Just installed the AWS CLI on my Mac and encountered the 'unknown encoding' error when I first tried to use it:

$ aws ec2 describe-instances

unknown encoding: 
$

This is caused by the default encoding not being set in Python. There's a couple different ways to go about setting it but the easiest I found was just adding the following to my ~/.bash_profile:

export PYTHONIOENCODING=utf-8

Open up a new terminal or source the your .bash_profile again and everything will be working swimmingly:

$ aws ec2 describe-instances | head
{
    "Reservations": [
        {
            "OwnerId": "", 
            "ReservationId": "", 
            "Groups": [], 
            "Instances": [
                {
                    "Monitoring": {
                        "State": "disabled"