GOLD: You Will NOT Get A Second Warning! | Mark Thornton
Summary
Macro Outlook: Guest highlights unsustainable government spending, $38T U.S. debt, and money printing driving long-term inflation and weakening global growth.
Precious Metals: Gold and silver framed as real money with a long-term bullish trend despite current pullback, supported by central bank buying and distrust of fiat currencies.
De-dollarization: Growing shift away from the U.S. dollar as a store of value, with central banks and companies seeking alternatives due to inflation and policy risks.
BRICS: Expansion of BRICS currency frameworks and gold trading infrastructure viewed as a secular force reducing dollar dominance over time.
Trade War: Protectionism and global trade tensions seen as major risks that reduce productivity, distort capital allocation, and raise geopolitical instability.
Fed Policy: Critique that the Fed’s primary tool is printing money; near-term cuts could give way to structurally higher rates, asset bubbles, and malinvestment.
Companies Mentioned: Government stakes in Intel (INTC), MP Materials (MP), and Trilogy Metals (TMQ) cited as problematic subsidies that may foster crony capitalism rather than productivity.
Investor Takeaway: Favor gold and silver as long-term hedges against fiat debasement and geopolitical risk; acknowledge short-term volatility, market disruptions, and liquidity anomalies.
Transcript
We are living in unprecedented times. The precious metals complex is trading still despite the correction at very very high levels and the US debt just reached $ 38 trillion. What what do we make of this? Uh it is a fascinating time and as you can tell I'm back in Frankfurt. I'm back in the studio and I'm really excited to have my usual setup here but I'm also really excited to introduce you to my next guest. His name is Mark Thornton. He's a senior fellow at the Mises Institute and uh as you can tell we we will talk about the Austrian economics or the school of Austrian economics and how we apply it to today like what can we learn from it and what should we be paying attention to moving forward. Really interesting discussion that we have lined up. I'm really looking forward to this. Um but before I switch over to my guest, hit that like and subscribe button helps us out tremendously and we much appreciate it. Thank you so much for doing that. Now Mark, it is great to welcome you on the program. I'm excited to have you on. Thank you so much for joining us. Oh, thank you, Kai. It's great to be here with you today. >> Yeah, really looking forward to this. Um, as I mentioned to you before hitting the record button, I think you're the first guest that we had on or that we have on uh from the Mises Institute, and we often use the term Austrian economics here on on this program, but I don't think we've ever explained what it means. So, I'd love to start off this discussion, Mark, real quick. Can you give us a 30, 60, maybe 90 second overview? What is the Austrian School of Economics? >> Sure. The Austrian school goes back into Europe into Austria in the 19th century founded by Carl Manger and then you know many students developed in Europe including Ludwig van Mises and he fled Europe during World War II and brought Austrian economics to the United States along with his student Friedrich van Hayek who won the Nobel Prize and Murray Rothbart a Native American and the Austrian school really is a theoretical school. The Austrians invented, you know, the concepts of uh opportunity, cost, comparative advantage, all the things you learn in the first few uh chapters of a a college course and really supply and demand as applied to marginal economics. So we're all about economic theory and less about, you know, charts and numbers, computer programs, data sets, that kind of thing. So we bring a fundamental analysis to the economy and to markets and to uh economic situations. And so that's that's really the important point is it's a theoretical approach, deduct deductive approach based on logic, reason, and human action. >> Really appreciate that, Mark, because I don't think we ever explained what it really means here on this program. Of course, a lot of our viewers know that, but I figured let's fill in the other half that might not be as familiar with that term. Um, but Mark, you you you mentioned something interesting like the economic situation. um help us interpret it a little bit from your point of view like where are we at right now? Um how would you describe it? >> Well, in terms of the economy, I you know, I'm very very concerned with the world economy uh because of the direction that governments have taken us. Uh they're spending out of control. They're all borrowing huge amounts of money and they're all printing up massive quantities of the fiat currencies. And so, you know, the US dollar is is down relative to some of the other currencies, but generally the trend of all fiat currencies right now is down and down precipitously in terms of their purchasing power and certainly if you want to measure it [clears throat] versus the price of gold, the price of silver and so forth. um you know it's obviously that the our money is able to purchase less and less and in the United States in my home economy and in many economies around the world you have a huge percentage of the population where their real income when it's adjusted by prices is actually falling so that they can buy less and less over time and that's a very dangerous situation because At the same time, the governments are making the economies less competitive and less productive. And the trade war on top of that is the thing that's the scariest of all because I know, you know, it comes and goes and President Trump does this and that, but we're still moving forward with a world trade war. And this has military implications and we have military hotspots around the world. And so this is all very very concerning to me um as an economist because of course war is the worst thing that the government can do. But inflation is also uh terrible and so is these massive government debts and politicians around the world whether it's the United States, Canada, Europe, uh the European economies, Japan, um and and even China and many other countries. they're running up huge debts. Um and and you know, even if they're not printing up money now, they're going to have to print up more money in the future to pay for all this. And so, uh the fundamental status of the economy is that it's weakening worldwide and and things like the military situation, the trade war, the budgets, and uh the money printing are all massive concern to me. Yeah, this is reminds me sort of of what the Austrian School of Economics has been warning about all along is exactly what is happening right now. Would would you underwrite that as like this is the endgame in bas based in your economic theory here? Is that what we've been fearing all along? >> Yeah, I mean it it certainly is. And of course an inevitable consequence of all this is that politicians want to push for more government intervention in the economy. They see all of the micro problems emerging because of the macro problems that they're causing. And so their first instinct is to enact even more government intervention. And I think that's where President Trump's trade war is coming, which of course invokes retaliate retaliation from other countries. Uh but they're, you know, in the process of, you know, making it more difficult for families uh to earn their way. It's making they're making it more difficult for companies uh to be productive and to employ workers. they're absorbing capital um throughout the economy so that we're putting more of our real