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The Age of Discord

The Age of Discord

It’s very difficult to find common ground that supports cooperation in the disintegrative stage of scarcities, rising prices, catastrophically centralized power and social discord.

Today’s topic echoes Peter Turchin’s 2016 book, Ages of Discord, which I have often referenced in blog posts.

I’ll also discuss two other books I’ve often referenced, Global Crisis: War, Climate Change and Catastrophe in the Seventeenth Century by Geoffrey Parker and The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fischer.

Turchin proposes repeating cycles of history of social integration (people finding reasons to cooperate) and disintegration (people finding reasons to not cooperate).

Clearly, we’re in a disintegrative stage.

Fischer proposed a repeating cycle of history in which humans expand their numbers and economy to consume all available resources.

Once all the low-hanging fruit has been consumed, scarcities arise, pushing prices above what commoners can afford, and the result is economic stagnation and social/political revolution.

Either humans exploit a new energy source at scale to provide for the larger population and higher consumption per person, or the population and consumption decline to fit available resources.

Parker covers the mutually reinforcing climate, political, social and economic crises of the 17th century. A long cycle of cold, wet summers reduced crop yields, leading to hunger and strife.

Parker also identifies another cause of the tumultuous, war-plagued 1600s: political leaders had consolidated too much power, enabling them to pursue disastrous wars without any restraint from competing domestic social-political interests.

Clearly, we’re in Fischer’s stage of overshoot and resource scarcity and Parker’s extremes of centralized power free to pursue catastrophic wars of choice.

In the 1600s, those launching wars reckoned a clean, decisive victory was within easy reach. In every case, the wars dragged on inconclusively or generated even wider conflicts.

…click on the above link to read the rest of the article…

The Difference Between a Forecast and a Guess

The Difference Between a Forecast and a Guess

Every forecast or guess has one refreshing quality: one will be right and the rest will be wrong.

What’s the difference between a forecast and a guess? On one level, the answer is “none”: the future is unknown and even the most informed forecast is still a guess. The evidence for this is the remarkable number of informed forecasts that prove to be as completely off-base as the wildest guesses.

On another level, there is a big difference between an informed forecast and a guess–if the informed forecast has the consequential system dynamics right. The world is complicated and discerning the consequential dynamics in the tangle of complexity is difficult.

Context and perspective matter. So do incentives. To take one example of many, war planners in the Vietnam era looked at war from the perspective of “scientific metrics” that focused on collecting data on the efficacy of sorties and combat missions. This resulted in the infamous “body counts.”

The larger context was that war could be productively distilled down to metrics, costs and attrition: the enemy was presumed to be a rational player who will give up when the pain and cost become too high.

Planners slouching in comfortable offices have many incentives to “go along to get along”: and veering off into dynamics that can’t be conveniently measured and questioning the entire foundation of the war’s planning and execution will get you sent to bureaucratic Siberia. “Getting with the program” will get you kudos and promotion.

Hmm, which will most people choose? The Pentagon Papers circulated among hundreds of senior officials, and parts of the report circulated among thousands of lower-ranking employees. Only one person took the risks of sharing the report with the American public.

…click on the above link to read the rest of the article…

Our Economy In a Nutshell

Our Economy In a Nutshell

The economy has reached an inflection point where everything that is unsustainable finally starts unraveling.

Our economy is in a crisis that’s been brewing for decades. The Chinese characters for the English word crisis are famously–and incorrectly–translated as danger and opportunity. The more accurate translation is precarious plus critical juncture or inflection point.

Beneath its surface stability, our economy is precarious because the foundation of the global economy– cheap energy–has reached an inflection point: from now on, energy will become more expensive.

The cost will be too low for energy producers to make enough money to invest in future energy production, and too high for consumers to have enough money left after paying for the essentials of energy, food, shelter, etc., to spend freely.

For the hundred years that resources were cheap and abundant, we could waste everything and call it growth: when an appliance went to the landfill because it was designed to fail (planned obsolescence) so a new one would have to be purchased, that waste was called growth because the Gross Domestic Product (GDP) went up when the replacement was purchased.

A million vehicles idling in a traffic jam was also called growth because more gasoline was consumed, even though the gasoline was wasted.

This is why the global economy is a “waste is growth” Landfill Economy. The faster something ends up in the landfill, the higher the growth.

Now that we’ve consumed all the easy-to-get resources, all that’s left is hard to get and expensive. For example, minerals buried in mountains hundreds of miles from paved roads and harbors require enormous investments in infrastructure just to reach the deposits, extract, process and ship them to distant mills and refineries. Oil deposits that are deep beneath the ocean floor are not cheap to get.

