Minor Issues, Major Conversations: Mark Thornton’s Four-Interview Roundup

Summary

• Precious Metals: Strong, long-term bullish case for gold and silver driven by fiscal deficits, debt monetization, central bank buying, and geopolitical tensions; recent pullbacks viewed as normal volatility.
• Gold: Framed as real money and a barometer of government intervention; signals de-dollarization and loss of confidence in fiat with central banks diversifying reserves into bullion.
• Silver: Expected to outperform due to byproduct supply constraints from industrial metals, rising tech/energy demand, and a likely decline in the gold-silver ratio over time.
• Energy Commodities: Underinvestment in oil, gas, coal, and uranium alongside surging AI-driven electricity demand supports a tilt toward energy commodities over equities.
• Macro Outlook: Elevated risks from renewed QE, rate cuts, large deficits, and potential hyperinflation; BRICS/de-dollarization trends weaken trust in the USD as a store of value.
• Policy Risks: Trade wars and industrial policy (e.g., stakes and subsidies in firms like Intel or rare earth plays) seen as misallocations; stock market fragility could catalyze rotation into hard assets.
• Investment Perspective: Preference for long-term allocation to physical metals as portfolio protection; cautious on long-duration bonds and fiat cash given erosion of purchasing power.

Transcript

Hello and welcome to another episode of the minor issues podcast. I'm Mark Thornton at the Misesus Institute. Well, our contest this year to p predict the value of Bitcoin and the value of gold in a relative sense by the end of this year, so all of 2025. Uh certainly been interesting. Volatility is still the name of the game. much has happened within the period uh and much has happened even in recent days since uh the last update. Bitcoin is up uh 8.4% year to date as of midweek and gold is up 61% uh year to date. So that puts the target winning number at less than 0.15. So it's a landslide victory so far this year for gold. Now given the volatility we've seen so far this year, a great deal could change by the end of 2025. So stay tuned. This week's episode will feature four different podcast interviews I've done in recent days. I was happy to find out that all of the hosts of these shows hold the Austrian school in high regard. In addition to questions about the Austrian school and the economy in general, there were several questions about recent episodes of the minor issues podcast and my analysis of the market for precious metals. Now, the interviews took place during the sharp contraction in uh recent precious metal prices. So, I think you'll find the discussion illuminating. Now, the interviews are about 30 minutes each, and given that there are four of them, you might want to increase the playback speed. Next week's episode is planned to show how the Austrian analysis provides an integrated and comprehensive analysis to all the major economic problems in the US and world economy and some of the so-called bright spots. In contrast, most economic com commentary deals with issues separately siloed outside of a theoretical framework with often a strong media bias. As always, your comments, your questions, and your suggestions on the YouTube platform of section of this show are very much appreciated. Thank you for listening. Hey everybody, this is Rob Kel with the Freedom Report and I have a very special firsttime guest on the program. It is Dr. Mark Thornton who is a senior fellow at the Misesus Institute. He's the Peterson chair in Austrian economics from 2021 to 2023. He uh hosts a couple of podcasts of his own and is a book review editor of the quarterly journal of Austrian economics. Uh Dr. Thornton, welcome to the program. >> Rob, it's great to be on the Freedom Report. Thank you for having me. >> So do Dr. Dr. Thornon, I guess you said I could call you Mark, so I'll call you Mark. So, we were chatting before the interview and just talking a little bit briefly about our own backgrounds and you mentioned something very interesting. And I said, you know, the way I came to Austrian economics was originally after I got laid off from Ernston Young in 2009 and then I started studying the economy, figure out what was going on, went to work for a forex company, had seen the mortgage market from the inside and I knew something was wrong and I was like the economics I was taught in my business degree was not correct and the accounting was not correct. Something was off and I read Creature from Jackal Island and then I started reading reading books at the Misesus Institute and I got hooked on Austrian economics. Can you explain what led you into Austrian economics as a field to study and and why that became s such an important part of what you do? Well, I grew up in the 1970s and you know the economy was in a quagmire of stagflation of high um inflation and high unemployment and the Keynesian models that I was still being taught in college were you know couldn't explain any of that and so naturally I was looking as an economics major I was looking for an alternative view and I found the Austrian school Lwig van Mises Friedrich von Hayek, Murray Rothbart, all on my