assets into the government instead of into the productive economy where it needs to be to employ people and to buy capital in order to raise people's wages. And so they're doing exactly the wrong things, moving ever closer to socialism rather than to a free market prosperity. >> Yeah, it is interesting. We're seeing that currently on the critical minerals side, but also on the AI chip side where the US has taken a stake in Intel. Um, we're seeing it now on the critical mineral side where the US has invested in MP Materials and many other companies as well. Um, Trilogy Metals comes to mind in Alaska. So, so you're saying like this is a step in the wrong direction. The government may be overstepping its its powers here or overusing its powers. There's ways that the United States can increase its production of anything, including rare earth and critical metals and so on and so forth. But the government coming in and buying stakes and providing subsidies and granting massive loans is obviously the wrong thing. And you have President Trump himself and President Trump's supporters and admirers who were very critical of President Obama making those same subsidies and investments in solar energy and other, you know, crackpot ideas. They were all critical back then of President Obama's choice of favorites, but now they're seemingly saying, "Well, this is the way to salvation." when it's the exact same stupid policy. And so, um, you know, if we peel back, uh, you know, a slight veneer, we realize that, you know, that it's it's the wrong way to go. I mean, that all of President Obama's subsidies and bailouts and uh, massive loan guarantees to the the his favorite firms, all they all failed. And we're going to find out, you know, that the investments in Intel and Rarehurse and Tungsten and all that kind of stuff, uh, it has a short-term blip where you seem to get, well, that that's getting some action. Uh, but down the road, you're going to find, um, you know, a crony capitalist uh, company that's underproductive and and living off the taxpayer. really before we come to the micro and I do want to discuss with you gold and silver because I know you've you've produced videos on that topic as well. I want to stay on the macro for just a bit longer. In my intro I mentioned the uh the crippling US debt situation over $ 38 trillion. The last trillion was the fastest added ever. Um how [clears throat] does that sort of fit in? Like what is the endgame here based on the Austrian framework? Like what what are we looking at? What can we anticipate? Well, I mean there's many different aspects. When you've got $ 38 trillion, there's lots of negative effects. And it means we've put 38 trillion dollars of real resources into the government, which is not productive. It's not efficient. Uh it's not producing goods and services. It's money that politicians have borrowed and they've spent it. And we don't have anything uh to show for all of that money. uh but the debt itself. And so now we're seeing uh the chickens come home to roost on that massive debt because the financing costs, the amount of money that Americans have to pay or excuse me, the American government has to pay to finance that $ 38 trillion is rising. It has risen. It's going to continue to rise and it's over like a trillion dollars a year right now. and it's I think it's the largest single item uh in the government budget or at least one of the top uh items in the government budget. So this is that's an expense that's going to even if everything stayed the same, it's going to you know that's a perpetual expense basically and and of course it's scheduled to rise and when interest rates go higher because of the inflation factor in interest rates I think you know the Fed's going to cut rates uh in the short term but in the longer term it's going to force interest rates higher um And so that debt servicing cost is is probably going to grow. And that's really the thing that I worry about because, you know, they they can't really tax the economy um anymore. We're at the limit as far as taxation is concerned. The borrowing costs are are crippling the private sector. So the only thing they really have to turn to at this point and a lot of uh experts in this area are anticipating them uh relying increasingly heavily on simply printing the money, rolling over the debt. So they'll uh the government will borrow the money and then the Fed will buy uh the debt from the marketplace, but they'll have to print up money uh in order to buy that. And you know we we already experienced that during COVID where the Fed bought up all the debt uh that the government was incurring in the short run and everybody said well it seems to be okay. Uh but then of course a year two three years later we were experiencing 9% in inflation. So that's what we have to look forward to. >> Inflation is an interesting topic Mark because uh we we it is Fed week. So, I almost forgot that in the intro, but it is Fed week, although it almost seems like a nothing burger this week. It doesn't really seem to be making headlines. At least I'm not hearing that much. But the inflation topic is an interesting one because that's sort of the only data we got last week. We didn't get any unemployment data, but the Fed is putting heavy heavy waiting on the unemployment trend that we're seeing right now or on the employment data in general. Do you think they're making a mistake? Are they focusing on the wrong end here, meaning the unemployment data versus inflation? I think the Fed is almost always making a mistake. Um, and I should say that when Austrians, you know, I should qualify my statements that we think that inflation is when the Fed is printing up money uh and injecting it into the economy. Of course, most people speak of inflation in terms of the effect of that policy, which is rising prices. And there is a disconnect between the two in the short run. they have to issue the money. It has to circulate in the economy and then prices rise. So the government gets to buy things uh before the prices go up. The government contractors get the money. The banks and the speculators on Wall Street, they all get the money first and then prices rise and then you and I get the money, but we have to pay the higher prices. And so that that's an important distinction uh that that Austrians do make. And you know the Fed no longer believes that they um are responsible for the higher prices. They they uh ignore and deny the fact that increased money supply increases prices. So they're in a total disconnect. Uh and that's why they make mistakes in terms of policy and timing. And frankly, right now they're, you know, they they've always been telling us, uh, you know, going back in time that they're data dependent. And now that the data is not there, well, they're just proceeding along their traditional playbook. And their playbook only has one play, that's printing money. And they see political problems for themselves. They see problems in banking. Uh, specifically, they see problems in the economy. and they see a stock market that's probably weakening. It's kind of leveling off. And so they're jumping and using their number one play, their number one tool, their only tool, which is to print money, which means they're going to cut interest rates and inject money into the banking system. >> Mark, like it's always interesting like I I like talking theory and it's it's popular of course to bash the Fed. Um, but what should they be doing? A or maybe let's roll or approach it from a different is the Fed even relevant these days and how would you substitute it and C maybe if if we agree that they might be relevant to a certain degree what should