In A World Of Artificial Liquidity – Cash Is King

And you'd better have some stashed out of the system
Friday, July 3, 2015, 11:19 AM

It's more crucial now than ever for people to consider extracting a portion of cash from their bank accounts. » Read more



2014 Year in Review

The year we piled up risks like a global game of Tetris
Friday, December 19, 2014, 11:27 AM

I have not seen a year in which so many risks—some truly existential—piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. Groping for a metaphor—I love metaphors and similes—I feel like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows. » Read more


Assets & Liabilities - Crash Course Chapter 14

Why the US is deeply insolvent
Friday, September 19, 2014, 9:29 PM

Building on the previous chapter on the US' tremendous and exponentially-increasing debt, this chapter looks at the shocking shortfall between our nation's assets and its liabilities.

In short, America is deeply insolvent. We're just not admitting it yet. » Read more


This chapter of the new Crash Course series has not yet been made available to the public.

Each week over the rest of 2014, in sequential order, a new chapter will be made publicly available (we've currently published up to Chapter 2)

If you don't want to wait, you can:



Off the Cuff: Vacuum of Leadership

Where have all the Churchills gone?
Thursday, December 5, 2013, 2:21 AM

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • Raising taxes until morale improves
    • Europe's misguided approach to its woes
  • Tough medicine for underfunded pensions
    • Detroit bankruptcy may be a key precedent
  • Manipulation & fraud
    • Two things the TBTF banks get away with
  • Vacuum of leadership
    • A defining crisis of our time
Featured Discussion

Open Season on Pensions

Open Season on Pensions

San Jose moves to cut government pensions. Expect much more of this in the future.


The Real Story to Focus On

Given the macro trends, how do we "win"?
Sunday, August 18, 2013, 11:12 PM

Executive Summary

  • What Detroit tells us about continuing the status quo
  • The shocking true size of the real U.S. debt
  • Why time is our most valuable but scarcest asset
  • Where your efforts need to be placed to address the big picture

If you have not yet read Part I: Why We All Lose If the Fed Wins, available free to all readers, please click here to read it first.

If we can't even have an honest conversation six years into this failed experiment about its core aspects, then it is little wonder that there's virtually no appetite for the bigger burning questions of our time, such as where do we want to be in twenty years and what do we need to do to get there?

Instead, the focus is simply on preserving the status quo and doing everything possible to maintain it. Never mind that the status quo is obviously failing in many key regards and needs some serious adjustments.  All that the Fed and D.C. have in mind here is more of the same.

And this is why we will lose the war.

The Detroit Harbinger

If we want to know what happens when we ignore reality and just soldier on, we need look no further than Detroit to see how that works out. For years, that city mismanaged its finances, continually banking on the idea that eventually jobs and opportunity would return. They continued to offer yet failed to fund lavish pension promises to municipal employees, even though anybody with a pocket calculator could work out that the plans were not viable.

But the plans were offered, and the union reps on the other side of the table accepted the terms, even though at some point it would have made sense for someone to raise the obvious by noting that the plans were utterly insolvent and almost certain to stay that way.

Right now, the pensions in Detroit are underfunded by $3.5 billion, according to official figures.  But those same officials are assuming an 8% rate of return on current pension assets, a rate that nobody is actually achieving in the pension world thanks, in large part, to Bernanke's 0% interest rate policy.

Here's how they got to this point: » Read more


How You Can Limit Your Exposure to the Fed's Financial Interference

There are ways to protect yourself
Thursday, August 1, 2013, 12:18 AM

Executive Summary

  • Understanding the Fed's ability to impact (or not) health & education, pensions, and inflation
  • What you can do to insulate yourself from the impacts of the Fed's financial interference
    • Mindset
    • Major expenses
    • Debt
    • Resilience
    • Income

If you have not yet read Part I: The Fed Matters Much Less Than You Think, available free to all readers, please click here to read it first.

In Part I, we found that the supposedly omniscient Federal Reserve is irrelevant to the engine of real wealth creation (innovation) and actively inhibits the allocation of capital and labor to innovation by incentivizing speculation and malinvestment.

In Part II, we’ll look at what else matters that the Fed either negatively influences or does not control, as well as specific actions we can take as individuals to insulate ourselves from the collateral damage caused by misguided central bank policies.

Health and Education

We all know health and education are vital to individuals and the economy, and like everything else that matters, the Fed’s influence is limited to financial repression of interest rates that enables the Federal government to avoid the sort of healthy fiscal discipline that higher rates would demand. In other words, the Fed has widened the moat around government spending, protecting it from the hard choices that would accompany massive deficits and bond issuance in a free-market economy.

Public and Private Pensions

By at least one measure, the Fed’s repression of interest rates (designed to recapitalize the banks at no direct cost to the Fed or government) has cost savers $10.8 trillion in lost income. Since the majority of savings in the U.S. are in public and private pension plans, 401Ks, and IRAs (individual retirement accounts), the Fed’s repression of interest rates has pushed these income-security savings into risky speculative asset bubbles in stocks, bonds, and real estate, and critically undermined the financial health of pensions by radically reducing their low-risk, safe returns. » Read more


2012 Year in Review

Free markets, rule of law, and other urban legends
Friday, December 21, 2012, 2:34 PM


I was just trying to figure it all out.

~ Michael Burry, hedge fund manager

Every December, I write a Year in Review that has now found a home at Chris Martenson’s website,2,3 What started as a simple summary intended for a couple dozen people morphed over time into a much more detailed account that accrued over 25,000 clicks last year.4 'Year in Review' is a bit of a misnomer in that it is both a collage of what happened, plus a smattering of issues that are on my radar right now. As to why people care what an organic chemist thinks about investing, economics, monetary policy, and societal moods I can only offer a few thoughts.

For starters, in 33 years of investing with a decidedly undiversified portfolio, I had only one year in which my total wealth decreased in nominal dollars. For the 13 years beginning 01/01/00—the 13 toughest investing years of the new millennium!—I have been able to compound my personal wealth at an 11% annualized rate. This holds up well against the pros. I am also fairly good at distilling complexity down to simplicity and seem to be a congenital contrarian. I also have been a devout follower of Austrian business cycle theory—i.e., free market economics—since the late 1990s.4

Each review begins with a highly personalized analysis of my efforts to get through another year of investing followed by a more holistic overview of what is now a 33-year quest for a ramen-soup-free retirement. These details may be instructive for those interested in my approach to investing. The bulk of the review, however, describes thoughts and observations—the year’s events told as a narrative. The links are copious, albeit not comprehensive. Some are flagged with enthusiasm. Everything can be found here.5 » Read more


Off the Cuff: Out of Order

We are dependent on models that don't work
Thursday, November 29, 2012, 11:36 AM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Fiscal Cliff Follies
    • Whatever 'solution' is enacted won't solve much
  • The Broken U.S. Education Model
    • We are graduating a generation of debt slaves
  • Dangerously Optmistic Stock Prices
    • Assuming elevated earnings in perpetuity
  • Pension Fund Posion
    • No way these funds will meet their actuarial targets

While there are no guarantees that any progress will emerge from the Obama-Boehner showdown, what is clear is that the impact of any agreements (higher taxes and spending cuts) struck on the "Fiscal Cliff" will be GDP-negative. So plan for the headwinds on our economy to strengthen in force next year.

Despite this certainty, as Chris and Mish look across the markets today, they see way too much 'pricing for perfection.' For example, corporate profits are far above their historical norm due to a number of extraordinary events over the past few years. But their underlying stocks are priced as if these elevated earnings levels will continue unabated far into the future. » Read more