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 View from the Trenches of the Alternative Media

What’s scarce in a world awash in free content and nearly infinite entertainment content? After 3,701 posts (from May 2005 to the present), here are my observations of the Alternative Media from the muddy trenches. It’s increasingly difficult to make a living creating content outside the corporate matrix.

Read More »

Truth Is What We Hide, Self-Serving Cover Stories Are What We Sell

The fact that lies and cover stories are now the official norm only makes us love our servitude with greater devotion. We can summarize the current era in one sentence: truth is what we hide, self-serving cover stories are what we sell. Jean-Claude Juncker’s famous quote captures the essence of the era: “When it becomes serious, you have to lie.”

Read More »

Bearish on Fake Fixes

Household Wealth by percentile

The conventional definition of a Bear is someone who expects stocks to decline. For those of us who are bearish on fake fixes, that definition doesn’t apply: we aren’t making guesses about future market gyrations (rip-your-face-off rallies, dizziness-inducing drops, boring melt-ups, etc.), we’re focused on the impossibility of reforming or fixing a broken economic system.

Read More »

America Needs a New National Strategy

A productive national Strategy would systemically decentralize power and capital rather than concentrate both in the hands of a self-serving elite. If you ask America’s well-paid punditry to define America’s National Strategy, you’ll most likely get the UNESCO version: America’s national strategy is to support a Liberal Global Order (LGO) of global cooperation on the environment, trade, etc. and the encouragement of democracy, a liberal order that benefits all by providing global security and avenues for cooperation.

Read More »

Does the Market Need a Heimlich Maneuver?

Effective Federal Funds Rate 2010-2018

For all we know, the panic selling is Wall Street’s way of forcing the Fed’s hand: stop with the rates increases already or Mr. Market expires. Markets everywhere are gagging on something: they’re sagging, crashing, imploding, blowing up, dropping and generally exhibiting signs of distress.

Read More »

Does Any of This Make Sense?

Federal Government; Student loans 2005-2018

Does any of this make sense? No. But it’s so darn profitable to the oligarchy, it’s difficult to escape debt-serfdom and tax-donkey servitude. We rarely ask “does this make any sense?” of things that are widely accepted as beneficial– or if not beneficial, “the way it is,” i.e. it can’t be changed by non-elite (i.e. the bottom 99.5%) efforts.

Read More »

The Implicit Desperation of China’s “Social Credit” System

S curve centralization

Other governments are keenly interested in following China’s lead. I’ve been pondering the excellent 1964 history of the Southern Song Dynasty’s capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government’s unprecedented “Social Credit Score” system, which I addressed in Kafka’s Nightmare Emerges: China’s “Social Credit Score”.

Read More »

Understanding the Global Recession of 2019

Effective Federal Funds Rate 1960-2018

Isn’t it obvious that repeating the policies of 2009 won’t be enough to save the system from a long-delayed reset? 2019 is shaping up to be the year in which all the policies that worked in the past will no longer work. As we all know, the Global Financial Meltdown / recession of 2008-09 was halted by the coordinated policies of the major central banks, which lowered interest rates to near-zero, bought trillions of dollars of bonds and iffy assets such as mortgage-backed securities, and issued unlimited lines of credit to insolvent banks, i.e. unlimited liquidity.

Read More »

Why Are so Few Americans Able to Get Ahead?

Real Median Household Income in the U.S. 1990-2018

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%. Despite the rah-rah about the “ownership society” and the best economy ever, the sobering reality is very few Americans are able to get ahead, i.e. build real financial security via meaningful, secure assets which can be passed on to their children.

Read More »

Is This “The Most Important Election of our Lives” or Just Another Distraction?

The problem isn’t polarization; the problem is neither flavor of the status quo is actually solving any of the nation’s most pressing system problems. As I write this at 5 pm (Left Coast) November 6, the election results are unknown. While various media are trumpeting this as “the most important election of our lives,” the less eyeball-catching, emotion-triggering reality is this election is nothing but another distraction.

Read More »

Turn Off, Tune Out, Drop Out

Civilian Labor Force Participation Rate 1960-2018

An unknown but likely staggeringly large percentage of small business owners in the U.S. are an inch away from calling it quits and closing shop. Timothy Leary famously coined the definitive 60s counterculture phrase, “Turn on, tune in, drop out” in 1966. (According to Wikipedia, In a 1988 interview with Neil Strauss, Leary said the slogan was “given to him” by Marshall McLuhan during a lunch in New York City.)

Read More »

What’s Behind the Erosion of Civil Society?

Smartphone Addiction Tightens Its Global Grip

Rebuilding social capital and social connectedness is not something that can be done by governments or corporations. As the mid-term elections are widely viewed as a referendum of sorts, let’s set aside politics and ask, what’s behind the erosion of our civil society? That civil society in the U.S. and elsewhere is fraying is self-evident.

Read More »

Why Is Social Media So Toxic?

Smartphone Addiction Tightens Its Global Grip

The desire to improve our social standing is natural. What’s unnatural is the toxicity of doing so through social media. It seems self-evident that the divisiveness that characterizes this juncture of American history is manifesting profound social and economic disorders that have little to do with politics. In this context, social media isn’t the source of the fire, it’s more like the gasoline that’s being tossed on top of the dry timber.

Read More »

Globalization Has Hollowed Out Rural America

Case Shiller Dallas, 2000 - 2018

What do we make of an economy in which a handful of bubblicious urban areas are magnets for jobs and capital while rural communities have been hollowed out? The short answer is that this progression of urbanization has been one of the core dynamics of civilization for thousands of years: opportunities are greater in cities, and so people move from rural areas with few opportunities to cities with greater opportunities.

Read More »

What’s the Real Meaning of the Stock Market Swoon?

S&P 500 Large Cap Index, Jul 2017 - Oct 2018

Economy has reached peak earnings so there’s no fundamentals-driven upside left. Bond yields are now high enough to dampen enthusiasm for inherently risky stocks. Central banks curtailing / ending their quantitative easing programs have reduced liquidity in the financial system. US markets are catching up to the rest of the world’s market slump.

Read More »

The Coming Inflation Threat

Inflation, consumer prices for US 1970-2010

Falling asset inflation plus rising cost inflation equals stagflation. Inflation is a funny thing: we feel it virtually every day, but we’re told it doesn’t exist—the official inflation rate is around 2.5% over the past few years, a little higher when energy prices are going up and a little lower when energy prices are going down.

Read More »

Mutiny, Class, Authority and Respect

Humiliation and fear of a catastrophic decline in status foment mutiny and rebellion. I recently finished The Bounty: The True Story of the Mutiny on the Bounty, a painstakingly researched history of the mutiny, but with a focus on how the story was shaped by influential families after the fact to save the life of one mutineer, Peter Haywood, and salvage the reputation of the leader, Fletcher Christian, via a carefully orchestrated character assassination of Captain Bligh.

Read More »

Is the Greatest Bull Market Ever Finally Ending? (Hint: Follow the Money)

Global wealth CSa

The key here is the gains generated by owning US-denominated assets as the USD appreciates. Is the Greatest Bull Market Ever finally ending? One straightforward approach to is to follow the money, i.e. global capital flows: assets that attract positive global capital flows will continue rising if demand for the assets exceeds supply, and assets that are being liquidated as capital flees the asset class (i.e. negative capital flows) will decline in price.

Read More »

Here’s Why the Next Recession Will Spiral Into a Depression

Gap in pension funding 2015-2016

Here’s the difference between a recession and a depression: you can’t get blood from a stone, or make an insolvent entity solvent with more debt. There are two basic differences between a recession and a depression: 1. Duration: a recession typically lasts between 6 and 18 months, while a depression drags on for years or even decades, often masked by official propaganda as “slow growth” or “stagnation.”

Read More »

How Many Households Qualify as Middle Class?

Ownership Society

By the standards of previous generations, the middle class has been stripmined of income, assets and purchasing power. What does it take to be middle class nowadays? Defining the middle class is a parlor game, with most of the punditry referring to income brackets as the defining factor.

Read More »

The Distortions of Doom Part 2: The Fatal Flaws of Reserve Currencies

US Dollar's Share of Global Payments, Loans and Reserves

The way forward is to replace the entire system of reserve currencies with a transparent free-for-all of all kinds of currencies. Over the years, I’ve endeavored to illuminate the arcane dynamics of global currencies by discussing Triffin’s Paradox, which explains the conflicting dual roles of national currencies that also act as global reserve currencies, i.e. currencies that other nations use for global payments, loans and foreign exchange reserves.

Read More »

The Global Distortions of Doom Part 1: Hyper-Indebted Zombie Corporations

The defaults and currency crises in the periphery will then move into the core. It’s funny how unintended consequences so rarely turn out to be good. The intended consequences of central banks’ unprecedented tsunami of stimulus (quantitative easing, super-low interest rates and easy credit / abundant liquidity) over the past decade were: 1.

Read More »

Fixing Infrastructure Isn’t as Simple as Spending Another Trillion Dollars

Public Infrastructure Has Been Neglected

It isn’t easy to add new subway lines or new highways, and so “solutions” don’t really exist. If there’s one thing Americans can still agree on, it’s that America needs to spend more on infrastructure which is visibly falling apart in many places. This capital investment creates jobs and satisfies everyone’s ideological requirements: investment in public infrastructure helps enterprises, local governments and residents.

Read More »

The Labor Shortage Is Real

Civilian Labor Force Participation Rate 1960-2000

Few conventional-media commentators are willing or able to discuss these factors in the labor shortage / declining participation trends. Is there a labor shortage in the U.S.? Employers are shouting “yes.” Economists keep looking for wage increases as evidence of a labor shortage, and since wage increases are still relatively modest, the argument that there are severe labor shortages in parts of the U.S. is unpersuasive to many conventional economists.

Read More »

Droit du Seigneur and the Neofeudal Privileges of Class in America

Want to understand the full scope of neofeudalism in America? Follow the money and the power and privilege it buys. The repugnant reality of class privilege in America is captured by the phrase date rape: the violence of forced, non-consensual sex is abhorrent rape when committed by commoner criminals, but implicitly excusable date rape when committed by a member of America’s privileged elite.

Read More »

When Does This Travesty of a Mockery of a Sham Finally End?

S-curved of Rapid Expansion

Credit bubbles are not engines of sustainable employment, they are only engines of malinvestment and wealth destruction on a grand scale. We all know the Status Quo’s response to the global financial meltdown of 2008 has been a travesty of a mockery of a sham–smoke and mirrors, flimsy facades of “recovery,” simulacrum “reforms,” serial bubble-blowing and politically expedient can-kicking, all based on borrowing and printing trillions of dollars, yen, euros and yuan, quatloos, etc.

Read More »

Digging into Wealth and Income Inequality

US Stock Market Bubble

The assets of U.S. households recently topped $100 trillion, yet another sign that everything is going swimmingly in the U.S. economy. Let’s take a look at the Federal Reserve’s Household Balance Sheet, which lists the assets and liabilities of all U.S. households in very big buckets (real estate: $25 trillion). (For reasons unknown, the Fed lumps non-profit assets and liabilities with households, but these modest sums are easily subtracted.)

Read More »

We’re All Speculators Now

US Stock Market to GDP Ratio 1960-2020

When the herd thunders off the cliff, most participants are trapped in the stampede.. One of the most perverse consequences of the central banks “saving the world” (i.e. saving banks and the super-wealthy) is the destruction of low-risk investments: we’re all speculators now, whether we know it or acknowledge it.

Read More »

Massive Deficit Spending Greenlights Waste, Fraud, Profiteering and Dysfunction

Household Inequality

The nice thing about free to me money from any source is the recipients don’t have to change anything. Free money is the ultimate free-pass from consequence and adaptation: instead of having to make difficult trade-offs or suffer the consequences of profligacy, the recipients of free money are saved: they can continue on their merry way, ignoring the monumental dysfunction of their lifestyle.

Read More »

The Next Financial Crisis Is Right on Schedule (2019)

S-curve of Rapid Expansion, Stagnation and Decline

Neither small business nor the bottom 90% of households can afford this “best economy ever.” After 10 years of unprecedented goosing, some of the real economy is finally overheating: costs are heating up, unemployment is at historic lows, small business optimism is high, and so on–all classic indicators that the top of this cycle is in.

