Author: Charles Hugh Smith

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. In effect, our leadership leads by lying. As we know, when it gets serious, you have to lie to preserve the perquisites and power of those atop the wealth-power pyramid, and well, it’s serious all the time now, so lies are the default setting of the entire status quo. But all … Continue reading →

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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: Stanford Says Soaring Public Pension Costs Devastating Budgets For Education And Social Services Which American Cities Will File Bankruptcy Next? Allow me to summarize for those who aren’t too squeamish: a lot of cities and counties are going to go broke, … Continue reading →

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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. 1. Most commentators may not realize that the vast majority of income taxes are paid by the top 10%–and that roughly 60% are paid by the top 4% of households. (A nice example … Continue reading →

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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. What the mainstream does get is speculative frenzy. New technologies tend to spark speculative manias once the adoption rate exceeds the Pareto Distribution’s critical threshold of … Continue reading →

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Once the shared memories of these values are lost, the Empire ceases to exist; there is nothing left to reform or renew. Is renewal/recovery from systemic decline possible? The history of the Roman Empire is a potentially insightful place to start looking for answers. As long-time readers know, I’ve been studying both the Western and Eastern (Byzantine) Roman Empires over the past few years. Both Western and Eastern Roman Empires faced existential crises that very nearly dissolved the empires hundreds of years before their terminal declines.The Western Roman Empire, beset by the overlapping crises of invasion, civil war, plague and economic … Continue reading →

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Lies, half-truths and cover-ups are all manifestations of fatal weakness. When we can no longer tell the truth because the truth will bring the whole rotten, fragile status quo down in a heap of broken promises and lies, we’ve reached the perfection of dysfunction. You know the one essential guideline to “leadership” in a doomed dysfunctional system: when it gets serious, you have to lie. In other words, the status quo’s secular goddess is TINA–there is no alternative to lying because the truth will bring the whole corrupt structure tumbling down. This core dynamic of dysfunction is scale-invariant, meaning that hiding the truth is … Continue reading →

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The one thing we can know with certainty is it won’t be easy to profit from the crash. After 8+ years of phenomenal gains, it’s pretty obvious the global stock market rally is overdue for a credit-cycle downturn, and many research services of Wall Street heavyweights are sounding the alarm about the auto industry’s slump, the slowing of new credit and other fundamental indicators that a recession is becoming more likely. Few have taken the risk of projecting a date for the crash, this gent being a gutsy outlier: Hedge Fund CIO Sets The Day When The Next Crash Begins. … Continue reading →

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Student loan lenders are skimming tens of billions in profits guaranteed by the taxpayers. “Legal” rackets have two essential components: a public-relations “cover” that obscures the racket and the mechanism that extracts the wealth from the “marks.” The Higher Education Racket qualifies on both counts: 1. The PR cover is “you all need a college diploma, and we’re here to make that happen.” Yea for more education! 2. The extraction mechanism is student loans. Here’s a chart that shows what happened relatively recently: your federal government began guaranteeing obscene profits to student-loan lenders and debt-serfdom for tens of millions of … Continue reading →

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If you need some evidence that the echo-bubble in housing is global, take a look at this chart of Sweden’s housing bubble. A funny thing often occurs after a mania-fueled asset bubble pops: an echo-bubble inflates a few years later, as monetary authorities and all the institutions that depend on rising asset valuations go all-in to reflate the crushed asset class. Take a quick look at the Case-Shiller Home Price Index charts for San Francisco, Seattle, and Portland, OR. Each now exceeds its previous Housing Bubble #1 peak: Time to buy old US gold coins Is an asset bubble merely … Continue reading →

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Although Plan B includes a wide spectrum of options, these three basic categories define three different purposes for having an alternative residence lined up. We all have a Plan A–continue living just like we’re living now. Some of us have a Plan B in case Plan A doesn’t work out, and the reasons for a Plan B break out into three general categories: 1. Preppers who foresee the potential for a breakdown in Plan A due to a systemic “perfect storm” of events that could overwhelm the status quo’s ability to supply healthcare, food and transportation fuels for the nation’s … Continue reading →

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Take a moment to consider the Neocon camp’s over-reaction to the inchoate challenge to its dominance posed by the Trump administration. 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. As I have been discussing for years, there are inevitable conflicts within the inner circle that executes The Long … Continue reading →

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Trying to reduce the carefully choreographed drama to one stage and one audience risks misunderstanding the signal. It seems many media observers are confused by events in Syria and the swirl of competing narratives. Did the Swamp drain Trump? Did the Neocons succeed in forcing Trump to follow their lead? Is the U.S. ramping up yet another endless war? Consider the possibility that none of these narratives actually get to the heart of what’s going on. To make sense of all this, we’re going to have to delve into topics far below today’s headlines. I think Ilargi (The Automatic Earth) got it right … Continue reading →

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The USA is already a Totalitarian State with a Ministry of Propaganda that works overtime to generate a flimsy illusion of “democracy.” Is your “democracy” (or republic) actually a Totalitarian State? That is, is it a “democracy” or “republic” in name only? To find out, take this quick quiz. 1. Does your government (federal, state and local) seize citizens’ assets without due process? In other words, the rule of law is dead; the state is the law. If the answer is yes, Your “democracy” is already a Totalitarian State. The answer in the USA is a definitive “yes.” 2. Does your government … Continue reading →

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The USA is already a Totalitarian State with a Ministry of Propaganda that works overtime to generate a flimsy illusion of “democracy.” Is your “democracy” (or republic) actually a Totalitarian State? That is, is it a “democracy” or “republic” in name only? To find out, take this quick quiz. 1. Does your government (federal, state and local) seize citizens’ assets without due process? In other words, the rule of law is dead; the state is the law. If the answer is yes, Your “democracy” is already a Totalitarian State. The answer in the USA is a definitive “yes.” 2. Does your government … Continue reading →

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No leader can reverse the dynamics of mutually reinforcing crises. Commentators seem to split into three camps: those who see Trump as a manifestation of smoldering social/economic ills, those who see Trump and his supporters as the cause of those ills, and those who see Trump as both manifestation and cause of those ills. I think this misses the point, which is the overlapping crises unfolding in this decade– diminishing returns on skyrocketing debts, the demographics of an aging populace, the erosion of the social contract and the profound disunity of political elites–will continue expanding and feeding on each other regardless … Continue reading →

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