Tag Archives: 5.) Charles Hugh Smith

What’s striking about our thought experiment is how little reliable data we have about the transmissibility of our hypothetical Virus Z and the long-term consequences of its mutations. Let’s run a thought experiment on a hypothetical virus we’ll call Virus Z, a run-of-the-mill respiratory variety not much different from other viruses which are 1) very small; 2) mutate rapidly and 3) infect human cells and modify the cellular machinery to produce more viral...

The unraveling of social cohesion has consequences. Once social cohesion unravels, the nation unravels. My recent posts have focused on the systemic financial risks created by Federal Reserve policies that have elevated moral hazard (risks can be taken without consequence) and speculation to levels so extreme that they threaten the stability of the entire financial system. These risks are well known, though largely ignored in the current speculative frenzy. But...

The Fed’s “choice” is as illusory as the “wealth” the Fed has created with its perfection of moral hazard. The belief that the Federal Reserve possesses god-like powers and wisdom would be comical if it wasn’t so deeply tragic, for the Fed doesn’t even have a plan, much less wisdom. All the Fed has is an incoherent jumble of expedient, panic-driven “saves” it cobbled together in the 2008-2009 Global Financial Meltdown that it had made inevitable. The irony is the...

The unraveling of America’s social order is accelerating, and denial will not save us from the consequences of the plundering of the social contract. What kind of nation boasts a record-high stock market and an unraveling social order? Answer: a failed nation, a nation that has substituted artifice for realism for far too long, a nation that now depends on illusory phantoms of capital, prosperity and democracy to prop up a crumbling facade of “wealth” that the...

Risk has not been extinguished, it is expanding geometrically beneath the false stability of a monstrously manipulated market. One of the most under-appreciated investment insights is courtesy of Mike Tyson: “Everybody has a plan until they get punched in the mouth.” At this moment in history, the plan of most market participants is to place their full faith and trust in the status quo’s ability to keep asset prices lofting ever higher, essentially forever. In other...

What if everyone in the market realizes it’s now the moment to front-run the crash? We have a fine-sounding word for running with the herd: momentum. When the herd is running, those who buy what the herd is buying and sell what the herd is selling are trading momentum, which sounds so much more professional and high-brow than the noisy, dusty image of large mammals (and their trading machines) mindlessly running with the herd. We also have a fine-sounding phrase for...

We’re getting a real-world economics lesson in rip-your-face-off increases in prices, and the tuition is about to go up–way up. Inflation will be transitory, blah-blah-blah–I beg to differ, for these reasons. There are numerous structural sources of inflation, which I define as prices rise while the quality and quantity of goods and services remain the same or diminish. Since the word inflation is so loaded, let’s use the more neutral (and more accurate) term...

People caught on that the returns on the frenzied hamster wheel of “normal” have been diminishing for decades, but everyone was too busy to notice. The superficial “return to normal” narrative focuses solely on first order effects: now that people can dispense with masks and social distancing, they are resuming their pre-pandemic spending orgy with a vengeance, which augurs great profits for Corporate America and higher tax revenues. Yea for “return to normal. “This...

For about 1 in 4, Social Security provides at least 90 percent of their income. How many retired workers are getting less than $1,000 per month in Social Security benefits? The question came up and I was curious enough to find the answer, and download the data into an Excel spreadsheet which I saved as a PDF that you can review here. Note that this data is for the 46.5 million retired workers only, and does not include benefits paid to survivors, spouses,...

That the era of stability has ended and a new era of increasingly chaotic volatility has begun is not on anyone’s radar as a possibility. The standard debate about the future of the economy is: which will we get, high inflation or a deflationary collapse of defaults and asset bubbles popping? The debate goes round and round in widening circles of complexity as analysts delve into every nuance of the debate. A recent conversation with my friend A.T. raised a third...