Author Archives: Charles Hugh Smith

The Global Test Most Will Fail: Surviving the Bust That Inevitably Follows a Boom

Booms powered by credit, new markets and speculation are followed by busts as night follows day. This creates a very difficult test for every nation-state facing the inevitable bust: how does the leadership deal with the end of the boom? … Continue reading

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The Scariest Halloween Stock Market Chart

What would Halloween be without a scary chart of The Stock Market That Cannot Die? We know the stock market cannot die because we’re constantly told it’s immortal: You know the drill: the Federal Reserve will never let the market … Continue reading

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Untangling America from the American Empire

The Status Quo would have us believe that America and its Empire are one entity. This is handy for those with Imperial designs but it is false: America could be untangled from its Empire, and many of us believe it … Continue reading

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All Hail Our New Lord and Master, the Stock Market

The all-powerful Federal Reserve is a mere minion of the stock market, a kitten absurdly claiming in public to be a tiger. If the market threatens to drop, the Fed quickly prostrates itself and does the bidding of its Lord … Continue reading

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The Federal Reserve: Illusion of Understanding, Illusion of Control

We live in an era of illusion: the illusion of understanding, and the illusion of control. Few institutions reflect these illusions better than the Federal Reserve, though the Pentagon, Congress, the Imperial Presidency, the sick-care cartel and the higher education … Continue reading

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Will this Manic Stock Market Rally End in Tears?

Judging by October’s rocket launch, the stock market is back to where it should be, i.e. in rally mode. Yee-haw! All it took to keep the party going was another rate cut in China, another “whatever it takes” assurance from … Continue reading

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Why Is Wealth/Income Inequality Soaring?

Why is wealth/income inequality soaring? The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own. But greed can’t be the only factor, for greed is hardly unknown in the bottom 90%. The … Continue reading

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Sorry, “Feel the Bern” Fans: President Sanders Won’t Change Anything

The appeal of Bernie Sanders is clear even to those who don’t “feel the Bern”: maybe, just maybe something will actually change in Washington. Fans of The Donald have the same hope. A vote for Hillary is a vote for the … Continue reading

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A Fatal Accident Waiting to Happen: U.S. Healthcare

Many of the systems we take for granted are historical accidents. Either based on legacy systems hundreds of years old (higher education) or assembled in a short-term, ad hoc fashion (post-1940 national defense/ national security), these systems have expanded into … Continue reading

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Four Ticking Global Time-Bombs Few Even Hear

The geopolitical and financial risks facing the global economy are well-known.Hot wars and currency meltdowns garner headlines around the world. But few even hear, much less discuss, four ticking global time-bombs: 1. The demographic time-bomb. 2. The public health time-bomb. … Continue reading

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The Problem Isn’t Student Loans–It’s Higher Education

Everyone understands soaring student debt is a problem: burdened with $1.3 trillion in student loans, young people are unable to start businesses, buy homes and start families. The high cost of housing and meeting regulations to launch businesses add additional … Continue reading

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Here’s Why Housing Must be Propped Up

The Powers That Be have gone to extraordinary lengths to prop up housing by whatever means are necessary since the collapse of the housing bubble in 2008: the Federal Reserve has pushed mortgages rates down by buying mortgage-backed securities, the … Continue reading

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The Paradox of Risk: Central Planning Is Linear, Reality Is Non-Linear

I first discussed the Paradox of Risk in August, 2008, just before the stock market melted down: The Unintended (Risky) Consequences of “Backstopping” Risk(August 12, 2008) This is the Paradox of Risk: the more risk is apparently lowered, the higher … Continue reading

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Where Is the First Helicopter Drop of Money Likely to Land?

We all know helicopter money of some kind is coming as the global economy spirals into recession. Quantitative Easing (QE)–the monetary stimulus of distributing newly created central-bank money to private banks–has been discredited, as even cheerleaders and apologists now admit … Continue reading

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When the Aristocracy Leaves the Commoners in the Dust, The Empire Is Doomed

Historian Peter Turchin identified “the degree of solidarity felt between the commons and aristocracy” as a key ingredient of the Republic of Rome’s enormous success. Turchin calls this attribute of social structure vertical integration, a term that usually refers to … Continue reading

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What Happens to our Economy as Millions of People Lose the Habits of Hard Work?

Simply put, job growth is not keeping pace with population growth–specifically, the growth of the labor force which is generally defined as the population between the ages of 18 and 64. So what happens to the economy as millions of … Continue reading

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One True Measure of Stagnation: Not in the Labor Force

Heroic efforts are being made to cloak the stagnation of the U.S. economy. One of these is to shift the unemployed work force from the negative-sounding jobless category to the benign-sounding Not in the Labor Force (NILF) category. But re-labeling stagnation … Continue reading

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Welcome to the Future: Downward Mobility and Social Depression

The mainstream is finally waking up to the future of the American Dream: downward mobility for all but the top 10% of households. A recent Atlantic article fleshed out the zeitgeist with survey data that suggests the Great Middle Class/Nouveau … Continue reading

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You Can’t Separate Empire, the State, Financialization and Crony Capitalism: It’s One Indivisible System

Disagreement is part of discourse, and pursuing differing views of the best way forward is the heart of democracy. Disagreement is abundant, democracy is scarce, despite claims to the contrary. If you think you can surgically extract Empire from the … Continue reading

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

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 … Continue reading

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China’s Leadership: Brilliant or Clueless?

I am often amused by the Western media’s readiness to attribute godlike powers of long-term planning and Sun-Tzu-like strategic brilliance to China’s leadership. A well-known anecdote illustrates the point. Zhou Enlai, Premier of China in the Mao era, who when … Continue reading

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The Echo Bubble in Housing Is About to Pop

The Federal Reserve-induced Echo Housing Bubble is finally starting to roll over, and the bubble’s pop won’t be pretty. Why is the bubble finally popping now? All the factors that inflated the Echo Housing bubble are running dry. These include: … Continue reading

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Global Markets: It’s Getting Ugly Out There

You’d have to be in full denial mode not to see that it’s getting ugly out there in global markets: currencies are melting down, trade and shipping are tanking, commodities are swooning and global stock markets are increasingly on central-bank … Continue reading

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Time to Trade in Your Jag, Benz, BMW for a Dented Econobox: Days of Rage Are Coming

It’s time to trade in your Jag, Mercedes, BMW (and maybe your Prius, Volvo, Lexus, etc.) before the Days of Rage start. As I’ve explained before ( As the “Prosperity” Tide Recedes, the Ugly Reality of Wealth Inequality Is Exposed), … Continue reading

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Financial Independence via Self-Employment: How Do We Do It?

The conventional financial industry touts gaining financial independence by playing Wall Street’s game: working a conventional job for decades to accumulate a chunk of money in retirement funds that Wall Street wizards magically squeeze for hefty annual returns in a … Continue reading

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The New Shackle of Serfdom: Clinging to Healthcare Insurance

One of the more remarkable characteristics of American life is our passive acceptance of systems that are so obviously completely insane. Yes, I refer to our healthcare system, a.k.a. sickcare because in America sickness is profitable and health is not, … Continue reading

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Why Has Labor’s Share of GDP Declined for 40 Years?

Why Has Labor’s Share of Gross Domestic Product (GDP) been declining for 40 Years? The question cuts right to the heart of the core socio-economic issues of our era: the decline of secure work and the explosive rise of wealth … Continue reading

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Life’s Most Important Dramas Are Being Disrupted

The idea that human life subdivides rather naturally into stages is based on our natural progression from childhood into adulthood and eventual (if we’re lucky) old age. Confucian thought views life as a developmental process with seven stages, each roughly … Continue reading

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As the “Prosperity” Tide Recedes, the Ugly Reality of Wealth Inequality Is Exposed

A rising tide raises all boats, from rowboats to yachts–this is the narrative of “prosperity.” A rising tide is also the political cover for rising inequality: if the guy in the rowboat makes $100 more a month, he feels like … Continue reading

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Here’s Why the Status Quo Is Doomed

The central illusion of this era is that the Status Quo can be reformed or saved.All we need to do is (or so we’re told): 1. Get money out of politics 2. Re-impose the Glass-Steagall Act on banking 3. Close … Continue reading

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The American Disease: I Deserve to Get Away with Anything and Everything

Here’s the American Disease in a nutshell: entitlement and power means you never have to apologize for anything. Public relations might require a grudging, insincere quasi-apology, but the person with power can’t evince humility or shame–he or she doesn’t have … Continue reading

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The Next Financial Crisis Won’t be Like the Last One

Central banks are like generals: they tend to fight the last war. The Great Financial meltdown of 2008 was centered in too big to fail, too big to jail transnational banks and other financial entities with enormous exposure to collateral … Continue reading

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Why the Fed Would be Insane to Raise Rates: The Rising U.S. Dollar

The parlor game of the moment is laying odds on the Federal Reserve’s decision to raise rates, leave rates unchanged, or (gasp!) hint at future stimulus. There are certainly a multitude of inputs to the Fed’s decision, and a variety … Continue reading

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Syria: Imperial Responsibility, Imperial Conscience

I am not an unbiased observer of the Syrian refugee crisis, for we have a Syrian friend. She is a young woman, with legal residency in the U.S. She is completing her university studies in computer science. Her uncle served … Continue reading

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Why Capital Is Fleeing China: The Crushing Costs of Systemic Corruption

Corruption isn’t just bribes and influence-peddling: it’s protecting the privileges of the few at the expense of the many. Rampant pollution is corruption writ large: the profits of the polluters are being protected at the expense of the millions being … Continue reading

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Is the Stock Market Now “Too Big to Fail”?

Correspondent Bart D. recently speculated that the U.S. stock market was now “too big to fail,” that is, that it was too integral to the global financial system and economy to be allowed to fail, i.e. decline 40+% as in … Continue reading

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China: Doomed If You Do, Doomed If You Don’t

Many commentators have ably explained the double-bind the central banks of the world find themselves in. Doing more of what’s failed is, well, failing to generate the desired results, but doing nothing also presents risks. China’s double-bind is especially instructive. … Continue reading

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Massive Central Bank Intrusion Means Ever Increasing System Fragility

In markets distorted by permanent manipulation the most powerful incentive is to borrow as much money as you can and leverage it as much as you can to maximize your gains in risk-on asset bubbles. A core dynamic is laying … Continue reading

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The Troubling Decline of Financial Independence in America

By financial independence, I don’t mean an inherited trust fund–I mean earning an independent living as a self-employed person. Sure, it’s nice if you chose the right parents and inherited a fortune. But even without the inherited fortune, financial independence … Continue reading

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Who Will Be the Bagholders This Time Around?

Once global assets roll over for good, it’s important to recall that somebody owns these assets all the way down. These owners are called bagholders, as in “left holding the bag.” Those running the rigged casino have to select the … Continue reading

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Global Markets to Fed: No Rate Hike, the Strong Dollar Is Killing Us

There are many reasons for global markets to melt down, but one that doesn’t get enough attention is the strong dollar. In effect, global markets are telling the Federal Reserve: don’t raise rates–the strong dollar is killing us. Here’s the … Continue reading

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Why the Bear of 2015 Is Different from the Bear of 2008

It’s tempting to see similarities in last week’s global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P … Continue reading

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Is It Time to Get into Crash Positions?

With stock markets diving around the globe, a pressing question arises: is it time to get into Crash Positions? In case you forgot how to get into Crash Positions, here’s a reminder: After a dizzying 500+ point drop in the … Continue reading

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Plunge Protection Teams of the World, Unite!

