Author Archives: Charles Hugh Smith

Which Rotten Fruit Falls First?

To those of us who understand the entire status quo is rotten and corrupt to its core, the confidence of each ideological camp that their side will emerge unscathed by investigation is a source of amusement. The fake-progressives (fake because these … Continue reading

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GDP Is Bogus: Here’s Why

The rot eating away at our society and economy is typically papered over with bogus statistics that “prove” everything’s getting better every day in every way. The prime “proof” of rising prosperity is the Gross Domestic Product (GDP), which never fails … Continue reading

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Fraud, Exploitation and Collusion: America’s Pharmaceutical Industry

America’s Pharmaceutical industry takes pride of place in this week’s theme ofThe Rot Within, as the industry has raised fraud, exploitation and collusion to systemic perfection. What other industry can routinely kill hundreds of thousands of Americans and suffer no … Continue reading

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The United States of Weinstein: Complicity, Greed and Corruption Is the Status Quo

The sordid story of Harvey Weinstein is being presented as an aberration. It is not an aberration; it is merely a high-profile example of how the status quo functions in the USA, a.k.a. The United States of Weinstein, in which complicity, … Continue reading

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The Fading Scent of the American Dream

It’s been 10 years since I devoted a week to the theme of The Rot Within(September 17, 2007). Back in 2007, I listed 16 systemic sources of rot in our society, politics and economy; none have been fixed. Instead, the gaping … Continue reading

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The Endgame of Financialization: Stealth Nationalization

As you no doubt know, central banks don’t actually print money and toss it out of helicopters; they create a digital liability and use this new currency to buy assets such as bonds and stocks. Central banks have found that they … Continue reading

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Are You Better Off Than You Were 17 Years Ago?

If we use gross domestic product (GDP) as a broad measure of prosperity, we are 160% better off than we were in 1980 and 35% better off than we were in 2000. Other common metrics such as per capita (per person) … Continue reading

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About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service

One of the more mysterious aspects of the official inflation rate is the hedonic quality adjustments that the Bureau of Labor Statistics makes to the components of the Consumer Price Index (CPI). The basic idea is that when innovations improve the utility … Continue reading

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Our Protected, Predatory Oligarchy: Dirty Secrets, Dirty Lies

The revelations coming to light about Hollywood Oligarch Harvey Weinstein perfectly capture the true nature of our status quo: a rotten-to-the-core, predatory, exploitive oligarchy of dirty secrets and dirty lies protected by an army of self-serving sycophants, servile toadies on … Continue reading

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The Consent of the Conned

My theme this week is The Great Unraveling, by which I mean the unraveling of our social-political-economic system of hierarchical, centralized power. Let’s start by looking at how the basis of governance has transmogrified from consent of the governed to consent of the conned. In … Continue reading

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Migration of the Tax Donkeys

A Great Migration of the Tax Donkeys is underway, still very much under the radar of the mainstream media and conventional economists. If you are confident no such migration of those who pay the bulk of the taxes could ever … Continue reading

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Be Careful What You Wish For: Inflation Is Much Higher Than Advertised

It’s not exactly a secret that real-world inflation is a lot higher than the official rates–the Consumer Price Index (CPI) and Personal Consumption Expenditures PCE). As many observers have pointed out, there are two primary flaws in the official measures of … Continue reading

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What Few Expect: Inflation Will Surge, Destabilizing the Status Quo

If there is any economic truism that is accepted by virtually everyone, it’s that inflation is low and will stay low into the foreseeable future. The reasons are numerous: technology is deflationary, globalization is deflationary, central banks will keep interest rates … Continue reading

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What If the Tax Donkeys Rebel?

Since federal income taxes are in the spotlight, let’s ask a question that rarely (if ever) makes it into the public discussion: what if the tax donkeys who pay most of the tax rebel? There are several likely reasons why this question … Continue reading

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Stagnation Is Not Just the New Normal–It’s Official Policy

Although our leadership is too polite to say it out loud, they’ve embraced stagnation as the new quasi-official policy. The reason is tragi-comically obvious: any real reform would threaten the income streams gushing into untouchably powerful self-serving elites and fiefdoms. In … Continue reading

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This Chart Defines the 21st Century Economy

One chart defines the 21st century economy and thus its socio-political system: the chart of soaring wealth/income inequality. This chart doesn’t show a modest widening in the gap between the super-wealthy (top 1/10th of 1%) and everyone else: there is … Continue reading

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Our Crazy-Making, Profiteering Education-Career Maze

So let’s say we want to set up a system to help students choose a career that fits their aptitudes and interests. What would we do? How about: 1. Give them zero (or superficial) aptitude and career-related tests. 2. Provide a … Continue reading

