Category Archive: 5.) Charles Hugh Smith

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When Everything from Bat Guano to Quatloos Is Soaring, Speculative Euphoria Has Reached an Extreme

2019-07-08

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2019-07-08

Workers Share of National Income, 1994-2020
The more extreme the speculative euphoria, the greater the risks of a reversal. One sentence sums up the speculative euphoria gripping markets: January and June of this year are the only months in the last 150 which have seen all assets post a positive total return. (Zero Hedge)

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Vested Interests in Charge = Guaranteed Failure

2019-07-06

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2019-07-06

Student Loans Owned and Securitized, 2008-2018
It boils down to two very simple principles: accredit the student, not the institution and teach every student how to rigorously learn on their own. Vested interests have every incentive to maintain the status quo: specifically, those who currently own the assets, income streams and power will continue to own the assets, income streams and power.

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What’s Left to Monetize?

2019-07-05

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2019-07-05

Smartphone Addiction Tightens Its Global Grip
What's left to monetize? It appears the answer is "very little." Advertising has always monetized consumers' time and attention, what we call engagement today. Newspapers and periodicals publish advertisements, radio/TV networks and stations air adverts, movie theaters run trailers/ads, billboards occupy our mental space while driving and websites and apps post adverts.

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America’s Concealed Crisis: Fifty Years of Economic Decline, 1969 to 2019

2019-07-02

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2019-07-02

U.S. Average Hourly Wages, SA 1964-2018
If we consider the long term, it's clear America's economy and society have been declining for the average household for 50 years. What if the "prosperity" of the past 50 years is mostly a statistical mirage for the bottom 80% of households? 

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Following in Rome’s Footsteps: Moral Decay, Rising Inequality

2019-07-01

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2019-07-01

U.S. Pre-Tax Income Share, 1913-2012
Here is the moral decay of America's ruling elites boiled down to a single word. 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, what's mine is mine and what's yours is mine, too.

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Could a Cryptocurrency Become a Global Reserve Currency?

2019-06-30

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2019-06-30

USD and other Currencies
Could a non-state cryptocurrency like bitcoin become a global reserve currency? I first proposed the idea back in November 2013, long before bitcoin's rise to $19,000, decline to $3,200, recent ascent to $13,000 and current retrace.

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No, Autos Are Not “Cheaper Now”

2019-06-28

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2019-06-28

How much did "cheapest" cars increase in 30 years?
According to the BLS, inflation in the category of "New Vehicles" has been practically non-existent the past 21 years. Longtime readers know I've long turned a skeptical gaze at official calculations of inflation, offering real-world analyses such as The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016) and Burrito Index Update: Burrito Cost Triples, Official Inflation Up 43% from 2001 (May 31, 2018).

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Local Government Is an Engine of Inflation

2019-06-27

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2019-06-27

The Rising Wedge Model of Breakdown
Insolvency isn't restricted to private enterprise; governments go broke, too. One reason the economy is so much more precarious than advertised is inflation has pushed households and small businesses to the edge--and one engine of that inflation is local government. This is not to dump on local government, which is facing essentially unlimited demands from the public for more services while mandated cost increases in government union employee wages...

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The Human Cost of “Recovery”: We’re Burning Out

2019-06-24

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2019-06-24

Workers Share of National Income, 1994-2020
The asymmetries are piling up and we're cracking under the weight. Judging by the record-high stock market and the record-low unemployment rate, the "recovery" has reached new heights of prosperity. Academics and think-tankers viewing the global economy from 40,000 feet are brimming with policies to bring the remaining laggards into the booming economy.

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The Lessons of Rome: Our Neofeudal Oligarchy

2019-06-23

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2019-06-23

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy. The Inheritance of Rome: Illuminating the Dark Ages 400-1000 is not an easy, breezy read; its length and detail are daunting. The effort is well worth it, as the book helps us understand how the power structures of societies change over time in ways that may be largely invisible to those living through the changes.