Central bankers are watching Marx’s dictum all that is solid melts into air play out in global stock markets with a terror informed by the scalding memories of 2008’s global financial meltdown. Once the trap-door opens, there is no bottom … Continue reading

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One Word Defines This Era: Stagnation

Beneath the surface PR of progress, the operant dynamic of this era is stagnation. Cheerleaders of progress have a few unalloyed wins in the past 15 years–battles won against diseases, for example–and a general increase in living standards among the … Continue reading

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China and the Decline in Quality (and Soon in Profits)

The general decline in the quality of tools and consumer goods predates the emergence of China as the workshop of the world, but the decline has gathered momentum with China’s dominance of manufacturing. Young people have little to no experience … Continue reading

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China, the Hollow Dragon

It is widely assumed that manufacturing (a.k.a. the world’s workshop) is the source of China’s wealth. But how can this be true, given that manufacturing profit margins are razor-thin in China, and have been since the early 2000s? Given that … Continue reading

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Voting With Your Feet

When do we finally accept the hopelessness of reforming a self-serving machine bent on destruction? My recent conversation with Max Keiser on Summer Solutions (25:45) included three bits of advice: 1. Stop financializing the human experience 2. Acquire skills, not … Continue reading

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Acquire Skills, Not Credentials

My recent conversation with Max Keiser on Summer Solutions (25:45) included three bits of advice: 1. Stop financializing the human experience 2. Acquire skills, not credentials 3. Vote with your feet Today’s topic is acquire skills, not credentials. I have … Continue reading

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Our Government, Destroyer of Jobs

Conventional economists and pundits are puzzled why jobs growth has been so anemic in this “recovery.” Here’s one factor they overlook: our government. In theory, our government is supposed to encourage private sector job growth. In reality, all the hundreds … Continue reading

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Stop Financializing the Human Experience

Correspondent Dani A.M. (of Removing the Shackles) was kind enough to identify three bits of advice from my recent conversation with Max Keiser on Summer Solutions (25:45): (9:20 min: “We’ve been brainwashed into financializing the human experience.”) 1. Stop financializing the … Continue reading

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Forget the Fake Statistics: China Is a Tinderbox

When China’s tinderbox economy implodes, who will be left to bid up the world’s surplus commodities and real estate? After 30 years of torrid expansion, perhaps the single most consequential factor in China’s economy is how much of it is … Continue reading

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Let’s Talk About Solutions, Not Fake Fixes

Since the status quo has no workable Plan B to “growth” in an economy in which household incomes have declined 8.5% in a supposedly expanding economy, real solutions must arise outside the status quo. It’s a lot easier to talk … Continue reading

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I Sure Am Glad There’s No Inflation

We are constantly bombarded with two messages about inflation: 1. Inflation is near-zero 2. This worries the Federal Reserve terribly, because stable prices are deflationary and deflation is (for reasons that are never explained) like the financial Black Plague that will … Continue reading

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Billary Clinton and the Perfection of Consumerist Narcissism

In this perfection of consumerist narcissism, the only goal is maximizing private gain by whatever means are available. I don’t think it’s coincidence that Bill Clinton’s presidency and Christopher Lasch’s landmark analysis The Culture of Narcissism: American Life in an … Continue reading

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Rent Bubble = Housing Bubble = Rent Bubble

Here is the conventional narrative about rents and housing valuations: 1. Rents have soared because people can’t afford to buy a house and have to rent 2. Based on soaring rents, housing is fairly valued In other words, rents and … Continue reading

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The Cost of Stagnation: We’re Living in Limbo

The idea that human life subdivides rather naturally into stages is based on our natural progression from childhood into adulthood and eventual (if we’re lucky) old age. Confucian thought views life as a developmental process with seven stages, each roughly … Continue reading

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Currency Devaluation: The Crushing Vice of Price

VICE is both a sin and a tool in the UK and Oz. In North America, the tool is VISE. I am using vice as both the tool and sin… When stagnation grabs exporting nations by the throat, the universal … Continue reading

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Does “Creative Destruction” Include the State?

Everyone lauds “creative destruction” when it shreds monopolies and disrupts private enterprise “business as usual.” If thousands lose their middle-class livelihoods– hey, that’s the price of progress. Improvements in productivity and efficiency can’t be stopped, and those employed making buggy … Continue reading

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When Authorities “Own” the Market, The System Breaks Down: Here’s Why

Panicked by the possibility of declines that undermine the official narrative that all is well, authorities the world over are purchasing assets like stocks, bonds and mortgages directly. Central banks are explicitly taking on the role of buyers of last … Continue reading

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Bubble, Bubble, Toil and Trouble: When Authorities Buy Assets to Prop Up Markets

The actual line from Shakespeare’s Macbeth is double, double, toil and trouble, fire burn, and cauldron bubble but for the purposes of analyzing what happens when authorities prop up market bubbles by directly buying assets, bubble, bubble, toil and trouble … Continue reading

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Is the Echo Housing Bubble About to Burst?

Speculative bubbles that burst are often followed by an echo bubble, as many participants continue to believe that the crash was only a temporary setback. The U.S. housing market is experiencing a classic echo bubble. Exhibit A is the Case-Shiller … Continue reading

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Will the Oil Patch Bust Trigger Recession?

This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that’s coming due. Could the oil patch bust triggered by oil plummeting from $100/barrel to $50/barrel kick the U.S. into recession? Longtime … Continue reading

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Are Tech Giants’ New Buildings Signs of the Top?

When banks build new gleaming headquarters, that generally marks the top of the bank’s fortunes. There appears to be some sort of hubris in constructing a monumental new headquarters that shouts “we’re rich beyond all conception” that angers the stock … Continue reading

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We Need a Crash to Sort the Wheat from the Chaff

When a speculator bought a new particle-board-and-paint McMansion in the middle of nowhere in 2007 with nothing down and a $500,000 mortgage, the lender and the buyer both considered the house as $500,000 of collateral. The lender counted the house … Continue reading

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Thank Goodness Everything’s Fixed

Thank goodness everything’s been fixed. Now that the bigshots in the Eurozone have given Greece the Humphrey Bogart treatment– When you’re slapped, you’ll take it and like it, Bogart’s line as he bullied Peter Lorre in The Maltese Falcon–and a … Continue reading

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When Capitalism Turns to Cannibalism

With authentic growth scarce, there’s no other way to reap huge profits but cannibalism. When people say “capitalism has failed” or “capitalism has succeeded,” we have to ask: what type of capitalism do you mean? Authentic capitalism, in which capital … Continue reading

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Diminishing Returns on Central-Planning Policy Extremes = 2016 Crash

It is perhaps fitting that I am posting a call for a financial crisis that fails to respond to the usual central-planning manipulations on Bastille Day. There are two main lessons for the present era we can draw from the … Continue reading

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Maintaining the Illusion of Stability Now Requires Ever-Greater Extremes

On the surface, everything still looks remarkably stable in the core industrial economies. The stock markets in Japan, Germany and the U.S. are only a few percentage points off their highs, and we’re constantly assured that inflation no longer exists … Continue reading

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No Jobs for the Young, No Retirement for the Old

You may have seen a variation of this chart of employment in the U.S. by age group. This chart–courtesy of mdbriefing.com— shows the number of those employed (with any kind of job–full-time, part-time, self-employed) as a percentage of the Civilian … Continue reading

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Ragin’ Contagion: When Debtors Go Broke, So Do Mercantilist Exporters

Beneath the endless twists and turns of Greece’s debt crisis lie fundamental asymmetries that doom the euro, the joint currency that has been the centerpiece of European unity since its introduction in 1999. The key imbalance is between export powerhouse … Continue reading

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Greece’s New Money: Many, Not One?

It was easy to predict the eventual collapse of the one-currency-fits-all euro:indeed, many analysts explained why it was doomed before it was adopted as an integral part of the European Project, which broadly speaking calls for complete integration of the … Continue reading

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The Coming Era of Pension Poverty

The core problem with pension plans is that the promises were issued without regard for the revenues needed to pay the promises. Lulled by 60 years of global growth since 1945, those in charge of entitlements and publicly funded pensions … Continue reading

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The Global Template for Collapse: The Enchanting Charms of Cheap, Easy Credit

According to polls, the majority of Greek citizens want the benefits of membership in the euro/EU and the end of EU-imposed austerity. The idea that these are mutually exclusive doesn’t seem to register. This is the discreet charm of magical … Continue reading

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Greece, Democracy and Magical Thinking

What is representative democracy but organized bribery on a mass scale? Politicians seeking control of the spigots of state wealth and power promise endless swag to voters. Those who promise the most swag and do so with the most inspirational Soaring … Continue reading

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Collapse, Part 5: Things Fall Apart

As noted earlier in this series, collapse is not an event, it’s a process, a process we experience as things fall apart. The phrase famously appears in William Butler Yeats’ 1919 poem, The Second Coming: Turning and turning in the … Continue reading

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Collapse, Part 4: Loss of Faith in Public Institutions

Though we may think of collapse in terms of ATMs not working and rampaging mobs, collapse actually starts with the intangible loss of faith in public institutions:elected officials, law enforcement, the justice system and the agencies of financial regulation (anti-trust, … Continue reading

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Collapse Part 3: No Institutional Path to Contraction

One poorly understood source of collapse is the lack of pathways to contraction and a reduction of complexity/cost. The only pathway that is clearly marked is the one to expansion–of production, debt, credit, government, income, benefits, costs and complexity: more … Continue reading

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Collapse, Part 2: The Nine Dynamics of Decay

While collapse may be sudden, the decay that generated the collapse had been rotting away the foundation for years or decades. In distilling the vast literature on collapse into nine dynamics, I am drawing upon many other authors’ work, including: … Continue reading

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Collapse, Part 1: Greece

The theme this week is collapse. It’s a big, complex topic because there are as many types of collapse as there are systems. Some systems appear stable on the surface but collapse suddenly; others visibly decay for decades before finally … Continue reading

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Future Shock and the Greening of America

During our recent breakfast meeting in Berkeley, author/blogger Jim Kunstler suggested that the coherence of eras waxed and waned, and the present era was incoherent. By this he meant the narratives being propagated by the status quo no longer align … Continue reading

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Diversify Your Portfolio with Informal Credit

Today we present a guest post by frequent contributor Jeff W. on informal credit, a non-financial but very real asset that is the foundation of the community economy.In our financialized world view, few even recognize the value of informal credit, … Continue reading

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On Financial Parasites and Predators

Reform is impossible in a system optimized for centralized power and financial predators and parasites. The problem with optimizing private gain by any means available is you also optimize financial predators and parasites. The problem with optimizing a system for … Continue reading

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Our Phantom Economy

Those who believe that phantom recoveries and phantom metrics can be substituted for reality are in for a shock in the next downturn. Stripped of artifice, there are only two kinds of media stories: those that support the status quo … Continue reading

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The Fed Is Funneling the Investing Herd Off a Cliff

As you probably know by now, it turns out lemmings didn’t voluntarily commit mass suicide: they were driven off the cliff by those in charge. Lemming Suicide Myth: Disney Film Faked Bogus Behavior. Investors in stocks, bonds and real estate … Continue reading

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Junk Fees and Debt: The Funding Template for American Cities

As many of us have observed over the past few years, local governments in America are caught in the pincers of rapidly rising pension and healthcare costs and stagnant tax revenues. The only “fixes” that don’t alienate vested interests or … Continue reading

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The Cost of China’s Industrialization

That the China Story is going to implode is already baked into the public health catastrophe that will unfold with a vengeance in the coming decade. The financial pundits gushing over “The China Story”–that the Middle Kingdom’s industrialization is a … Continue reading

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Memo to the Fed and its Media Tool Hilsenrath: We’re Not Here to Enrich Your Corporate Cronies

The Federal Reserve is appalled that we’re not spending enough to further inflate the value of its corporate and banking cronies. In the Fed’s eyes, your reason for being is to channel whatever income you have to the Fed’s private-sector … Continue reading

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Being Healthy Is Unprofitable

That good health is insanely unprofitable was highlighted by a staggering statistic in the recent research paper The Concentration of Health Care Spending (via B.C.): Mean annual spending for the bottom half of (the American population) distribution was just $236 … Continue reading

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Liberation Is Unprofitable

If we had to summarize the sickness of our economy and society, we could start by noting that liberation is unprofitable, and whatever is not profitable to vested interests is marginalized, outlawed, proscribed or ridiculed. Examples of this abound. Liberation … Continue reading

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Is Our Economy’s Cinderella Carriage About to Turn Into a Pumpkin?

The past six years of expansion have been as illusory as Cinderella’s magic carriage. The clock is about to strike midnight, and our Cinderella economy’s magic carriage will revert to a pumpkin. The magic of the Federal Reserve’s flood-the-fields policies … Continue reading

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How Much More Extreme Can Markets Get?

These charts help us understand that a top is not just price, but a reversal in extremes of margin debt, valuation and sentiment. In blow-off tops, extremes of valuation, complacency and margin debt can always shoot beyond previous extremes to … Continue reading

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U.S. Households Under Pressure: Stagnant Incomes, Rising Basic Expenses

How do you support a consumer economy with stagnant incomes for the bottom 90%, rising basic expenses and crashing employment for males ages 25-54? Answer: you don’t. Frequent contributor B.C. passed along a sobering set of charts that provide context … Continue reading

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How Healthcare Is Dooming the U.S. Economy

Three charts crystallize the healthcare dynamics that are dooming the U.S. economy. The first depicts the runaway growth of healthcare costs–a rapid expansion that is a permanent feature of U.S. healthcare, regardless of which party is in office or what … Continue reading

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China’s Shenzhen Stock Exchange: The Sky’s the Limit, Baby!