Read More »

After 10 Years of “Recovery,” What Are Central Banks So Afraid Of?

Central Bank Balance sheet

If the world’s economies still need central bank life support to survive, they aren’t healthy–they’re barely clinging to life. The “recovery”/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of? 

Read More »

The Global Financial System Is Unraveling, And No, the U.S. Is Not immune

Shanghai Stock Exchange Composite Index

Currencies don’t melt down randomly. This is only the first stage of a complete re-ordering of the global financial system. Take a look at the Shanghai Stock Market (China) and tell me what you see: A complete meltdown, right? More specifically, a four-month battle to cling to the key technical support of the 200-week moving average (the red line). Once the support finally broke, the index crashed.

Read More »

Why Is Productivity Dead in the Water?

US Productivity Growth, 1980 - 2016

As the accompanying chart shows, productivity in the U.S. has been declining since the early 2000s. This trend mystifies economists, as the tremendous investments in software, robotics, networks and mobile computing would be expected to boost productivity, as these tools enable every individual who knows how to use them to produce more value.

Read More »

Here’s How We Ended Up with Predatory, Parasitic Elites

Income Inequality, 1913 - 2012

Combine financialization, neoliberalism and moral bankruptcy, and you end up with predatory, parasitic elites.

How did our financial and political elites become predatory parasites? Some will answer that elites have always been predatory parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises.

Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality(September 30, 2015)

As historian Peter Turchin explained in his book War and Peace and War: The Rise and Fall of Empires, the value of sacrifice was a core characteristic of the early Republic’s elite:

“Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in

Read More »

To Understand America’s Neofeudal Economy, Start with Extortion

US Inflation, 1996 - 2016

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 the river, we’re constantly being stopped and charged a fee for transiting one small fiefdom after another. When we finally reach the city, there’s an entry fee for bringing our goods to market.

Read More »

How “Wealthy” Would We Be If We Stopped Borrowing Trillions Every Year?

US Total Credit Market Debt

These charts reflect a linear system that is wobbling into the first stages of non-linear destabilization.

The widespread presumption is the U.S. is wealthy beyond words, and will remain so as far as the eye can see: wealthy enough to fund trillion-dollar weapons systems, trillion-dollar endless wars, multi-trillion dollar Medicare for all, multi-trillion dollar Universal Basic Income, and so on, in an endless profusion of endless trillions.

Just as a thought experiment, let’s ask: how “wealthy” would we be if we stopped borrowing trillions of dollars every year? Or put another way, how “wealthy” would we be if the rest of the world stops buying our trillions in newly issued bonds, mortgages, auto loans, etc.?

The verboten reality is our “wealth” is nothing but a sand castle of debt.

Read More »

If You Want to Survive this Election with Your Mental Health Intact, Turn Off the “News” and Social Media Now

Media Concentration

If you want to preserve your sanity and avoid unhappy derangement, turn off all corporate and social media from now to Thanksgiving. Since elections are extremely profitable for traditional media / social media corporations, your sanity will gleefully be sacrificed in the upcoming election–if you are gullible enough to watch the “news” and tune into social media.Elections are extremely profitable because candidates spend scads of cash on media adverts.

Read More »

Our “Prosperity” Is Now Dependent on Predatory Globalization

Labor Compensaton's share of GDP, 1980-2018

Nowadays, trade and “prosperity” are dependent on currencies that are created out of thin air via borrowing or printing. So here’s the story explaining why “free” trade and globalization create so much wonderful prosperity for all of us: I find a nation with cheap labor and no environmental laws anxious to give me cheap land and tax credits, so I move my factory from my high-cost, highly regulated nation to the low-cost nation, and keep all the profits I reap from the move for myself.

Read More »

The Fantasy of “Balanced Returns” Funding Retirement

Collapsed the Global Financial System, 1960 - 2018

The fantasy that a “balanced portfolio” yielding “balanced returns” will fund a stable retirement for decades to come is widely accepted as a sure thing: inflation will stay near-zero essentially forever, assets such as stocks and bonds will continue yielding hefty income and capital gains, and all the individual or fund needs to do is maintain a “balanced portfolio” of various asset classes that yield “balanced returns,” i.e. some safe “value” lower-yield returns and some higher risk “growth” returns.

Read More »

Here’s What We’ve Lost in the Past Decade

The ever-widening wage gap 1973-2015

The confidence and hubris of those directing the rest of us to race off the cliff while they watch from a safe distance is off the charts. The past decade of “recovery” and “growth” has actually been a decade of catastrophic losses for our society and nation. Here’s a short list of what we’ve lost: 1. Functioning markets. Free markets discover price and assess risk.

Read More »

Here’s How Systems (and Nations) Fail

Rising Insulin prices 2001-2015

These embedded processes strip away autonomy, equating compliance with effectiveness even as the processes become increasingly counter-productive and wasteful. Would any sane person choose America’s broken healthcare system over a cheaper, more effective alternative?

Read More »

When Long-Brewing Instability Finally Reaches Crisis

Systems Collapse

The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.

Read More »

The Imperial Naivete of the American Public

Dominance of Google and Facebook

The nation’s premier corporate profit engines / social media giants are the ideal platforms for undermining the U.S. via the sowing of disintegration. Whether it’s stated or not, one source of the inchoate outrage triggered by Russian-sourced purchases of adverts on Facebook in 2016 (i.e. “meddling in our election”) is the sense that the U.S. is sacrosanct due to our innate moral goodness and our Imperial Project.

Read More »

Our Institutions Are Failing

Lifecycle bureaucracy

Our institutional failure reminds me of the phantom legions of Rome’s final days. The mainstream media and its well-paid army of “authorities” / pundits would have us believe the decline in our collective trust in our institutions is the result of fake news, i.e. false narratives and data presented as factual.

Read More »

Will AI “Change the World” Or Simply Boost Profits?

National Income: Corporate Profits Before Tax 1950-2018

The real battle isn’t between a cartoonish vision or a dystopian nightmare–it’s between decentralized ownership and control of these technologies and centralized ownership and control. The hype about artificial intelligence (AI) and its cousins Big Data and Machine Learning is ubiquitous, and largely unexamined. AI is going to change the world by freeing humankind from most of its labors, etc. etc. etc.

Read More »

We Are All Hostages of Corporate Profits

Corporate Profits Before Tax 1950-2018

We’re in the endgame of financialization and globalization, and it won’t be pretty for all the hostages of corporate profits. Though you won’t read about it in the mainstream corporate media, the nation is now hostage to outsized corporate profits. The economy and society at large are now totally dependent on soaring corporate profits and the speculative bubbles they fuel, and this renders us all hostages: Make a move to limit corporate profits or speculative bubbles, and your pension fund gets a bullet in the head.

Read More »

The USA Is Now a 3rd World Nation

Try arguing against the facts displayed in this chart:

I know it hurts, but the reality is painfully obvious: the USA is now a 3rd World nation. Dividing the Earth’s nations into 1st, 2nd and 3rd world has fallen out of favor;apparently it offended sensibilities. It has been replaced by the politically correct developed and developing nations, a terminology which suggests all developing nations are on the pathway to developed-nation status.

Read More »

The Gathering Storm

S-Curve Expansion, Stagnation and Decline

July 4th is an appropriate day to borrow Winston Churchill’s the gathering storm to describe the existential crisis that will envelope America within the next decade. There is no single cause of the gathering storm; in complex systems, dynamics feed back into one another, and the sum of destabilizing disorder is greater than a simple sum of its parts.

Read More »

Make Capital Cheap and Labor Costly, and Guess What Happens?

Price Changes, 1996 - 2016

Employment expands in the Protected cartel-dominated sectors, and declines in every sector exposed to globalization, domestic competition and cheap capital. If you want to understand why the global economy is failing the many while enriching the few, start with the basics: capital, labor and resources. What happens when central banks drop interest rates to near-zero? Capital becomes dirt-cheap.

Read More »

Dear High School Graduates: the Status Quo “Solutions” Enrich the Few at Your Expense

Student Loans Debt 2008-2018

You deserve a realistic account of the economy you’re joining. Dear high school graduates: please glance at these charts before buying into the conventional life-course being promoted by the status quo. Here’s the summary: the status quo is pressuring you to accept its “solutions”: borrow mega-bucks to attend college, then buy a decaying bungalow or hastily constructed stucco box for $800,000 in a “desirable” city, pay sky-high income and property taxes on your earnings, and when the stress of all these crushing financial burdens ruins your health, well, we’ve got meds to “help” you-lots of meds at insane price points paid for by insurance- if you have “real” insurance without high deductibles, of course.

Read More »

Gresham’s Law and Bitcoin

Bolivar/U.S. Dollar, 2010-2018

Rather suddenly, the state issued fiat currency bolivar lost 99% of its purchasing power. Gresham’s law holds that “bad money drives out good money,” meaning that given a choice of currencies (broadly speaking, “money” that serves as a store of value and a means of exchange), people use depreciating “bad” to buy goods and services and hoard “good” money that is appreciating or holding its value.

Read More »

Here We Go Again: Our Double-Bubble Economy

S&P/Case-Shiller 2000-2018

The bubbles in assets are supported by the invisible bubble in greed, euphoria and credulity. Well, folks, here we go again: we have a double-bubble economy in housing and stocks, and a third difficult-to-chart bubble in greed, euphoria and credulity.

Read More »

The Three Crises That Will Synchronize a Global Meltdown by 2025

Systems Collapse

We’re going to get a synchronized global dynamic, but it won’t be “growth” and stability, it will be DeGrowth and instability. To understand the synchronized global meltdown that is on tap for the 2021-2025 period, we must first stipulate the relationship of “money” to energy:”money” is nothing more than a claim on future energy. If there’s no energy available to fuel the global economy, “money” will have little value.

Read More »

Burrito Index Update: Burrito Cost Triples, Official Inflation Up 43 percent from 2001

US Healthcare 1960 - 2010

Welcome to debt-serfdom, the only possible output of the soaring cost of living. Long-time readers may recall the Burrito Index, my real-world measure of inflation. The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016). The Burrito Index tracks the cost of a regular burrito since 2001. Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the cost of a regular burrito at our favorite taco truck with great accuracy: the cost of a regular burrito has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.

Read More »

America 2018: Dicier by the Day

Venezuela is Annual Inflation Rate 2015-2018

Scrape all this putrid excrescence off and we’re left with a non-fantasy reality: everything is getting dicier by the day. If we look beneath the cheery chatter of the financial media and the tiresomely repetitive Russian collusion narrative (that’s unraveling as the Ministry of Propaganda’s machinations are exposed), we find that America in 2018 is dicier by the day.

Read More »

How Systems Collapse

System Collapse

This is how systems collapse: faith in the visible surface of abundance reigns supreme, and the fragility of the buffers goes unnoticed. I often discuss systems and systemic collapse, and I’ve drawn up a little diagram to illustrate a key dynamic in systemic collapse. The key concepts here are stability and buffers. Though complex systems are never static, but they can be stable: that is, they ebb and flow within relatively stable boundaries supported by reserves, i.e. buffers.

Read More »

Sustainability Boils Down to Scale

Black Market Exchange Rate of Venezuelan Bolivar to US Dollar, 2010 - 2018

Only small scale systems can sustainably impose “skin in the game”– consequences, accountability and oversight. Several conversations I had at the recent Peak Prosperity conference in Sonoma, CA sparked an insight into why societies and economies thrive or fail: It All Boils Down to Scale. In a conversation with a Peak Prosperity member who goes by MemeMonkey, MemeMonkey pointed out that social / economic organizations that function well at small scales (i.e. localized) fail when scaled up and centralized (i.e. globalized).

Read More »

The Next Recession Will Be Devastatingly Non-Linear

All Sector Debt Securities and Loans, 1960 - 2018

The acceleration of non-linear consequences will surprise the brainwashed, loving-their-servitude mainstream media. Linear correlations are intuitive: if GDP declines 2% in the next recession, and employment declines 2%, we get it: the scale and size of the decline aligns. In a linear correlation, we’d expect sales to drop by about 2%, businesses closing their doors to increase by about 2%, profits to notch down by about 2%, lending contracts by around 2% and so on.

