything that’s broken, lost or scarce is the ultimate in denial, fantasy and magical thinking.
Let’s revisit the pandemic projection chart I prepared on February 2, 2020, nine days after authorities publicly acknowledged the Covid virus outbreak in China. Wave 2 shown on the chart is now underway with a vengeance and next up is Global Depression.

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This projection was based on two well-known dynamics:
1. History offers a basic template for viral pandemics in which the initial wave dies back in summer and then re-ignites in a second larger Wave 2 in autumn and winter.
2. Humanity’s default responses to novel crises: denial, fantasy, magical thinking and manipulating data to support a simplistic,

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Everything is Staged

8 days ago

All the staging is a means to an end, and everyone in America is nothing more than a means to an end: close the sale so the few can continue exploiting the many.
You know how realtors stage a house to increase its marketability: first, they remove all evidence that people actually live there. (Of course a vacant house is ideal for staging because there’s none of the messy real-life stuff to deal with.)
All the clutter of everyday life must be moved elsewhere so the house can look like a bloodless furniture showroom. In other words, fake.
Then various tricks /cues are employed to activate the sense of “home”: induce the “smell of fresh bread” in the kitchen, adorn rooms with vases of fresh flowers, and have a few fake “family” photos set on bookshelves.
We all

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The New Tyranny Few Even Recognize

9 days ago

Clearly, the Fed reckons the public is foolish enough to believe the Fed’s money will actually be “free.”
It’s pretty much universally recognized that authorities use crises to impose “emergency powers” that become permanent. This erosion of civil and economic liberties is always sold as “necessary for your own good.” Of course the accretion of ever greater power in the hands of the few is for our own good. How could it be otherwise? (Irony off)
In this environment of “emergency powers”, it’s almost refreshing to find a power grab so blatant that its sheer boldness boggles the mind. I’m talking about the Federal Reserve’s FedNow, a proposed system of instant payments and digital dollars.
This paper from the Cleveland Fed describes the system: FedNow paper from

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Will the Stock Market Be Dragged to the Guillotine?

10 days ago

The Fed’s rigged-casino stock market will be dragged to the guillotine by one route or another.
The belief that the Federal Reserve and its rigged-casino stock market are permanent and forever is touchingly naive. Never mind the existential crises just ahead; the financial “industry” (heh) projects unending returns of 7% per year, or is it 14% per year? Never mind the details, the Fed has our back and since the Fed is forever, so too will be the gains for everyone playing the rigged games in the Fed’s casino.
What makes this presumption so childishly naive is the tides of history are about to sweep away the era of central banks, their fiat currencies and their rigged casino markets. That the global citizenry might realize these are all forms of financial tyranny

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Why We’re Doomed: Our Delusional Faith in Incremental Change

14 days ago

Better not to risk any radical evolution that might fail, and so failure is thus assured.
When times are good, modest reforms are all that’s needed to maintain the ship’s course. By “good times,” I mean eras of rising prosperity which generate bigger budgets, profits, tax revenues, paychecks, etc., eras characterized by high levels of stability and predictability.
Since stability has been the norm for 75 years, institutions and conventional thinking have both been optimized for incremental change. This is an analog of natural selection in Nature: when the organism’s environment is stable, there’s little pressure to favor random mutations, as these can be risky. Why risk big changes when everything’s working fine as is?
Absent any big changes in their environment,

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Our Simulacrum Economy

17 days ago

In the hyper-real casino, everyone has access to the terrors of losing, but only a few know the joys of the rigged games that guarantee a few big winners by design.
Readers once routinely chastised me for over-using simulacrum to describe our economy and society. The problem is this word perfectly describes the hollowed-out, rigged economy and social order we inhabit and so synonyms don’t quite cut it: it’s not the same as simulation or imitation or counterfeit.
My use (or over-use) dates back to the 2009 publication of my book Survival+, which included a chapter titled Simulacrum and the Politics of Experience. I use simulacrum to describe a carefully constructed representation of a once-authentic system that is intended to shape our behavior to suit the

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A Hard Rain Is Going to Fall