In the event you haven’t heard about the stock bubble currently inflating in China, please take a quick look at these two charts of the Shenzhen Composite: This second chart displays the Shenzhen’s price-earnings ratio (PE), a widely used measure … Continue reading

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Surplus Repression and the Self-Defeating Deep State

The nation is wallowing self-piteously in a fetid trough of denial and adolescent rage/magical thinking now that the nation’s bogus, debt-based “prosperity” has crashed and cannot be restored. If you type Deep State into the custom search window in the … Continue reading

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The Case for Nationalizing Monsanto

Ridding the world of Monsanto via a state buy-out would be a boon to humanity. Capitalism fails in two situations: monopoly and state-capital cronyism. Monopoly extinguishes competition and that effectively extinguishes capitalism. When the elites of the state and private … Continue reading

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Our Crazy-Making Economy’s Endgame: Festering Frustration Seeking an Outlet

The consequence of policies that exacerbate injustice, inequality and double-bind demands is a madness that will find a social and economic outlet somewhere, sometime. We all know crazy-makers: people who make contradictory claims about reality, who say one thing and … Continue reading

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When the Current Housing Bubble Finally Bursts

Bubbles are followed by echo-bubbles, and the bursting of the second bubble ends the speculative cycle. If we have learned anything in the past 20 years of massive asset bubbles and equally massive declines when the bubbles finally pop, it’s … Continue reading

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Our Social Depression

This erosion of opportunities to complete life’s stages and core dramas is rarely recognized, much less addressed. The consequences of economic stagnation are not limited to finance: stagnation is causing a social depression. We can best understand this social depression … Continue reading

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Stocks and Bonds Are Due for a Generational Crash of 75%

From the point of view of history, a reversion to generational lows is inevitable, and a valuation level around 50% of GDP for stocks is a fair target. If we look back to 1981 valuations of stocks and bonds as … Continue reading

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Is This the Chart of a Healthy Stock Market?

If fundamentals like profits and sales no longer matter, then all that’s left is faith that central banks will never let stock markets fall ever again. Is this the chart of a healthy stock market? The consensus view is either … Continue reading

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When Europe Gets Greece’s Jingle Mail: Dealing with Default

The costs and consequences of Greece exiting the Eurozone may well dwarf the financial losses triggered by Greece’s default. The term Jingle mail originated in the great popping of the housing bubble 2008-2011. It refers to defaulting homeowners mailing the … Continue reading

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The Central Problem with Central Banks: They Become the Greater Fools/Bag-Holders

Those who are confident the central banks can print unlimited money may find there are political and financial consequences to such extremes that cannot be foreseen. The central problem with central banks is their mandate now includes propping up all … Continue reading

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No Bubble Here: Rent a Bed for $1,000/Month

Those who say there are only two sure things in life, death and taxes, should add a third sure thing: realtors and stock market mavens will deny there’s a bubble even when it’s obvious to everyone the bubble has already … Continue reading

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Tax Donkeys: Rich Enough to Pay Most of the Taxes, Not Rich Enough to Buy Politicians

Real political representation must be bought, just like everything else in a market economy. Mike Swanson (Wall Street Window) and I were discussing the difference between the 1% who earn $360,000 annually and up and those in the Oligarchy class–the … Continue reading

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Bank Reserves and Loans: The Fed is Pushing On a String

The money multiplier effect no longer works. As you (hopefully) know, we live in a fractional reserve banking system: if the bank is required to have $1 in cash reserves for every $10 in loans, it means the bank creates … Continue reading

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No Wrongdoing Here, Just 6,300 Corporate Fines and Settlements

Despite the PR about how corporate profits benefit widows and orphans, this vast wealth is concentrated in the top 1% and the top 5%. I am honored to share a remarkable data base of Corporate Fines and Settlements from the early … Continue reading

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Innovate or Die

Collaboration, innovation and risk are all intrinsic to adaptation. Without adaptation, every system eventually perishes once conditions change. One feature of capitalism that is rarely discussed is the premium placed on cooperation and collaboration. The Darwinian aspect of competition is … Continue reading

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Endangered Species: The Self-Employed Middle Class

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 … Continue reading

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When the Herd Turns

  Once market participants realize the top is in and the only possible result from here on is a loss, the herd will turn and follow the leaders who are selling. A funny thing happens when the stock market herd … Continue reading

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The Financial Markets Now Control Everything

The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets. The financial markets don’t just dominate the economy–they now control everything. In 1999, the BBC broadcast a 4-part documentary … Continue reading

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How Much of our Work Is Compliance, Enforcement and Menial Servitude to the New Aristocracy?

It’s difficult to estimate the quantity of our work devoted to data-shuffling compliance with and enforcement of perverse regulations and neofeudal menial-servitude to the top 10%. A spate of recent articles have investigated the nature of today’s jobs: The Cult … Continue reading

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Is This a Blow-Off Top? Four Ways to Tell

Those who lived through the last two speculative blow-off tops know the impossibility of predicting the final top. How can we tell if stocks are in the final blow-off stage of a bubble? There are four basic give-aways: 1. Parabolic … Continue reading

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Our Financial Future: Infinite Greed Meets a Funny Thing Called Karma

All those angered by the mere question of the viability of this predatory pillaging in the name of capitalism are incapable of even admitting this cultural crisis exists. Somewhere along the line, we lost the ability to distinguish between earning … Continue reading

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The Rehypothecation of Gold, and Why It Matters

Claiming to own X quantity of gold is one thing, and reporting how many times the gold has been pledged as collateral is another. When correspondent Scott A. Batten offered to write an explanation of the rehypothecation of gold and … Continue reading

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The Old Models of Work Are Broken

The only sustainable way to avoid being commoditized is to learn to create value in ways that cannot be commoditized. Though we are still in the early stages of web-enabled automation, it’s already evident that the old models of work … Continue reading

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Wedges and Triangles: Big Move Ahead?

The central bank high is euphoric, the crash and burn equally epic. Just out of curiosity, I called up a few charts of key markets: stocks (the S&P 500), volatility (VIX), gold and the U.S. dollar (UUP, an exchange-traded fund … Continue reading

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Ten Wonderful Things I’m Grateful For (Irony Alert)

Being grateful boosts your happiness. Ten wonderful things I’m grateful for. Since every volume on the nearly endless shelf of pop psychology self-help books recommends working up some gratitude as the key to happiness, I’ve conjured up a list of … Continue reading

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Disrupt or Be Disrupted

Either join the disruptors or prepare to be disrupted. Disruptive technology is a tiresome cliche, as every Twitter/ AirBnB/ Uber/ Skype/etc. wannabe start-up declares itself disruptive. That the vast majority of self-congratulatory start-ups are over-hyped and derivative should not distract … Continue reading

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The Changing World of Work 5: “Human Robots” and High-Level Skills

A diploma by itself does not create value; only experiential skills create value. While it is impossible to summarize the job market in a vast, dynamic economy, we can say that the key to any job is creating value. That … Continue reading

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The Changing World of Work 4: The “Signal” Value of Credentials Is Eroding

An entire new feedback loop of accreditation is needed, and fortunately that feedback is within our control: it’s a process I call accredit yourself. Economist Michael Spence developed the job market signaling model of valuing employees based on their credentials … Continue reading

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The Changing World of Work 3: “Full-Stack” Skills

More important than being a full-stack employee is owning a full stack of skills. My longtime friend G.F.B. sent me an article on the emerging value of tech-savvy generalists: The full-stack employee by Chris Messina: Nearly two years after I … Continue reading

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The Changing World of Work 2: Financialization = Insecurity

Promises of wealth and security are far more contingent than is being advertised. The Millennial Generation, if we’re to believe various polls, aspires to either make boatloads of money on Wall Street, or secure a can’t-be-fired job in the government. … Continue reading

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The Changing World of Work I: America’s Nine Classes

Eight of the nine classes are hidebound by backward-looking conventions, neofeudal and neocolonial arrangements and a spectrum of perverse incentives and false choices. My theme this week is the changing world of work. The goal of this week’s five-part look … Continue reading

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Rich Middle Class, Poor Middle Class

his 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? Spending and saving habits … Continue reading

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Neofeudalism 101: Strip-Mining the Upper Middle Class

This Neofeudal structure is unstable by its very nature. I have often examined the Neofeudalist structure of the U.S. economic hierarchy, and the many social and financial fault lines running through this creaking structure. For example: America’s Nine Classes: The … Continue reading

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What Happens to Sales and Employment When Corporate Profits Fall?

Corporate profits are back at the levels reached in 1990, 1999 and 2008 that presaged recessions and a sharp downturn in sales and employment. It really isn’t a surprise that corporate profits are falling: not only is the stronger U.S. … Continue reading

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Guaranteed Financial Security Is a Fantasy

Guarantees based on extracting higher taxes, borrowing trillions of dollars and creating trillions more out of thin air only guarantee eventual systemic implosion. It is difficult for those living through tectonic social and economic shifts to recognize the passing of … Continue reading

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The Inevitable Failure of Mechanistic Monetary Policy

Our current faith in central banks’ ability to “make the economy all better, all the time” is horrendously misplaced. We are living in the Cargo Cult Era of Central Bankers. The era began in earnest on December 5, 1996, when … Continue reading

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The U.S. Economy Slows to Stall Speed

This long-term weakening of the economy is the direct result of financialization and the Federal Reserve’s policy of propping up impaired debt with more debt and constantly bringing demand forward with zero interest rates. The U.S. economy is slowing to … Continue reading

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A Shocking Admission: “The Federal Reserve is a Criminal Conspiracy”

A spokesperson assured the assembled media that the Fed Board was “deeply concerned” about the American people, inflation, and the unemployment rate, but he was heckled off the stage. In an extraordinary admission, the Board of Governors of the Federal … Continue reading

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

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 … Continue reading

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Complacency Reigns Supreme–Nothing Can Possibly Go Wrong, Right?

So by all means, buy the dip now that the VIX soared in full-blown panic from 12 to 17. One of the more remarkable features of the Bull market in stocks is the ascendancy of complacency and the banishing of … Continue reading

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Will Cash Always Be Trash, Or Will It One Day Be King?

When the phantom wealth evaporates and risk assets go bidless, cash will once again be king, for the simple reason there will be so little of it. Occasionally it’s a good idea to step away from the daily grind to … Continue reading

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What Will End the 34-Year US Treasury Bond Bull Market?

U.S. Treasury bonds (10-year and 30-year) topped out above 15% in late 1981, and have traced a sawtooth pattern down ever since. The 10-year bond now yields 1.92% and the 30-year yields 2.51%. Daily Treasury Yield Curve Rates. Correspondent Mark … Continue reading

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Orwell and Kafka Do America: How the Government Steals Your Money–“Legally,” Of Course

Due process and rule of law have been replaced with “legalized” looting by government in America. Did you know that the government of Iran steals your cash if they find more than loose change in your car? They don’t arrest … Continue reading

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Who Left the Crash Window Open?

Can stocks keep hitting new highs even as sales and profits fall? Given that we live in a world where a modest 3% decline in the stock market triggers panicky demands for more quantitative easing (QE 4), few observers expect … Continue reading

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The Web: Destroyer or Savior of Culture, Pay and Employment?

The cost of creating and distributing content has fallen to near-zero, and that is not going away. Last month I explored the contentious question, Is the Web Destroying the Cultural Economy? In my recent video discussion with analyst Gordon T. … Continue reading

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Income, Education and Inequality in the “Recovery”: Prepare to be Surprised

Note to the higher education industry: issuing diplomas doesn’t magically create new jobs in the real world. By virtually any standard, wealth inequality has soared to historic levels in the six years of “recovery” since the Great Recession of 2008-09. … Continue reading

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Dollar Demand = Global Economy Has Skidded Over the Cliff

Borrowing in USD was risk-on; buying USD is risk-off. There is a lively debate about the global demand for U.S. dollars: Global finance faces $9 trillion stress test as dollar soars (Telegraph.co.uk) Is There a US$ Shortage? Will it Sink … Continue reading

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The Undebtors: Sworn Enemies of the Vampires of Debt

Those who refuse debt, regardless of the sacrifice, are starving the parasitic, exploitive machine; those with debt are feeding it. We hear a lot about debtors, and very little about undebtors. I define an undebtor as an individual or entity … Continue reading

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When It Becomes Serious, First They Lie–When That Fails, They Arrest You

When lying is no longer enough to gain compliance, then the organs of security are unleashed on dissent and resistance. “When it becomes serious, you have to lie.” Jean-Claude Juncker simply gave voice to what the world’s leaders practice on … Continue reading

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What Happens to the Stock Market if the U.S. Follows the World into Recession?

History is rather unkind to blind faith in central banks, just as the rising U.S. dollar and stagnant sales are being very unkind to corporate profits. The quasi-religious faith that central banks can push stock markets ever higher regardless of … Continue reading

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The Fed Blew It

The Fed had multiple opportunities to let the air out of unsustainable asset bubbles by notching interest rates higher and tapering its asset purchases (QE). The Federal Reserve blew it by not normalizing interest rates a long time ago. The … Continue reading

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Why Is Per Capita Energy Consumption at Recession Levels After Six Years of Recovery?