they be doing? >> Well, I think it is it is relevant in the sense that what they do does matter. >> Um they're the ones that are responsible for creating higher prices in the economy. They're the ones that are responsible for destabilizing the economy by creating business cycles. Okay? So, they reduce interest rates. They engineer investment demand uh on Wall Street. They drive up asset prices. Uh they create booms. But of course, as that money circulates and as prices rise, those booming investments sour out eventually down the line. and it could take a long time depending on how much money they're willing to inject. Uh and they're also responsible for uh distorting the distribution of income. So when they're in an active phase, they're benefiting stock owners, asset owners, bankers, uh the government, politicians, uh but simultaneously they're undermining the American family. They're undermining real wage rates in the economy. They're undermining productive investment in capital in the firms that actually produce things uh provide services uh that increase the economy's productivity. Everybody knows that small companies that are making investments uh that are you know creating efficiencies and productivity that those are really the source of new jobs and higher wages in the economy. And when the Fed is printing up money and sending it to Wall Street and sending it to Washington DC that means there's not money going to those small companies that we haven't even heard of yet. But that's really the source of growth and strength and prosperity in the economy. Uh, and the Fed can get away with that because, you know, nobody knows about Corporation XYZ or Bob and Ted's magical company um out there that's going to be, you know, the next big company on the horizon that's going to produce the next great product that's going to, you know, create the next great technology that's going to make us more efficient and and that sort of thing. So they can get away with uh you know with the price inflation distortions and the business cycle and also this male distribution of income that they cause that makes the rich richer. The people who already have money and can leverage up. they get richer. But the working class in America who sees their real wages uh undermined and the companies that they work for unable to grow and expand and become more productive and more efficient. Those are all the people that are getting hurt and those are the people that are suffering right now. And and they are based on the unemployment data and and and the other like data that we're seeing it it is not looking great. credit card delinquencies, car loan delinquencies are all increasing as well. Um, it's not looking pretty out there. Um, let's be honest. Um, but let's try to put that into context with the rising gold price as well. And, uh, I'm wondering like Mark, maybe on a very high level at first, but what is gold and and and silver to a degree telling you here as we actually dive below 4,000 as we speak here, Mark? >> [clears throat and cough] >> Gold and silver, excuse me. Are real money. That's what the market chose as money thousands of years ago. The government has intervened in money slowly. It took them about a hundred years to go from gold and silver uh a hundredyear transition to where they could just print up pieces of paper. But they did it. They got away with it. They're getting away with it. Uh but they can't completely hide what they're up to because gold and silver prices are reacting uh to this runaway spending, inflation, and borrowing. And uh you know, and so we've already seen a big big increase in gold prices from like a,000 to over 4,000. Um and silver prices from around $10 on up to $50. And so this runaway government is showing up in the markets for pre precious metals. Um I'm not very surprised at that whatsoever. And I I think that's going to continue. I know that we're going through uh a painful pullback right now. But if you look back in the charts, um, you'll see that there's been, you know, a a many hundred% increase in the price of both of those metals since they bottomed out a number of years ago. And, uh, you know, there's nothing really to suggest that uh, that's going to stop or reverse itself in any kind of major way. I mean right now this uh has is really being led by other central banks themselves. So the dollar is the world dominant currency but other central banks no longer trust the dollar. So it's hard to believe that individuals could trust the dollar as a store of value. Of course we have to use it as a medium of exchange. Um it's that's still relevant. But as far as being a store of value, um even central banks, other central banks no longer trust the dollar and an increasing number of individuals and companies um are turning away from that. That's really what the whole bricks uh currency alternative is about where you have you know Brazil, Russia, India, China, South uh Africa and other countries uh wanting to get away from the dollar uh the monopoly dollar and have some alternative that's more stable and less subject to US control. I was going to say like the dollar has been declining since the 70s since the Nixon took us off the gold standard or took the US off the gold standard. Um why is it now so pertinent to to leave the dollar system and um it seems to be there was a rethink that was going on and I'm struggling a little bit that it's just the the loss of value of the US dollar as a currency. I think there is more at play and you sort of hinted at it with sort of your last remark here. It's there there's geopolitics at play as well. Um, so I'm trying to understand and put maybe the rise of the gold price in context. How much does it have to do with a loss of value in the currency versus just geopolitical turmoil on the other end? >> Well, there's so many factors. I mean, that's the thing about gold and silver as money is that everything affects them. And I showed recently if we did have a free market world economy that that those two things would be perfectly almost perfectly stable. But in the world where you have a highly interventionist economy and competing countries where the where the US is no longer um you know the sole dominating factor in the world. you know, you have China which has risen to an economic superpower and it wants to have a say so uh with respect to money and and so it's organized the brick countries and so it's actively um trying to take its role as a world dominating currency and then of course you have the situation in Russia where President Biden essentially took away the Russia's foreign exchange uh money and its it and its ownership of US government debt. The Europeans did the same thing. So, uh, the the Russia, not only are the Russians no longer trusting the United States and the euro with respect to this paper system, but all central banks are now worried that if the US can do this to one country, if the European Union, European Central Bank can do this to one country, and you've got runaway government that where politicians think that they can do anything they want, then why not you know the US and the Europeans um uh do the same thing to other countries who don't please them or don't obey them and so yes those geopolitical factors do matter uh in currency and debt as well as in this trade war and so you know the the the trade war is obviously directly linked to these this international conflict because Russia is uh right in the middle of it and Russian Russia's friends, you know, India has gotten dragged into this, China's gotten dragged into this and who's to say the next country that doesn't get dragged into this conflict because of some other uh connections