21 days ago

The status quo is about to discover that it can’t stop the hard rain or protect its fragile sandcastles. You’ll recognize A Hard Rain Is Going to Fall as a cleaned-up rendition of Bob Dylan’s classic “A Hard Rain’s a-Gonna Fall”. Since the world had just avoided a nuclear conflict in the Cuban Missile Crisis, commentators reckoned Dylan was referencing a nuclear rain. But he denied this connection in a radio interview, stating: “…it’s just a hard rain. It isn’t the fallout rain. I mean some sort of end that’s just gotta happen….” (Source)
Which brings us to the present and America’s dependence on the sandcastles of monopoly, corruption, free money and a two-tier legal/political system. You know, BAU–business as usual. A hard rain’s a-gonna fall on these sand

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Things Change

25 days ago

Things Change
October 2, 2020
“Doing more of what’s hollowed out our economy and society” is a slippery path to ruin.
Things change, supposedly immutable systems crumble and delusions die. That’s the lay of the land in the  The Empire of Uncertainty I described yesterday.
It’s difficult not to be reminded of the Antonine Plague of 165 AD that crippled the Western Roman Empire. The exact nature of the virus that struck down as many as one-third of the Empire’s residents is unknown; it’s thought to be an early variant of measles or smallpox.
One would have guessed the populace achieved “herd immunity” after the first wave devastated the Empire, but that’s not what happened. The plague continued until 180 AD, and recurred a decade later, continuing to sow misery

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The Urban Exodus and How Greatness Goes Bankrupt

27 days ago

The best-case scenario is those who love their “great city” will accept the daunting reality that even greatness can go bankrupt. Two recent essays pin each end of the “urban exodus” spectrum. James Altucher’s sensationalized NYC Is Dead Forever, Here’s Why focuses on the technological improvements in bandwidth that enable digital-economy types to work from anywhere, and the destabilizing threat of rising crime. In his telling, both will drive an accelerating urban exodus over the long-term.
Jerry Seinfeld’s sharp rebuttal, So You Think New York Is ‘Dead’, focuses on the inherent greatness of NYC and other global metropolises based on their unique concentration of wealth, arts, creativity, entertainment, business, diversity, culture, signature neighborhoods, etc.

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The Empire of Uncertainty

28 days ago

Anyone claiming they can project the trajectory of the U.S. and global economy is deluding themselves.
Normalcy depends entirely on everyday life being predictable. To be predictable, life must be stable, which means that there is a high level of certainty in every aspect of life.
The world has entered an era of profound uncertainty, an uncertainty that will only increase as self-reinforcing feedbacks strengthen disrupting dynamics and perverse incentives drive unintended consequences.
It may be more accurate to say that we’ve entered the Empire of Uncertainty, an empire of ambiguous borders and treacherous topology.
A key driver of uncertainty is the Covid-19 virus, which is a slippery little beast. Nine months after its emergence on the world stage,

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The Silent Exodus Nobody Sees: Leaving Work Forever

September 24, 2020

The “take this job and shove it” exodus is silently gathering momentum.
The exodus out of cities is getting a lot of attention, but the exodus that will unravel our economic and social orders is getting zero attention: the exodus from work. Like the exodus from troubled urban cores, the exodus from work has long-term, complex causes that the pandemic has accelerated.
These are the core drivers of the exodus from work.
1. labor’s share of the economy has been in multi-decade decline. It’s easy to blame globalization and/or automation–and it’s true that the decline in labor’s share accelerated from 2000 on.
But this trend began around 1970, long before China joined the World Trade Organization and the advent of “software eating the world.” (see chart below)
2. While

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Inflation and “Socialism-Lite” Are Just What the Billionaires Want

September 23, 2020

After a bout of inflation and “socialism-light”, we could end up with even more extreme inequality when the whole rotten structure collapses.
Imagine owning a Buffett-Bezos fortune of bilious billions, or even 10% of these mega-fortunes, i.e. between $5 billion and $20 billion. Heck, imagine owning 1% of these mega-fortunes, i.e. $500 million to $2 billion.
You’re extremely rich so you can buy the best advice. Your capital is mobile, and so are you. You can live anywhere and shift your capital anywhere.
Your advisors have noted an increase in media chatter on inequality, for example:
The Bill for America’s $50 Trillion Gluttony of Inequality Is Overdue, and they’re busy preparing plans to weather the storm and preserve your fortune come what may.
It’s all too