Per capita energy consumption remains at recession levels. One way to verify rosy official data–GDP growth, low unemployment, etc.–is to compare it with data that is less easily gamed: for example, energy consumption.Those seeking a realistic snapshot of the Chinese … Continue reading

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If Everything’s so Great, Why Are New Orders Cratering?

New Orders are in recessionary territory. The financial news is astonishingly rosy: record trade surpluses in China, positive surprises in Europe, the best run of new jobs added to the U.S. economy since the go-go 1990s, and the gift that … Continue reading

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Monetary Policy Can’t Fix an Economy’s Structural Problems

When we look back from 2025, it will be painfully obvious that central bank policies exacerbated the systemic crises that brought down the global financialization machine. What with all the praise being heaped on central banks for “saving” the world … Continue reading

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Solutions Start with Innovation and Transparency

Innovation is selectively restrained in systems controlled by vested interests. Just as everyone supports “solutions” until the solutions crush their share of the swag, everybody supports innovation and transparency (IT) until IT disrupts their share of the swag. Then they … Continue reading

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What’s America’s Fragility Score?

By this measure, the U.S. scores very poorly: 4 out of a possible 5 on the Fragility Index. There is a certain logic to the idea that stability is a good predictor for future stability: if a nation’s economy and … Continue reading

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The Three Acronyms That Best Describe This Era: TINA, TANSTAAFL and FUGAZI

TINA and the complacent belief in free lunches strip the resiliency from a system and leave it vulnerable to collapse. It’s tough to select three acronyms that best capture the current perfection of central planning, central banking and centralized propaganda. … Continue reading

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China and the Dragon Tail of Marx

The dragon tail of Marx’s end-game of overcapacity and finance capital is about to shred China’s fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences. Longtime readers know my one expertise is annoying the … Continue reading

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Forget The $1 Trillion Platinum Coin–Here’s the $10 Trillion Stone Coin

The point I’m making with the $10 trillion stone coin is that if money is a social contrivance, then it should be distributed to those creating goods and services. You’ve probably heard of the $1 trillion platinum coin proposal: the … Continue reading

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Grexit Drama Greenlighted for a 5th Season–New Characters, New Plot Twists

Season 5 of the popular drama GREXIT is now in production. The political-financial drama Grexit was greenlighted for a 5th season, as new characters and new narratives have reinvigorated a series that was clearly flagging in mid-2014. Given the sleepy … Continue reading

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Greece and the Endgame of the Neocolonial Model of Exploitation

With the bankruptcy of Greece now undeniable, we’ve finally reached the endgame of the Neocolonial-Financialization Model. We all know how old-fashioned colonialism worked: the imperial power takes physical control of previously independent lands and declares its ownership of the region … Continue reading

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The Catastrophic Costs of Extend-and-Pretend Are About to Crush Europe

Like a star which has expanded and now cannot maintain its grand state, Europe’s extend-and-pretend economy is now poised to experience a supernova implosion. The costs of ill-conceived policies are always paid by someone–usually those with the least political power. … Continue reading

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Failed Discipline, Failed Reforms and Grexit: Why the Euro Failed

There is no substitute for the discipline of a market that cannot be manipulated by political elites. It’s not that difficult to understand why the euro is doomed to fail. Given its structure, there is no other possible outcome but … Continue reading

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Greece and Euroland’s Crumbling McMansion of Debt

All the gimmicks lenders press on borrowers to maintain the artifice that the loan is being serviced are financial frauds. Sometimes the best way to summarize a complex situation is with an analogy. The Greek debt crisis, for example, is … Continue reading

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Will China’s Currency Peg Be the Next to Fall?

I suspect China’s leadership is wary of unpegging the RMB for one reason: the FX market is too large to manipulate for long. What is China’s currency the renminbi (RMB, a.k.a. yuan) really worth? Nobody knows, because price discovery has … Continue reading

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Empire of Lies

How many nations are blessed with political and financial leaders who routinely state the unvarnished truth in public? Only two come immediately to mind: Greece and Bhutan: Greece, where the new leadership repeatedly states the nation is bankrupt and extend-and-pretend … Continue reading

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Some Thoughts on Greece’s Exit from the Euro (Grexit)

Greece has the potential to be the small domino that ends up toppling much larger dominoes. Here is a preliminary semi-random list of thoughts on Greece’s exit from the euro. 1. I make no claim to expertise in this matter–but … Continue reading

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The Top 1/10th of 1% Loves a Guaranteed Minimum Income: With One Caveat

Why wouldn’t the top 1/10th of 1% love a central bank-funded guaranteed minimum income? It is widely assumed that the super-wealthy top 1/10th of 1% are against a guaranteed minimum income (GMI) (also known as guaranteed basic income or basic … Continue reading

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Greece: Are You Finally Ready to Do the Right Thing and Leave the Euro?

The era of living off borrowed money is over in Greece, and the Greek people now have a choice. Almost four years ago I wrote Greece, Please Do The Right Thing: Default Now (June 1, 2011). Default remains the only real … Continue reading

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The Lesson of Greece: Only Collapse Makes Real Change Possible

When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse. Of the many lessons we can learn from Greece’s difficult path to rejection of debt-serfdom, … Continue reading

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The USD Bull in the Global China Shop

The long-term consequences of primary FX trends may be entirely unintended. Indulge me two “I told you so’s”: 1. That the U.S. dollar (USD) would rise a lot, confounding those busily digging the dollar’s grave 2. That the stronger dollar … Continue reading

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Rates Don’t Matter–Liquidity Matters

The cure for systemic fragility is not low interest rates forever–it’s a market that transparently prices credit and risk for lenders and borrowers, qualified and marginal alike. One of the most unquestioned narratives out there is that the Federal Reserve … Continue reading

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Greece Just Blew Up the Empire’s Death Star of Debt

The Greek Elites and kleptocrats are terrified of the discipline that leaving the euro will impose, but the general public should welcome the transition to an economy and society that has been freed from the shackles of Imperial debt and … Continue reading

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Looks Like I’ll Be Able to Retire Comfortably at Age 91

My advice is to focus not on retiring comfortably, but on working comfortably. You’ve probably seen articles and adverts discussing how much money you’ll need to “retire comfortably.” The trick of course is the definition of comfortable. The general idea … Continue reading

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The Surprising Consequences of the Global Frenzy for Positive Yield

As the dollar soars, so does the real yield on bonds denominated in dollars. As central banks rush to depreciate their currencies and push yields into negative territory, what’s becoming scarce globally is real yield in an appreciating currency.Real yield … Continue reading

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Greece at the Crossroads: the Oligarchs Blew It

Once one oligarchy falls, it will threaten to topple a long line of oligarch dominoes. A great many narratives invoking Greece are being tossed around, but only one really encapsulates the unvarnished truth: the Oligarchs blew it. The oligarchs in … Continue reading

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The Federal Reserve Has Declared the Winner in the Generational Financial War

The policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our “leadership” and central bank to tell them the truth. Though it is exceedingly politically incorrect … Continue reading

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Oil Dinosaurs Face Extinction: State Oil Companies and the Meteor-Strike of Low Oil Prices

State-owned oil companies that don’t slash expenses to align with revenues and boost critical investment in the infrastructure needed to maintain production will suffer financial extinction. Domestic and international energy companies are responding to the 50% decline in the price … Continue reading

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Do We Want Solutions, Or Just What’s Easy?

We are so brainwashed by centralized models of state authority that few can even imagine a system where the solution is not one centralized monstrosity ruled by a political/financial Aristocracy but a competing profusion of opt-in, transparent solutions. Many readers … Continue reading

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Asset Ownership and Our System of Deepening Debt-Serfdom

Debt-serfs who make the difficult and risky transition to small-scale business owners find they have simply moved to another class of serfdom. The core dynamic of debt-serfdom is that debt-serfs must borrow money to buy essentials while the wealthy borrow … Continue reading

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How Do You Unmanipulate a Manipulated Economy?

Breaking the stranglehold of vested interests is the essential step to rebuilding an economy that isn’t totally dependent on manipulated money and statistics. The word manipulated has the sour taste of officially sanctioned distortion in service of an Elite’s interests. … Continue reading

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Who Benefits When Bubbles Burst?

Blowing speculative bubbles cannot possibly lead to organic growth because speculative bubbles fatally undermine the real economy. An astute reader recently posed an insightful question: we all know who benefits from asset bubbles in stocks, bonds and real estate–owners of … Continue reading

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The Fed and the Price of Oil

Given the potential for financial losses triggered by oil’s price collapse to cascade into the financial sector at large, the Fed may well be forced to intervene either directly or indirectly. An email dialog with correspondent Mark G. last month … Continue reading

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What Is a National Nervous Breakdown?

When the citizenry cease to believe the lies, the nation suffers a nervous breakdown. Last week I used the phrase National Nervous Breakdown without clarifying its meaning. (The War on Our Intuition That Something Is Fundamentally Amiss) By National Nervous … Continue reading

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The Deep State Strategy: Burn Everyone Else’s Oil First, Leave Ours in the Ground

The U.S. Deep State is in favor of Saudi Arabia’s strategy of forcing production cuts on its rivals and marginal producers for two profound reasons. It is widely presumed that if the U.S. government isn’t actively concerned about the financial … Continue reading

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The Achilles Heel of the Global Status Quo: Deflation

Rather than being the Monster Under the Bed in central bank nightmares, deflation is the natural result of a competitive economy experiencing productivity gains. That the global Status Quo is terrified of deflation is the background of every policy decision … Continue reading

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2015: The War on Our Intuition That Something Is Fundamentally Amiss

In 1967, the rock group Buffalo Springfield recorded a song titled For What It’s Worth which speaks not just to the late 1960s but to the present. Consider the opening lines: There’s something happening here What it is ain’t exactly … Continue reading

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2015: Asymmetric Oil Warfare

Let’s consider some examples of potential asymmetric-warfare tactics as they relate to the price of oil. The world has habituated to the never-ending undeclared war over ownership and access to hydrocarbons. Now we are entering a new phase of asymmetric … Continue reading

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2015: Now That the Fed Drove Everyone Into Ruinously Risky Bets….

It is impossible for everyone to sell at the top before the implosion; the assets are owned by someone all the way down. The central bank/state plan for 2015 is a continuation of the same plan that’s been in play … Continue reading

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2015: A World Ruled by Hubris, Willful Blindness and Desperation

Issuing lies and pursuing willful blindness is not leadership: it’s failure on a grand scale. Rather than issue predictions for 2015, this week I’ll cover themes that I believe will be consequential in the year ahead. The first theme is … Continue reading

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Should I Buy a House in 2015?

No one can answer that question for anyone else, but it seems prudent to ask the question in the context of an Echo Bubble in valuations that appears to be deflating. Readers often ask me if now is a good … Continue reading

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Don’t Just Follow the Money–Follow the Income

Lies are no substitute for truth and fantasy is no substitute for reality. Follow the money is a good start–but what matters going forward is income, and most especially, net income and disposable income. Debt is important, money/capital flow is … Continue reading

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We Just Enjoyed the Last Christmas in America

The end of rising wages = the end of mass affluence: we just enjoyed the Last Christmas in America (TLCIA). As unemployment topped 10%, the January 1975 cover of Ramparts magazine blared: The End of Affluence: The Last Christmas in … Continue reading

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I Call BS on Projections of a Decade of $20/Barrel Oil

The ability of oil exporters to trigger a short-term collapse in price does not automatically translate into an ability to control the financial conflagration such a crash ignites. My BS detector went off when two stories with similar headlines touting … Continue reading

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Will the Fed Intervene in the Oil Market?

In a larger sense, the Fed is already intervening in the oil sector via its zero interest rate policy (ZIRP) and its unlimited liquidity for financial speculation. The problem with financializing a critical sector of the economy is the financialization … Continue reading

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Maybe Oil Goes to $70 on its Way to $40

A retrace that fills open gaps and kisses the 50-day moving average surprises everyone who was confident oil was heading straight down to $40/barrel. When the conventional media ordains oil inevitably dropping to $40/barrel, I start looking for something else … Continue reading

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What Is the Gold-Oil Ratio Telling Us?