Read More »

U.S. Healthcare Isn’t Broken–It’s Fixed

US Health Spending, 2010

If you want to understand why the U.S. healthcare system is bankrupt, financially, morally and politically, then start with this representative anecdote from a U.S. physician. I received this report from correspondent J.F. on the topic of direct advertising of pharmaceutical products to the public (patients).

Read More »

A Funny Thing Happened on the Way to Market Complacency / Euphoria

CBOE Options Equity Put/Call Ratio, Dec 2017 - May 2018

Fortunately for Bulls, none of this matters. A relatively reliable measure of complacency/euphoria in the stock market just hit levels last seen in late January, just before stocks reversed in a massive meltdown, surprising all the complacent/euphoric Bulls. The measure is the put-call ratio in equities. Since this time is different, and the market is guaranteed to roar to new all-time highs, we can ignore this (of course).

Read More »

How Safe Are We? Our Blindness to Systemic Dangers

United States Drug Overdose Deaths, 2000 - 2018

How do we explain our obsession with relatively low risk dangers and our collective blindness to manufactured/marketed scourges that kill tens of thousands of people annually? If you’ve bought a new vehicle recently, you may have noticed some “safety features” that strike many as Nanny State over-reach. You can’t change radio stations, for example, if the vehicle is in reverse.

Read More »

Taking the Pulse of a Weakening Economy

Global Central Bank Security Purchases, 2009 - 2018

Corporate buybacks provide the key analogy for the economy as a whole. Central banks have been running a grand experiment for 9 years, and now we’re about to find out if it succeeds or fails. For 9 unprecedented years, central banks have pushed the pedal of monetary stimulus to the metal: near-zero interest rates, monumental purchases of bonds, mortgage-backed securities, stocks and corporate bonds.

Read More »

What Lies Beyond Capitalism and Socialism?

Global Debt, 1997 - 2017

The status quo, in all its various forms, is dominated by incentives that strengthen the centralization of wealth and power. As longtime readers know, my work aims to 1) explain why the status quo — the socio-economic-political system we inhabit — is unsustainable, divisive, and doomed to collapse under its own weight and 2) sketch out an alternative Mode of Production/way of living that is sustainable, consumes far less resources while providing for the needs of the human populace — not just for our material daily bread but for positive social roles, purpose, hope, meaning and opportunity, needs that are by and large ignored or marginalized in the current system.

Read More »

What Do We Know About Syria? Next to Nothing

Total Primary Energy Consumption

Anyone accepting “facts” or narratives from any interested party is being played. About the only “fact” the public knows with any verifiable certainty about Syria is that much of that nation is in ruins. Virtually everything else presented as “fact” is propaganda intended to serve one of the competing narratives or discredit one or more competing narratives.

Read More »

Why Trade Wars Ignite and Why They’re Spreading

Trade Wars

What ignites trade wars? The oft-cited sources include unfair trade practices and big trade deficits. But since these have been in place for decades, they don’t explain why trade wars are igniting now. To truly understand why trade wars are igniting and spreading, we need to start with financial repression, a catch-all for all the monetary stimulus programs launched after the Global Financial Meltdown/Crisis of 2008/09.

Read More »

The Genie’s Out of the Bottle: Eight Defining Trends Are Reversing

The Fruit of Financialization, 1980 - 2014

Though the Powers That Be will attempt to placate or suppress the Revolt of the Powerless, the genies of political disunity and social disorder cannot be put back in the bottle. The saying “the worm has turned” refers to the moment when the downtrodden have finally had enough, and turn on their powerful oppressors.

Read More »

Why Systems Fail

Federal Government, 2005 - 2018

Since failing systems are incapable of structural reform, collapse is the only way forward. Systems fail for a wide range of reasons, but I’d like to focus on two that are easy to understand but hard to pin down. Systems are accretions of structures and modifications laid down over time.Each layer adds complexity which is viewed at the time as a solution. This benefits insiders, as their job security arises from the need to manage the added complexity.

Read More »

Were Trade Wars Inevitable?

US National Income, 1960 - 2018

Were trade wars inevitable? The answer is yes, due to the imbalances and distortions generated by financialization and central bank stimulus. Gordon Long and I peel the trade-war onion in a new video program, Were Trade Wars Inevitable?

Read More »

Playing for All the Marbles

Asset Prices vs GDP, 1992 - 2016

Global Plunge Protection Teams must be ordering take-out food; every night is a long one now. The current stocks/bonds game is for all the marbles, by which I mean the status quo now depends on valuations and interest rates remaining near their current levels for the system to function.

Read More »

The Problem with a State-Cartel Economy: Prices Rise, Wages Don’t

The Fruit of Financialization, 1980 - 2014

The vise will tighten until something breaks. It could be the currency, it could be the political status quo, it could be the credit/debt system–or all three. The problem with an economy dominated by state-enforced cartels and quasi-monopolies is that prices rise (since cartels can push higher costs onto the consumer) but wages don’t (since cartels can either dominate local labor markets or engage in global wage arbitrage: offshore jobs, move to lower-wage states, etc.)

Read More »

What If All the Cheap Stuff Goes Away?

GSCI/S&P 500 Ratio, 1971 - 2017

Nothing stays the same in dynamic systems, and it’s inevitable that the current glut of low costs / cheap stuff will give way to scarcities that cannot be filled at current low prices. One of the books I just finished reading is The Fate of Rome: Climate, Disease, and the End of an Empire.

Read More »

15 Years of War: To Whose Benefit?

National Income: Corporate Profits Before Tax, 1960 - 2018

As for Iraq, the implicit gain was supposed to be access to Iraqi oil. Setting aside the 12 years of “no fly zone” air combat operations above Iraq from 1991 to 2003, the U.S. has been at war for almost 17 years in Afghanistan and 15 years in Iraq. (If the word “war” is too upsetting, then substitute “continuing combat operations”.)

Read More »

Decrypting the Appointment of John Bolton

Mr Bolton

So perhaps the dominant wing of the Deep State is finally willing to cut a deal with Trump. To many observers, the appointment of John Bolton as national security advisor is the functional equivalent of appointing the Anti-Christ–or maybe worse. Indeed, these observers would, when comparing the two, find grudging favor with the Anti-Christ.

Read More »

Should Facebook and Google Pay Users When They Sell Data Collected from Users?

The Dominance of Google and Facebook, 2014 - 2015

Let’s imagine a model in which the marketers of data distribute some of their immense profits to the users who created and thus “own” the data being sold for a premium. It’s not exactly news that Facebook, Google and other “free” services reap billions of dollars in profits by selling data mined/collected from their millions of users. As we know, If you’re not paying for it, you’re not the customer; you’re the product being sold, also phrased as if the service is free, you are the product.

Read More »

Solutions Only Arise Outside the Status Quo

Lifecycle of Bureaucracy

Solutions are only possible outside these ossified, self-serving centralized hierarchies. Correspondent Dan F. asked me to reprint some posts on solutions to the systemic problems I’ve outlined for years, most recently in How Much Longer Can We Get Away With It? and Checking In on the Four Intersecting Cycles. I appreciate the request, because it’s all too easy to dwell on what’s broken rather than on the difficult task of fixing what’s broken.

Read More »

Is Profit-Maximizing Data-Mining Undermining Democracy?

Dominance of Google and Facebook, 2014 - 2015

As many of you know, oftwominds.com was falsely labeled propaganda by the propaganda operation known as ProporNot back in 2016. The Washington Post saw fit to promote ProporNot’s propaganda operation because it aligned with the newspaper’s view that any site that wasn’t pro-status quo was propaganda; the possibility of reasoned dissent has vanished into a void of warring accusations of propaganda and “fake news” –which is of course propaganda in action.

Read More »

Checking In on the Four Intersecting Cycles

Intersection of Four Long-Term Cycles, 1900 - 2020

Correspondent James D. recently asked for an update on the four intersecting cycles I’ve been writing about for the past 10 years. Here’s the chart I prepared back in 2008 of four long-term cycles: 1. Generational (political/social).2. Price inflation/wage stagnation (economic). 3. Credit/debt expansion/contraction (financial). 4. Relative affordability of energy (resources).

Read More »

How Much Longer Can We Get Away With It?

Debt Securities and Loans, 1960 - 2018

Alas, fakery isn’t actually a solution to fiscal/financial crisis.. This chart of “debt securities and loans”–i.e. total debt in the U.S. economy–is also a chart of the creation and distribution of new money, as the issuance of new debt is the mechanism in our financial system for creating (or “emitting” in economic jargon) new currency: when a bank issues a new home mortgage, for example, the loan amount is new currency created out of the magical air of fractional reserve banking.

Read More »

There is No “Free Trade”–There Is Only the Darwinian Game of Trade

Corporate Profits After Tax, 1950 - 2018

Rising income and wealth inequality is causally linked to globalization and the expansion of Darwinian trade and capital flows. Stripped of lofty-sounding abstractions such as comparative advantage, trade boils down to four Darwinian goals: 1. Find foreign markets to absorb excess production, i.e. where excess production can be dumped. 2. Extract foreign resources at low prices. 3. Deny geopolitical rivals access to these resources.

Read More »

The Death of Buy and Hold: We’re All Traders Now

Asset Prices vs GDP, 1992 - 2016

The percentage of household assets invested in stocks fell from almost 40% in 1969 to a mere 13% in 1982, after thirteen years of grinding losses. The conventional wisdom of financial advisors–to save money and invest it in stocks and bonds “for the long haul”–a “buy and hold” strategy that has functioned as the default setting of financial planning for the past 60 years–may well be disastrously wrong for the next decade.

Read More »

Never Mind Volatility: Systemic Risk Is Rising

S&P 500, 2008 - 2018

So who’s holding the hot potato of systemic risk now? Everyone. One of the greatest con jobs of the past 9 years is the status quo’s equivalence of risk and volatility: risk = volatility: so if volatility is low, then risk is low. Wrong: volatility once reflected specific short-term aspects of risk, but measures of volatility such as the VIX have been hijacked to generate the illusion that risk is low.

Read More »

Our Fragmented Labor Markets Defy Outdated Conventions

Annual Growth of Hourly Earnings, Jan 1965 - 2018

There are hundreds of extraordinarily diverse labor markets in the U.S. economy, and it takes a much more granulated approach to make any sense of this highly fragmented and dynamic marketplace. onventional economists/media pundits typically view the labor market as monolithic, i.e. as one unified market. The reality is the labor market is highly fragmented. Thus it’s little wonder that conventional measures are giving mixed signals on employment, wage inflation, etc.

Read More »

Career Advice to 20-Somethings: Create Value as a Mobile Creative

Federal Government; Consumer Credit, Student Loans; Asset, Level, 2005 - 2018

Finding work that fits who you are is rarely easy, especially if you don’t fit into the mainstream, and usually it requires a lot of compromises, hard work and dead-ends. But that’s the process. Establishing a satisfying career is difficult in today’s economy, doubly so for those who find life within hierarchical institutions (corporate America and government) unrewarding, and triply so for those burdened with student loan debt and college educations/diplomas of uncertain market value or those re-entering the job market with skills that have been marginalized.

Read More »

The End of (Artificial) Stability

Asset Prices vs GDP, 1992 - 2016

The central banks’/states’ power to maintain a permanent bull market in stocks and bonds is eroding. There is nothing natural about the stability of the past 9 years. The bullish trends in risk assets are artificial constructs of central bank/state policies. As these policies are reduced or lose their effectiveness, the era of artificial stability is coming to a close. The 9-year run of Bull-trend stability is ending as a result of a confluence of macro dynamics.

Read More »

Our Approaching Winter of Discontent

Black Market Exchange Rate of Venezuelan Bolivar to US Dollar, 2010 - 2018

The tragedy is so few act when the collapse is predictably inevitable, but not yet manifesting in daily life. That chill you feel in the financial weather presages an unprecedented–and for most people, unexpectedly severe–winter of discontent. Rather than sugarcoat what’s coming, let’s speak plainly for a change: none of the promises that have been made to you will be kept.

Read More »

What Just Changed?

