by Charles Hugh Smith
Of Two Minds
Realism must precede optimism or the optimism will collapse as the tsunami of reality comes ashore.
It’s time to prepare materially and psychologically for a winter unlike any other in our lifetimes.
Here’s the view from 30,000 feet:
1. The stock market and the general zeitgeist of optimism have soared based on expectations that the real-world economy and efforts to suppress Covid would also track a V-shaped recovery.
While GDP did make a V-shaped recovery, GDP (gross domestic product) is a measure of flows and consumption, not a measure of the socio-economic “balance sheet.” GDP measures the money flowing through accounts but not the “assets” of a functioning society: functional institutions and infrastructure and the well-being and security of the citizenry.
Thus GDP soars while the real-world economy and society are hollowed out by economic inequality, declining health, financial insecurity, rising prices for essentials, dysfunctional institutions and decaying infrastructure.