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“Inflation” and America’s Accelerating Class War

September 21, 2020

Those who don’t see the fragmentation, the scarcities and the battlelines being drawn will be surprised by the acceleration of the unraveling.
I recently came across the idea that inflation is a two-factor optimization problem: inflation is necessary for the macro-economy (or so we’re told) and so the trick for policy makers (and their statisticians who measure the economy) is to maximize inflation in the economy but only to the point that it doesn’t snuff out businesses and starve workers to death.
From this perspective, households have to grin and bear the negative consequences of inflation for the good of the whole economy.
This narrative, so typical of economics, ignores the core reality of “inflation” in America: it’s a battleground for the class war that’s

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Sacrifice for Thee But None For Me

September 16, 2020

The banquet of consequences for the Fed, the elites and their armies of parasitic flunkies and factotums is being laid out, and there won’t be much choice in the seating.
Words can be debased just like currencies. Take the word sacrifice. The value of the original has been debased by trite, weepy overuse to the point of cliche. Like other manifestations of derealization and denormalization, this debasement is invisible, profound and ultimately devastating.
Consider the overworked slogan of implied shared sacrifice: we’re all in this together. Pardon my cynicism, but doesn’t this sound like what the first class passengers in the lifeboats shouted to the doomed steerage passengers on the sinking Titanic?
Here is the ice-cold reality of America in 2020: Sacrifice for

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The Four D’s That Define the Future

September 14, 2020

When the money runs out or loses its purchasing power, all sorts of complexity that were previously viewed as essential crumble to dust.Four D’s will define 2020-2025: derealization, denormalization, decomplexification and decoherence. That’s a lot of D’s. Let’s take them one at a time.
I use the word derealization to describe the inner disconnect between what we experience and what the propaganda / marketing complex we live in tells us we should be experiencing.
Put another way: our lived experience is derealized (dismissed as not real) by official spin and propaganda.
The current state of the economy is a good example. We see the real-world economy declining yet the officially approved narrative is that there’s a V-shaped recovery underway because Big Tech

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This Is How It Ends: All That Is Solid Melts Into Air

September 13, 2020

While the Federal Reserve and the Billionaire Class push the stock market to new highs to promote a false facade of prosperity, everyday life will fall apart.
How will the status quo collapse? An open conflict–a civil war, an insurrection, a coup–appeals to our affection for drama, but the more likely reality is a decidedly undramatic dissolution in which all the elements of our way of life we reckoned were solid and permanent simply melt into air, to borrow Marx’s trenchant phrase.
In other words, Rome won’t be sacked by Barbarians, or ignite in an insurrectionary conflagration–everything will simply stop working as those burdened with the impossible task of keeping a failed system glued together simply walk away.
If we examine the collapse of the Soviet Union

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Intolerance and Authoritarianism Accelerate Disunity and Collapse

September 12, 2020

Scapegoating dissenters only hastens the disunity and disarray that accelerates the final collapse.
Authoritarianism is imposed on us, but its sibling intolerance is our own doing. Intolerance and authoritarianism are two sides of the same coin: as intolerance becomes the norm, the intolerant start demanding that the state enforce their intolerance by suppressing their enemies via increasingly heavy-handed authoritarian measures.
Intolerance and authoritarianism increase as instability takes hold and living standards decline. In good times, dissent and differences of opinion are not only tolerated but celebrated, as this freedom to hold a variety of beliefs serves to unify society.
In bad times, dissent and differences are viewed as mortal threats to the social

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The Sinking Titanic’s Great Pumps Finally Fail