Based on historical gold-oil ratios, oil appears extraordinarily cheap right now. One way to establish if a commodity or asset is relatively expensive or inexpensive is to price it in something other than a fiat currency–for example, gold. Gold goes … Continue reading

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Here’s What’s Wrong with Corporate America–and the U.S. Economy

Will we ever tire of navigating the multiple layers of intermediaries between the customer and the provider, while corporate profits soar to unprecedented heights? If we had to summarize what’s wrong with Corporate America and the entire U.S. economy, we … Continue reading

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The Great Generic Drug Rip-Off

Big Pharma has followed the only avenue left to reap billion-dollar profits: jack up the price of generics. What happens when rapacious cartels run out of billion-dollar-profit products? They jack up the price of what was previously low-cost. And why … Continue reading

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The Financialized-Oil Dominoes Are Toppling

The drop in oil revenues has triggered a self-reinforcing feedback dynamic. Oil is not just something that is refined into fuel–it is capital, collateral, debt and risk. In other words, it is intrinsically financial. As I noted in The Oil-Drenched … Continue reading

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Central Banks’ 2% Plan to Impoverish You

The 2% target is low enough that the household frogs in the kettle of hot water never realize they’re being boiled alive because the increase is so gradual. A comment by correspondent David C. suggested the importance of demonstrating the … Continue reading

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Central Banks Have Failed Because They Can’t Push Wages Higher

You can print all the money you want, but it will never boost wages to keep up with prices. Central banks have been pursuing two goals for the past six years: ignite inflation and an expansion of debt that will … Continue reading

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Central Banks Create Deflation, Not Inflation

Financial and risk bubbles don’t pop in a vacuum–all the phantom collateral constructed with mal-invested free money for financiers will also implode. If there’s one absolute truism we hear again and again, it’s that central banks are desperately trying to create inflation. … Continue reading

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We’ve Habituated to a Rigged, Fraudulent Market

Fraud generates risk, and risk eventually breaks out in the “safest” parts of the financial plumbing, the ones nobody gives a second thought to because they’re “low risk.” Let’s go all the way back to the last time a central … Continue reading

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The Only Two Charts You Need to Understand the S&P 500

As long as corporations continue borrowing money to buy back their own stocks and the yen keeps dropping, the SPX will continue lofting higher. Why is the S&P 500 rising, even as valuations are getting stretched, profit growth is declining … Continue reading

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The Oil-Drenched Black Swan, Part 4: The Head-Fake Disruption Ahead

Add these factors up and we conclude there is no visible price limit on oil after supply falters. I’ve been discussing the concept of an Oil Head-Fake since 2008, most recently inThe Oil Head-Fake: The Illusion that Lower Oil Prices Are Positive (September … Continue reading

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The Oil-Drenched Black Swan, Part 3: Multiple Risks, Multiple Unknowns

It is these unforeseeable and uncontrollable consequences that are poised to wreak havoc on the global financial system. Here’s the thing about risk: it bursts out of whatever is deemed “safe.” It wasn’t accidental that the Global Financial Meltdown originated in … Continue reading

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The Oil-Drenched Black Swan, Part 2: The Financialization of Oil

All the analysts chortling over the “equivalent of a tax break” for consumers are about to be buried by an avalanche of defaults and crushing losses as the chickens of financializing oil come home to roost. The pundits crowing about … Continue reading

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The Oil-Drenched Black Swan, Part 1

Given the presumed 17% expansion of the global economy since 2009, the tiny increases in production could not possibly flood the world in oil unless demand has cratered. The term Black Swan shows up in all sorts of discussions, but what does … Continue reading

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Nothing Has Changed–and That’s the Problem

Playing monetary games has done nothing to eliminate moral hazard. If we step back and look at the past six years since the global financial meltdown of 2008, we see that in terms of financial and political power, nothing has … Continue reading

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The Astonishing Rise of Central Bank Fear

Anyone who looks at central bankers speak can sense the fear behind their absurd bravado, and the dishonesty of their public confidence. The extraordinary disconnect between soaring stock markets and stagnating real economies has been gleefully embraced by all who … Continue reading

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Have Central Banks Entered an Undeclared War?

The monetary tectonic plates are shifting, and predicting the next global financial earthquake is relatively easy. I recently suggested that the devaluation of the yen was Japan’s Monetary Pearl Harbor: a direct attack on the currencies of its major trading partners: … Continue reading

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The Falcon Can No Longer Hear the Falconer

We in the center that cannot hold can only watch as things fall apart. In so many ways, the falcon can no longer hear the falconer. The phrase is drawn from William Butler Yeats’ poem, The Second Coming: Turning and turning in … Continue reading

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Why Living in a Post-Bubble World Is No Fun

What do we do when the bubble economy cannot be reflated? It is generally conceded that we are living in an era of Peak Everything: peak central bank omnipotence, peak powerless of the non-elites, peak wealth inequality, peak media-induced delusion, peak … Continue reading

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The Cruel Injustice of the Fed’s Bubbles in Housing

As the generational war heats up, we should all remember the source of all the bubbles and all the policies that could only result in generational poverty: the Federal Reserve. Federal Reserve chair Janet Yellen recently treated the nation to … Continue reading

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The Rubber Band Is Stretched–Will It Break?

A rubber band can remain stretched for some time, but it takes some force to keep it stretched. The consensus is anticipating a smooth sleigh ride for Santa’s traditional stock market rally from November to year-end. But the rubber band of … Continue reading

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It’s Not Just Japan That’s Failed; The “Asian Miracle” Model Has Also Failed

The inevitable result of the centrally planned Asian Miracle Model is credit bubbles and the crippling misallocation of capital in Building Bridges to Nowhere. Japan’s extraordinary rise from the ashes of World War II created an “Asian Miracle” template that … Continue reading

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Which Cities/States Will Be the First to Default When the Economy Rolls Over?

What happens to local governments when the economy rolls over? Though we’re constantly reassured the “recovery” that’s stumbled for five years has years of strong growth ahead, history suggests the “recovery” is due to roll over. Few recoveries last longer than … Continue reading

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What Have We Learned From 24 Years of War?

The responsibility for starting and ending wars, the way wars are fought and the losses we suffer all rest with our elected civilian leadership. What have we learned from 24 years of war? Since the First Gulf War in early 1991, … Continue reading

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Where Will Risk Erupt This Time?

So where has all the risk pooled up in the system? In foreign exchange (FX) markets, that’s where. One of the precepts of this blog is that risk cannot be disappeared, it can only be transferred or temporarily hidden from view. This … Continue reading

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About That “S&P 500 Will Be 2,150 by Christmas” Call….

So this megaphone playing out again is just plain crazy. Back on October 13, when the stock market was in free-fall, I prepared this chart showing a potential megaphone pattern. With major indicators (such as the MACD and stochastics) looking decidedly … Continue reading

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If You Really Think It Matters Which Party Controls the Senate, Answer These Questions

Please don’t claim anything changes if one party or the other is in the majority. Anyone clinging to that fantasy is delusional. If you really think it matters which political party controls the U.S. Senate, please answer these questions. Don’t worry, … Continue reading

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Anatomy of a Failing State: Japan’s Budgetary Nightmare

Once the global economy rolls over into contraction, the tide will recede and Japan’s fiscal and monetary bankruptcy will become painfully apparent. What do you get after 25 years of stagnation and Keynesian Cargo Cult monetary stimulus? A failing state, … Continue reading

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Japan’s Monetary Pearl Harbor

Trying to “fix” a sclerotic, inefficient state-cartel economy by boosting inflation–the ultimate goal of Japan’s Monetary Pearl Harbor– is a self-liquidating path to destruction. The Bank of Japan’s surprise expansion of financial stimulus strikes me as the monetary equivalent of … Continue reading

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Why We’re Poorer: Inflation and Deflation Are Now Globalized

We’re being hit with a double-whammy: Wages are under deflationary pressure, and almost everything else is exposed to inflationary pressure. As correspondent Mark G. observed in Globalization = Permanent Instability, it’s impossible to understand inflation and deflation now except in a … Continue reading

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Globalization = Permanent Instability

Globalization continually creates imbalances that fuel a perpetual instability that gradually impoverishes every sector other than global capital. Globalization has two guaranteed consequences: permanent instability and endless boom-and-bust cycles. As noted in Forget “Free Trade”–Focus on Capital Flows, the key engine of … Continue reading

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Forget “Free Trade”–Focus on Capital Flows

In a world dominated by mobile capital, mobile capital is the comparative advantage. Defenders and critics of “free trade” and globalization tend to present the issue as either/or: it’s inherently good or bad. In the real world, it’s not that simple. The … Continue reading

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We Don’t Have One Problem–We Have Three Interlocking Sets of Problems

The additional sets of problems added as “solutions” only guarantee that the third and final crash of asset bubbles just ahead will be far more devastating than the crashes of 2000 and 2009. The conventional view tacitly assumes the global … Continue reading

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Does Anyone Else Think the Stock Market Is Living on Reds, Vitamin C and Cocaine?

This state of delusion would be amusing if it wasn’t so tragic. The stock market’s wild swings of sentiment have got me thinking it’s living on reds, vitamin C and cocaine. This is a famous line from the Grateful Dead song Truckin’. … Continue reading

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What Happens When Cash Is No Longer Trash?

Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains. When those closest to the money spigots of the Federal Reserve can borrow billions for … Continue reading

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In Uncharted Waters

What I see as extremes that must necessarily end badly, others see as mere extensions of recently successful policies and trends. A long-time reader recently chastised me for using too many maybe’s in my forecasts. The criticism is valid, as “on the other … Continue reading

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The Artists’ Road to Serfdom: The Commoditization of Creative Content

This is the net result of commoditization: there’s no premium for commoditized capital, labor, goods, services or content. As I noted in Our New Robot Overlords & The Third Type of Capital, profits flow to whatever inputs are scarce. Unfortunately for musicians, … Continue reading

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Our New Robot Overlords & The Third Type of Capital

Fortune will instead favor a third group: those who can innovate and create new products, services, and business models. A recent issue of Foreign Affairs sported a catchy cover teaser: Our New Robot Overlords. This brings to mind various sci-fi scenarios, but the … Continue reading

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Why Nations (and organizations) Fail: Self-Serving Elites

For those who doubt that America is ruled by a narrow elite: three charts. The book Why Nations Fail: The Origins of Power, Prosperity, and Poverty neatly summarizes why nations fail in a few lines: (A nation) is poor precisely because it … Continue reading

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Why the State Has Failed to Reform Our Broken Financial System

Expecting the state to truly reform the nation’s engines of financialization is like asking the cocaine addict married to the wealthy dealer to divorce the dealer. Most observers think they know why the government (i.e. the state) has failed to … Continue reading

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What Options Are Left for Central Banks?

Central banks have reached a fork in the road. Never before have quasi-omnipotent financial gods had so few powers. A lot is being written about central bank policies now as the Federal Reserve ends its primary quantitative easing (QE) program and … Continue reading

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End of the Empire

If the top 1/100th of 1% crowding airports with their private jets isn’t afraid of impoverished, disenchanted debt-serfs with pitchforks, they should be. By End of the Empire I refer not to the collapse of American Imperial power but to the excesses … Continue reading

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The Critical Difference Between Rentier Wealth and Wealth Creation

If you want to understand why our economy is stagnating and wealth inequality is rising, look at the rise of rentier skims and the resulting decline in wealth creation. To understand why the real economy is stagnating, we have to … Continue reading

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What the Global Status Quo Optimizes: Protecting Elites and the Clerisy Class That Serves Them

The incestuous embrace of privilege and power by entrenched, socially isolated Elites characterizes failed states and brittle, doomed regimes throughout history. Every system is optimized to serve a specific purpose. As noted in my recent essay What Metric Are We Optimizing For?, … Continue reading

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Global Bellwether: Japan’s Social Depression

Beneath the surface wealth of bullet trains, cute robots and exuberant fashions, this is the Japan few outsiders understand: the one gripped by a deepening social depression. This week I’ve highlighted the structural flaws of using GDP as a measure … Continue reading

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What Metric Are We Optimizing For?

If we choose metrics unwisely, we create self-destructive choices, policies and goals. Yesterday, I explained why GDP = Waste. This raises a larger issue: we shape our choices and goals to optimize what we choose to measure. If cholesterol is established as … Continue reading

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GDP = Waste

Any system that has no way to measure, much less prioritize, opportunity costs and maximization of utility is not just flawed–it is terribly misguided and structurally destructive. We’re told the gross domestic product (GDP) measures growth, but what it really measures is … Continue reading

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The Counter-Intuitive Rise of the U.S. Dollar

As things get dicier globally, assets in periphery nations typically get dumped as mobile capital flees risk and migrates to lower risk core nations and currencies. I received many thoughtful comments on Why the Dollar May Remain Strong For Longer Than We Think. … Continue reading

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Are We Ready for Daily-Life Drones?

This exploration illustrates how ill-prepared we are, legally and socially, for the multitude of issues and conflicts that will inevitably arise as private drones become cheap and ubiquitous. A recent experience provided grist for a “what-if” exploration of how drones … Continue reading

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Which Global Hegemon Is on Shifting Sands?

Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century. Which nation with aspirations of global dominance (i.e. hegemony) has these attributes? 1. The … Continue reading

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Janus Yellen and the Great Transition from Risk-On to Risk-Off

The end of risk-on cannot be prettily managed. In ancient Roman religion and myth, Janus is the god of transitions–beginnings and endings of conflict, war and peace, journeys, trades and eras. Janus has two faces, as befits a god that looks both to the … Continue reading

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Is Risk-On About to Switch to Risk-Off?