…click on the above link to read the rest of the article…

For Freak’s Sake, People, Even the Crash Test Dummies Are Nervous

For Freak’s Sake, People, Even the Crash Test Dummies Are Nervous

Those trusting the Fed to be visibly weak, corrupt and incompetent forever might be in for an unwelcome surprise.

When even the crash test dummies are nervous, it pays to pay attention. Being in a mild crash isn’t too bad if all the protective devices inflate as intended. But in a horrific crash where nothing goes as planned, it’s like speeding in a ready-to-explode Pinto and being side-swiped by a semi on Dead Man’s Curve.

The stock market is in the Pinto, and the smell of gasoline is so strong it’s overpowering the smell of old Cheetos and stale beer. The Federal Reserve is driving, and it’s got a crazy glint in its eyes that everyone dismisses– to their immense regret when the Pinto goes off the cliff and flames envelop the wreckage.

We’re talking metaphorically here. The pain of catastrophic financial losses isn’t physical. But that doesn’t mean it won’t hurt for years or even decades.

Here’s a brief recap: The Fed says inflation is under control, will soon subside, and is no biggie.

In other words, the Fed believed it wielded Jedi Mind Tricks (to convince the masses that there was nothing to worry about as “this isn’t the inflation you’re looking for”) and that it was living in a Wizard of Oz world in which it possessed supernatural powers: if we say inflation is declining, it will decline.

Put simply, the Fed is completely delusional. If you need more proof, consider their risible claim that Fed policies aren’t the cause of soaring wealth inequality, when the evidence that the Fed has destabilized society by boosting wealth inequality to new heights is incontestable to all but con artists and the delusional.

…click on the above link to read the rest of the article…

Serf-Expression

Serf-Expression

Eventually the “flock of timid and industrious animals” changes their minds about how much exploitation by the few is acceptable.

You may have noticed the news flow beyond the hot war in Ukraine is largely focused on capital: financial capital (markets, liquidity, interest rates, commodities, central bank tightening, etc.) and political capital (geopolitical maneuvering, sanctions, revising energy and defense policies, etc.)

Notice who’s left out, unnoticed and invisible? The serfs, the bottom 90% who have been decapitalized in the developed world and exploited in the developing world for the past 45 years.

With capital ascendant, the vast majority of financial and political gains flowed to the top tier of speculative capital (banks and billionaires) while the purchasing power of labor (i.e. wages) has been in a 45-year descent. (See chart below)

This disemboweling of labor transferred $50 trillion from labor to capital in the U.S. alone. Financialization and globalization devalued labor and working-class assets such as savings and boosted leveraged speculative bets only available to financiers and corporations, for example, stock buybacks funded by the tsunami of free money for financiers unleashed by the Federal Reserve and other central banks. (See chart below)

Even though the corporate media gives it no notice, serf-expression will become increasingly consequential. No, serf-expression is not a typo for self-expression, the core doctrine of modernism. By serf-expression I mean the serf’s expression of what is no longer acceptable. Another term for this is cultural revolution. I address social and cultural revolutions in my new book, Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States.

Is a Cultural Revolution Brewing in America? (April 9, 2021)

When the serfs no longer believe in the divine right of banks and billionaires, then the concentration of economic and political power in the hands of the few will no longer be acceptabl…

…click on the above link to read the rest of the article…

What If It Breaks?

What If It Breaks?

Making your entire economy a Landfill Economy dependent on the fantasy of infinite replacements and substitutions is the height of hubris and folly.

Very few people ask: what if it breaks? It’s a question we can ask of a great many things: touchscreens, motherboards, tools, vehicles, supply chains and entire systems: what if it breaks?

The first thing we notice is the great number of things which can’t be repaired, they can only be replaced. Good luck repairing the touchscreen or motherboard in your vehicle. Oops, the puncture in your tire is in the sidewall, no repair possible, buy a new tire.

The entire economic system assumes two things: 1) there will always be replacements for everything that can’t be repaired and 2) there will always be substitutes for everything we want. Beef too expensive? Then buy fake-meat. If that’s too expensive, substitute chicken. And so on: there will always be a substitute that can scale globally that will get cheaper as it scales.

