Guest Post by Charles Hugh Smith
What would be truly optimistic would be to surrender our dependence on asset bubbles and malinvested debt to prop up an unstable delusion of effortless “wealth.”
The most sacred liturgy of American culture is to always be positive and optimistic. The greatest taboo is breaking this sacred duty to say something upbeat and optimistic; it is acceptable (barely) to make awkwardly negative observations, but only if you immediately follow up the negative comments with a treacly, double-serving of sugary optimism: for example, inflation is transitory, the economy is growing strongly, wages are rising, etc.
And so we sleepwalk into 2022, ill-prepared to deal with reality which most annoyingly continues responding to systemic dynamics no matter how much sugary optimism is spread around.
The endless servings of sugary optimism serve several purposes:
1. They create an appealing illusion that systemic problems can be solved without materially changing the status quo or demanding any sacrifices.
2. They mask the inconvenient reality that the status quo is incapable of solving systemic problems because doing so would demand sacrifices of those skimming the vast majority of the benefits of the status quo, i.e. the wealthy and powerful.
3. They mask the enormous sacrifices being imposed on the bottom 90% to keep the status quo unchanged, i.e. benefiting the few at the expense of the many.
4. The demand to always be sugar-high optimistic is a handy tool to bludgeon critics who point out the systemic failure of the status quo as alarmists, doom-and-gloomers, etc.
In other words, you’re only allowed to point out a critical systemic flaw if you also parrot a completely unrealistic, impractical “solution” that fits the sugar-high optimism requirement: fusion: unlimited energy for everyone forever! Modern Monetary Theory: free money for everyone forever! And so on, in an endless gush of detached-from-reality “solutions” that all magically solve all problems without changing anything in the power structure of who benefits from the existing arrangement or demanding any reduction in our waste is growth Landfill Economy.
We no longer solve the hard problems because they require changing a system that benefits the wealthy and powerful to the exclusion of everyone else. Only the debt-serfs and tax-donkeys suffer, but since they’re passive and powerless, who cares?
The sugary optimism also masks the destructive nature of the easy fixes that are so beloved by the political class: debt, inflation and narrative control. All are politically and economically painless at first, and but the systemic consequences eventually erode the entire status quo, which collapses in a putrid heap of lies, artifice, fakery, profiteering, delusion and deception.
Making everyone feel warm and fuzzy by borrowing and distributing “free money” works wonders more or less like a sugar-cocaine speedball. The cost of the new debt is spread over years in the future, and a Federal Reserve beholden to those reaping the profits from debt (banks, financiers, the wealthy) is always ready to lower interest rates to ease the pain of servicing debt as a means of enabling ever-greater borrowing going forward.
What could be better? Borrow and spend now, pay in installments stretching far into the future. Alas, the advance of time is inexorable, and the future soon becomes the present. And despite the declining rate of interest, all that rapidly expanding debt is now sucking the income well dry, leaving insufficient income to borrow more or spend more.
Oops. Don’t you hate it when the system works so well and then it suddenly implodes due to its self-reinforcing, self-destructive structural incoherence? A system dependent on debt for “growth” is self-liquidating, meaning that the debt eats the system alive by siphoning off income while malinvestment, waste and speculative gambling destroys the “capital” funded by the debt.
Inflation is equally beloved by the political class for the same reasons: it’s painless at the start and everyone loves the illusion that assets are rising without anyone actually creating any additional value or productivity–it’s all magic. Just print a few trillion dollars and pump the “free money” into stock buybacks and speculative bets, and voila, everyone who already owns assets gets richer without doing anything but being a genius.
All the fun stuff eventually generates real-world inflation and inflates assets into insane bubbles that eventually pop at the least opportune time, right when everyone watching their wealth swell like clockwork starts believing not just in their own genius but in the perpetual-motion machine of Fed-printing and rapidly expanding debt.
Those expecting assets to bubble higher forever and real-world costs to deflate have it backward: it’s the assets which have inflated that will deflate back to starting levels of valuation and it’s real-world inflation that will gather momentum and shred the economy and political structure.
Those depending on earned income will see the purchasing power of their earnings drop precipitously while those who were counting on their vastly enlarged unearned “wealth” in asset bubbles to fund their lifestyle and lavish retirement will experience 80% declines in the “wealth” they presumed was permanent.
It will be a great shock to the political class, but controlling the narrative to protect your interests won’t actually stop the systemic momentum careening over the cliff. Demanding that everyone disavow problems doesn’t actually solve the problems.