Asset Prices and GDP, 1992 - 2018

The illusion that risk can be limited delivered three asset bubbles in less than 20 years. Has anything actually changed in the past two weeks? The conventional bullish answer is no, nothing’s changed; the global economy is growing virtually everywhere, inflation is near-zero, credit is abundant, commodities will remain cheap for the foreseeable future, assets are not in bubbles, and the global financial system is in a state of sustainable wonderfulness.

Read More »

Three Crazy Things We Now Accept as “Normal”

Aggregate balance Sheet of Large Central Banks, 2000 - 2018

How can central banks “retrain” participants while maintaining their extreme policies of stimulus? Human habituate very easily to new circumstances, even extreme ones. What we accept as “normal” now may have been considered bizarre, extreme or unstable a few short years ago.

Read More »

Before You “Buy the Dip,” Look at This One Chart

Dow Jones Industrial Average Index, Nov 2015 - Feb 2018

There’s a place for fancy technical interpretations, but sometimes a basic chart tells us quite a lot. Here is a basic chart of the Dow Jones Industrial Average, the DJIA. It displays basic information: price candlesticks, volume, the 50-week and 200-week moving averages, RSI (relative strength), MACD (moving average convergence-divergence), stochastics and the MACD histogram. These kinds of charts are free (in this case, from StockCharts.com).

Read More »

Is the 9-Year Long Dead Cat Bounce Finally Ending?

Dow Jones Futures, 2003 - 2021

Ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo. The term dead cat bounce is market lingo for a “recovery” after markets decline due to fundamental reversals. Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to “buy the dips” once again buy the decline, and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.

Read More »

Is Congress Finally Pushing Back Against Security Agencies’ Over-Reach?

Political Polarization, 1990 - 2018

The last time the U.S. Congress pushed back against the Imperial Presidency and the over-reach of the nation’s Security Agencies was 43 years ago, in 1975. In response to the criminal over-reach of the Imperial Presidency (Watergate) and to the criminal over-reach of the security agencies (FBI, CIA, et al.), the Church Committee finally resusitated the constitutional powers of the Congress to serve the interests of the citizenry rather than the interests of political elites and the rogue agencies of the federal government.

Read More »

Political Correctness Serves the Ruling Elite

Median Value of Financial Assets, 1989 - 2016

No wonder the Ruling Elites loves political correctness: all those furiously signaling their virtue are zero threat to the asymmetric plunder of the status quo. The Ruling Elites loves political correctness, for it serves the Elite so well. What is political correctness? Political correctness is the public pressure to conform to “progressive” speech acts by uttering the expected code words and phrases in public.

Read More »

The Pie Is Shrinking for the 99 percent

US Productivity Growth, 1980 - 2018

The ensuing social disunity and disruption will be of the sort many alive today have never seen. Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

Read More »

Can We Finally Have an Honest Discussion about the Opioid Crisis?

A Lethal Record, 1999 - 2016

The economy no longer generates secure, purposeful jobs for the working class, and so millions of people live in a state of insecure despair. The opioid epidemic is generating a lot of media coverage and hand-wringing, but few if any solutions, and this is predictable: if you don’t face up to the causes, then you can’t solve the problem.

Read More »

Central Banks: From Coordination to Competition

ECB, BoJ and BoE Buyings, 2008 - 2017

This is one reason why I anticipate “unexpected” disruptions in the global economy in 2018. The mere mention of “central banks” will likely turn off many readers who understandably have little interest in convoluted policies and arcane mumbo-jumbo, but bear with me for a few paragraphs while I make the case for something to happen in 2018 that will impact us all to some degree.

Read More »

It’s Time to Retire “Capitalism”

The Fruit of Financialization, 1980 - 2014

Our current socio-economic system is nothing but the application of force on the many to enforce the skims, scams and privileges of the self-serving few. I’ve placed the word capitalism in quotation marks to reflect the reality that this word now covers a wide spectrum of economic activities, very little of which is actually capitalism as classically defined.

Read More »

The Fascinating Psychology of Blowoff Tops

Dow Jones 2009 - 2017

The psychology of blowoff tops in asset bubbles is fascinating: let’s start with the first requirement of a move qualifying as a blowoff top, which is the vast majority of participants deny the move is a blowoff top.

Read More »

Yes, But at What Cost?

Federal Debt: Total Public Debt, 1970 - 2017

This is how our entire status quo maintains the illusion of normalcy: by avoiding a full accounting of the costs. The economy’s going great–but at what cost? “Normalcy” has been restored, but at what cost? Profits are soaring, but at what cost? Our pain is being reduced–but at what cost? The status quo delights in celebrating gains, but the costs required to generate those gains are ignored for one simple reason: the costs exceed the gains by a wide margin.

Read More »

Why the Financial System Will Break: You Can’t “Normalize” Markets that Depend on Extreme Monetary Stimulus

Monthly Fed, ECB, BoE, BoJ, ECB asset purchases, 2008 - 2017

Central banks are now trapped. In a nutshell, central banks are promising to “normalize” their monetary policy extremes in 2018. Nice, but there’s a problem: you can’t “normalize” markets that are now entirely dependent on extremes of monetary stimulus. Attempts to “normalize” will break the markets and the financial system. Let’s start with the core dynamic of the global economy and nosebleed-valuation markets: credit.

Read More »

“Wealth Effect” = Widening Wealth Inequality

Spending by the top 5% pulls away from 95%

Note that widening wealth and income inequality is a non-partisan trend. One of the core goals of the Federal Reserve’s monetary policies of the past 9 years is to generate the “wealth effect”: by pushing the valuations of stocks and bonds higher, American households will feel wealthier, and hence be more willing to borrow and spend, even if they didn’t actually reap any gains by selling stocks and bonds that gained value.

Read More »

Christmas 2017: Why I’m Hopeful

Constantine Cavafy Poem

A more human world lies just beyond the edge of the Status Quo. Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn’t leave much to be happy about.

Read More »

Santa’s Stock Market Rally: Tears of Joy, Or Just Tears?

VXX S&P 500

Judging by this year’s version of Santa Claus’s reliable year-end stock market rally, risk has vanished, not just in stocks but in bonds, junk bonds, housing, commercial real estate, collectible art–just about the entire spectrum of tradable assets (with precious metals and agricultural commodities among the few receiving coals rather than rallies).

Read More »

Regulating Cryptocurrencies–and Why It Matters

S-Curve of Centralization

Nations that attempt to limit cryptocurrencies’ ability to solve these problems will find that protecting high costs and systemic friction will grind their economies into dust. There’s a great deal of confusion right now about the regulation of cryptocurrencies such as bitcoin. Many observers seem to confuse “regulation” and “banning bitcoin,” as if regulation amounts to outlawing bitcoin.

Read More »

Could Central Banks Dump Gold in Favor of Bitcoin?

Bank of Japan Balance Sheet, 2000 - 2017

All of which brings us to the “crazy” idea of backing fiat currencies with cryptocurrencies, an idea I first floated back in 2013, long before the current crypto-craze emerged. Exhibit One: here’s your typical central bank, creating trillions of units of currency every year, backed by nothing but trust in the authority of the government, created at the whim of a handful of people in a room and distributed to their cronies, or at the behest of their cronies. And this is a “trustworthy” currency?

Read More »

Bitcoin vs Fiat Currency: Which Fails First?

What if bitcoin is a reflection of trust in the future value of fiat currencies? I am struck by the mainstream confidence that bitcoin is a fraud/fad that will soon collapse, while central bank fiat currencies are presumed to be rock-solid and without risk. Those with supreme confidence in fiat currencies might want to look at a chart of Venezuela’s fiat currency, which has declined from 10 to the US dollar in 2012 to 5,000 to the USD earlier this year to a current value in December 2017 of between 90,000 and 100,000 to $1.

Read More »

A Radical Critique of Universal Basic Income

Money and Work

This critique reveals the unintended consequences of UBI. Readers have been asking me what I thought of Universal Basic Income (UBI) as the solution to the systemic problem of jobs being replaced by automation.To answer this question, I realized I had to start by taking a fresh look at work and its role in human life and society. And since UBI is fundamentally a distribution of money, I also needed to take a fresh look at our system of money.

Read More »

What Is Money? (Yes, We’re Talking About Bitcoin)

What is money? We all assume we know, because money is a commonplace feature of everyday life. Money is what we earn and exchange for goods and services. Everyone thinks the money they’re familiar with is the only possible system of money—until they run across an entirely different system of money.

Read More »

The Cost Basis of our Economy is Spiraling Out of Control

US Healthcare Spending, 1960 - 2010

What will it take to radically reduce the cost basis of our economy? If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would either be the stagnation of income or the spiraling out of control cost basis of our economy, that is, the essential foundational expenses of households, government and enterprise.

Read More »

Stock Market 2018: The Tao vs. Central Banks

Asset Prices vs GDP, 1992 - 2016

The central banks claim omnipotent financial powers, and their comeuppance is overdue. will be the first to admit that invoking the woo-woo of the Tao as the reason to expect a reversal of the stock market in 2018 smacks of Bearish desperation. With everything coming up roses in much of the global economy, there is precious little foundation for calling a tumultuous end to the global Bull Market other than variations of nothing lasts forever.

Read More »

My Crazy $17,000 Target for Bitcoin Is Looking Less Crazy

Bitcoin Potential Value

The basis of this admittedly crazy forecast was simple: capital flows. I think we can all agree that bitcoin (BTC) is “interesting.” One of the primary reason that bitcoin (and cryptocurrency in general) is interesting is that nobody knows what will happen going forward. Unknowns and big swings up and down are characteristics of open markets.It’s impossible to forecast bitcoin’s future price because virtually all the future inputs are unknown.

Read More »

The Asymmetry of Bubbles: the Status Quo and Bitcoin

Global Financial Assets, 2005 - 2014

Regardless of one’s own views about bitcoin/cryptocurrency, what is truly remarkable is the asymmetry that is applied to questioning the status quo and bitcoin. As I noted yesterday, everyone seems just fine with throwing away $20 billion in electricity annually in the U.S. alone to keep hundreds of millions of gadgets in stand-by mode, but the electrical consumption of bitcoin is “shocking,” “ridiculous,” etc.

Read More »

Addictions: Social Media & Mobile Phones Fall From Grace

US Time Spent per Adult User per Day with Digital Media, 2008 - 2015

Identifying social media and mobile phones as addictive is only the first step in a much more complex investigation. For everyone who remembers the Early Days of social media and mobile phones, it’s been quite a ride from My Space and awkward texting on tiny screens to the current alarm over the addictive nature of social media and mobile telephony.

Read More »

Beware the Marginal Buyer, Borrower and Renter

S&P/Case-Shiller CA-San Francisco Home Price Index, 1990 - 2017

When times are good, the impact of the marginal buyer, borrower and renter on the market is often overlooked. By “marginal” I mean buyers, borrowers and renters who have to stretch their finances to the maximum to afford the purchase, loan or rent.

Read More »

Want Widespread Prosperity? Radically Lower Costs

Selected Goods Price Changes, 1996 - 2016

As long as this is business as usual, it’s impossible to slash costs and boost widespread prosperity. It’s easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it’s actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.

Read More »

Forget the Bogus Republican “Reform”: Here’s What Real Tax Reform Would Look Like

US Household Incomes, 1980 - 2014

The point is to end the current system in which billionaires get all the privileges and financial benefits of owning assets in the U.S. but don’t pay taxes that are proportional to the benefits they extract. As has been widely noted, the Republicans’ proposed “tax reform” is not only just more BAU (business as usual, i.e. cut taxes for the wealthy), it’s also not real reform. At best, it’s just another iteration of D.C. policy tweaks packaged for PR purposes as “reform.”

Read More »

The Fetid Swamp of Tax Reform

Average Benefits Received and Taxes Paid per Person

The likelihood that either party will ever drain the fetid swamp of corruption that is our tax code is zero, because it’s far too profitable for politicos to operate their auction for tax favors. To understand the U.S. tax code and the endless charade of tax reform, we have to start with four distasteful realities: 1. Ours is not a representational democracy, it’s a political auction in which wealth casts the votes that count.

Read More »

Where are Europe’s Fault Lines?