Unfortunately, both assumptions are false. There are no replacements for oil and fertilizers. What we have are ifs: if we build 1,000 nuclear reactors, then we can convert this electricity into hydrogen which will be the fuel of the future. And so on. If, if, if. Nice, but getting beyond if is non-trivial: oops, we need hydrocarbon energy to build the 1,000 nuclear reactors and all the complex equipment to convert seawater into hydrogen on a scale large enough to matter.

Not only are there no substitutes for many things, there are no replacement parts, either. Too bad about your entire Smart Home system going down. The vendor of the do-hickey that’s connected to your hub went out of business and so there’s no replacement parts or software upgrades….

…click on the above link to read the rest of the article…

Geopolitics and Degrowth

Geopolitics and Degrowth

The Geopolitics of Degrowth holds that real power flows not from waste, centralization and coercion but from decentralization, relocalization and the free flow of value.

Conventional geopolitics is all about more: more military power, more sanctions, more coercion, more influence.

The Geopolitics of Degrowth is all about the the power of less: wasting less, consuming less, needing less from other nations, reducing dependence on rivals, reducing coercion and centralized over-reach.

Conventional geopolitics concentrates wealth and political power in a giant dam on the biggest river. Centralized control of massed power is considered the acme of geopolitical strength. Everyone is coerced into funding and relying on the dam.

But this has it backwards: when the centralized dam bursts, the nation is in ruins. This vulnerability isn’t power, it’s weakness. The Degrowth model of strength is to make local use of every rivulet, stream and tributary, carefully shepherding its sustainability and use.

Unbeknownst to the mainstream, the world has entered an era of scarcity. The current abundance is a temporary flush of the last of the cheap-to-extract resources. Once this illusory abundance has been consumed, all that’s left is hard-to-extract, costly resources.

In an era of scarcity, power flows not from coercion but from needing less by consuming less by eliminating the tremendous waste and friction that consumes resources, capital and time without generating any positive returns.

The conventional mindset is deadset on maintaining this waste and friction, as if it was positive rather than negative. By focusing on “growth” in GDP, our system optimizes waste, fraud, friction and a throwaway mentality. The reality that 40% of everything we consume is wasted is not even recognized. In the conventional mindset, the goal is to waste more by accelerating The Landfill Economy of buying some product that fails or is obsoleted even faster than the previous generation.

…click on the above link to read the rest of the article…

Our Financial System Is Optimized for Sociopaths and Exploitation

Our Financial System Is Optimized for Sociopaths and Exploitation

Let’s call this financial system what it really is: the MetaPerverse, a conjured world of self-serving cons.

We live in a peculiar juncture of history in which truth has been banished as a threat to the maximization of private gain, i.e. the hyper-pursuit of self-interest. Evidence that supports a causal chain has been replaced by cherry-picked data that supports a self-serving narrative: both the evidence and narrative are manufactured to serve the interests of the few at the expense of the many.

In this juncture of history, evidence is easily disputed because the process of manufacturing self-serving evidence has been perfected. Indeed, self-serving evidence is now a commodity which can be purchased wholesale: rig the sample size, massage the data statistically, conjure up a context that serves to frame the evidence in a slippery self-interested fashion, omit disinterested evidence and contexts, top with arcane math and voila, evidence and narrative are presented as “facts” rather than what they really are, an elaborate, well-staged con designed to maximize the private gains of the few by exploiting the many.

Organizing the entire system to serve the pathological greed of the few is best served by devaluing truth to mere opinion and causal chains to mere narratives. In this juncture of history, truth has been revealed as a chimera; there is only opinion, and all opinions are equal. Opinions are beliefs, and all beliefs are equal. All narratives are equal. All questions boil down to values: values are all equally detached, free-floating and of the same value: zero.

…click on the above link to read the rest of the article…

Our Leaders Made a Pact with the Devil, and Now the Devil Wants His Due

Our Leaders Made a Pact with the Devil, and Now the Devil Wants His Due

The unprecedented credit-fueled bubbles in stocks, bonds and real estate are popping, and America’s corrupt leaders can only stammer and spew excuses and empty promises.

Unbeknownst to most people, America’s leadership made a pact with the Devil: rather than face the constraints and injustices of our economic-financial system directly, a reckoning that would require difficult choices and some sacrifice by the ruling financial-political elites, our leaders chose the Devil’s Pact: substitute the creation of asset-bubble “wealth” in the hands of the few for widespread prosperity.

The Devil’s promise: that some thin trickle of the trillions of dollars bestowed on the few would magically trickle down to the many. This was as visibly foolish as the promise of immortality on Planet Earth, but our craven, greedy leadership quickly sealed the deal with the Devil and promptly inflated the greatest credit-asset bubble in human history.

