Tag Archives: 5.) Charles Hugh Smith

As the word suggests, cannibalism won’t end well for those consumed by the infinitely insatiable few. Cannibalize is an interesting word. It is a remarkably graphic way to describe the self-inflicted destruction of a system by stripping previously functional subsystems to sustain the illusion of system functionality. Here are some examples. An Air Force which routinely posts photos of its impressive fleet of 100 aircraft has been cannibalizing parts from 80 aircraft...

While it’s fun to sort all the propaganda into various boxes, we would do well to look for what all the marketers / MoP players seek to mystify. It’s time once again to check for Ministry of Propaganda updates, which like Windows and iOS is constantly being updated to counter new threats and enhance the user experience (heh). Much like the other operating systems that underpin our daily lives, the core functions of the MoP don’t change much.My chart from 2007...

If “markets” controlled by the rich are allowed to distribute essentials, the result will be civil disorder and the overthrow of regimes. What’s worse than inflation? Depression + Inflation. And that’s where we’re heading. As I explained yesterday in The Fed Can’t Stop Supply-Side Inflation, central banks are trying to reduce inflation by crushing demand. This works in eras of abundance, but not in eras of scarcity in which supply constraints drive inflation. If the...

The Fed and other central banks have zero control of supply-driven inflation, period. America’s financial punditry is bewitched by four fatal fantasies: 1. Inflation is demand-driven. If the Federal Reserve (or other central banks) reduce demand with monetary tools like raising interest rates, inflation will cool. 2. Substitution of high-cost goods with lower-cost goods reduces inflation, and substitution is infinite: there’s always cheaper chicken if beef gets too...

Even currencies maintaining convertibility to gold are still subject to bond yields, interest rates, trade and capital flows. It’s widely held that all of our financial woes are the result of abandoning the discipline of the gold standard in 1971. The premise here is that if the U.S. had maintained the gold standard, the excesses of the fiat currencies regime could not have arisen. The real story is the U.S. was hemorrhaging gold in the 1960s at such a rate that...

Events may show that there are no winners, only survivors and those who failed to adapt. Some recessions are brief, necessary cleansings in which extremes of leverage and speculation are unwound via painful defaults, reductions of risk and bear markets. Some are reactions to exogenous shocks such as war or pandemic. The uncertainty triggers a mass reduction of risk which recedes once the worst is known and priced in. Far less frequently, structural recessions are...

So what are conventional pundits missing today? I would start with three dynamics. Only old people experienced real recessions–those in 1973-74 and 1980-82. Recessions since then have been shorter and less systemic. In the good old days, a recession laid waste to entire industries which never recovered their previous employment. People who were laid off couldn’t find another job. Major sectors of the economy dried up and blew away. Jobs were scarce and there was an...

Are 55 and older workers propping up the U.S. economy? The data is rather persuasive that the answer is yes. The chart of U.S. employment ages 25 to 54 years of age and 55 and older reveals a startling change. There are now 20 million more 55+ employed than there were in 2000, an equivalent of the entire workforce of Spain. This unprecedented demographic / employment transition is worth a closer look. As the second chart shows, some of this increase is due to the...

A strong currency exports inflation to those nations which do not issue the currency. Though it’s difficult to be confident of anything in the current flux, I am pretty confident of three things: 1) price is set on the margins 2) currencies are the foundation of every economy 3) the financial forecasts issued to calm the public do not reflect operative geopolitical goals. Every national government has “global interests.” Governments naturally do whatever they can to...

The problem for global corporations feasting on “Inflation” profiteering is that the vast majority of consumers can’t afford another lavish vacation, overpriced vehicle or specious subscription. A funny thing seems to be happening within “Inflation”: companies are using “inflation” as cover for outrageous price increases that have little to do with actual inflation. Consider a water or electric utility that is directly impacted by rising costs of natural gas / oil....