own. And I took all these courses in college and never once were any of these people mentioned. >> And so I decided to go to graduate school and learn more about it only to find that they really didn't teach any Austrian economics in graduate school. But I was fortunate that the Misesus Institute came to Auburn University right after I showed up. So, >> you know, the Austrian school uh Ludwig van Mises brought it to the United States uh during World War II when he was chased out of Europe by Hitler. And um you know it dates back into the old classical school uh where economic reasoning is deductive, it's logical, it's based on human action, human motivations um you know and the Austrians are the ones that created things like supply and demand and opportunity cost all the things at the beginning of an economics course which seemed seem to make sense to everybody before they get off into Keynesian um monitoriism and other diversions. um you know and and even price controls. >> Uh we you see early on in an economics course, Ludu Van Misesus was a socialist when he was young >> and he he was uh given a research project to study rent control in Vienna and found out that it just didn't work. And so he started digging deeper and he found the existing Austrian school at the University of Vienna and he made some wonderful contributions. The theory of money and credit, the book on socialism which debunked socialism in 1920 and then of course he went on to make many many more uh contributions and that all fell into my lap. And so it was a um it was a very fortunate thing that happened to me many years ago and I'm still living the dream. Yeah, it really changed the way that I looked at economics when I had my business school degree at University of Texas at Dallas. It was a hybrid degree at tech and a business one called management information systems. But I took accounting and finance classes and I remember getting into economics and they were talking about supply and demand, micro and macro. And it was funny. We would be in class and we would take a current event and it didn't match up with what they were teaching. And I knew back then, you know, something's a little off, but really when it came to the Great Recession, you could tell that the the the printing policies, the the the way that the Fed had been intervening in the market, uh the direction of the economy wasn't stable. And at that point, I had sort of a disconnect. I was like, wait a minute, this is what I've always been taught. I've been a business student. I've been in business for a long time. Was working for the big four, made all these assumptions that were wrong. It kind of turned it on its head. And the way I saw that was through the failure of the mortgage market and working inside on a project for EY. Our client was Morgan Stanley. They bought 52,000 loans from Novastar. They were collapsing. They brought us on a bunch of us accountants and technical people to say, "Come help us fix this." It was a weird project, not my typical auditing project, but we got to see the problems from the inside. And I began to look at this and say, "This is insanity." uh the way that they were issuing these loans uh made no sense whatsoever. And all of a sudden I began to see this bubble and I knew at that point there were problems. And then I got, you know, my famous story is I got laid off in in February 1st, the the height of the the crisis and went to work for a forex company and then looked at the currency markets and said, "Okay, this is insanity. This makes no sense." And the funny thing is I could see on the charts because I was supporting our clients, so I would have to explain to them what's going on. and I would see the charts and you would see these big interventions come in the forex market and you knew it couldn't be an individual player. So at that point I knew that the US government was intervening in markets and since then I've talked about how they intervene in the gold markets which we'll get to. Um and that's kind of how I came to it. I came through experentially. Uh sounds like you may have also. I was reading one of your recent stories on tariffs and you were talking about how tariffs are really not the answer. Could you talk about tariffs a little bit and why tariffs can be dangerous in an economy and some of this distortive effects that they have on the economy? >> Well, tariffs is actually one of those things that almost all economists agree >> that it's bad for an economy. It's a it's a burden on the domestic people, Americans, and it's also a burden on foreigners. and it it really uh hurts consumers and it hurts our ability to produce. It doesn't really provide any rational benefits. Now, of course, there's cronies um that are going to be able to take advantage of the tariff protectionism. So, if we put on tariffs, it's going to protect inefficient uh local domestic producers. But by and large, it's going to hurt people across the board. American consumers are going to be hurt and American producers, entrepreneurs, workers are going to be hurt because they're going to have to pay more for their inputs. So, it actually makes American suppliers uh less efficient and less competitive. And