Map

Beneath the surface of modern maps, numerous old fault lines still exist. A political earthquake or two might reveal the fractures for all to see. Correspondent Mark G. and I have long discussed the potential relevancy of old boundaries, alliances and structures in Europe’s future alignments.Examples include the Holy Roman Empire and the Hanseatic League, among others.

Read More »

Our Culture of Rape

Global Wealth Pyramid

These are the poisoned fruits of a neofeudal system in which power, wealth and political influence are concentrated in the apex of the wealth-power pyramid. Stripped of pretense, ours is a culture of rape. Apologists for the system that spawned this culture of rape claim that this violence is the work of a few scattered sociopaths. The apologists are wrong: The system generates a culture of rape.

Read More »

How Will Bitcoin React in a Financial Crisis Like 2008?

Bitcoin Distribution

Whenever I raise the topic of bitcoin and cryptocurrencies, I feel like an agnostic in the 30 Years War between Catholics and Protestants. There is precious little neutral ground in the crypto-is-a-bubble battle; one side is absolutely confident that bitcoin and the other cryptocurrencies are in a tulip-bulb type bubble, while the other camp is equally confident that we ain’t seen nuthin’ yet in terms of bitcoin’s future valuation.

Read More »

Let’s Clear Up One Confusion About Bitcoin

Bitcoin One-year Chart, Jan - Oct 2017

If bitcoin can be converted into fiat currencies at a lower transaction cost than the fiat-to-fiat conversions made by banks and credit card companies, it’s a superior means of exchange. One of the most common comments I hear from bitcoin skeptics goes something like this: Bitcoin isn’t real money until I can buy a cup of coffee with it. In other words, bitcoin fails the first of the two core tests of “money”: that it is a means of exchange and a store of value.

Read More »

What’s Driving Social Discord: Russian Social Media Meddling or Soaring Wealth/Power Inequality?

Boris Natasha

The nation’s elites are desperate to misdirect us from the financial and power dividethat has enriched and empowered them at the expense of the unprotected many. There are two competing explanatory narratives battling for mind-share in the U.S.: 1. The nation’s social discord is the direct result of Russian social media meddling– what I call the Boris and Natasha Narrative of evil Russian masterminds controlling a vast conspiracy of social media advertising, fake-news outlets and trolls that have created artificial divides in the body politic, or exacerbated minor cracks into chasms.

Read More »

Observations on Wealth-Income Inequality (from Federal Reserve Reports)

Percent of Families with business equity, 1989 - 2016

There’s a profound difference between assets that produce no income and those that produce net income. To those of us nutty enough to pore over dozens of pages of data on wealth and income in the U.S., the Federal Reserve’s quarterly Z.1 reports and annual Survey of Consumer Finances (SCF) are treasure troves, as are I.R.S. tax and income reports.

Read More »

Where To Invest When (Almost) Everything’s in a Bubble

S&P 500 and US Home Price Index, 1980 - 2017

Many things that are scarce and thus valuable cannot be bought on the global marketplace. Now that almost every asset class is in a bubble, the question of where to invest one’s capital has become particularly vexing. The ashes of wealth consumed by the 2008-09 Global Financial Meltdown are still warm, at least to those who never recovered, and so buying assets at nosebleed valuations in the hopes of earning another 5% aren’t very compelling to anyone pursuing common-sense risk management.

Read More »

What Could Pop The Everything Bubble?

Selected Consumer Goods and Services Price Changes, 1996 - 2016

As central bank policies are increasingly fingered by the mainstream as the source of soaring wealth-income inequality, policies supporting credit/asset bubbles will either be limited or cut off, and at that point all the credit/asset bubbles will pop.

Read More »

Why Governments Will Not Ban Bitcoin

Value of Financial Assets for Families with holdings, 1989 - 2016

Those who see governments banning ownership of bitcoin are ignoring the political power and influence of those who are snapping up most of the bitcoin. To really understand an asset, we have to examine not just the asset itself but who owns it, and who can afford to own it. These attributes will illuminate the political and financial power wielded by the owners of the asset class.

Read More »

Which Rotten Fruit Falls First?

US Gross Domestic Product, 1940 - 2017

I predict the current investigations will widen and take a variety of twists and turns that surprise all those anticipating a tidy, narrowly focused denouement. The theme this week is The Rot Within. 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.

Read More »

GDP Is Bogus: Here’s Why

US Real GDP, 1940 - 2017

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 to loft higher, with the rare excepts being Spots of Bother (recessions) that never last more than a quarter or two.

Read More »

Fraud, Exploitation and Collusion: America’s Pharmaceutical Industry

The rot within manifested by the pharmaceutical industry almost defies description.The theme this week is The Rot Within. America’s Pharmaceutical industry takes pride of place in this week’s theme of The 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 blowback? Only recently has the toll of needless deaths from the opioid pandemic finally roused a comatose corporate media and bought-and-paid-for, see-no-evil Congress to wonder if maybe there should be some limits placed on Big Pharma and its drug distributors.

Read More »

The Fading Scent of the American Dream

US Household Income, 1980 - 2014

The theme this week is The Rot Within. 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 holes have been filled with Play-Do and hastily painted to create the illusion of shiny solidity.

Read More »

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

Airplane seats

The quality, durability, utility and enjoyment-of-use of our products and services has been plummeting for years. 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 (and pleasure derived from) a product, the price is adjusted to reflect this improvement.

Read More »

Migration of the Tax Donkeys

Donkey

Dear local leadership: here’s the formula for long-term success. 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 occur, please consider the long-term ramifications of these two articles.

Read More »

Are You Better Off Than You Were 17 Years Ago?

US Gross Domestic Product, 1960 - 2017

We tend to measure what’s easily measured (and supports the status quo) and ignore what isn’t easily measured (and calls the status quo into question). 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) income and total household wealth reflect similarly hefty gains.

Read More »

The Consent of the Conned

US Federal Debt, 1970 - 2017

Every single line item in our entire Bernie Madoff scam of a system is cooked. 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.

Read More »

What If the Tax Donkeys Rebel?

Family Income, 1989 - 2016

I would hazard a guess that an increasing number of tax donkeys are considering dropping out as a means of increasing their happiness and satisfaction with life. 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 rarely arises.

Read More »

Surprise! The Rules Will Change (But Not to Your Benefit)

Aggregate balance sheet of Central Banks, 2000 - 2017

These expedient fixes end up crippling the mechanisms that are needed to actually solve the systemic sources of the crisis. We can add a third certainty to the two standard ones (death and taxes): The rules will suddenly change when a financial crisis strikes. Why is this a certainty? The answer is complex, as it draws on human nature, politics and the structure of societies/economies ruled by centralized states (governments).
The Core Imperative of the State: Expand Control

Read More »

This Chart Defines the 21st Century Economy

Household Income Inequality, 1980 - 2014

There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system. 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 a veritable Grand Canyon between the super-wealthy and everyone else, a gap that is recent in origin.

Read More »

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

US Productivity Growth, 1980 - 2017

Japan is a global leader is how to gracefully manage stagnation. 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.

Read More »

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

Central Bank balance sheet, 2006 - 2017

Yes, this time it’s different: all the foundations of a healthy economy are crumbling into quicksand. 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 different bearish going forward? The basic answer is that nothing that is structurally broken has actually been fixed, and the policy “fixes” have fatally weakened the global financial system.

Read More »

Housing Bubble Symmetry: Look Out Below

U.S. National Home Price Index, 1980 - 2017

Housing markets are one itsy-bitsy recession away from a collapse in domestic and foreign demand by marginal buyers. 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 illusions created by cherry-picked data; furthermore, markets are now completely controlled by central banks so cycles have vanished.

Read More »

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

US Wages & Salaries as GDP, 1960 - 2017

Labor’s share of the national income is in freefall as a direct result of the optimization of 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 increasing wealth will be distributed widely, if not fairly.

Read More »

Is the High Cost of Housing Crushing Wages?

Top 5% Spending, 1990 - 2012

The authors’ thesis doesn’t explain the 47-year downtrend of labor’s share of the economy. 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 crushingly high cost of housing:

Read More »

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

A tale of two countries 1962-2017

In an economy in which wages for 95% of households are stagnant for structural reasons, pushing inflation higher is destabilizing. 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 with fixed incomes that don’t keep pace with inflation will have lost a third of their income after a decade of central bank-engineered inflation.

Read More »

Why We’re Doomed: Stagnant Wages

Diverging Income Trajectories 1947 - 2014

The point is the present system cannot endure. 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 of GDP going to wages and salaries has plummeted: this is simply an extension of a 47-year downtrend.

Read More »

Bitcoin, Sour Grapes and the Institutional Herd

One Year Chart of Bitcoin, Oct 2016 - Jul 2017

The point is institutional ownership of bitcoin is in the very early stages.
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:

Read More »

Why Wages Have Lost Ground in the 21st Century

Ever-Widening Wage Gap, 1973 - 2015

One of the enduring mysteries for conventional economists is why wages aren’t rising for the bottom 95% even as unemployment is low and hiring remains robust. According to classical economics, the limited supply of available workers combined with strong demand for workers should push wages higher.

Read More »

Did the Economy Just Stumble Off a Cliff?

Total Credit, 1990-2017

This is more intuitive than quantitative, but my gut feeling is that the economy just stumbled off a cliff. Neither the cliff edge nor the fatal misstep are visible yet; both remain in the shadows of the intangible foundation of the economy: trust, animal spirits, faith in authorities’ management, etc.

Read More »

We Need a Social Revolution

Corporate Profits After Tax

In the conventional view, there are two kinds of revolutions: political and technological. Political revolutions may be peaceful or violent, and technological revolutions may transform civilizations gradually or rather abruptly—for example, revolutionary advances in the technology of warfare.

Read More »

Why We’re Doomed: Our Economy’s Toxic Inequality

Fruit of Financialization

Why are we doomed? Those consuming over-amped “news” feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency. The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York Times: Our Broken Economy, in One Simple Chart.

Read More »

Are We Already in Recession?

U.S. Employment Change, 1970 - 2016

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 be surprised to discover that the eight-year long “recovery,” the weakest on record, had finally rolled over into recession?

Read More »

What the Mainstream Doesn’t Get about Bitcoin

One-year chart of Bitcoin

The real demand for bitcoin will not be known until a global financial crisis guts confidence in central banks and politicized capital controls. 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 a generality don’t really grasp the dynamics driving bitcoin and the other cryptocurrencies.

Read More »

Is Another Oil Head-Fake Brewing?

Crude Oil, Apr 2016 - Jul 2017

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 of extracting and processing oil will rise over time as the easy-to-get oil is depleted, oil occasionally plummets to such low prices that we’re fooled into thinking it will remain cheap for a long time to come.

Read More »

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

Debt Cost Of Living, 1959 - 2016

If our faith in the future and our resilience is near-zero, then we can’t take any chances. 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.

Read More »

The Two Charts That Dictate the Future of the Economy

US Average Household Income, 1965 - 2017

The stock market, bond yields and statistical measures of the economy can be gamed, manipulated and massaged by authorities, but the real economy cannot. This is espcially true for the core drivers of the economy, real (adjusted for inflation) household income and real disposable household income, i.e. the real income remaining after debt service (interest and principal), rent, healthcare co-payments and insurance and other essential living expenses.

Read More »

There Is Only One Empire: Finance

China Debt - Breakdown, 2002 - 2016

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 is seriously misleading, in my view, for this reason:

Read More »

The Inevitability Of DeGrowth

Wages and Salaries as Percent of GDP

Debt-dependent consumption in a world in which wages stagnate for the bottom 90% and energy costs increase as demand outstrips supply is a system with only one possible end-point: collapse. Even though we don’t know precisely how the future will unfold, we know a few things: Of the 7.5 billion humans on the planet, virtually every individual wants to enjoy a high-energy consumption “middle-class” lifestyle.

Read More »

We Need a New American (Social) Revolution

GDP Energy

The solution is a new decentralized way of living that bypasses the chokepoints of centralized political and financial power. I’m going to tell a story here using charts–a story that leads to one conclusion: we need a New American Social Revolution.