Cranking markets full of financial cocaine so they never correct simply sets up the crash-and-burn destruction of the addict. Human memory being what it is, almost three years of risk-on euphoria has created the illusion that risk-on is The New Normal that will continue on for … Continue reading

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What If the Easy Money Is Now on the Bear Side?

Complacent melt-ups aren’t just boring–they’re not very profitable. File this under Devil’s Advocate: what if the easy money in the stock market is no longer the “guaranteed” Bull melt-up but the Bearish bet on a sudden air pocket?Just as a … Continue reading

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Why Has Classical Capitalism Devolved to Crony-Capitalism?

The money-shot: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” Here is the quote that perfectly captures our era: “People of privilege will always risk their complete destruction rather than … Continue reading

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How the China Boom Unravels: One Person at a Time

The dashing of youthful expectations of open-ended wealth and security for everyone with a college degree is highly combustible when combined with a popping real estate bubble and systemic corruption. Those enamored of China’s ability to build empty apartments, empty … Continue reading

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Could the Alibaba Model Undo the Wal-Mart Model?

These are questions that arise as a consequence of the digitization of the global/local supply chain in the peer-to-peer model. Longtime correspondent Bill M. reckoned I missed the longer-term story in my piece on the Alibaba IPO: namely, that the … Continue reading

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The China Boom Story: Alibaba and the 40 Thieves

I suspect the Alibaba IPO may well prove to be the high water mark of the China Boom Story in more ways than one. We all know the story of Ali Baba and the 40 Thieves. Poor woodcutter Ali Baba discovers … Continue reading

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Stocks Have Reached a Permanently High Plateau

A permanently high plateau of stock prices is a marvelous innovation. Somebody said this before, of course, but one glance at a chart of the S&P 500 tells us that stock prices have reached what looks like a permanently high … Continue reading

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Here’s Why the Market Could Crash–Not in Two Years, But Now

Markets crash not from “bad news” but from the exhaustion of temporary stability. Yesterday I made the case for a Financial Singularity that will never allow stocks to crash. We can summarize this view as: the market and the economy are not systems, … Continue reading

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Have We Reached a Financial Singularity?

Encouraging and supporting asset bubbles is essentially the only force remaining to keep the system intact as we know it. The Singularity is based on the idea that machine intelligence will soon exceed human intelligence, and human history is unknowable beyond … Continue reading

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Central Bank Monetary Policy Enables Us to Put Off Real Reforms

This cycle of entrenched interests protecting their skims and scams via central bank monetary policy is self-liquidating. I finally figured out that the core purpose of central banks’ monetary policy is to enable vested interests to avoid desperately needed reforms … Continue reading

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The Underbelly of Corporate America: Insider Selling, Stock Buy-Backs, Dodgy Profits

The hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility. Anonymous comments on message boards must be taken with a grain of salt, but this comment succinctly captures the underbelly … Continue reading

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Is There Capitalism After Cronyism?

The more the Status Quo pursues the same old Keynesian Cargo Cult script of central planning and free money for financiers, the more self-liquidating the system becomes. Judging by the mainstream media, the most pressing problems facing capitalism are: 1) income … Continue reading

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Can a National Quasi-Religion (Pro Sports) Go Broke?

Attending costly games is on the margins of the household budget. When the credit card gets maxed out, attending is no longer an option. Please understand I’m not suggesting professional sports isn’t the greatest thing since sliced bread: I’m simply asking … Continue reading

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The Housing Echo-Bubble Is Popping

There is nothing remotely “normal” about the echo-bubble’s rise, and we can anticipate that its deflation will be equally abnormal. Conventional wisdom on the resurgence of the housing markets takes one of two paths: 1. Housing is not in a … Continue reading

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Why Artifice Rules the World: We Have No Choice

There’s only one small problem with relying on artifice: we haven’t actually fixed what’s broken in the real world. As I noted yesterday, we now game dysfunctional systems rather than actually repair them. Rather than fix the dysfunctional system of higher education, … Continue reading

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It’s Not Just Politics That’s Broken–The Status Quo’s Model of “How the World Works” Is Broken

The Status Quo is dysfunctional because its model of how the world works is broken. Much has been written about the dysfunction in Washington D.C. Pundits have been wringing their hands for years over the rise of bitter partisan politics and … Continue reading

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The New Misery Index

The Status Quo is desperate to mask the declining fortunes of those who earn income from work, and the Misery Index 2.0 strips away the phony facade of bogus unemployment and inflation numbers. The classic Misery Index is the sum of unemployment … Continue reading

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Is the $5 Bill the New $1 Bill?

Events, food purchased away from home and live entertainment are increasingly unaffordable to the bottom 90%. It’s starting to feel like a $5 bill is the new $1 bill: everything that could be purchased with one or two dollars not that long … Continue reading

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Why the Fed Must Taper

The Fed is being forced to end its bond-buying, cutting off the “free money for financiers” that has sustained a frothy stock market. While the Federal Reserve presents itself as free to do whatever it pleases whenever it pleases, the … Continue reading

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The Crazy-Making Fed

The Federal Reserve’s communications and policies are a form of crazy-making double bind. Systems theorist/anthropologist Gregory Bateson developed (with others) the concept of double bind, a psychological and social conflict in which contradictory demands generate a form of schizophrenia: Unlike the usual no-win situation, … Continue reading

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The Housing Bubble’s Silver Lining

As rents climb, developers large and small take out their calculators and dreams of wealth blossom: but no, this is not bubble. The disastrous blowback from inflating housing bubbles is painfully obvious: as housing becomes unaffordable, households impoverish themselves to “get … Continue reading

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Are Capital Inflows Propping Up U.S. Markets?

It seems likely that significant capital inflows are helping prop up asset valuations in the U.S. Nobody really believes the official narrative that the “recovery” is powering the remarkable strength of U.S. stocks, bonds and real estate. The real Main Street … Continue reading

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Don’t Think It Won’t Happen Just Because It Hasn’t Happened Yet: Loss of Faith in the Fed

Much of the supposedly godlike power of central banks is participants’ faith in their powers to control not just finance but the real world that can be leveraged by finance. The Grand Narrative of the global economy since the 2008 … Continue reading

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Is Collapse the Only Real “Fix” to Our Healthcare and Legal Systems?

If structural reform is impossible as a result of political capture by vested interests, collapse is the only “fix” left. A few days ago I discussed the overlap of two bankrupt systems: Healthcare (a.k.a. Sickcare) and our legal system–malpractice. Today we … Continue reading

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Are There No Hard Limits on Financial Finagling?

The hard limits are hidden, and we will discover them only when it’s too late to modify the self-destructive behavior and policies we’ve pursued as “safe” and “forever.” Why do hard limits matter? Because we only change when we’ve run … Continue reading

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We’re Relying on Phantom Wealth to Fund Our Retirement

Phantom wealth cannot possibly fund unprecedented retirement and healthcare promises. The narrative that Social Security, Medicare and pension funds invested in stocks and bonds can fund the retirement of 65 million people is a misleading fantasy. The sad reality is we … Continue reading

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Here’s Why Wages Might Rise Despite Millions of Unemployed Being Available for Work

Tragically, the inability of our institutions to impart the skills required by the emerging economy hobble not just the unemployed but employers. A reader recently offered a compelling reason why total compensation costs (wages plus benefits/payroll taxes) could rise even in a … Continue reading

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A Brief Note on the Difference Between Trading and Investing

Investing in oneself and enterprises one actively controls may be the only legitimate deployment of capital that qualifies as an investment in the traditional sense. Since I’ve been discussing the stock market in general terms (Bull and Bear, etc.), it … Continue reading

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How Economies Collapse: Systemic Friction and Debt Are Self-Liquidating

Paying for unproductive friction with borrowed money has generated the illusion that free to me is actually free–it isn’t. We all understand how friction slows our progress: flatten the tires on a bicycle and it becomes much harder to maintain speed. … Continue reading

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The Slide to Collapse Is Greased with Self-Interest

Self-interest is intrinsically self-liquidating on a systemic level. One enduring if rarely stated principle of Neoliberal Democracy is that the single-minded pursuit of self-interest magically produces an equilibrium which serves everyone’s interests well enough to avoid the destabilization of rebellion … Continue reading

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It Doesn’t Take Much Land to Grow A Lot of Food

Perhaps time learning in a garden should be considered as important as time spent sitting in a classroom. The important national discussions about food security and hunger in America rarely seem to mention a critical fact: it doesn’t take much … Continue reading

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Why Wait for the Shoe to Hit the Floor? The Case for Selling Now

Waiting to sell is akin to ignoring the smoke and flames in the crowded theater and hesitating until somebody yells “fire!” to rush for the now-jammed exit. The stock market is supposed to be a discounting mechanism that anticipates and prices in … Continue reading

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Substituting Debt for Income Is Not Success–It’s Failure on an Epic Scale

The Fed’s substitution of debt for income has only doomed the nation to a deeper, more painful realignment of real income and expenses. The economic “recovery” has been based on a simple premise: debt can be substituted for income with … Continue reading

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The Fed’s Failure Complicates Its Endgame

To demonstrate it hasn’t failed, the Fed must taper/withdraw its monetary heroin. That the Federal Reserve’s policies have failed is now so painfully evident that even the political class is awakening to this truth. Rather than re-ignite broad-based, self-sustaining economic growth, … Continue reading

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Our Marginal Economy

Before you buy another ticket for the Bull market bandwagon of “don’t fight the Fed,” perhaps you should take a look at the quality of the debt the Fed has enabled and the diminishing returns on all that debt. The … Continue reading

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The Case for a Bull or Bear Market in Two Charts

Which appears more likely–a straight-line extension of the past two years’ rise in stocks, or another “impossible” decline to complete the megaphone pattern? There are dozens of charts and data points supporting the case for a continuation of the Bull … Continue reading

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Are We Addicted to Failure?

Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion. Addiction is many things, but beneath its complexities it is a self-destructive expression of the desire to avoid or … Continue reading

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The Rot Within, Part III: Our Political Order Is Defined by Favoritism and Extortion

What’s the difference between the U.S. Congress and corrupt petty officials taking bribes at a Third-World border crossing? Only one of scale. Corruption ceases to be corruption when it becomes the Status Quo; what was once recognized as corruption is … Continue reading

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The Rot Within, Part II: Inflation Is Not “Growth”

Just as the Federal Reserve cannot directly force you to stick the needle of monetary heroin (debt) into your arm, it also can’t force employers to pay employees more. The official policy of the Central Bank (Federal Reserve)/government is: inflation … Continue reading

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The Rot Within, Part I: Our Ponzi Economy

Depending on blowing the next bubble to temporarily prop up the economy is the height of foolhardy shortsightedness. All the conventional policy fixes proposed by Demopublican politicos, technocrats and the vast army of academic/think-tank apparatchiks are the equivalent of slapping … Continue reading

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The Insiders’ Case for a Stock Market Mini-Crash

The trade only works if everyone is lulled into staying on the long side until it’s too late. Let’s try a thought experiment: suppose we’re players in the stock market, Wall Street insiders with real leverage and connections to the … Continue reading

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Degrowth Solutions: Half-Farmer, Half-X

The Status Quo is terrified of a world devoid of debt-serf “middle class” consumers. When people say they want solutions, they’re actually seeking only a specific kind of solution, one that leaves everything they have now intact but guarantees them … Continue reading

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The Coming Crash Is Simply the Normalization of a Mispriced Market

The correlation between the Fed’s monetary heroin production and the stock market will break down as the market normalizes. In the spirit of calling things what they are, longtime correspondent Harun I. explains that market crashes are simply distorted/mispriced economies attempting … Continue reading

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Finding Shelter from the Storm Part 2

Investing your time wisely and productively is a skill that doesn’t require any expenditure of cash to learn. A Reader Asks: How to Find Shelter from the Coming Storms? prompted some excellent follow-on suggestions for what we can do to survive the … Continue reading

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Why America’s Healthcare (Sickcare) System Is Broken and Unfixable

Here’s a two-word summary of why the American healthcare system is fundamentally broken and cannot be fixed with policy tweaks: perverse incentives. If you type sickcare in the custom search box on this site, you get 10+ pages of articles. I have … Continue reading

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Why We’re Doomed: Interest and Debt

Even if the economy were growing at a faster pace, it wouldn’t come close to offsetting the interest payments on our ever-expanding debt. If you want to know why the Status Quo is unsustainable, just look at interest and debt. These … Continue reading

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You Want a Solution? Try Not to Get Hurt When It Collapses, Then Start Over

Once the deadwood piles high enough, the random lightning strike ignites a fire so fast-moving and so hot that it cannot be suppressed, and the entire financial system burns to the ground. In discussing our broken healthcare system with a … Continue reading

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A Reader Asks: How to Find Shelter from the Coming Storms?