Rather than trade away one’s soul, America’s leaders traded away the future security and stability of the nation. By refusing to deal with the real problems exposed by the collapsing financial scams in 2008-09, our leaders–both the unelected Federal Reserve and the elected “best government money can buy”–chose to bail out the scammers who had greased their palms so generously and sacrificed the prosperity of the many to do so.

This is more or less the equivalent of sacrificing innocents at the altar of the gods to ensure the leaders’ rule will continue to be successful.

The Devil was delighted to serve up the illusion of godlike powers to our corrupt, greedy leaders. The deal looked oh-so win-win: we enrich the top few percent and offload the costs and sacrifices on the powerless many, who were told that they would benefit from the trickle of cash leaking out of the super-wealthy’s bulging pockets.

…click on the above link to read the rest of the article…

Choose One, But Only One: Defend the Billionaire’s Bubble or the U.S. Dollar and Empire

Choose One, But Only One: Defend the Billionaire’s Bubble or the U.S. Dollar and Empire

The Empire is striking back, protecting what really counts, and the Billionaire Bubble sideshow is folding its tents.

One of the most enduring conceits of the modern era is that the Federal Reserve acts to goose growth and therefore employment while keeping inflation moderate (whatever that means–the definition is adjustable). This conceit is extremely handy as PR cover: the Fed really, really cares about little old us and expanding our ballooning wealth.

Nice, except it doesn’t. The Fed’s one real job is defending the U.S. dollar, which is the foundation of America’s global hegemony a.k.a. The Empire.

One thing and one thing alone enables global dominance: being able to create “money” out of thin air and use that “money” to buy real stuff in the real world. The nations that can create “money” out of thin air and trade it for magnesium, oil, semiconductors, etc. have an unbeatable advantage over nations that must actually mine gold or make something of equal value to trade for essentials.

The trick is to maintain global confidence in one’s currency. There is no one way to manage this, as confidence in a herd animal such as human beings is always contingent. Once the herd gets skittish, all bets are off.

The herd is exquisitely sensitive to movements on the edge of the herd, where threats arise. There are various tricks one can deploy to maintain confidence: pay a higher rate of interest on bonds denominated in one’s currency, so global capital flows into your currency; treat this capital well with a transparent set of tax laws and judiciary / regulatory oversight, maintain a deep pool of liquidity so capital can enter and exit without stampeding the herd, and having at least a semi-productive, diverse economy that generates goods, services and income streams to support the currency.

…click on the above link to read the rest of the article…

Politics Is Dead, Here’s What Killed It

Politics Is Dead, Here’s What Killed It

Here’s “politics” in America now: come with mega-millions or don’t even bother to show up.

Representational democracy–a.k.a. politics as a solution to social and economic problems–has passed away. It did not die a natural death. Politics developed a cancer very early in life (circa the early 1800s), caused by wealth outweighing public opinion. This cancer spread slowly but metastasized in the past few decades, spreading to every nook and cranny of our society and economy as “democracy” devolved into an invitation-only auction of elections and political favors.

Politics might have had a fighting chance but three forces betrayed the nation and its citizenry.

1. The Federal Reserve transferred trillions of dollars of unearned wealth into the feeding troughs of the super-wealthy and corporations, vastly increasing the wealth the top 0.01% had to buy elections and favors. The Federal Reserve cloaked its treachery with jargon– quantitative easing, stimulus, etc.–and then stabbed the nation’s representational democracy in the back.

2. The Supreme Court betrayed the nation’s representative democracy by labeling corporations buying elections and political favors a form of “free speech.” (Please don’t hurt yourself laughing too hard.) The Supreme Court’s equating wealth buying elections and favors with individual citizens’ sacrosanct right of free speech was a knife in the back of the nation and its citizenry.

3. The two political parties betrayed their traditional voter bases to kneel at the altar of corporate / elite wealth, wealth which bought elections and political favors. The Democrats, traditional champions of the workforce in the 20th century, abandoned workers in favor of serving their corporate masters, masking their betrayal with fine-sounding phrases.

…click on the above link to read the rest of the article…

Entropy intensifies (E1797)

Entropy intensifies (E1797)

In this special first episode of 2022 of Keiser Report, Max and Stacy chat to author, philosopher, and blogger Charles Hugh Smith of OfTwoMinds.com about the acceleration in entropy of the economic, monetary, and cultural systems around us. Smith focuses on the positives of what’s to come after the collapse in terms of a better quality of life based less on hyper-consumption and more on local communities.