economic, political or military that they have with some unfavored uh government actor in the economy. You know, that doesn't mean I agree with everything the Russians or the Indians or the Chinese do. Uh it's just that, you know, that this is uh conflict between politicians that could drastically negatively affect your economy, my economy, and our listeners economy out there in a major way. >> Yeah. Well, Germany's economy is already down the drain. So uh that ship has sailed um for for us but maybe just coming back to the currency. I have one last follow-up question before I you know want to end with some more questions on gold here. But China is pushing more countries and more trading partners uh to to transact into yuan. Um is the Chinese economy or is the Chinese financial system strong enough to demand that already? Um are we at a turning point here where China is starting to make inroads? BHP was an example where 30% of their iron ore trade has to be settled in in yuan. Um as a signal perhaps is the Chinese financial system strong enough to handle that already or is there just a blip? >> Well, [snorts] it's not a blimp. And it, you know, as I mentioned before, it took uh 100 years for the US to become an economic superpower. It also took a hundred years uh [clears throat] for for us to turn the gold standard system in a into a pure paper system. So these things take time. I mean uh for sure and ch but China's been working on this for quite a while and a lot of its strategic economic uh measures in terms of refining gold and refining silver, refining rare earth uh you know this is all part of it. uh you know, President Trump didn't realize when he started this trade war is that he was not holding all of the economic cards that China was actually holding many more cards than um anybody thought. And uh and so they've been working on this uh for quite some time. And you know, the BRICS currency union that they're developing uh is developing very rapidly. And the moves that the United States has been making are really, as I see it, they're they tend to be falling directly into the hands um of the Chinese. And uh so what we've been doing, what President Trump has been doing is uh unfortunately it it has the the effect of actually strengthening the China's hands and they're developing you know a a trading system, a currency trading system, uh a gold trading system around the world and you know the fact that western uh markets for gold and silver really clammed up recently. I mean, that's part of the whole downdraft in the metals market is uh that we couldn't handle uh the the expansion in this marketplace that we've been that you and I have been looking at for a couple of years. Uh and these, you know, London and and Chicago and all these marketplaces didn't they didn't really measure up to that expansion in business, but China is working on expanding all of those businesses. So the trend is in China's favor as I see it and it's going to take some time. Uh I don't see you know the dollar disappearing and the Chinese wan magically dominating the globe in the next couple of years but that's the direction. >> No I appreciate that. I really appreciate your remarks on that topic Marcus. I think it is an important trend that is accelerating. Um maybe last 90 seconds here Mark on gold and silver. Um, as we as we were speaking, gold is below 4,000 and silver is way below $50. Again, around $46.50 as we speak. What should investors do right now? >> Well, I'm not a financial analyst, but you know, I see this as a very long-term trend. Uh, that has positive implications for gold and silver. uh you know if the governments magically or if they even if they tried to fake us into thinking that they weren't going to spend more, borrow more and print more uh you know we don't see any signs on the horizon that that's going to take place. They they haven't made a dent um in the US in terms of government spending. President Trump is, you know, attacking the Federal Reserve for not reducing interest rates and printing more. He's appointing people who advocate for more printing. He's been beating up Jerome Powell who had been, you know, towing a tough line on monetary policy and now Powell has caved in uh concessions to cut interest rates going forward, which means more printing. So I would view I mean there's been a tremendous rise in both metals and the painful adjustment downdraft uh that we are experiencing currently is you know it's relatively small compared to the big up move and I think some of this is obviously profit taking uh and short-term investors running for cover but it's it's also the fact this market is expanding and instead of just silver stackers and central bankers who are long-term holders, you know, we've got a lot more traders and speculators and day traders and machine buying and all that have entered the marketplace and we've seen a lot of disruption in the formal markets in London and in the United States. We're seeing refineries all backed up. We're seeing the the spot price rise above the future price. So this is an abnormal situation right now. >> No, >> although a cutback a cut back in price is is fairly normal. >> Yeah, I think we're overextended over the 200 moving day average by over 30% I believe. So it is normal to see that setback. So personally I'm not too too worried. Of course it is sad to see $4,000 losing the four thou the four handle on the on the gold price here. But hey, as you said, the trend is intact. So I'm not too worried. I think we can all see where this is headed long term and uh really appreciate your insights Mark really appreciate you joining us here on sore financially where where can we send our audience to follow more of your work Mark >> well Mises Institute misesorg it's one of the largest economic web pages in the world one of the most trafficked web pages and you can read everything that we do we have like five different podcasts and right now we're offering her free copy of Friedrich Hayek's uh really his the greatest hits of his articles uh which contains um you know his his article where he suggested the idea of Bitcoin uh you know he was the major inflation fighter during the 1970s uh he wrote about how the worst get to the top. So, if you want a copy of this free book from the institute, just put a comment uh on this podcast episode that I want Friedrich Hayek's greatest hits and I'll send you the link to it. >> Perfect. Awesome. Yeah, just put Hayek or something down below so it's easier to track. And really appreciate that offer, Mark. Much much appreciate that. It was a great pleasure having you on the program. Next time we'll need to schedule like three hours um just just to get through it all. Um really there there's so many things that just you mentioning just bringing up Bitcoin like how does that work in the world where gold and everybody is buying gold and silver right now to protect and just the the theory behind it would be really interesting to discuss. We haven't even talked CBDC's so we'll need to do a part two here Mark very soon. So um really appreciate your time. Thanks so much for coming on and everybody else thank you so much for watching. If you enjoyed this conversation, don't just put hashek down below, but also leave a like and if you haven't done so, hit subscribe to the channel as well. And just just leave general comments down below as well. What do you think of the conversation and how are you applying the school of like the Austrian economics uh to your daily life as well? I'm really curious um how how that works out and what what your thoughts are in that regard. Thank you so much for tuning in. We'll be back. Take care out there.