July 13, 2020

The greater fools still partying in the first-class lounge are in denial that even the greatest, most technologically advanced ship can sink.
On April 14, 1912, the liner Titanic, considered unsinkable due to its watertight compartments and other features, struck a glancing blow against a massive iceberg on that moonless, weirdly calm night. In the early hours of April 15, the great ship broke in half and sank, ending the lives of the majority of its passengers and crew.
The usual analogy drawn between the Titanic and our financial meltdown stems from the initial complacency of the passengers after the collision. Some passengers went on deck to play with the ice scraped off the berg, while most returned to the festivities still working their magic as midnight

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The American Economy in Four Words: Neofeudal Extortion, Decline, Collapse

July 9, 2020

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy.
Now that the pandemic is over and the economy is roaring again–so the stock market says–we’re heading straight back up into the good old days of 2019. Nothing to worry about, we’ve recovered the trajectory of higher and higher, better every day in every way.
Everything’s great except the fatal rot at the heart of the U.S. economy hasn’t even been acknowledged, much less addressed: every sector of the economy is nothing but one form of neofeudal extortion or another.
Let’s spin the time machine back to the late Middle Ages, at the height of feudalism, and imagine we’re trying to get a boatload of goods to the nearest city to sell. As we drift down

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What Makes You Think the Stock Market Will Even Exist in 2024?

July 6, 2020

Given the extremes of the stock market’s frauds and even greater extremes of wealth/income inequality it has created, tell me again why the stock market will still exist in 2024?
When I read a financial pundit predicting a bull market in stocks through 2024, blah-blah-blah, I wonder: what makes you think the stock market will even exist in 2024, at least in its current form?
Given the current trajectory of the real economy into the Greatest Depression while the Federal Reserve’s entire raison d’etre is to send stocks soaring to the moon forever and ever, what are the odds that this disconnect leads to a political rebellion against the Fed and its wealth inequality machine, the stock market?
Just as Communism was a god that failed, finance capitalism is also a

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Dancing Through the Geopolitical Minefield

July 4, 2020

The elites dancing through the minefield all have plans, but how many are prepared for the punch in the mouth?
Open any newspaper from the past 100 years and you will soon find a newsworthy geopolitical hotspot or conflict. Geopolitical conflict is the default setting for humanity, it seems, but it does feel as if the minefield of geopolitical rivalries and flashpoints has been thickly sown and many of the players are dancing through the minefield with a worrisomely cavalier confidence that they won’t step on mine, i.e. bad stuff only happens to the other players.
The global minefield includes these dynamics:
1. The grinding collision of geopolitical tectonic plates: spheres of influence, soft and hard power projection, border conflicts, etc.
2. The urgency

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An Interesting Juncture in History

July 2, 2020

Just as the rewards of central-bank bubbles have not been evenly distributed, the pain created by the collapse of the bubbles won’t be evenly distributed, either.
We’ve reached an interesting juncture in history, and I don’t mean the pandemic. I’m referring to the normalization of extremes in the economy, in social decay and in political dysfunction and polarization.
Let’s ask a very simple question. The S&P 500 stock index went up five-fold from its 2009 low at 667 to a recent high around 3,400. Did your income rise five-fold since 2009? Probably not.
Houses that sold for $150,000 in 2000 are now valued at $900,000, a six-fold increase since 2000. Did your income rise six-fold since 2000? Probably not.
State university tuition has risen about 2.5 times from

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Forget the V, W or L Recovery: Focus on N-P-B

June 29, 2020

The only realistic Plan B is a fundamental, permanent re-ordering of the cost structure of the entire U.S. economy.
The fantasy of a V-shaped recovery has evaporated, and expectations for a W or L-shaped recovery are increasingly untenable. So forget V, W and L; the letters that will shape the future are N, P, B: there is No Plan B.
All the hopes for a recovery were based on a quick return to the economy that existed in late 2019. All the bailouts and stimulus programs were based on this single goal: a quick return to The Old Normal. This was Plan A.
For all the reasons that have been laid out here over the past six months, The Old Normal is gone for good. The Old Normal economy was too precarious, too brittle and too fragile to survive the toppling of any domino,

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Is Data Our New False Religion?