What Will Surprise Us in 2022

What Will Surprise Us in 2022

What seemed so permanent for 13 long years will be revealed as shifting sand and what seemed so real for 13 long years will be revealed as illusion. Magical thinking isn’t optimism, it is folly.

Predictions are hard, especially about the future, but let’s look at what we already know about 2022. Viewed from Earth orbit, 2022 is Year 14 of extend and pretend and too big to fail, too big to jail and Year 2 of global supply chains break and energy shortages.

The essence of extend and pretend is to substitute income earned from increases in productivity–real prosperity–with debt–a simulation of prosperity –that doesn’t solve the real problems, it simply adds a new and fatal problem: since productivity hasn’t expanded across the spectrum, neither has income or prosperity.

All that happened over the past 13 years is that debt–money borrowed against future productivity gains and energy consumption–funded illusions of prosperity in all three sectors: households, enterprise and government.

The explosion of debt and interest due on that debt could not occur if interest rates still topped 10% as they did 40 years ago in the early to mid-1980s. We couldn’t add tens of trillions of dollars, yen, yuan and euros in new debt unless interest rates were pushed down to near-zero (for the government, the wealthy and corporations only, of course–debt-serfs still pay 7%, 10%, 15%, 19%, etc.)

This monetary trick was accomplished by making central banks the linchpin of the entire global economy as central banks created “money” out of thin air and used the currency to buy trillions in government and corporate bonds, artificially creating near-infinite demand which then drove the rate of interest into the ground.

…click on the above link to read the rest of the article…

2022: The Year of Breakdown

2022: The Year of Breakdown

In other words, our economy and society have been optimized for failure.

If we look at the fragility and instability of essential systems, it’s clear that 2022 will be the year of breakdown. Let’s start by reviewing how systems break down, a process I’ve simplified into the graphic below.

1. Regardless of whether it was planned or not, all systems are optimized to process specific inputs to generate specific outputs. Each system is pared down to maximize efficiency as the means to maximize profits. This efficiency in service of maximizing profits requires trade-offs that only become visible when some key part of the system fails.

The system that ships containers around the world offers a useful example. Shipping containers revolutionized shipping and reduced costs by commoditizing containers (all standard sizes), container ships (specifically designed to carry thousands of containers and container ports with specifically designed cranes, docks and truck lanes / queueing.

It’s possible to load a container on some other craft with a jury-rigged crane, but the efficiency of that is essentially a fraction of the optimized system: the jury-rigged crane will only be able to load a handful of containers, the ship will only be able to carry a few containers, and the likelihood of the containers shifting increases.

The infrastructure and labor are both highly specialized. Calling out the National Guard to speed up container offloading is a useless gesture unless the Guard can deliver more cranes and experienced operators.

The greater the optimization, the greater the fragility as the breaking of any one link brings the entire system to a halt. Throwing in equipment and labor that the system isn’t designed to use will fail.

…click on the above link to read the rest of the article…

Get in Crash Positions

Get in Crash Positions

When the market goes bidless, it’s too late to preserve capital, never mind all those life-changing gains.

Everyone with some gray in their ponytails knows the stock market has ticked every box for a bubble top, so everybody get in crash positions:

Let’s run through the requirements for a bubble top:

1. Retail investors (i.e. dumb money) are all in and buying the dip with absolute confidence. As the gray-ponytail traders know, there are many moving parts to the retail dumb money going all in:

— The pain of the last bubble bursting has finally faded and been replaced by greed as retail punters watch everyone else mint fortunes by buying the dip and gambling with abandon at the casino’s trendy tables: crypto, NFTs, Mega-Tech, EVs, uranium, etc.

— Prudence and caution (i.e. holding cash in low-risk accounts) are thrown to the wind as the more money you put into the bet, the bigger the rewards.

— Punters realize the key to the really big gains is maxing out margin and leverage, preferably by foregoing owning the underlying equity in favor of options and futures contracts.

— Confidence in the Federal Reserve’s god-like powers and determination to never let stocks decline more than a few percentage points over a few hours or days is off the charts.

— Confidence that this is a new era and so old rules no longer apply is in the stratosphere. Retail punters believe that cryptos, NFTs and blockchain are can’t-lose bets as these are A) unstoppable and B) revolutionizing finance and the economy. As for stocks, retail traders have discovered the power of the herd: if the herd all buys call options by the thousands, this forces market makers to buy the underlying stocks, pushing the price higher in a self-reinforcing feedback loop that is guaranteed to succeed.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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