GOLD: You Will NOT Get A Second Warning! | Mark Thornton
Summary
Transcript
We are living in unprecedented times. The precious metals complex is trading still despite the correction at very very high levels and the US debt just reached $ 38 trillion. What what do we make of this? Uh it is a fascinating time and as you can tell I'm back in Frankfurt. I'm back in the studio and I'm really excited to have my usual setup here but I'm also really excited to introduce you to my next guest. His name is Mark Thornton. He's a senior fellow at the Mises Institute and uh as you can tell we we will talk about the Austrian economics or the school of Austrian economics and how we apply it to today like what can we learn from it and what should we be paying attention to moving forward. Really interesting discussion that we have lined up. I'm really looking forward to this. Um but before I switch over to my guest, hit that like and subscribe button helps us out tremendously and we much appreciate it. Thank you so much for doing that. Now Mark, it is great to welcome you on the program. I'm excited to have you on. Thank you so much for joining us. Oh, thank you, Kai. It's great to be here with you today. >> Yeah, really looking forward to this. Um, as I mentioned to you before hitting the record button, I think you're the first guest that we had on or that we have on uh from the Mises Institute, and we often use the term Austrian economics here on on this program, but I don't think we've ever explained what it means. So, I'd love to start off this discussion, Mark, real quick. Can you give us a 30, 60, maybe 90 second overview? What is the Austrian School of Economics? >> Sure. The Austrian school goes back into Europe into Austria in the 19th century founded by Carl Manger and then you know many students developed in Europe including Ludwig van Mises and he fled Europe during World War II and brought Austrian economics to the United States along with his student Friedrich van Hayek who won the Nobel Prize and Murray Rothbart a Native American and the Austrian school really is a theoretical school. The Austrians invented, you know, the concepts of uh opportunity, cost, comparative advantage, all the things you learn in the first few uh chapters of a a college course and really supply and demand as applied to marginal economics. So we're all about economic theory and less about, you know, charts and numbers, computer programs, data sets, that kind of thing. So we bring a fundamental analysis to the economy and to markets and to uh economic situations. And so that's that's really the important point is it's a theoretical approach, deduct deductive approach based on logic, reason, and human action. >> Really appreciate that, Mark, because I don't think we ever explained what it really means here on this program. Of course, a lot of our viewers know that, but I figured let's fill in the other half that might not be as familiar with that term. Um, but Mark, you you you mentioned something interesting like the economic situation. um help us interpret it a little bit from your point of view like where are we at right now? Um how would you describe it? >> Well, in terms of the economy, I you know, I'm very very concerned with the world economy uh because of the direction that governments have taken us. Uh they're spending out of control. They're all borrowing huge amounts of money and they're all printing up massive quantities of the fiat currencies. And so, you know, the US dollar is is down relative to some of the other currencies, but generally the trend of all fiat currencies right now is down and down precipitously in terms of their purchasing power and certainly if you want to measure it [clears throat] versus the price of gold, the price of silver and so forth. um you know it's obviously that the our money is able to purchase less and less and in the United States in my home economy and in many economies around the world you have a huge percentage of the population where their real income when it's adjusted by prices is actually falling so that they can buy less and less over time and that's a very dangerous situation because At the same time, the governments are making the economies less competitive and less productive. And the trade war on top of that is the thing that's the scariest of all because I know, you know, it comes and goes and President Trump does this and that, but we're still moving forward with a world trade war. And this has military implications and we have military hotspots around the world. And so this is all very very concerning to me um as an economist because of course war is the worst thing that the government can do. But inflation is also uh terrible and so is these massive government debts and politicians around the world whether it's the United States, Canada, Europe, uh the European economies, Japan, um and and even China and many other countries. they're running up huge debts. Um and and you know, even if they're not printing up money now, they're going to have to print up more money in the future to pay for all this. And so, uh the fundamental status of the economy is that it's weakening worldwide and and things like the military situation, the trade war, the budgets, and uh the money printing are all massive concern to me. Yeah, this is reminds me sort of of what the Austrian School of Economics has been warning about all along is exactly what is happening right now. Would would you underwrite that as like this is the endgame in bas based in your economic theory here? Is that what we've been fearing all along? >> Yeah, I mean it it certainly is. And of course an inevitable consequence of all this is that politicians want to push for more government intervention in the economy. They see all of the micro problems emerging because of the macro problems that they're causing. And so their first instinct is to enact even more government intervention. And I think that's where President Trump's trade war is coming, which of course invokes retaliate retaliation from other countries. Uh but they're, you know, in the process of, you know, making it more difficult for families uh to earn their way. It's making they're making it more difficult for companies uh to be productive and to employ workers. they're absorbing capital um throughout the economy so that we're putting more of our real assets into the government instead of into the productive economy where it needs to be to employ people and to buy capital in order to raise people's wages. And so they're doing exactly the wrong things, moving ever closer to socialism rather than to a free market prosperity. >> Yeah, it is interesting. We're seeing that currently on the critical minerals side, but also on the AI chip side where the US has taken a stake in Intel. Um, we're seeing it now on the critical mineral side where the US has invested in MP Materials and many other companies as well. Um, Trilogy Metals comes to mind in Alaska. So, so you're saying like this is a step in the wrong direction. The government may be overstepping its its powers here or overusing its powers. There's ways that the United States can increase its production of anything, including rare earth and critical metals and so on and so forth. But the government coming in and buying stakes and providing subsidies and granting massive loans is obviously the