Read More »

The Real Cause of the Opioid Epidemic: Scarcity of Jobs and Positive Social Roles

Opioid Deaths

The employment rate for males ages 25-54 has been stairstepping down for 30 years, but it literally fell off a cliff in 2009. We all know there is a scourge of addiction and premature death plaguing the nation, a scourge that is killing thousands and ruining millions of lives: the deaths resulting from the opioid epidemic (largely the result of “legal” synthetic narcotics) are mounting at an alarming rate: We also know that the proximate cause of this epidemic is Big Pharma, which promised non-addictive painkillers that lasted for 12 hours but delivered addictive painkillers that did not last 12 hours.

Read More »

If We Don’t Change the Way Money Is Created, Rising Inequality and Social Disorder Are Inevitable

Wealth Pyramid

Centrally issued money optimizes inequality, monopoly, cronyism, stagnation and systemic instability. Everyone who wants to reduce wealth and income inequality with more regulations and taxes is missing the key dynamic: central banks’ monopoly on creating and issuing money widens wealth inequality, as those with access to newly issued money can always outbid the rest of us to buy the engines of wealth creation.

Read More »

Automation’s Destruction of Jobs: You Ain’t Seen Nothing Yet

Labor Force Participation Rate

Automation–networked robotics, software and processes–has already had a major impact on jobs. As this chart from my colleague Gordon T. Long illustrates, the rise of Internet technologies is reflected in the steady, long-term decline of the labor force participation rate– the percentage of the populace that is actively in the labor market.

Read More »

Can We See a Bubble If We’re Inside the Bubble?

Mental Map

If you visit San Francisco, you will find it difficult to walk more than a few blocks in central S.F. without encountering a major construction project. It seems that every decrepit low-rise building in the city has been razed and is being replaced with a gleaming new residential tower.

Read More »

The Path to Inflation: “Helicopter Money”

Price Changes, 1996 - 2016

Yet conventional economists are virtually unanimous that deflation is the danger and inflation is a “good thing” we need to spur so servicing existing debt becomes easier for debtors. Due to the deflationary pressures of technology and stagnant wages for the bottom 90%, the consensus sees low inflation as far as the eye can see.

Read More »

How Debt-Asset Bubbles Implode: The Supernova Model of Financial Collapse

Venezuelan Bolivar, January 2013 - May 2017

Gravity eventually overpowers financial fakery. When debt-asset bubbles expand at rates far above the expansion of earnings and real-world productive wealth, their collapse is inevitable. The Supernova model of financial collapse is one way to understand this. As I noted yesterday in Will the Crazy Global Debt Bubble Ever End?, I’ve used the Supernova analogy for years, but didn’t properly explain why it illuminates the dynamics of financial bubbles imploding.

Read More »

Will the Crazy Global Debt Bubble Ever End?

Inflation

We’ve been playing two games to mask insolvency: one is to pay the costs of rampant debt today by borrowing even more from future earnings, and the second is to create wealth out of thin air via asset bubbles. The two games are connected: asset bubbles require leverage and credit.

Read More »

The Keynesian Cult Has Failed: “Emergency” Stimulus Is Now Permanent

Total Public Debt, 1970 - 2017

Can we finally admit that eight years of following the Keynesian coloring-book have not just failed, but failed spectacularly? What do we call a status quo in which & emergency measures” have become permanent props? A failure. The “emergency” responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures.

Read More »

Who Will Live in the Suburbs if Millennials Favor Cities?

America's Economic Output

Who’s going to pay bubble-valuation prices for the millions of suburban homes Baby Boomers will be off-loading in the coming decade as they retire/ downsize?Longtime readers know I follow the work of urbanist Richard Florida, whose recent book was the topic of Are Cities the Incubators of Decentralized Solutions?(March 14, 2017).

Read More »

Our State-Corporate Plantation Economy

US Productivity, 1980 - 2016

I have often discussed the manner in which the U.S. economy is a Plantation Economy, meaning it has a built-in financial hierarchy with corporations at the top dominating a vast populace of debt-serfs/ wage slaves with little functional freedom to escape the system’s neofeudal bonds.

Read More »

Marx, Orwell and State-Cartel Socialism

Denmark's Household Dept, 1996 - 2014

When “socialist” states have to impose finance-capital extremes that even exceed the financialization of nominally capitalist economies, it gives the lie to their claims of “socialism.” OK, so our collective eyes start glazing over when we see Marx and Orwell in the subject line, but refill your beverage and stay with me on this. 

Read More »

The Left’s Descent to Fascism

The Left is morally and fiscally bankrupt, devoid of coherent solutions, and corrupted by its embrace of the Corporatocracy. History often surprises us with unexpected ironies. For the past century, the slide to fascism could be found on the Right (conservative, populist, nationalist political parties).

Read More »

Who’s Playing The Long Game–and What’s Their Game Plan?

S-curve of Rapid Expansion

When we speak of The Long Game, we speak of national/alliance policies that continue on regardless of what political party or individual is in office. The Long Game is always about the basics of national survival: control of and access to resources, and jockeying to diminish the power and influence of potential adversaries while strengthening one’s own power and influence.

Read More »

Do the Roots of Rising Inequality Go All the Way Back to the 1980s?

US Household Wealth, 1917 - 2017

Unless we change the fundamental structure of the economy so that actually producing goods and services and hiring people is more profitable than playing financial games with phantom assets, the end-game of financialization is financial collapse. I presented this chart of rising wealth inequality a number of times over the past year. Do you notice something peculiar about the inflection points in the 1980s?

Read More »

The Deep State’s Dominant Narratives and Authority Are Crumbling

boris and natasha

This is why the Deep State is fracturing: its narratives no longer align with the evidence. As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I’ve been writing about the Deep State, and specifically, the fractures in the Deep State, for years.

Read More »

Solutions Abound–on the Local Level

S-Cruve of Centralization

Rather than bemoan the inevitable failure of centralized “fixes,” let’s turn our attention and efforts to the real solutions: decentralized, networked, localized.Those looking for centralized solutions to healthcare, jobs and other “macro-problems” will suffer inevitable disappointment. The era in which further centralization provided the “solution” has passed: additional centralization (Medicare for All, No Child Left Behind, federal job training, Universal Basic Income, central banking “free money for financiers”, etc.) have all entered Diminishing Returns.

Read More »

Now That Everyone’s Been Pushed into Risky Assets…

Global Financial Assets, 2005 - 2014

If we had to summarize what’s happened in eight years of “recovery,” we could start with this: everyone’s been pushed into risky assets while being told risk has been transformed from something to avoid (by buying risk-off assets) to something you chase to score essentially guaranteed gains (by buying risk-on assets).

Read More »

The Next Domino to Fall: Commercial Real Estate

Just as generals prepare to fight the last war, central banks prepare to battle the last financial crisis–which in the present context means a big-bank liquidity meltdown like the one that nearly toppled thr global financial system in 2008-09.

Read More »

Are Central Banks Losing Control?

China Debt, 2002 - 2016

If you want a central banker to choke on his croissant, read him this quote from socio-historian Immanuel Wallerstein: “Countries (have lost the ability) to control what happens to them in the ongoing life of the modern world-system.”

Read More »

Why Is the Cost of Living so Unaffordable?

US Health care 1960-2010

Strip away the centralized power that protects and funds cartels, and prices would plummet. The mainstream narrative is “the problem is low wages.” Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher education and government services were as cheap as they once were, a wage of $10 or $12 an hour would be more than enough to maintain a decent everyday life.

Read More »

Virtue-Signaling the Decline of the Empire

Top 1% US Pre-Tax Income Share, 1913-2012

Virtue-signaling doesn’t signal virtue–it signals decline and collapse. There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, the status quo seeks to mask its self-serving rot behind high-minded “virtue-signaling” appeals to past glories and cost-free idealism.

Read More »

There’s a Difference: Fake News and Junk News

U.S. Unemployment Rate 1950 - 2017

The mainstream media continues peddling its “fake news” narrative like a desperate pusher whose junkies are dying from his toxic dope. It’s slowly dawning on the media-consuming public that the MSM is the primary purveyor of “fake news”– self-referential narratives that support a blatantly slanted agenda with unsupported accusations and suitably anonymous sources.

Read More »

The Problem with Gold-Backed Currencies

China is debt breakdown

Any currency is only truly “backed by gold” if it is convertible to gold. There is something intuitively appealing about the idea of a gold-backed currency –money backed by the tangible value of gold, i.e. “the gold standard.” Instead of intrinsically worthless paper money (fiat currency), gold-backed money would have real, enduring value-it would be “hard currency”, i.e. sound money, because it would be convertible to gold itself.

Read More »

The Criminalization of Financial Independence

Wage GDP 1950 - 2016

Just as the “war on drugs” criminalized and destroyed large swaths of African-American and Latino communities, the “war on cash” will further criminalize the few remaining avenues to financial independence and freedom. The introduction of “entitlement” welfare in the 1960s generated a toxic dependency on the state that institutionalized worklessness, a one-two punch that undermined marriage and family in America’s working class of all ethnicities.

Read More »

Want to Bring Back Jobs? It’s Impossible Unless We Fix these Four Things

U.S. Healthcare System

It’s your choice, America–you can keep your cartels and the captured government that enables and protects them, or you can fix what’s broken and unaffordable. If there is any goal that might attract support from across the political spectrum, it’s creating more fulltime jobs in the U.S. But this laudable goal is dead-on-arrival (DOA) unless we first fix these four things. Why is job growth stagnating? Many point to automation, and yes, that is a systemic dynamic that will only expand going forward.

Read More »

The Central Banks Pull Back: Now It’s Up to Fiscal Policy to “Save the World”

Top Spending from 1990 to 2012

Another problem is the rise of social discord, for reasons that extend beyond the reach of tax reductions and increased infrastructure spending. Have you noticed that the breathless anticipation of the next central bank “save” has diminished? Remember when the financial media was in a tizzy of excitement, speculating on what new central bank expansion would send the global markets higher in paroxysms of risk-on joy?

Read More »

Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?

Share of Gross Domestic Income: Compensation of employees,

Your skills, knowledge and and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not. Longtime correspondent C.A. recently asked a question every American household should be asking: which assets are most likely to survive the “system re-set” that is now inevitable?

Read More »

What Would a Labor-Centered Economy Look Like?

Wealth Pyramid 2015

How about moving the power to create money from the apex of the pyramid down to its lowest level? Let’s spend a moment deconstructing the word “capitalism.” Note it contains the word Capital. So far so good. Obviously the key concept here is capital. So what is “capital”? It turns out there are multiple kinds of capital. The most familiar kinds are tangible: cash, orchards, factories, water rights, tools, and so on.

Read More »

Why Our System Is Broken: Cheap Credit Is King

Global Bond Market

You want to fix the economic system, reduce political bribery and reduce rising income inequality? Shut off the cheap unlimited credit spigot to banks, financiers and corporations. Cheap credit–newly issued money that can be borrowed at low rates of interest–is presented as the savior of our economic system, but in reality, it’s why our system is broken.

Read More »

The Collapse of the Left

Shares of Gross Domestic Income

The Left is not just in disarray–it is in complete collapse because the working class has awakened to the Left’s betrayal and abandonment of the working class in favor of building personal wealth and power. The source of the angry angst rippling through the Democratic Party’s progressive camp is not President Trump–it’s the complete collapse of the Left globally. To understand this collapse, we turn (once again) to Marx’s profound understanding of the state and capitalism.

Read More »

What’s Truly Progressive?

The New Normal

What’s progressive? Pushing power, agency, skills, capital and solutions down to the individual, household, community, enterprise, town and city levels and focusing on doing more with much less.

Read More »

The Eight Forces That Are Pressuring Profits

Spending by the top 5% pulls away from the 95%

If there is any economic assumption that goes unquestioned, it’s the notion that profits will remain robust for the foreseeable future. This assumption ignores the tidal forces that are now flowing against profits. Any discussion of corporate profits must start by noting the astonishing rise in U.S. corporate profits since the heyday of the late 1990s dot-com boom. From $800 billion to $2.4 trillion in a few years is not just extraordinary–it’s unprecedented.

Read More »

Why Profits Are Faltering

National Income: Corporate Profits

Profits are faltering for structural reasons that are not easily resolved. The bedrock assumption of the Bull market is that corporate profits will keep rising indefinitely. Hiccups are allowed, but current stock market valuations are implicitly based on profits expanding.