it gets worse from there because, you know, tariffs are something that can get out of control. Um because if we enact tariffs, uh people other countries will enact retaliatory tariffs against Americans and you get into a trade war where everybody is upping the ante, so to speak, on tariff rates. And so you're continually throwing greater and greater burdens on uh your domestic consumers, your domestic producers and on foreigners. Uh and so this is you know there's nothing good about tariffs. And eventually you know these tariffs become uh they uh develop bad relations between countries. And so because of uh President um you know Trump's tariffs uh we're losing friends in Canada and in Mexico. We're losing friends in Europe and we're we're confronting China. You know, these are there's a lot of things that can be done to address those issues um that don't involve tariffs and uh and don't create tensions between countries because history reveals that tariffs are just one step away from actual confrontation, actual military uh intervention um on the part of players. And we see people taking up sides and we see the United States losing friends like we put this uh big tariff on India because it was accepting Russian oil. Um we've been trying for decades and decades and decades to develop good relations with India and to pull them away from communist China and communist in in Russia. and uh and now we've just simply thrown them back into that Chinese Russian orbit uh and away from the United States. So it it degenerates in terms of foreign relations as well as just basic economic efficiency and basic uh and it's basically a harm to our standard of living. >> Yeah. And I wanted to transition to another big talking point more here at home with regards to Austrian economics versus Keynesian econ economics that most of us were taught in school and is the subject of taxes. Um taxes in my opinion can be very damaging to economy because they will reduce the amount at which consumers can spend and can overall reduce the output of the economy and often the monies are given to a government which can be the least efficient option in implementing whatever program needs to be implemented whether it be social programs even building roads things like that. Can you talk a little bit about your view on taxes whether they're generally a good or bad thing? Is it good to have them at all? Is there like a point at which they start to become uh negative to the economy or is it good to have them at all or is it would it be good to to completely remove them? >> Yeah, I'm against all taxation on libertarian grounds and on economic grounds. All taxes uh destroy production, destroy capital uh and reduce the standard of living. So they're across the board negative. Now, Americans, you know, or people living in big countries, they don't feel like they can do very much uh to avoid taxes. Uh but if we look at like the situation in the United Kingdom right now where they're uh threatening to raise taxes uh in order to continue to finance government bureaucracies and welfare and increase military spending and you know all sorts of things that don't add anything productively into the economy. Well, it's undermining business. It's undermining what's left of industry in the UK. uh and it's it's quickly leading people to actually just pull up the roots and leave the United Kingdom. So people are have been leaving uh are preparing to leave uh you know and it's the wealthiest people who are leaving and the people who pay the most taxes. Uh and so this is a negative uh reinforcing um circular uh system that just reduces the overall economy uh and it's going to reduce the overall standard of living. So if you take it to a smaller country where people are more mobile uh you see that um people are running away from those taxes and it's precisely the most productive people and the people who pay the most taxes who are the mo ones that are most likely going to flee away. And so yeah, I would I would definitely put the brakes on all ideas about increased taxation. And what we really need is uh more tax cuts. You know, President Trump passed uh what was called a tax cut, but it was really just locking in place for a few more years um the tax cuts that were already on the books. So we need to think about cutting government, cutting the deficit, and cutting taxes even further to stimulate the economy to encourage wealth and capital production and to increase the standard of living. >> Yeah. I I want to switch over to fiscal policy here for a moment because taxation is a way in which the government takes a portion of the money supply out of the hands of Americans and reallocates it to government. But really maybe looking at an even bigger part of the problem and another uh thing that we created in the early 1900s was the Fed. I know you've written a lot about the Fed. The the Fed, you know, the value of our dollar has decreased by 98% since 1913. That's a popular statistic and often you'll see graphics in social media about how the dollar value has gone down. Of course, gold is reflecting that now as the prices rise, but um recent decisions by the Fed because of the unemployment issue to end their quantitive