wrong thing. And you have President Trump himself and President Trump's supporters and admirers who were very critical of President Obama making those same subsidies and investments in solar energy and other, you know, crackpot ideas. They were all critical back then of President Obama's choice of favorites, but now they're seemingly saying, "Well, this is the way to salvation." when it's the exact same stupid policy. And so, um, you know, if we peel back, uh, you know, a slight veneer, we realize that, you know, that it's it's the wrong way to go. I mean, that all of President Obama's subsidies and bailouts and uh, massive loan guarantees to the the his favorite firms, all they all failed. And we're going to find out, you know, that the investments in Intel and Rarehurse and Tungsten and all that kind of stuff, uh, it has a short-term blip where you seem to get, well, that that's getting some action. Uh, but down the road, you're going to find, um, you know, a crony capitalist uh, company that's underproductive and and living off the taxpayer. really before we come to the micro and I do want to discuss with you gold and silver because I know you've you've produced videos on that topic as well. I want to stay on the macro for just a bit longer. In my intro I mentioned the uh the crippling US debt situation over $ 38 trillion. The last trillion was the fastest added ever. Um how [clears throat] does that sort of fit in? Like what is the endgame here based on the Austrian framework? Like what what are we looking at? What can we anticipate? Well, I mean there's many different aspects. When you've got $ 38 trillion, there's lots of negative effects. And it means we've put 38 trillion dollars of real resources into the government, which is not productive. It's not efficient. Uh it's not producing goods and services. It's money that politicians have borrowed and they've spent it. And we don't have anything uh to show for all of that money. uh but the debt itself. And so now we're seeing uh the chickens come home to roost on that massive debt because the financing costs, the amount of money that Americans have to pay or excuse me, the American government has to pay to finance that $ 38 trillion is rising. It has risen. It's going to continue to rise and it's over like a trillion dollars a year right now. and it's I think it's the largest single item uh in the government budget or at least one of the top uh items in the government budget. So this is that's an expense that's going to even if everything stayed the same, it's going to you know that's a perpetual expense basically and and of course it's scheduled to rise and when interest rates go higher because of the inflation factor in interest rates I think you know the Fed's going to cut rates uh in the short term but in the longer term it's going to force interest rates higher um And so that debt servicing cost is is probably going to grow. And that's really the thing that I worry about because, you know, they they can't really tax the economy um anymore. We're at the limit as far as taxation is concerned. The borrowing costs are are crippling the private sector. So the only thing they really have to turn to at this point and a lot of uh experts in this area are anticipating them uh relying increasingly heavily on simply printing the money, rolling over the debt. So they'll uh the government will borrow the money and then the Fed will buy uh the debt from the marketplace, but they'll have to print up money uh in order to buy that. And you know we we already experienced that during COVID where the Fed bought up all the debt uh that the government was incurring in the short run and everybody said well it seems to be okay. Uh but then of course a year two three years later we were experiencing 9% in inflation. So that's what we have to look forward to. >> Inflation is an interesting topic Mark because uh we we it is Fed week. So, I almost forgot that in the intro, but it is Fed week, although it almost seems like a nothing burger this week. It doesn't really seem to be making headlines. At least I'm not hearing that much. But the inflation topic is an interesting one because that's sort of the only data we got last week. We didn't get any unemployment data, but the Fed is putting heavy heavy waiting on the unemployment trend that we're seeing right now or on the employment data in general. Do you think they're making a mistake? Are they focusing on the wrong end here, meaning the unemployment data versus inflation? I think the Fed is almost always making a mistake. Um, and I should say that when Austrians, you know, I should qualify my statements that we think that inflation is when the Fed is printing up money uh and injecting it into the economy. Of course, most people speak of inflation in terms of the effect of that policy, which is rising prices. And there is a disconnect between the two in the short run. they have to issue the money. It has to circulate in the economy and then prices rise. So the government gets to buy things uh before the prices go up. The government contractors get the money. The banks and the speculators on Wall Street, they all get the money first and then prices rise and then you and I get the money, but we have to pay the higher prices. And so that that's an important distinction uh that that Austrians do make. And you know the Fed no longer believes that they um are responsible for the higher prices. They they uh ignore and deny the fact that increased money supply increases prices. So they're in a total disconnect. Uh and that's why they make mistakes in terms of policy and timing. And frankly, right now they're, you know, they they've always been telling us, uh, you know, going back in time that they're data dependent. And now that the data is not there, well, they're just proceeding along their traditional playbook. And their playbook only has one play, that's printing money. And they see political problems for themselves. They see problems in banking. Uh, specifically, they see problems in the economy. and they see a stock market that's probably weakening. It's kind of leveling off. And so they're jumping and using their number one play, their number one tool, their only tool, which is to print money, which means they're going to cut interest rates and inject money into the banking system. >> Mark, like it's always interesting like I I like talking theory and it's it's popular of course to bash the Fed. Um, but what should they be doing? A or maybe let's roll or approach it from a different is the Fed even relevant these days and how would you substitute it and C maybe if if we agree that they might be relevant to a certain degree what should they be doing? >> Well, I think it is it is relevant in the sense that what they do does matter. >> Um they're the ones that are responsible for creating higher prices in the economy. They're the ones that are responsible for destabilizing the economy by creating business cycles. Okay? So, they reduce interest rates. They engineer investment demand uh on Wall Street. They drive up asset prices. Uh they create booms. But of course, as that money circulates and as prices rise, those booming investments sour out eventually down the line. and it could take a long time depending on how much money they're willing to inject. Uh and they're also responsible for uh distorting