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You Can Only Choose One: Cheap Oil or a Weak Dollar

Glance at this chart of the trade-weighted U.S. dollar, and note the swing highs and lows in the price of oil per barrel around each peak and trough. You can look up historical inflation-adjusted prices of oil in USD on this … Continue reading

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The Demise of the Dollar: Don’t Hold Your Breath

The demise of the U.S. dollar has been a staple of the financial media for decades. The latest buzzword making the rounds is de-dollarization, which describes the move away from USD in global payments. De-dollarization is often equated with the demise of the … Continue reading

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Loving Our Debt-Serfdom: Our Neofeudal Status Quo

I have often used the words neoliberal, neocolonial and neofeudal to describe our socio-economic-political status quo. Here are my shorthand descriptions of each term: 1. Neoliberal: the commoditization / financialization of every asset, input (such as labor) and output of the economy; the … Continue reading

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Financialization and The Destruction of the Real Economy

Financialization is destroying the real economy, but few in power seem to notice or care. The reason why is painfully obvious: those in power are reaping vast fortunes from the engines of financialization–for example, former President Obama:Obama Goes From White House … Continue reading

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What Is Real Wealth?

What is real wealth? Money, right? Currency, gold, quatloos, you name it.Money is real wealth because you can use it to buy whatever you want. I would argue money in any form is only the means to acquire real wealth, which … Continue reading

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Dear Jamie Dimon: Predict the Crash that Takes Down Your Produces-Nothing, Parasitic Bank and We’ll Listen to your Bitcoin “Prediction”

Dear Jamie Dimon: quick quiz: which words/phrases are associated with you and your employer, J.P. Morgan? Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized … Continue reading

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Yes, This Time It Is Different: But Not in Good Ways

The rallying cry of Permanent Bulls is this time it’s different. That’s absolutely true, but it isn’t bullish–it’s terrifically, terribly bearish. Why is this time it’s differentbearish going forward? The basic answer is that nothing that is structurally broken has actually been fixed, and … Continue reading

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Housing Bubble Symmetry: Look Out Below

There are two attractive delusions that are ever-present in financial markets:One is this time it’s different, because of unique conditions that have never ever manifested before in the history of the world, and the second is there are no cycles, they are … Continue reading

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The Real Reason Wages Have Stagnated: Our Economy is Optimized for Financialization

The Achilles Heel of our socio-economic system is the secular stagnation of earned income, i.e. wages and salaries. Stagnating wages undermine every aspect of our economy: consumption, credit, taxation and perhaps most importantly, the unspoken social contract that the benefits of productivity and … Continue reading

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The Insanity of Pushing Inflation Higher When Wages Can’t Rise

The official policy goal of the Federal Reserve and other central banks is to generate 3% inflation annually. Put another way: the central banks want to lower the purchasing power of their currencies by 33% every decade. In other words, those … Continue reading

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Is the High Cost of Housing Crushing Wages?

A provocative essay, Don’t Blame the Robots, makes the bold claim that “Housing Prices and Market Power Explain Wage Stagnation.” (Foreign Affairs) In other words, the stagnation of the bottom 95% of wages isn’t caused by automation or offshoring, but by the … Continue reading

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The Trouble with Asset Bubbles: If You Stop Pumping, They Pop

The trouble with inflating asset bubbles is that you have to keep inflating them or they pop. Unfortunately for the bubble-blowing central banks, asset bubbles are a double-bind: you cannot inflate assets forever. At some unpredictable point, the risk and moral … Continue reading

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Bitcoin, Sour Grapes and the Institutional Herd

If I had a bitcoin for every time some pundit declared bitcoin is a bubble, I’d be a billionaire. There are three problems with opining that bitcoin and cryptocurrencies are bubblicious: 1. Everything is in a bubble now: stocks, bonds, housing, heck, … Continue reading

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Why We’re Doomed: Stagnant Wages

Despite all the happy talk about “recovery” and higher growth, wages have gone nowhere since 2000–and for the bottom 20% of workers, they’ve gone nowhere since the 1970s. Gross domestic product (GDP) has risen smartly since 2000, but the share … Continue reading

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Systemic Uncertainty, Meet Fragility

Life is inherently uncertain, but systems that were once considered certainties have increasingly become uncertain. Social Security is one example; recent polls reflect widespread doubts among Millennials and Gen-Xers that there will be any Social Security benefits left for them by … Continue reading

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The 5 Steps to World Domination

World Domination–it has a nice ring, doesn’t it? Here’s how to achieve it in 5 steps: 1. Turn everything into a commodity that can be traded on the global market:land, leases on land, options to purchase land, houses, buildings, rooms … Continue reading

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Have We Lost the Ability to Adapt to Rapidly Changing Circumstances?