tightening program that Pal's had in place the last couple of years where he raised interest rates and where they assuances of debt that they held expired, there weren't buying new ones. So, it was like the slow passive roll off of debt holdings by the Fed. It looks like they're going into more of a quantitative easing. They've lowered interest rates now down to the 3 and 3/4 to 4% rate, almost a full percent below the peak during his tenure. And with them ending quantitative tightening, I'm assuming that at some point they're going to quantitative ease. They're actually going to buy if we continue to have problems in the economy. At this point in time, with over $ 38 trillion in debt, with a declining dollar that for the first time, you know, in my lifetime is no longer, I don't think, the reserve currency because we're now below 50% of foreign held reserves. you know, what is that signal? Is that signaling the end of this stage of the dollar era? Do you think bigger troubles are coming? And what do you think about the Fed's policy recently? >> Well, I mean, definitely I'm in in terms of the macroeconomy, I'm definitely worried about the current state. I mean, we have runaway government spending. We have runaway government deficits. And we have a $ 38 trillion national debt. It only took a couple of months to go from 37 to 38 trillion dollar in debt. And then of course there's the unfunded liabilities of the federal government in terms of social security, Medicaid, Medicare and pensions etc. Uh so we're in a very unbalanced fiscal situation in the US and of course that necessitates um you know they can't really raise taxes fundamentally. Um they're not cutting spending at all. Um you know that uh Elon's uh program was really a mirage, a fake. Um, and uh, you know, as much as we cheered it on, it it really didn't put a dent in anything. And so, you know, that means in all likelihood that the Fed is going to monetize that debt, that they're going to have to buy up a good portion of that and monetize it, uh, injecting, uh, money into the economy and creating price inflation, uh, down the road. Um there's really um you know that's the way it looks. I mean uh and they you know the Fed has one thing you know it's printing money of course they reduce interest rates they buy government bonds they they just make up money out of thin air in order to pay for those bonds. And that money of course benefits the government. It benefits the big banks. It benefits the power elites um tremendously, but as it trickles through the economy and is spent by these initial money grabbers, uh of course it means higher prices for you and me and everybody out there. And uh and you know, we we've got to expect that that's what's go coming down the line. And I've been expecting, you know, they've been tailing off this quantitative tightening business where they're selling part of their balance sheet into the marketplace that never really got very far. Um, and they began, you know, uh, curtailing that program, uh, a long time ago. Now they stopped, uh, releasing that debt into the economy. And I have every belief in the world that they're going to start buying up uh more assets, monetizing more government debt, maybe mortgage back securities. You know, they're very they're very worried about the long end of the curve, the 30-year government bond, the 30-year mortgages, things of that nature. Um, you know, on the short end of the curve, of course, Obama, Biden, and Trump one and Trump two are are appointing easy money doves to the Federal Reserve uh rate making body. Uh, so that reinforces our expectations. You know, if the president is calling for lower interest rates, and the last several presidents have been appointing people who are amicable to lower rates, um then that's what we've got to expect. And that means they're going to be buying up uh they're going to be quantitative easing. They're going to be buying up a lot of uh you know, government debt uh across the curve. And uh so that means more inflation uh price inflation in our future. Um and ultimately of course uh that's going to harm our economy, no doubt. Um but that's I I think that's the general direction. Um and uh there's nothing that they've said, there's nothing that they've done that would lead us to believe that they are somehow in the process of reforming the way they do things in Washington DC and the Congress, the president or the Fed itself. >> Yeah. Something interesting that you mentioned uh uh at the beginning was that the big banks benefit from the monetary creation and I wondered if you would talk about something called the Cantalon effect in which the money as it's produced benefits the first person that gets it more than everybody else and then eventually as money enters society you get inflation. Has that been something that you've studied as well? >> Oh yeah. I've done um most of my research in recent years on the economist Richard Cantion >> who wrote a manuscript in 1730 uh in the aftermath of the South Sea and Mississippi bubble in which he made he became a you know a millionaire uh back then and uh was one of the richest people in the world. Um but he was involved in the Mississippi bubble. He