the distribution of income. So when they're in an active phase, they're benefiting stock owners, asset owners, bankers, uh the government, politicians, uh but simultaneously they're undermining the American family. They're undermining real wage rates in the economy. They're undermining productive investment in capital in the firms that actually produce things uh provide services uh that increase the economy's productivity. Everybody knows that small companies that are making investments uh that are you know creating efficiencies and productivity that those are really the source of new jobs and higher wages in the economy. And when the Fed is printing up money and sending it to Wall Street and sending it to Washington DC that means there's not money going to those small companies that we haven't even heard of yet. But that's really the source of growth and strength and prosperity in the economy. Uh, and the Fed can get away with that because, you know, nobody knows about Corporation XYZ or Bob and Ted's magical company um out there that's going to be, you know, the next big company on the horizon that's going to produce the next great product that's going to, you know, create the next great technology that's going to make us more efficient and and that sort of thing. So they can get away with uh you know with the price inflation distortions and the business cycle and also this male distribution of income that they cause that makes the rich richer. The people who already have money and can leverage up. they get richer. But the working class in America who sees their real wages uh undermined and the companies that they work for unable to grow and expand and become more productive and more efficient. Those are all the people that are getting hurt and those are the people that are suffering right now. And and they are based on the unemployment data and and and the other like data that we're seeing it it is not looking great. credit card delinquencies, car loan delinquencies are all increasing as well. Um, it's not looking pretty out there. Um, let's be honest. Um, but let's try to put that into context with the rising gold price as well. And, uh, I'm wondering like Mark, maybe on a very high level at first, but what is gold and and and silver to a degree telling you here as we actually dive below 4,000 as we speak here, Mark? >> [clears throat and cough] >> Gold and silver, excuse me. Are real money. That's what the market chose as money thousands of years ago. The government has intervened in money slowly. It took them about a hundred years to go from gold and silver uh a hundredyear transition to where they could just print up pieces of paper. But they did it. They got away with it. They're getting away with it. Uh but they can't completely hide what they're up to because gold and silver prices are reacting uh to this runaway spending, inflation, and borrowing. And uh you know, and so we've already seen a big big increase in gold prices from like a,000 to over 4,000. Um and silver prices from around $10 on up to $50. And so this runaway government is showing up in the markets for pre precious metals. Um I'm not very surprised at that whatsoever. And I I think that's going to continue. I know that we're going through uh a painful pullback right now. But if you look back in the charts, um, you'll see that there's been, you know, a a many hundred% increase in the price of both of those metals since they bottomed out a number of years ago. And, uh, you know, there's nothing really to suggest that uh, that's going to stop or reverse itself in any kind of major way. I mean right now this uh has is really being led by other central banks themselves. So the dollar is the world dominant currency but other central banks no longer trust the dollar. So it's hard to believe that individuals could trust the dollar as a store of value. Of course we have to use it as a medium of exchange. Um it's that's still relevant. But as far as being a store of value, um even central banks, other central banks no longer trust the dollar and an increasing number of individuals and companies um are turning away from that. That's really what the whole bricks uh currency alternative is about where you have you know Brazil, Russia, India, China, South uh Africa and other countries uh wanting to get away from the dollar uh the monopoly dollar and have some alternative that's more stable and less subject to US control. I was going to say like the dollar has been declining since the 70s since the Nixon took us off the gold standard or took the US off the gold standard. Um why is it now so pertinent to to leave the dollar system and um it seems to be there was a rethink that was going on and I'm struggling a little bit that it's just the the loss of value of the US dollar as a currency. I think there is more at play and you sort of hinted at it with sort of your last remark here. It's there there's geopolitics at play as well. Um, so I'm trying to understand and put maybe the rise of the gold price in context. How much does it have to do with a loss of value in the currency versus just geopolitical turmoil on the other end? >> Well, there's so many factors. I mean, that's the thing about gold and silver as money is that everything affects them. And I showed recently if we did have a free market world economy that that those two things would be perfectly almost perfectly stable. But in the world where you have a highly interventionist economy and competing countries where the where the US is no longer um you know the sole dominating factor in the world. you know, you have China which has risen to an economic superpower and it wants to have a say so uh with respect to money and and so it's organized the brick countries and so it's actively um trying to take its role as a world dominating currency and then of course you have the situation in Russia where President Biden essentially took away the Russia's foreign exchange uh money and its it and its ownership of US government debt. The Europeans did the same thing. So, uh, the the Russia, not only are the Russians no longer trusting the United States and the euro with respect to this paper system, but all central banks are now worried that if the US can do this to one country, if the European Union, European Central Bank can do this to one country, and you've got runaway government that where politicians think that they can do anything they want, then why not you know the US and the Europeans um uh do the same thing to other countries who don't please them or don't obey them and so yes those geopolitical factors do matter uh in currency and debt as well as in this trade war and so you know the the the trade war is obviously directly linked to these this international conflict because Russia is uh right in the middle of it and Russian Russia's friends, you know, India has gotten dragged into this, China's gotten dragged into this and who's to say the next country that doesn't get dragged into this conflict because of some other uh connections economic, political or military that they have with some unfavored uh government actor in the economy. You know, that doesn't mean I agree with everything the Russians or the Indians or the Chinese do. Uh it's just that, you know, that this is uh conflict between politicians that could drastically negatively affect your economy, my