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2016: The Year Wishful Thinking Fails
2016: The Year Wishful Thinking Fails If we collectively choose wishful thinking, catastrophic consequences are guaranteed. Wishful thinking has been an integral driver of the “recovery” 2009-2015:asset bubbles aren’t bubbles, central bank policies are brilliantly successful, unemployment has dropped to levels of full employment, and so on. The problems with wishful thinking that I describe in […]
Why NIRP (Negative Interest Rates) Will Fail Miserably
Why NIRP (Negative Interest Rates) Will Fail Miserably What NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals. The last hurrah of central banks is the negative interest rate policy–NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled […]
If Knowledge Is Power, Is It Also Wealth?
If Knowledge Is Power, Is It Also Wealth? Ironically perhaps, the ideas that are scarce are those that disrupt “business as usual” by automating what has not yet been automated. Let’s consider a syllogism: Knowledge is power, power equals wealth, so knowledge equals wealth. Is this true? Author George Gilder thinks so. His book Knowledge and Power: […]
The Increasingly Fragile Upper-Middle Class
The Increasingly Fragile Upper-Middle Class Many of these apparently high incomes are completely absorbed by high-cost upper middle class expenses. Since the top 10% takes home 50% of all household income, it follows that this top slice has most of the discretionary cash, i.e. net income left after taxes, servicing debt and paying for essentials […]
The Chart of Doom: When Private Credit Stops Expanding…
The Chart of Doom: When Private Credit Stops Expanding… Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff. Few question the importance of private credit in the global economy. When households and businesses are borrowing to expand production and buy homes, vehicles, etc., […]
The Opaque Process of Collapse
The Opaque Process of Collapse The ultimate cost of protecting the privileges of the few at the expense of the many is the dissolution of the social order that enabled the rule of the privileged few. When I write about the demise of unsustainable systems, readers often ask me to describe the collapse I see […]
Why We Won’t Have a “Lehman Moment” in the 2016 Crash
Why We Won’t Have a “Lehman Moment” in the 2016 Crash What the central banks cannot do is create productive places to invest the credit they’ve generated in such excess, or force qualified borrowers to swallow more unproductive debt. One way to lose a war is to focus on preparing to fight the last war. Preparing […]
The Global Economy Could Fall Farther and Faster Than Pundits Expect
The Global Economy Could Fall Farther and Faster Than Pundits Expect Systemic fragility doesn’t respond to central bank jawboning or Keynesian claptrap; unlike those “policy tools,” fragility is real. The core narrative of central bank/cartel capitalism is centralized agencies have the power to limit downturns and extend credit-based “good times” almost indefinitely. The centralized power bag […]
Be Your Own Medicine
Be Your Own Medicine Treatment of atomized individuals in a setting of atomized symptoms and treatments is by any measure the opposite of a system that encourages and enables everyone to be their own medicine. I recently saw a slogan that encapsulated what’s wrong with the U.S. healthcare system: Be Your Own Medicine. To Be Your Own Medicine is […]
Success Is a Source of Destabilization
Success Is a Source of Destabilization We tend to assume our system for understanding the cause of failure must be sound, because we’ve experienced Roaring Success for so long. Rip-Roaring Success is a funny thing: we assume it’s the goal of every person, household, enterprise and nation, but we overlook that rip-roaring success can be as […]
Top-Down “Solutions” = Institutionalized Serfdom, Bottom-Up Solutions = Reviving Opportunity
Top-Down “Solutions” = Institutionalized Serfdom, Bottom-Up Solutions = Reviving Opportunity If the “solution” doesn’t enable the accumulation of capital in all its forms by individuals and households, it isn’t a real solution–it’s just another top-down scheme that institutionalizes subsistence serfdom. Phrases like reviving the American Dream emit the lingering stench of empty political rhetoric mouthed by bought-and-paid-for […]
Central Banks Are Out of Tricks
Central Banks Are Out of Tricks Once the power to manage expectations has been lost, the central bank bag of tricks is empty. No one knows precisely how and when the global unraveling will impact their corner of the planet, but we do know one thing with absolute certainty: central banks are out of tricks. […]
Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline
Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline This has three extremely negative consequences. In response to a recent post on the structural decline in the velocity of money, correspondent Mike Fasano described a key dynamic in both the decline of money velocity and the middle class. “There […]
The Coming Era of Financial Triage
The Coming Era of Financial Triage Virtually every major program of every major nation-state is financially unsustainable going forward. Though triage is typically used in a medical setting, we are entering an era when financial triage will increasingly be necessary on a household, enterprise and national level. The term triage may have originated during the Napoleonic Wars from the work […]
What’s Eroding the Middle Class?
What’s Eroding the Middle Class? This erosion of a self-employed, independent middle class was an important pre-condition for the collapse of Rome and the French Revolution. I have devoted many blog posts to the erosion of the middle class, for the specific reason that when the middle class–the layers of the economy between the Power Elites […]