June 26, 2020

In the false religion of data, heresy is asking for data that is not being collected because it might reveal unpalatably unprofitable realities.
Here’s how every modern con starts: let’s look at the data. Every modern con starts with an earnest appeal to look at the data because the con artist has assembled the data to grease the slides of the con.
We have been indoctrinated into a new and false religion, the faith of data. We’ve been relentlessly indoctrinated with the quasi-religious belief that “data doesn’t lie,” when the reality is that data consistently misleads us because that is the intent.
Nobody in the False Religion of Data ever looks at what we don’t measure because that would uncover disruptive truths. My latest book Will You Be Richer or Poorer?:

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The Illusion of Control: What If Nobody’s in Charge?

June 24, 2020

The last shred of power the elites hold is the belief of the masses that the elites are still in control.
I understand the natural desire to believe somebody’s in charge: whether it’s the Deep State, the Chinese Communist Party, the Kremlin or Agenda 21 globalists, we’re primed to believe somebody somewhere is controlling events or pursuing agendas that drive global responses to events.
I submit whatever control we discern is illusory, as the dynamics unleashed by the pandemic have already escaped the control of elites. The fundamental reason the elites have lost control is that all the systems they depend on have been broken for 12 years, but were successfully papered over by doing more of what broke them in the first place. This papering over of broken systems

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For the Rich to Keep Getting Richer, We Have to Sacrifice Everything Else

June 22, 2020

They’re hoping the endless circuses and trails of bread crumbs will forever distract us from their plunder and the inequalities built into America’s financial system..
The primary story of the past 20 years is the already-rich have gotten much richer, with destabilizing economic, social and political consequences. The Federal Reserve and its army of academic / think-tank / financier apologists, lackeys, toadies, apparatchiks and sycophants have several rather thin excuses to explain this away, including:
1. Gee, wealth/income inequality isn’t quite as bad as everyone claims.
(Actually, it’s worse, but never mind unwelcome reality. Let us prove yet again how statistics can always be gamed.)
2. Wealth/income inequality is bad, but it’s not the Fed’s or policymakers’

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Our Wile E. Coyote Economy: Nothing But Financial Engineering

June 21, 2020

Ours is a Wile E. Coyote economy, and now we’re hanging in mid-air, realizing there is nothing solid beneath our feet.
The story we’re told about how our “capitalist” economy works is outdated. The story goes like this: companies produce goods and services for a competitive marketplace and earn a profit from this production. These profits are income streams for investors, who buy companies’ stocks based on these profits. As profits rise, so do stock valuations.
It’s all win-win: consumers get competitively priced goods and services, workers have jobs producing goods and services and investors earn a return on their capital.
Sadly, this is a fairy tale that no longer aligns with the reality that the U.S. economy is now a decaying billboard of “producing goods and

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The Fed’s Grand Bargain Has Finally Imploded

June 19, 2020

The Fed has backed itself not into a corner but to the edge of a precipice.
Though the Federal Reserve never stated its Grand Bargain explicitly, their actions have spoken louder than their predictably self-serving, obfuscatory public pronouncements. Here’s the Grand Bargain they offered institutional investors and speculators alike:
We’re taking away your low-risk, high-yield investments by slashing interest rates to near-zero, but we’re giving you endless asset bubbles as a new way to notch reliable gains. This trade-off has worked for 20 years as the Fed hyper-inflated one asset bubble after another until they finally inflated everything to precarious extremes: The Everything Bubble of 2019 that started unraveling in September 2019, long before the pandemic.

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Is the Pandemic Over and a V-Shaped Recovery Baked In?

June 15, 2020

So what do we know with any sort of certainty about the claim that “the pandemic is over”? Very little.
Is the pandemic over in China, Europe, Japan and the U.S./Canada? Is the much-anticipated V-Shaped economic recovery already baked in, i.e. already gathering momentum? The consensus, as reflected by the stock market (soaring), the corporate media and governmental easings of restrictions seems to be “yes” to both questions.
But science is not a consensus-based activity, and so skeptics of consensus are looking to the sciences of epidemiology, virology, etc., and economics for evidence-based answers.
But as scientist and author Michael Crichton explains in this seminal paper he gave at Caltech in 2003, much of what is presented (“sold”) as “hard science” is

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