economy, and our listeners economy out there in a major way. >> Yeah. Well, Germany's economy is already down the drain. So uh that ship has sailed um for for us but maybe just coming back to the currency. I have one last follow-up question before I you know want to end with some more questions on gold here. But China is pushing more countries and more trading partners uh to to transact into yuan. Um is the Chinese economy or is the Chinese financial system strong enough to demand that already? Um are we at a turning point here where China is starting to make inroads? BHP was an example where 30% of their iron ore trade has to be settled in in yuan. Um as a signal perhaps is the Chinese financial system strong enough to handle that already or is there just a blip? >> Well, [snorts] it's not a blimp. And it, you know, as I mentioned before, it took uh 100 years for the US to become an economic superpower. It also took a hundred years uh [clears throat] for for us to turn the gold standard system in a into a pure paper system. So these things take time. I mean uh for sure and ch but China's been working on this for quite a while and a lot of its strategic economic uh measures in terms of refining gold and refining silver, refining rare earth uh you know this is all part of it. uh you know, President Trump didn't realize when he started this trade war is that he was not holding all of the economic cards that China was actually holding many more cards than um anybody thought. And uh and so they've been working on this uh for quite some time. And you know, the BRICS currency union that they're developing uh is developing very rapidly. And the moves that the United States has been making are really, as I see it, they're they tend to be falling directly into the hands um of the Chinese. And uh so what we've been doing, what President Trump has been doing is uh unfortunately it it has the the effect of actually strengthening the China's hands and they're developing you know a a trading system, a currency trading system, uh a gold trading system around the world and you know the fact that western uh markets for gold and silver really clammed up recently. I mean, that's part of the whole downdraft in the metals market is uh that we couldn't handle uh the the expansion in this marketplace that we've been that you and I have been looking at for a couple of years. Uh and these, you know, London and and Chicago and all these marketplaces didn't they didn't really measure up to that expansion in business, but China is working on expanding all of those businesses. So the trend is in China's favor as I see it and it's going to take some time. Uh I don't see you know the dollar disappearing and the Chinese wan magically dominating the globe in the next couple of years but that's the direction. >> No I appreciate that. I really appreciate your remarks on that topic Marcus. I think it is an important trend that is accelerating. Um maybe last 90 seconds here Mark on gold and silver. Um, as we as we were speaking, gold is below 4,000 and silver is way below $50. Again, around $46.50 as we speak. What should investors do right now? >> Well, I'm not a financial analyst, but you know, I see this as a very long-term trend. Uh, that has positive implications for gold and silver. uh you know if the governments magically or if they even if they tried to fake us into thinking that they weren't going to spend more, borrow more and print more uh you know we don't see any signs on the horizon that that's going to take place. They they haven't made a dent um in the US in terms of government spending. President Trump is, you know, attacking the Federal Reserve for not reducing interest rates and printing more. He's appointing people who advocate for more printing. He's been beating up Jerome Powell who had been, you know, towing a tough line on monetary policy and now Powell has caved in uh concessions to cut interest rates going forward, which means more printing. So I would view I mean there's been a tremendous rise in both metals and the painful adjustment downdraft uh that we are experiencing currently is you know it's relatively small compared to the big up move and I think some of this is obviously profit taking uh and short-term investors running for cover but it's it's also the fact this market is expanding and instead of just silver stackers and central bankers who are long-term holders, you know, we've got a lot more traders and speculators and day traders and machine buying and all that have entered the marketplace and we've seen a lot of disruption in the formal markets in London and in the United States. We're seeing refineries all backed up. We're seeing the the spot price rise above the future price. So this is an abnormal situation right now. >> No, >> although a cutback a cut back in price is is fairly normal. >> Yeah, I think we're overextended over the 200 moving day average by over 30% I believe. So it is normal to see that setback. So personally I'm not too too worried. Of course it is sad to see $4,000 losing the four thou the four handle on the on the gold price here. But hey, as you said, the trend is intact. So I'm not too worried. I think we can all see where this is headed long term and uh really appreciate your insights Mark really appreciate you joining us here on sore financially where where can we send our audience to follow more of your work Mark >> well Mises Institute misesorg it's one of the largest economic web pages in the world one of the most trafficked web pages and you can read everything that we do we have like five different podcasts and right now we're offering her free copy of Friedrich Hayek's uh really his the greatest hits of his articles uh which contains um you know his his article where he suggested the idea of Bitcoin uh you know he was the major inflation fighter during the 1970s uh he wrote about how the worst get to the top. So, if you want a copy of this free book from the institute, just put a comment uh on this podcast episode that I want Friedrich Hayek's greatest hits and I'll send you the link to it. >> Perfect. Awesome. Yeah, just put Hayek or something down below so it's easier to track. And really appreciate that offer, Mark. Much much appreciate that. It was a great pleasure having you on the program. Next time we'll need to schedule like three hours um just just to get through it all. Um really there there's so many things that just you mentioning just bringing up Bitcoin like how does that work in the world where gold and everybody is buying gold and silver right now to protect and just the the theory behind it would be really interesting to discuss. We haven't even talked CBDC's so we'll need to do a part two here Mark very soon. So um really appreciate your time. Thanks so much for coming on and everybody else thank you so much for watching. If you enjoyed this conversation, don't just put hashek down below, but also leave a like and if you haven't done so, hit subscribe to the channel as well. And just just leave general comments down below as well. What do you think of the conversation and how are you applying the school of like the Austrian economics uh to your daily life as well? I'm really curious um how how that works out and what what your thoughts are in that regard. Thank you so much for tuning in. We'll be back. Take care out there.