Read More »

Prosperity = Abundant Work + Low Cost of Living

Net Annual Change in the Number of Firms

If we seek a coherent context for the new year, we would do well to start with the foundations of widespread prosperity. While the economy is a vast, complex machine, the sources of widespread prosperity are not that complicated: abundant work and a low cost of living.

Read More »

Fragmentation and the De-Optimization of Centralization

US Healthcare System

Many observers decry the loss of national coherence and purpose, and the increasing fragmentation of the populace into “tribes” with their own loyalties, value systems and priorities. These observers look back on the national unity of World War II as the ideal social standard: everyone pitching in, with shared purpose and sacrifice. (Never mind the war killed tens of millions of people, including over 400,000 Americans.)

Read More »

Why I’m Hopeful

santa2010

Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn’t leave much to be happy about.

Read More »

Ungovernable Nation, Ungovernable Economy

Yesterday I described the conditions that render the U.S. ungovernable. Here is a chart of why the U.S. economy will also be ungovernable. Longtime readers are acquainted with the S-curve model of expansion, maturity, stagnation and decline.

Read More »

What Triggers Collapse?

A variety of forces will disrupt or obsolete existing modes of production and the social order.

Though no one can foretell the future, it is self-evident that the status quo—dependent as it is on cheap oil and fast-expanding debt—is unsustainable. So what will trigger the collapse of the status quo, and what lies beyond when the current arrangements break down?  Can we predict how-when-where with any accuracy?

All prediction is based on extrapolating current trends. If we expect ‘more of the same’, it’s not too difficult to make predictions about the near future. But history is not always simply more of the same.

Suppose we are in the midst of an era that is as monumental as the first Industrial Revolution or the fall of Rome. Suppose we’re in an era that will compress a century of

Read More »

When Did Our Elites Become Self-Serving Parasites?

When did our financial and political elites become self-serving parasites? Some will answer that elites have always been self-serving parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises.

Read More »

What Have the “Experts” Gotten Right? In the Real Economy, They’re 0 for 5

Personal Consumption Expenditures; Services; Housing; Rental of tenant-occupied nonfarm housing

If the “experts” were assessed on results, they’d all be fired. The mainstream media continually hypes the authority of “experts,” i.e. people with a stack of credentials from top institutions. But does the mainstream media ever check on whether the “experts” got anything right? Let’s compare the “experts” (conventional PhD economists) diagnoses and fixes with the results of their policies.

Read More »

Are You a Deplorable? Take This Quiz to Find Out

Media Concentration

Regardless of your ethnicity, class or religion, if you perceive the institutions that govern American life as corrupted, riddled with favoritism and spin or as broken, you’re a Deplorable. Are you a Deplorable? The answer might surprise you. Take this short quiz to find out.

Read More »

Is the Deep State at War–With Itself?

Deep State Network

The recent pronouncement by the C.I.A. that Russian hackers intervened in the U.S. presidential election doesn’t pass the sniff test–on multiple levels. Let’s consider the story on the most basic levels.

Read More »

Why the Democrats Can’t Let Go of Losing

Democratic party

The Democratic Party has become everything it once was against. The Democratic Party has become everything that it once loathed: elitist, globalist, interventionist, self-serving, warmongering and overflowing with hubris.

Read More »

Rich Middle Class, Poor Middle Class

S&P / Case-Shiller

This great generational injustice is the direct consequence of central banks lowering interest rates to zero and inflating asset bubbles. How can middle class households have similar incomes but some are asset-rich and others are asset-poor?

Read More »

“Fake News”, Censorship, Darwin and Democracy

Mass Media Gallup

Perhaps we can start by separating “news” from “analysis” from “commentary.” “News” is “he said this, she did that, this happened.” Analysis tries to make sense of trends that are apparent in the news longer-term–for example, why did Trump win? Is the economy actually healthy or not? “Commentary” is opinion that establishes a point of view and defends it while attacking other POVs.

Read More »

A Disintegrative Winter: The Debt and Anti-Status Quo Super-Cycle Has Turned

Political Polarization Has Exploded Since 2000

With this list of manifestations in hand, we can practically write the headlines for 2017-2025 in advance. How would you describe the social mood of the nation and world? Would anti-Establishment, anti-status quo, and anti-globalization be a good start? How about choking on fast-rising debt? Would stagnant growth, stagnant wages be a fair description? Or how about rising wealth/income inequality? Wouldn’t rising disunity and political polarization be accurate?

Read More »

Charles Hugh Smith a Russian Propaganda Site?

WaPo-methodology on identifying "Russian Propaganda " Guilt by Associaton

We highly appreciate the site of Charles Hugh Smith because it integrates good economic graph with critical political comments.
A couple of days ago, it appeared on a list of “Russian Propaganda Sites” that got cited by mainstream media.

Read More »

Populism in America: “Follow the Money”

Shares of Gross Domestic Income

If you want to understand today’s populism, don’t look to the mainstream media’s comically buffoonish propaganda blaming the Russians: look at the four issues listed below. One of the most disturbing failures of the mainstream media in this election cycle was its complete lack of historical context for Trump’s brand of populism.If you consumed the mainstream media’s coverage of the campaign and election, you noted their obsession with speech acts (as opposed to concrete actions), personalities and conspiracy theories pinning American populism on Russian propaganda.

Read More »

Our “Gaslight” Economy

Civilian Unemployment Rate

If you don’t like what these charts are saying, please notify The Washington Post to add the St. Louis Federal Reserve to its list of Russian propaganda sites. Yesterday I described our gaslight financial system. Today we’ll look at our gaslight economy. Correspondent Jason H. alerted me to the work of author Thomas Sheridan ( Puzzling People: The Labyrinth of the Psychopath), who claims to have coined the term gaslighting.

Read More »

Beyond Income Inequality

US Household Wealth

Judging by the mainstream media, the most pressing problems facing capitalism are 1) income inequality, the basis of Thomas Piketty’s bestseller Capital in the Twenty First Century, and 2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’ recent book and 2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’ recent book The Failure of Laissez Faire Capitalism.

Read More »

Why Is the US Dollar Rising?

US Dollar Index - Cash Settle

Note the apparent breakout above 100 and the constructive similarities to the 2014 breakout that was followed by a 20% increase in the purchasing power of the USD relative to other currencies.

Read More »

How Do We Create Value When Knowledge Is Almost Free?

Credentials are increasingly in over-supply; problem-solving skills are scarce. How do we create value in an economy that is increasingly dependent on knowledge? The answer is complicated by the reality that knowledge is increasingly digital and “unownable” and therefore almost free. Financialization as a substitute for creating value has run its course.

Read More »

The Age of Disintegration: Political Disunity and Elites At War

Distribution of Wealth in the US Since 1917

Historian Michael Grant identified profound political disunity in the ruling elite as a key cause of the dissolution of the Roman Empire. Grant described this dynamic in his excellent account The Fall of the Roman Empire. The chapter titles of the book illuminate the complex causes of profound political disunity in the ruling elite: The Gulfs Between the Classes: a.k.a. soaring income/wealth inequality: check.

Read More »

The Great Con: Political Correctness Has Marginalized the Working Class

Shares of Gross Domestic Income

So when the protected class of well-paid institutional “progressives” speak darkly of “reversing 40 years of social progress,” what they’re really saying is we’re terrified that the bottom 95% might be waking up to our Great Con of identity politics and political correctness. To understand the Great Con of political correctness, we must first grasp the decline of the working class (self-described as “the middle class”), i.e. those who must sell their labor to earn their livelihood.

Read More »

Rising Immigration but no Jobs

New immigration was higher in the most recent decade, even though there were no jobs

The list of pundits jostling for air time to add their two cents to discussions of hot-button issues such as immigration is endless. The airwaves and social media are overflowing with people wanting to comment on hot-button social issues, but when it comes to the the one truly critical dynamic that will shape the future–everyone’s strangely silent.

Read More »

The Source of Trump’s Success: The Bigger and Bigger Wage Gap

Shares of Gross Domestic Income

There are many sources of rage: injustice, the destruction of truth, powerlessness. But if we had to identify the one key source of non-elite rage that cuts across all age, ethnicity, gender and regional boundaries, it is this: The Ruling Elite is protected from the destructive consequences of its predatory dominance.

Read More »

Seven Suggestions for President-Elect Trump

Donald Trump

Make sure your administration is as diverse as America. No single act will give your enemies more ammo than populating your cabinet and administration with the Usual Suspects: Caucasian elites from Ivy League universities. These privileged “experts” have bankrupted the nation financially, morally and spiritually while enriching themselves and their privileged cronies.

Read More »

Hillary Is The Perfection of a Corrupt System

Exposing the Clintons’ perfection of a corrupt political system won’t change the conditions and incentives that created the Clintons’ harvester of corruption. Let’s set aside Hillary Clinton as an individual and consider her as the perfection of a corrupt political system. As I noted yesterday, Politics As Usual Is Dead, and Hillary Clinton is the ultimate product of the political system that is disintegrating before our eyes.

Read More »

The Bankrupt U.S. Healthcare System

The mainstream became mainstream because it worked: the mainstream advice to “go to college and you’ll get a good job” worked, the mainstream financial plan of buying a house to build equity to pass on to your children worked, the mainstream of government regulation worked to the public’s advantage at modest cost to taxpayers and the mainstream media, despite being cozy with government agencies such as the C.I.A. and operating as a profit machine for the families that owned the newspapers, radio stations, etc., functioned as a basically honest broker of information and reporting.

Read More »

Could Inflation Break the Back of the Status Quo?

Consumer Price Index

Political resistance to the oligarchy’s financialization skimming operations will eventually cripple central bank giveaways to the financial sector and corporate oligarchs. That inflation and interest rates will remain near-zero for a generation is accepted as “obvious” by virtually the entire mainstream media.

Read More »

The Secrets of Self-Employment: Overhead and Capital Accumulation

There are still opportunities to not just earn a wage, but the overhead, profit and capital skimmed by global corporations. So how can someone earning $15 an hour as an employee get ahead? The short answer is: they can’t. One worker earning $15/hour will struggle to get ahead, which I define as building capital that generates an income stream.

Read More »

Two Sets of Solutions as the Status Quo Crumbles

Two charts illustrate Why Our Status Quo Failed and Is Beyond Reform: this chart of the S-Curve of financialization, leverage, debt, central planning, regulatory capture and globalization–that is, the engines of modern “growth”–depicts the inevitable stagnation and decline of these dynamics as overcapacity, debt saturation and diminishing returns take hold.

Read More »

The Ruling Elite Has Lost the Consent of the Governed

Brimming with hubris and self-importance, the ruling Elite and mainstream media cannot believe they have lost the consent of the governed. Every ruling Elite needs the consent of the governed: even autocracies, dictatorships and corporatocracies ultimately rule with the consent, however grudging, of the governed.

Read More »

Welcome to Neocolonialism, Exploited Peasants!

In my latest interview with Max Keiser, Max asked a question of fundamental importance: (I paraphrase, as the interview has not yet been posted): now that the current iteration of capitalism has occupied every corner of the globe, where can it expand to for its “growth”?

Read More »

What Happens When Rampant Asset Inflation Ends?

GDP - Median Household Income

Yesterday I explained why Revealing the Real Rate of Inflation Would Crash the System. If asset inflation ceases, the net result would be the same: systemic collapse. Why is this so? In effect, central banks and states have masked the devastating stagnation of real income by encouraging households to take on debt to augment declining income and by inflating assets via quantitative easing and lowering interest rates and bond yields to near-zero (or more recently, less than zero).

Read More »

Where Will All the Money Go When All Three Market Bubbles Pop?

Since the stock, bond and real estate markets are all correlated, it’s a question with no easy answer. Everyone who’s not paid to be in denial knows stocks, bonds and real estate are in bubbles of one sort or another. Real estate is either an echo bubble or a bubble that exceeds the previous bubble, depending on how attractive the market is to hot-money investors.

Read More »

This Is How Quiet Fascism Works

So my little-visited Wikipedia entry was minding its own business, not bothering anyone, until I dared to criticize the Clinton Foundation. The next day, my Wikipedia entry was taken out and shot by a mysterious “editor.” It was just coincidence, right, that my Wikipedia entry had been available for years without offending anyone, and then suddenly it’s deleted the day after I dared to criticize the Clinton Foundation.