Some basic suggestions for those who are seeking shelter from the coming storms of global financial crisis and recession. Reader Andy recently wrote: “I look forward to your blog each day but am still waiting for your ideas for surviving … Continue reading

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Neofeudalism’s Tax Donkeys (Yes, You) and the Battle for Control of Resources

Those who own the resources and influence the political control of those resources are the New Nobility in a pernicious Neofeudalism enforced by the very government that claims to serve the debt-serfs and tax donkeys. Let’s tease apart several strands … Continue reading

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Why Housing Will Crash Again–But For Different Reasons Than Last Time

Institutionalizing the speculative excesses that inflated the previous housing bubble has fed magical thinking and fostered illusions of phantom wealth and security. The global housing market has been dominated by magical thinking for the past 15 years. The magical thinking can … Continue reading

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How Recession-Proof Is Your Job Sector?

History suggests that previously sound assumptions about financial security and recession-proof sectors may not apply in the next recession. Nobody wants to lose their job in a recession, but that’s what happens when credit tightens, profits fall and tax revenues … Continue reading

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What’s Lurking Beneath the Glossy Veneer of the Jobs Report?

The jobs report has little value if we don’t peer beneath the glossy veneer. On the surface, last week’s jobs report was glossy good news: the U.S. economy added 288,000 non-farm jobs. Beneath the glossy veneer, however, the news wasn’t quite … Continue reading

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(In)Dependence Day 2014: Freedom from Pain, or Freedom from Dysfunction?

Having surrendered our independence for the quick, easy fix, we will inevitably surrender our health, liberty and freedom. As we celebrate the declaration of political independence from Empire today, a question arises: how independent are we today in our day-to-day lives? The … Continue reading

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Is This a Self-Sustaining Recovery or As Good As It Gets?

The reality is that nothing has been done to address the structural rot at the heart of the U.S. economy. Opinions about the U.S. economy boil down to two views: 1) the recovery is now self-sustaining, meaning that the Federal Reserve … Continue reading

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The Inevitable Stock Market Reversal: The New Normal Is Just Another Bubble Awaiting a Pop

Is the New Normal of ever-higher stock valuations sustainable, or will low volatility lead to higher volatility, and intervention to instability? Though we’re constantly reassured by financial pundits and the Federal Reserve that the stock market is not a bubble … Continue reading

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The Next Global Meltdown Is Baked In: Connecting the Dots Between Oil, Debt, Interest Rates and Risk

The bottom line is the Fed can only keep the machine duct-taped together by suppressing the market’s pricing of risk. One of the Grand Narratives of our era is the substitution of debt for income: as earned income and disposable income … Continue reading

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The Systemic Sources of Geopolitical Turmoil: Instability, Fragmentation, Resource Wars

The proximate trigger of instability is less important than we think. It’s tempting to think that the resolution of various geopolitical crises would restore global stability: tempting, but wrong. Global turmoil may appear to have specific causes–Ukraine, Iraq, Syria, etc.–but the … Continue reading

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What’s Behind the Rise in U.S. Industrial Production?

The domestic energy boom is behind the expansion of Industrial Production. In contrast to other measures of economic activity that are stagnant or declining, U.S. industrial production has been rising: Industrial Production and Capacity Utilization (Federal Reserve data) Is this evidence that … Continue reading

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The Coming Global Generational Adjustment

All sorts of promises, explicit and implicit, were issued to win votes. All the promises are now empty, and we might as deal with this reality head-on. Here’s what often happens when people start discussing Baby Boomers, Gen-X and Gen-Y … Continue reading

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The Happy Story of Boomers Retiring on Their Generational Wealth Is Wrong

This happy story is wrong on multiple counts. The conventional view of the Baby Boomers’ retirement is a happy story: since we’re living longer and remaining productive longer, Boomers will not be as much of a burden on Gen-X and Gen-Y … Continue reading

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The Fed’s Hobson’s Choice: End QE and Zero-Interest Rates or Destabilize the Dollar and the Treasury Market

Though the Fed is doing its best to mask its abject failure and lack of choices with public relations, the reality is it has no choice but to taper and eventually end its endless spew of credit and its unprecedented … Continue reading

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The Generational Short Part 2: Who Will Boomers Sell Their Stocks To?

Those who see the current era as the New Normal also have one logical action: sell now at the top and wait for the smoke to clear in 2016. In The Generational Short: Banks, Wall Street, Housing and Luxury Retail Are … Continue reading

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The Next 20 Years Will Not Be Like the Last 20 Years–Here’s Why

The Status Quo is not sustainable. Here are some resources on the many reasons why. Coming to the understanding that the Status Quo is not sustainable is often a crooked path of overcoming programming, propaganda, denial and fear. My colleagues at peakprosperity.com (where … Continue reading

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Here’s What I Recommend in the Stock Market: Zip, Zero, Nada

Timing matters, as fundamentals have no impact in a euphoric blow-off top or in a panic-driven, bidless crash. I recently received an email from a reader suggesting I back up my opinions by publishing my own trading positions. The reader suggested … Continue reading

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After 6 Years of Unprecedented Central Planning, the Economy Is More Fragile Than Ever

We will all discover that the economy is much more fragile than advertised by the Central Planners and their media toadies. This week I have made the case that the past 13.5 years have been the most destructive to the … Continue reading

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The Most Destructive Presidencies in American History, Part 2: The Fatal Incoherence of the Bush/Obama Foreign Policy

The tragic reality is the Bush II/Obama administrations have made the world a far more dangerous place. A great many rationales have been floated for the most destructive foreign policy in American history, i.e. the fatally incoherent policies of the Bush … Continue reading

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The Most Destructive Presidencies in U.S. History: George W. Bush and Barack H. Obama

Powers once granted are almost impossible to take back. After 13.5 years, there is more than enough evidence for reasonable people to conclude that the presidencies of George W. Bush and Barack H. Obama are easily the most destructive in … Continue reading

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The Generational Short: Banks, Wall Street, Housing and Luxury Retail Are Doomed

If Gen-Y cannot afford to buy Boomers’ houses at bubble-level prices, then what will keep housing prices at these elevated levels? Mish recently posted excerpts of a Brookings Institution study on changing generational values: How Millennials Could Upend Wall Street and … Continue reading

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The Neofeudal-Neoliberal Arrangement: Since We Own What You Need, We Own You

Neofeudalism depends on the cultural supremacy of Neoliberalism, the belief that the social order is defined and created by markets. I’ve been discussing the essence of Neofeudalism this week: those with access to the low-interest unlimited credit spigot of the … Continue reading

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Sorry, You’re Not Allowed: Capital Segregation and Rising Inequality

If capital is not treated equally, political equality is an illusion. In a fully financialized economy, capital grows faster than earned income. We can quibble about the various rates of growth and measures of wealth, but none of this cross-talk/noise changes … Continue reading

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One Overlooked Reason Why the Middle Class Is in Decline

The middle class happily accepts high risk in return for temporary gains in the asset bubble of the day, guaranteeing a steady progression of losses. It’s well known that a major reason why the middle class is in decline is … Continue reading

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The Stock Market Is Like a Fish Tank

Now that the majority is tightly packed into a market devoid of yield/alpha, this concentration sets up the inevitable collapse of valuations perfectly. I recently had the pleasure of visiting a state fish hatchery. Those of you who fish know … Continue reading

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What’s the Source of Soaring Corporate Profits? Stagnant Wages

What if all the low-hanging fruit of outsourcing jobs and financialization have already been plucked by Corporate America? The connection between soaring corporate profits and stagnant wages is both common sense and inflammatory: common sense because less for you, more for me and … Continue reading

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About Those Forecasts of Eternally Rising Corporate Profits…

If corporate profits decline, what will hold up the market’s lofty valuations other than the tapering flood of liquidity from the Federal Reserve? I have often noted that profits of global U.S. corporations have been boosted by the weak U.S. … Continue reading

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The Purchase of Our Republic

The massive consolidation of wealth, combined with the removal of any limits on money in campaigns, has allowed for the purchase of our government. Today I am publishing a comprehensive and important guest essay, The Purchase of Our Republic, by longtime … Continue reading

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Nobody Wins Elections Promising to Trim Waste/Fraud and Simplify Regulations

The problem in representative democracy is that every instance of waste, graft, fraud and monopolistic racket is somebody’s fat paycheck or government contract. Promising good governance guarantees a losing campaign for public office. The central irony of representative democracy is similar … Continue reading

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“Buying Time” Doesn’t Fix Financial Crises, It Makes the Next One Worse

The strategy of “buying time so the financial system can heal itself” by protecting a systemically destabilizing financial sector has failed because it could only fail. The core strategy of central states and banks to fix the Global Financial Meltdown … Continue reading

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The Destroyer of Fake “Recoveries”: Unintended Consequences

Destroy the market’s ability to price assets, risk and credit, and you take away the essential information participants need to make rational, informed decisions. A correspondent recently summarized why unintended consequences eventually destroy all politically expedient strategies that temporarily prop … Continue reading

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This Is What’s Wrong with the Legal System in America

What else could we have done with the billions of dollars squandered on regulatory friction and the pursuit of questionable claims of damage? Behind the public-relations facade of “advocacy” and “justice,” much of the American legal system is unproductive regulatory … Continue reading

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Still Think the Fed Isn’t Fueling Inflation? Check Out This Chart

Just as we can’t eat iPods, we can’t subsist on official reassurances that the Fed and inflation are both benign. There is a great divergence between the conventional financial media and the public who goes to the supermarket: the financial media … Continue reading

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Our “Make It Look Good” Economy Has Failed

When rigged numbers are the basis of our success, we have failed. The essence of the U.S. economy is make it look good: never mind quality or long-term consequences, just make it look good today, this week, this month, this quarter: make … Continue reading

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Why Are Food Prices so High? Because We’re Eating Oil

Regardless of what we eat, we’re actually eating oil. Anyone who buys their own groceries (as opposed to having a full-time cook handle such mundane chores) knows that the cost of basic foods keeps rising, despite the official claims that inflation is … Continue reading

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The Housing “Recovery” in Four Charts

The unintended consequences of the Fed’s unprecedented interventions will rip the heart and lungs out of the housing market The housing “recovery” since 2010 can be summarized in four phrases: diminishing returns, unprecedented central state/bank intervention, unintended consequences, end-game. Three charts … Continue reading

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Memorial Day 2014: Just Following Orders

Large-scale evil requires surrender of autonomy, coercion by a central authority and a willingness to follow orders. There is evil, and then there’s organized evil. This is a memorial outside the village where my brother lives in the south of France. … Continue reading

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The Essential Role of Volatility, Stress and Dissent

The individual or system that never experiences dissent, volatility or stress is systemically unhealthy and increasingly prone to sudden “gosh, I didn’t see this coming” collapse. To say that volatility, stress, dissent are not just healthy, but essential for maintaining … Continue reading

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A Productive Economy Is a Trading Circle

The destructive consequences of a parasitic Tyranny of the Wealthy and Majority have yet to play out, but they will, and sooner than most believe possible. One of the core concepts of my work is that our state-cartel dominated economy … Continue reading

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A Tale of Two Charts (and Two Economies)

These two charts depict the same index (DJIA) over the same time frame, but they reflect two stories and two economies. Long-time correspondent Harun I. recently submitted two charts of the stock market that suggest two different stories–and these two … Continue reading

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I’m a Fiat Slave, And So Are You

Fiat money is at base a form of indirect wealth transfer from those forced to hold the money to those issuing the money. I describe the pernicious servitude created by debt as debt serfdom, as serfdom implies a neofeudal arrangement … Continue reading

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The Decline of Small Business = Decline of Basic Skills

An economy where most people work for the state or a global corporation is an economy that has lost its knowledge of the key entrepreneurial building blocks. The decline of small business has numerous long-term consequences. One is the decline of … Continue reading

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Is Small Business a Threat to the Status Quo?

Truth is the first victim of the Company Store’s dominance. My view of the Status Quo as a neocolonial, neofeudal arrangement is succinctly captured by correspondent D.C.’s description of state-corporate capitalism: the Company Store. In the plantation model (i.e. any economic … Continue reading

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Investing in Ourselves

The power to shape what we repeatedly do is key to becoming a better investor. I am generally skeptical of the value of behavioral economics, as the primary insight (that humans are irrational and rationalize their mistakes/failures) doesn’t differentiate between economic … Continue reading

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Bernanke the Sophist: The Deception Behind QE

Bernanke’s legacy: a deceptive case for a failed policy. Sophistry: the use of fallacious arguments, especially with the intention of deceiving. The Federal Reserve’s core policy of quantitative easing (QE) is based on a deceptive but appealing argument voiced by former … Continue reading

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How Malinvestment Poisons the Entire Economy

Our Fed-fueled lottery-ticket economy will unravel with a vengeance in the years ahead. Malinvestment–the systemic consequence of the Federal Reserve’s policies of near-zero interest rates and abundant credit–doesn’t just inflate destruction asset bubbles: it poisons productive assets and the entire … Continue reading

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Can the Top 10% Prop Up the Whole Economy?