Successful adaptation requires a willingness to accept the risks of experimentation, innovation, flexibility and failure. The idea that the pace of change in technology, the economy and society is accelerating is increasingly self-evident. That this acceleration exceeds our built-in ability to … Continue reading

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Are We Fiddling While Rome Burns?

It turns out Nero wasn’t fiddling as Rome burned–he was 60 km away at the time. Did Nero Really Fiddle While Rome Burned? The story has become short-hand for making light of a catastrophe, either out of self-interest (one theory had … Continue reading

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Beware the “The Cultural Civil War” Narrative: You’re Being Played

Remember the “Russians hacked our election!” hysteria–or have you already forgotten? That entire narrative collapsed under a deluge of factual evidence that the Democratic National Committee (DNC) data release was an insider job, and a compelling lack of evidence of any … Continue reading

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Are Profit and Healthcare Incompatible?

As I have been noting for a decade, the broken U.S. healthcare system will bankrupt the nation all by itself. We all know the basic facts: the system delivers uneven results in terms of improving health and life expectancy while costing … Continue reading

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Are We Already in Recession?

How shocked would you be if it was announced that the U.S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters? Would you really … Continue reading

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What the Mainstream Doesn’t Get about Bitcoin

I’ve been writing about cryptocurrencies and bitcoin for many years. For example: Could Bitcoin Become a Global Reserve Currency? (November 7, 2013) I am an interested observer, not an expert. As an observer, it seems to me that the mainstream–media, financial punditry, etc.–as … Continue reading

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Powerlessness and Consumerism

There is perhaps no better metric of class in America than personal power–what is known as agency: the power to influence or transform one’s circumstances in a a self-directed manner. Those with agency have power, those without agency (or very limited agency) … Continue reading

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Is Another Oil Head-Fake Brewing?

The dramatic declines in the costs of oil production will be boosting supply at the very moment that demand is falling. Over the past decade I’ve addressed what I call Head-Fakes in the cost of oil/fossil fuel: even though we know the cost … Continue reading

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Why We’re So Risk-Averse: “We Can’t Take That Chance”

You’ve probably noticed how risk-averse Hollywood has become: the big summer movies are all extensions of existing franchises–mixing up the superheroes in new combinations, or remaking hit films from the past–all safe bets. The trend to “playing it safe” is not … Continue reading

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6 Key Questions about RussiaGate

The claims that Russia meddled in the 2016 U.S. election are now known as RussiaGate, in a loose reference to the Watergate scandal of the early 1970s. In the U.S., the issue has been poisoned by profound partisanship: those who … Continue reading

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Meanwhile, Somewhere in the Pentagon…

As North Korean supreme leader Kim Jong Un declares that “The Entire US Territory Is Now Within Our ICBM Range”, somewhere in the Pentagon, operational plans to neutralize North Korean nuclear and long-range missile capabilities are being refined. There are undoubtedly … Continue reading

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We Need a Social Economy, Not a Hyper-Financialized Economy

We all know what a hyper-financialized economy looks like–we live in one:central banks create credit/money out of thin air and distribute it to the already-wealthy, who use the nearly free money to buy back corporate shares, enriching themselves while creating zero jobs. … Continue reading

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There Is Only One Empire: Finance

There’s an entire sub-industry in journalism devoted to the idea that China is poised to replace the U.S. as the “global empire” / hegemon. This notion of global empire being something like a baton that gets passed from nation-state to nation-state … Continue reading

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In the Footsteps of Rome: Is Renewal Possible?

Is renewal / recovery from systemic decline possible? The history of the Roman Empire is a potentially insightful place to start looking for answers. As long-time readers know, I’ve been studying both the Western and Eastern (Byzantine) Roman Empires over the … Continue reading

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When We Can No Longer Tell the Truth…

When we can no longer tell the truth because the truth will bring the whole rotten, fragile status quo down in a heap of broken promises and lies, we’ve reached the perfection of dysfunction. You know the one essential guideline to … Continue reading

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The Death Spiral of Financialization

The primary driver of our economy–financialization–is in a death spiral. Financialization substitutes expansion of interest, leverage and speculation for real-world expansion of goods, services and wages. Financial “wealth” created by leveraging more debt on a base of real-world collateral that doesn’t actually … Continue reading

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Why 2017 Is Like 1969

A deeply polarizing new president, a disastrously misguided official narrativethat the political Establishment doggedly supports despite a damning lack of evidence, and an economy teetering on the edge of recession–and worse. Sound familiar? Welcome to 1969 redux. The similarities between the … Continue reading

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