Read More »

USA 2017-2020: An Ungovernable Nation?

The U.S. needs to overthrow a corrupt, self-serving elite. Regardless of who wins the presidency, a much larger question looms: will the U.S. be ungovernable 2017-2020? There are multiple sources of the question.

Read More »

Is The US Dollar Set To Soar?

Hating the U.S. dollar offers the same rewards as hating a dominant sports team: it feels righteous to root for the underdogs, but it’s generally unwise to let that enthusiasm become the basis of one’s bets. Personally, I favor the emergence of non-state reserve currencies, for example, blockchain crypto-currencies or precious-metal-backed private currencies–currencies which can’t be devalued by self-serving central banks or the private elites that control them.

Read More »

You Want to Fix the Economy? Then First Fix Healthcare

Business Sector: Real Compensation Per Hour, Average Hourly Earnings of Production and Nonsupercisory Employees

We don’t just deserve an affordable, sustainable healthcare system–we’re doomed to bankruptcy without one. What is blindingly obvious to employers but apparently invisible to the average zero-business-experience mainstream pundit is this: if you want to fix the economy, you must first fix healthcare.

Read More »

Are The ‘Invisible Americans’ the Key Players in This Election?

For the bottom 90% of American households, the “prosperity” of the “recovery” since 2009 is a bright shining lie. The phrase is from a history of the Vietnam War, A Bright Shining Lie: John Paul Vann and America in Vietnam. Just as the Vietnam War was built on lies, propaganda, PR and rigged statistics(the infamous body counts–civilians killed as “collateral damage” counted as “enemy combatants”), so too is the “recovery” nothing but a pathetic tissue of PR, propaganda and lies.

Read More »

Trump, Trade and Taxes

Donald Trump has made trade agreements a central issue in this presidential election, declaring trade treaties such as the North American Free Trade Agreement (NAFTA) as unfair and subject to cancellation or renegotiation. Setting aside the issue of whether presidents can cancel trade treaties via executive orders, let’s look at the underlying issue: the erosion of manufacturing and entry-level job opportunities that lead to middle-class security and pay.

Read More »

Why the Coming Wave of Defaults Will Be Devastating

Total Credit ASTDSL + ASTLL

In an economy based on borrowing, i.e. credit a.k.a. debt, loan defaults and deleveraging (reducing leverage and debt loads) matter. Consider this chart of total credit in the U.S. Note that the relatively tiny decline in total credit in 2008 caused by subprime mortgage defaults (a.k.a. deleveraging) very nearly collapsed not just the U.S. financial system but the entire global financial system.

Read More »

The Three Stages of Empire

US Defense Budget

I consider it self-evident that we are in the third and final stage of self-serving Imperial decay. Though Edward Luttwak’s The Grand Strategy of the Roman Empire: From the First Century CE to the Third is not specifically on the rise and fall of empires, it does sketch out the three stages of Empire.

Read More »

The ZIRP/NIRP Gods and their PhD Priesthood Have Failed

The priesthood’s insane obsession with forcing people to spend their savings by punishing savers with ZIRP/NIRP has failed spectacularly for a simple reason: it completely misunderstands human psychology. Let’s start with a simple chart of the Fed Funds Rate, which the Federal Reserve has pinned near zero for years.

Read More »

The Mainstream Media Bet the Farm on Hillary–and Lost

The MSM has forsaken its duty in a democracy and is a disgrace to investigative, unbiased journalism. The mainstream media bet the farm on Hillary Clinton, confident that their dismissal of every skeptical inquiry as a “conspiracy” would guarantee her victory. It now appears they have lost their bet.

Read More »

It’s Time to Bring Back Bernie

This tells you everything you need to know about how Hillary will operate as President: there will be no honesty, transparency or truth, ever. Hillary’s bid for the presidency is no longer defensible; it’s time to bring back Bernie Sanders as the Democratic nominee.

Read More »

If Everything Is So Great, How Come I’m Not Doing So Great?

National health expenditures, Gross Domestic Product, Wages

While the view might be great from the top of the wealth/income pyramid, it takes a special kind of self-serving myopia to ignore the reality that the bottom 95% are not doing so well. We’re ceaselessly told/sold that the U.S. economy is doing phenomenally well in our current slow-growth world — generating record corporate profits, record highs in the S&P 500 stock index, and historically low unemployment (4.9% in July 2016).

Read More »

Our Selfie Society Is Incompatible with Democracy

Now that the U.S. is a neoliberal selfie society, we have the worst of all possible worlds in terms of a failed, doomed democracy. Each individual’s liberty to do whatever you want, be whatever you want, go wherever you want, etc. (within the legal boundaries set by the state) is the core of the American Dream. The individual’s civil liberties and right to the unlimited pursuit of happiness is sacrosanct.

Read More »

Our Impoverished, Pathological Society

If asked what’s intrinsic to human happiness, most people in consumer societies will offer up answers such as money, status, a nice house, etc. But as Sebastian Junger observes in his book Tribe: On Homecoming and Belonging, what’s actually intrinsic to human happiness is: meaningful relationships within a community (i.e. a tribe); opportunities to contribute to the group and to be appreciated; being competent at useful tasks and opportunities for authentic experiences.

Read More »

The “Secret Sauce” of the Byzantine Empire: Stable Currency, Social Mobility

One of my reading projects over the past year is to learn more about empires:how they are established, why they endure and why they crumble. To this end, I’ve recently read seven books on a wide variety of empires. The literature on empires is vast, so this is only a tiny slice of the available books. Nonetheless I think these 7 titles offer a fairly comprehensive spectrum:

Read More »

Central Banks = Welfare for the Wealthy

The fact that central banks provide welfare for the wealthy is now entering the mainstream. The fact that all central bank policies since 2008 have dramatically increased wealth and income inequality is now grudgingly being accepted as reality by mainstream economists and the financial media. The central banks’ PR facade of noble omniscience on behalf of the great unwashed masses has cracked wide open.

Read More »

Trump By a Landslide?

If we believe the mainstream media and the Establishment it protects and promotes, Trump has no chance of winning the presidential election. For starters, Trump supporters are all Confederate-flag waving hillbillies, bigots, fascists and misogynists. In other words, “good people” can’t possibly vote for Trump.

Read More »

China’s Great Divide: A New Cultural Revolution?

In Asia, it’s generally seen as unpatriotic to criticize one’s country in public, even if you disagree with its direction and leadership. The cultural norm is to maintain the “face” of one’s country by hiding its ills from outsiders. This reticence is especially evident in China, which suffers from the memory of being subjugated by the Western imperialist powers in the late 19th century and early 20th century.

Read More »

What Are the Odds that the 2020-2022 Olympics Will Be Cancelled?

In the modern era (1896-present), the Olympics have only been cancelled in wartime: 1916 (World War I), 1940 and 1944 (World War II). But world war is not the only circumstance that could derail the Olympics; a global crisis in energy, finance or geopolitics could send the risks and costs of the Olympics beyond the reach of most participants.

Read More »

The Deep State’s Catch-22

What happens if the Deep State pursues the usual pathological path of increasing repression? The system it feeds on decays and collapses. Catch-22 (from the 1961 novel set in World War II Catch-22) has several shades of meaning (bureaucratic absurdity, for example), but at heart it is a self-referential paradox: you must be insane to be excused from flying your mission, but requesting to be excused by reason of insanity proves you’re sane.

Read More »

What the Fed Hasn’t Fixed (and Actually Made Worse)

The Fed has not only failed to fix what’s broken in the U.S. economy–it has actively mad those problems worse. The Federal Reserve claims its monetary interventions saved America from economic ruin in 2009, and have bolstered growth ever since. Don’t hurt yourself patting your own backs, Fed governors past and present: it’s bad enough that the Fed can’t fix the economy’s real problems–its policies actively make them worse.

Read More »

The Odds of a Global Food Crisis Are Rising

Given the current abundance of food globally, confidence in permanent food surpluses and low grain prices is high. Few worry that the present abundance of food could be temporary. But the global food supply is more fragile than we might think, despite historically low grain/agricultural commodity prices.

Read More »

Why Wages Have Stagnated–and Will Continue to Stagnate

Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / “recovery.” The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for workers increases in an expanding economy.

Read More »

What Does It take to Be Upper Middle Class?

The U.S. Wealth-Income Pyramid

What’s left unsaid is much of the upper middle class is prospering due to privileged positions that are increasingly at risk of disruption. What does it take to be upper middle class? According to one analyst, the answer is: at least $100,000 a year for a family of three. The Growing Size and Incomes of the Upper Middle Class (Urban Institute).

Read More »

What Killed the Middle Class?

The Great Prosperity and Regression

If the four structural trends highlighted below don’t reverse, the middle class is heading for extinction. Everyone knows the middle class is fading fast. I’ve covered this issue in depth for years, for example: Honey, I Shrunk the Middle Class: Perhaps 1/3 of Households Qualify (December 28, 2015) and What Does It Take To Be Middle Class? (December 5, 2013)

Read More »

Honey, I Shrunk the Middle Class: Perhaps 1/3 of Households Qualify

Latest Share of Owned by Top 10%

If it takes more than $126,000 to fund a qualitatively defined middle class lifestyle, what sense does it even make to call this “middle”? The Pew Research Center’s recent report The American Middle Class Is Losing Ground: No longer the majority and falling behind financially made a media splash, as it reported that less than 50% of adults are members of the Great American Middle Class.

Read More »

The Self-Employed Middle Class Hardly Exists Anymore

The revenue breakdown of non employer businesses in 2011

It’s sobering that in a nation of 317 million people (of which 145 million people file tax returns), only 3% of all those reporting income are self-employed people earning enough to support a middle class life without the additional income earned by a working spouse. Many people rightly aspire to improve their household’s state of resilience through actions such as storing emergency supplies, starting a vegetable garden, and learning basic readiness/maintenance skills, etc. In general, resilience boils down to self-reliance.

Read More »

Endangered Species: The Self-Employed Middle Class

The revenue breakdown of non employer businesses in 2011

Including the professional class, perhaps 3% of the workforce is truly independent. Being self-employed (i.e. owning your own small business that does not require employees) is an integral part of the American Dream. Many start out dreaming of a corner office in Corporate America, but as they move up the ladder, many become disillusioned by the process and the goal: do I really want to spend my life making big-shots even wealthier?

Read More »

How Many Slots Are Open in the Upper Middle Class? Not As Many As You Might Think

Even the most educated workers have declining wages

Not only are there not that many slots in the upper middle class, the number of open slots is considerably lower. If America is the Land of Opportunity, why are so many parents worried that their princeling/princess might not get into the “right” pre-school, i.e. the first rung on the ladder to the Ivy League-issued “ticket to the upper middle class”? The obsessive focus on getting your kids into the “right” pre-school, kindergarten and prep school to grease the path to the Ivy League suggests there aren’t as many slots open as we’re led to believe.

Read More »

America’s Nine Classes: The New Class Hierarchy

Eight of the nine classes are hidebound by conventions, neofeudal and neocolonial arrangements and a variety of false choices. There are many ways to slice and dice America’s power/wealth hierarchy. The conventional class structure is divided along the lines of income, i.e. the wealthy, upper middle class, middle class, lower middle class and the poor.

Read More »

What Does It Take To Be Middle Class?

Percent change in real income since 1948

By standards of previous generations, the middle class has been stripmined of income, assets and purchasing power. What does it take to be middle class nowadays? A recent paper, The Distribution of Household Income and the Middle Class, used Census data to discuss what sort of income it takes to qualify as middle class, but reached no firm conclusion: people tend to self-report that they belong to the middle class based on income, but income is not the only the metric–indeed, it can be argued that 12 other factors are more telling measures of middle class membership than income.

Read More »

Financialization and Crony Capitalism Have Gutted the Middle Class

Lifecycle of Financialization, Emergence, Expansion, Maturity, Stagnation, Crisis: Ti

The neofeudal colonization of the “home market” has transformed the middle class into debt serfs. According to the conventional account, the Great American Middle Class has been eroded by rising energy costs, globalization, and the declining purchasing power of the U.S. dollar in the four decades since 1973.

Read More »