Is the top 10% up to the task of borrowing and blowing enough money to prop up a debt and bubble-dependent economy? Since the entire economy depends on consumption for its “growth,” and discretionary consumption is financed with either cash … Continue reading

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When The Real Cost is Hidden, Making Good Decisions Is Impossible

When good decisions are no longer possible, bad decisions are inevitable. If we had to summarize the response of the Federal government and the Federal Reserve to the structural financial crisis of 2008-2009, we could say that both institutions went … Continue reading

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The Solution to the Declining Middle Class: Destroy Fixed Costs and Debt

The solution to the erosion of the middle class lifestyle is to destroy debt and other fixed costs and eliminate self-sabotaging discretionary consumption. Last week I covered the structural dynamics causing the decline of the middle class. In general, the costs … Continue reading

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Technology Isn’t the Only Source of Innovation

The solution is to recognize the critical role of social innovation enabled by networked human and social capital. This week I’ve addressed the structural reasons for the decline of the middle class. As with all complex systems, there is no one cause–instead there … Continue reading

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The Decline of Small Business and the Middle Class

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead. It is not coincidental that the middle class and small business are both in decline. Entrepreneurial enterprise and small business … Continue reading

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The Changing Nature of Middle Class Work

As a result of profound systemic changes, new models of work are emerging. Gordon T. Long and I recently discussed the changing nature of work–specifically, work that can support a middle class lifestyle and aspirations. This is the third of my … Continue reading

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How the Middle Class Lifestyle Became Unaffordable

There are four structural drivers behind the soaring costs of the middle class lifestyle. Why have the costs of a middle class lifestyle soared while income has stagnated?Though it is tempting to finger one ideologically convenient cause or another, there … Continue reading

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The Destabilizing Truth: Only the Wealthy Can Afford a Middle Class Lifestyle

The “middle class” has atrophied into the 10% of households just below the top 10%. The truth is painfully obvious: a middle class lifestyle is unaffordable to all but the top 20%. This reality is destabilizing to the current arrangement, i.e. … Continue reading

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Coppock Market Message: Get Out and Stay Out–Check Back in Q1 2015

This chart’s value is in posing an if-then question: if today’s S&P 500 follows these patterns, what will our reaction be? Longtime contributor B.C. recently submitted a chart that combines two interesting market tools: the Coppock Curve and historical analogies. Coppock called his … Continue reading

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NASDAQ: Classic Head-and-Shoulders and Blow-Off Top?

If the advance from January 2013 to the top in early 2014 isn’t a blow-off top, it’s certainly a pretty good imitation of one. Technical analysis seeks to identify trends and recognize signals. The predictive value of trends (up, flat or … Continue reading

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Please Stop Me Before I Vote for a Bought-&-Paid-For Demopublican Again

If we only voted for unbuyable candidates, money would become poison in politics rather than mother’s milk. The solution to money in politics is simple: stop voting for politicos who accept millions of dollars in bribes, ahem, campaign contributions and … Continue reading

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International Workers’ Day (May 1) and the New Class: Mobile Creatives

The Mobile Creative credo: trust the network, not the corporation or the state. In America’s Nine Classes: The New Class Hierarchy, I described a “wild card” new class of workers that doesn’t fit the conventional paradigms: Mobile Creatives. I use the word mobile here … Continue reading

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Want to Fix Income/Wealth Inequality? Here’s How

There is nothing fancy about these three solutions. I have covered rising income/wealth inequality for many years in dozens of entries. Since Thomas Piketty’s new book has catapulted the topic into the media spotlight, it’s a good time to list solutions … Continue reading

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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, … Continue reading

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A Critique of Piketty’s Solution to Widening Wealth Inequality

The real problem with Piketty’s taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism. Those of us concerned by widening wealth/income inequality have been following the work … Continue reading

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Are You an Elitist? Class Warfare and the New Nobility

Class warfare reflects a dysfunctional divide-and-conquer society. One of the easiest ways to put someone on the defensive in America is to accuse him/her of being an elitist. The power of this accusation derives from a complex mix of dynamics. At … Continue reading

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Measured by Gold and the Dow, Wheat Is Cheap (But Maybe Not For Long)

Priced in gold and stocks, wheat is near multi-decade lows. That may not last. Measuring the cost of anything in currency can be misleading. As we know, inflation can be gamed by authorities to appear low, and supposedly low inflation is … Continue reading

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This Is How Empires Collapse

This is how empires collapse: one complicit participant at a time. Before an empire collapses, it first erodes from within. The collapse may appear sudden, but the processes of internal rot hollowed out the resilience, resolve, purpose and vitality of the … Continue reading

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The Political Poison of Vested Interests

Once vested interests take control, the only possible “solution” left is collapse. I have long identified diminishing returns as a key dynamic in the current unraveling of the Status Quo. Why is this so? We can summarize diminishing returns as dumping more money, capital, energy … Continue reading

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Sorry, Fed Inflationistas: Technology Is Deflationary

Technology, like Nature itself, has no emotional stake in what is creatively destroyed. We all know the Federal Reserve is terrified of deflation, because they keep telling us that deflation is the equivalent of death and inflation is the equivalent … Continue reading

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It’s Time to Retire Gross Domestic Product (GDP) as a Measure of Prosperity

What if we used wellness (Gross Domestic Happiness) as a metric for prosperity rather than GDP? Distilling an economy’s success in delivering “prosperity” to a single number has outlived its purpose. Zachary Karabell describes the birth of GDP in far less … Continue reading

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It’s Time to Ditch the Consumer Price Index (CPI)

So why does the government maintain such a transparently inaccurate and misleading metric? For three reasons. That the official rate of inflation doesn’t reflect reality is obvious to anyone paying college tuition and healthcare out of pocket. The debate over the … Continue reading

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What’s the Difference Between Fascism, Communism and Crony-Capitalism? Nothing

The essence of crony-capitalism is the merger of state and corporate power–the definition of fascism. When it comes to the real world, the difference between fascism, communism and crony-capitalism is semantic. Let’s start with everyone’s favorite hot-word, fascism, which Italian dictator … Continue reading

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The Alienation of Work

The emerging economy is opening up new ways to reconnect workers to their work and the profits from their work. One of the most striking blind spots in our collective angst over the lack of jobs is our apparent disinterest … Continue reading

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How To Get a Job Despite the Economy

An entire new feedback loop of accreditation is necessary in the economy we have, and fortunately that feedback is within our individual control. To paraphrase Donald Rumsfeld, we work in the economy we have, not the economy we might want … Continue reading

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Are We Losing Practical Life-Skills?

Poverty and lack of life skills are causally connected. Are we as a society losing the basic practical life skills? Longtime correspondent Kevin K. recently submitted his informal survey of two basic skills: repairing a flat bicycle tire and changing a … Continue reading

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Now That the U.S. and China Have Picked the Low-Hanging Fruit, Peak Everything Looms

With no plan to manage an economy in which expanding credit no longer generates growth, the two nations are rapidly reaching Peak Everything. Let’s call the strategy of picking all the low-hanging fruit in an economy Plan A: you know, … Continue reading

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Fed to the Sharks, Part 2: Housing and the Death of the Middle Class

The Fed sacrificed the foundation of middle class wealth–stable housing values–to boost bank profits. Lest you think the phrase “death of the middle class” is hyperbole, please examine these two charts, keeping in mind the middle class by definition must … Continue reading

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Fed to the Sharks, Part 1: The Fed Takes Our Money, Gives It to Banks Who Loan It Back to Us at 16%

We’re being Fed to the sharks, every day, one morsel at a time. What a way to go…. What can we say about the Federal Reserve’s policies that hasn’t been said a million times? How about simplifying the two primary … Continue reading

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And the Next Big Thing Is … Degrowth?

This is not doom-and-gloom for society–it is only doom-and-gloom for the current unsustainable arrangement (Plan A). The Grand Narrative of the past few centuries goes something like this: from religious authority to secular authority, from agriculture to industrial, from rural to … Continue reading

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My Wish for 2016: We Finally Get a President Who Doesn’t Kiss Wall Street’s Rear End

Is there any hope that we might actually elect a president with the mandate and courage to take down Wall Street instead of kissing its rear end in humiliating obeisance? The 2016 presidential election may be far away to those … Continue reading

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It’s Not Just the Stock Market That’s Rigged: the Entire Status Quo Is Rigged

One has to wonder why we are dodging this truth about what we’ve become: a nation that turns a blind eye to skimmers, scammers and legal looting. As in the story of the Emperor’s new clothes, the onlooker who declares … Continue reading

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What Happens After the Low-Hanging Fruit Has Been Picked?

Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead. What happens after all the low-hanging fruit has been picked? We can phrase the same question using a different analogy: what happens when … Continue reading

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April 2016: Dow Jones-30 Suspended Due to Lack of Interest

Though many blame the Global Crash of 2015 for the loss of faith in stocks, others say the erosion dated back to at least 2014. April 1, 2016: In an unprecedented move, Dow Jones announced that it was suspending its … Continue reading

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Have We Reached Peak Putin?

The capture of a few pawns has cleared the chessboard, but the strategic choices already made have greatly reduced Putin’s room to maneuver. No tree grows to the sky. Once extremes are reached, trends reverse, often with symmetry: the decline often … Continue reading

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The Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting

The 1950s/60s were not “normal”–they were a one-off, extraordinary anomaly. If there is one thing that unites trade unionists, Keynesian Cargo Cultists, free-market fans and believers in American exceptionalism, it’s a misty-eyed nostalgia for the Golden Era of the 1950s … Continue reading

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Dear Keynesians: Your Sad Devotion to Your Failed Religion Hasn’t Conjured Up a Recovery–Here’s Why

That any schoolkid could predict eliminating feedback and consequences will lead to a series of disastrously poor choices by speculators and imprudent borrowers doesn’t register with the Keynesian Cargo Cult. The Keynesian Cargo Cult’s ability to print and squander money … Continue reading

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Does Our System Select for Incompetent Sociopaths?

What is the shelf life of a system that rewards confidence-gaming sociopaths rather than competence? Let’s connect the dots of natural selection and the pathology of power. In his 2012 book The Wisdom of Psychopaths: What Saints, Spies, and Serial Killers … Continue reading

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The Incompetence of the Federal Reserve and Deep State Is Unavoidable

It’s not the managers who are incompetent, it’s the organization itself that is incompetent. I received a number of interesting reader responses to my previous entries on the incompetence of the Federal Reserve and the Deep State: The Federal Reserve: … Continue reading

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What’s the Primary Cause of Wealth Inequality? Financialization

Financialization results when leverage and information asymmetry replace innovation and productive investment as the source of wealth creation. Emmanuel Saez and Thomas Piketty are leading lights in the exploration of rising wealth inequality. Both are academic economists who have devoted considerable … Continue reading

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The Federal Reserve: Masters of the Universe or Trapped Incompetents?

Suppose the Fed was actually little more than a collection of incompetents trapped in a broken system that is beyond repair. For a variety of reasons, the Federal Reserve is viewed by many as the financial Master of the Universe. Given … Continue reading

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Pay Our Pensions Or We’ll Throw You in Jail: the Legalization of Looting

Rather than deal forthrightly with the reality that unrealistic promises made to their employees cannot be honored, local government has pursued a strategy of legalizing looting. The gradual erosion of civil liberties, legal rights and government ethics are connected: our rights … Continue reading

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The Five-Year Fantasy Is Ending

Since these monetary/fiscal fixes (i.e. distortions) didn’t address the real issues, all they can possibly do is increase the magnitude of the next collapse. For five long years, we have pursued the fantasy that we could return to “growth” without … Continue reading

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Finally, a Plausible Scenario of What Happened to Flight 370

The scenario that best fits the facts is a spontaneously initiated “drastic political protest” by the captain that went awry. At long last, a plausible scenario of what happened to Flight 370 has emerged. By plausible I mean that the scenario fits all … Continue reading

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Is the Deep State Fracturing into Disunity?

I recently discussed the Deep State and “throwing Wall Street under the bus” with my friend and colleague Jim Kunstler. When we speak of The Powers That Be or the Deep State, this ruling Elite is generally assumed to be … Continue reading

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What Happened to Flight 370? An Analysis of What Is Known

UPDATE 3/13/14: As expected (see my analysis of ocean currents and drift-time below), the purported debris was a false lead. The revelation that the automated ACARS was still sending data on the Rolls Royce engines is not surprising given what else … Continue reading

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How The Fed Has Failed America, Part 2

The only way to eliminate the financial parasites is to stop subsidizing their skimming and scamming, and the only way to stop subsidizing the financial parasites is to shut down the Fed. Before I explain how the Federal Reserve has … Continue reading

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