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The Fed’s Casino Is Giving Away Free Gambling Chips (But Only to the Super-Rich)

2019-06-21

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2019-06-21

The rest of us eat our losses, either all at once or in bitter bites as we trudge through the financial wasteland left after bubbles burst. The news that the Federal Reserve Casino is giving away free gambling chips triggered a frenzied rush that trampled the bears, including poor Yogi:

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Dear Central Bankers: Prepare to be Swept Away in the Next Wave of Populism

2019-06-20

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2019-06-20

The Fruit of Financialization: Soaring Income Inequality
The political moment when the "losers" connect their discontent and decline with central bankers is approaching. The Ruling Elites' Chattering Classes still haven't absorbed the key lesson of the 2016 U.S. presidential election.

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How Much of Your “Wealth” Is Hostage to Bubbles and Impossible Promises?

2019-06-18

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2019-06-18

S&P/Case-Shiller U.S. National Home Price Index, 1990-2015
All asset "wealth" in credit-asset bubble dependent economies is contingent and ephemeral. A funny thing happens to "wealth" in a bubble economy: it only remains "wealth" if the owner sells at the top of the bubble and invests the proceeds in an asset which isn't losing purchasing power.

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Misplaced Pride: Most of the “Middle Class” Is Actually Working Class

2019-06-17

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2019-06-17

Concentration of stock ownership by Wealth Bracket
If we look at these charts, it looks like only the top 10%, or perhaps the top 20% at best, might qualify as "middle class" by the metrics described below. The conventional definition of working class is based on income and education:the working class household earns between $30,000 and $69,000 annually, and the highest education credential in the household is a two-year community college degree or trade certification.

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A Stock Market Crash Scenario

2019-06-14

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2019-06-14

A Stock Market Crash Scenario
Herds get spooked and run. That's the crash scenario in a nutshell. We have all been trained by a decade of central bank saves to expect any stock market swoon will soon be reversed by central bank sweet talk and/or rate cuts. 

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What Would It Take to Spark a Rural/Small-Town Revival?

2019-06-12

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2019-06-12

Merchandise Exports 2015
Recent research supports the idea that this under-the-radar migration is already under way. The decline of rural regions and small towns is a global phenomenon, and the causes are many but boil down to two primary dynamics: 1. Cities and megalopolises (aggregations of cities, suburbs and exurbs) attract capital, infrastructure, markets and talent, and these are the engines of job creation.

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Is the Tech Bubble Bursting?

2019-06-07

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2019-06-07

Acceleration of Technological Adoption Curves 1867-2017
There are two other trends that don't attract quite the media attention that soaring profits do. Is the decade-long tech bubble finally popping? Tech bulls are overlooking the fundamental reality that the drivers of Big tech's phenomenal growth--financialization and expansion into mobile telephony-- are both losing momentum.

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A Quiet Revolution Is Brewing

2019-06-05

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2019-06-05

Income Inequality and Political Polarization, 1947-2009
Politics as practiced in a bygone era of stability no longer offers any solutions to these profound disruptions. I recently read a fascinating history of the social, political and economic context of the American Revolution: The Radicalism of the American Revolution by Gordon Wood.

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Why Being a Politician Is No Longer Fun

2019-05-31

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2019-05-31

Income Inequality and Political Polarization, 1947-2007
As a society, we are ill-prepared for the end of "politics is the solution." It's fun to be a politician when there's plenty of tax revenues and borrowed money to distribute, and when the goodies get bipartisan support. An economy that's expanding all household incomes more or less equally is fun, fun, fun for politicians because more household income generates more income tax revenues and more spending that generates other taxes.

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Lesson of the S-Curve: Doing More of What’s Failed Will Fail Spectacularly

2019-05-29

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2019-05-29

S-curve of Rapid Expansion, Stagnation and Decline
I often refer to the S-Curve because Nature so often tracks this curve of ignition, rapid expansion, stagnation and decline. One lesson of the S-Curve is that the human bias to keep doing more of what worked so well in the past leads to doing more of what failed even as results turn negative.

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