Alas, expedient speedball fixes to systemic problems only create new instabilities while fueling the instabilities of the problems left unsolved. Sleepwalking in a fantasy-dream of free money forever, free energy forever and endlessly expanding asset bubbles of “wealth” will take us to the edge of the cliff and then into the abyss.
What would be truly optimistic would be to surrender our dependence on asset bubbles and mal-invested debt to prop up an unstable delusion of effortless “wealth” and an unsustainable waste is growth Landfill Economy.
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1,000+
(But, I would keep any PMs in my control not in a Swiss vault).
Couple of rolls of Mercury dimes will go a long way, and easy to carry.
Greyerz has a minimum of $400K. Not what most people feel comfortable keeping at home. (not that I am in a position of being his customer. Dang it.)
Sleep walking into the abyss? No, we are literally speeding to the abyss. I do not know about anyone else, but I feel like we are very close to the end already. I’m a US Veteran who has seen a lot including over 7 years in the Angolan civil war which was BTW a communist country. I will fight and make the ultimate sacrifice for our Constitution but I WILL NOT risk my life for couch potatoes.
If these couch potato’s want to inject their children, their spouses & themselves then they should do so but, don’t come for me or at me to do the same. The way I see it there is only one fix for stupid. The clot shot may be just that fix. Let them soldier on and live their choice. It was not “my” mandate nor do I intend to take responsibility for their choices. I shall live my life a free man as long as I can.
It was insta-taters what couched the coo-coo-ka-chingstatution.
80% don’t know shit, don’t want to know shit and don’t give a shit. Darwin will give them what they deserve.
@otc
yes. I was told (early on) in no uncertain terms, to keep
my “negativity” to myself. People (my friends) told me their life
was full of stresses and they didn’t need more stress. I gave out
books and links, so my “friends” could prepare to prepare. Nope.
Not interested. Well, I moved away. North actually. An unforgiving
climate but not very many people. No fear of other cultures trying
to kill me as I walk down the street. No keeping up with the Jones
people. No playing “I am more liberal than you are.” No 1K/month
property taxes. Good enough for the likes of me and mine. Mental
preparedness is valuable, as much so as cases of baked beans.
A positive attitude can make beans and cornbread taste like steak. I grew up poor and think beans and cornbread is walking in tall cotton. Add onions please.
rock soup is good too…
What is the minimum cook time in a pressure cooker for rock soup at 15 pounds?
I like Egon…read him regularly on KWN a few years back. He brought to me an awareness of some things going on, and how to plan for any upheavals that were predicted, with actionable steps.
Having said that, and done that,
EvG has company, in that a couple dozen men have been talking about an economic doomsday for years, and the advised tactic of hedging and preserving wealth via PMs.
Catherine Austin Fitts is an intelligent source, too.
We are closer now, more than ever, to the PM bugs and Austrian economist gang’s predictions coming to pass.
Right, Doug Casey?
Jim Rickards?
Eric Sprott?
And, many, many more.
List all the dentistry specializations that depend on lollypoptimism & you’ll have identified the reason the good ship lollipop’s listing so badly & ballistic solution to what fired Shirley Temple Black’s career arc, too.
There’s no business like sugar business. It’s so sweet it’s got to wear subsidy shades.
Sweet!
Us serfs have a choice…
Root for the Fed and its owners or own even less from the Davos commies.
With choices like that I believe I will use the eenie meenie minee mo system.
I’m thinking the former can be beaten by opting out more often.
The latter leaves us less choice.
I could say something, but I’d just get put on a “list” for doing so.
How about we dump cowardice and get back to courage.
That’s a great idea! Let’s Go Brandon.
I like Hugh Charles Smith. He always makes sense as a ‘systems man’ and he resonates with my own understanding of complex adaptive systems. They are rather like a sand heap – as you add more sand the heap grows (assets expand). There comes a tipping point, or phase shift when just one extra grain of sand added cause a final collapse (global financial crisis number 2).
It is not possible to predict when the crash will occur, this is something that physicists have never solved in spite of their excessive modelling. Grid lock on a freeway occurs when the extra car joins the crowded road, but again, we can never predict when. It looks as if the traffic flow can go on forever to the unsuspecting observer but therein lies the hidden trap.
I describe all this in my book, The Financial Jigsaw, but I can only surmise what will happen after the crisis. But I do see indications of breakdown in global supply chains, volatility in financial markets, inflating consumer prices, food production problems etc. All hinted at by many writers like Chris MacIntosh, Gail Tverberg, Dr Tim Morgan (who wrote the Epilogue for me), Brandon Smith ….it goes on and on. All easily available on the web – for free.