was an insider and he wrote a manuscript where he basically developed economic theory and he explained everything from price formation and supply and demand uh trade policies, currency policies and the business cycle and the role of the national bank is what it was called back then. and um he said that you know it's all it's all a game and it's going to come home to roost. And basically uh his idea and he looked at several different cases but in our uh environment basically the national bank is going to be injecting money uh into the economy and the people who get the money first um they're going to benefit. uh you know typically uh they've got the money before prices go up uh or they get the credit uh from the uh finance industry um and it raises asset prices. So stock prices for example, you know, he saw that the policies back then raised the prices of Mississippi company stock and uh and so there were these great beneficiaries uh tightly held. It was a tight-knit group of investors in this company and the price of that stock went crazy uh upward and he and a lot of other people made tons of money off of it. But of course, the bubble burst. The money was all still there percolating through the economy, but it was driving up prices of food, of clothing, of, you know, of shelter and and everything else that regular people buy. They never owned the shares of the company. So, they didn't benefit. All as they saw were higher prices, higher cost of living. And so canon developed that analysis at a theoretical level and we're still using it today. Now, of course, notoriously the Fed says, you know, they don't touch that theory with a 10-ft pole because it implicates them >> uh as the bad guy um you know, as part of a corrupt process uh that hurts the American people. uh and so the Austrian school uh Misesus Hayek and Rothbard you know made a big deal of this analysis and of course it makes perfect sense once you once you're it's explained to you um but of course uh mainstream economics in the elite Ivy League schools they don't mention it um you know University of Chicago it doesn't get mentioned at all at the Fed it just doesn't get mentioned. It gets dismissed um as not important. But of course, it's really one of the most important things. It causes higher prices. It causes the business cycle. And it causes a government distribution of wealth away from the working class and into the highest levels of the capital owning classes. And again, so this is the big banks, big corporations, and the power elite that really control the government. >> Yeah. And I think gold has been signaling transitioning precious metals. Gold's been signaling something is wrong with the economy over the last 18 months to two years. Gold has doubled in price. We almost got to that $4500 range. Right now, it's hovering at $4,000. Silver broke its all-time high of $50 uh that it hit twice. Uh the precious metals seem to be indicating that uh the dollar's under a lot of pressure. We're under a lot of pressure, the currency is not doing well, the economy is not doing well. I know you've been studying the precious metals as of late as well. What are your thoughts on gold and silver, what they're doing in this market and what they may be telling people about what's going on with our currency and with our current economy? Well, you know, in a free market economy, the price of gold or its purchasing power um is the most stable thing in the economy. Okay? So, if we had a free market society, if we had a libertarian globe, um you know, the purchasing power of gold would stay almost constant over long periods of time. So anytime there's a change uh in the price of gold, it reflects some kind of government intervention and government uncertainty. Uh whether that's inflating the money supply or uh military tensions around the world or, you know, inflation getting into interest rates. Um gold reflects everything that's going on in the world. And so when we see gold, you know, go completely berserk uh from like almost down to $1,000 an ounce up over $4,000 an ounce. um you know that's all driven by government activities in the marketplace and uh and so that's a direct reflection of what our governments are up to and uh you know creating tensions uh spending wildly uh inflating madly u you know this is a direct reflection of all that and so uh I'm not the least bit surprised that uh precious precious metal prices have gone up. Of course, we're experiencing a pullback right now as you know the the market experienced intense growing pains there as we approached $4,000 on gold and $50 on silver. People were rushing in the commodities um uh wholesale markets got all glued up. The futures and the spot price got all glued up. Um you know so we were experiencing growing pains. Uh metals were being flown around the world and uh you know markets were seizing up and refineries couldn't handle all the the product coming in um you know and and the premiums on on coins were were swinging wildly. Okay, that's just growing pains um in the market. everybody rushing in uh to get involved. And I think that's, you know, that's a normal part of markets. Markets never go in linear fashion up or down. Only in my mind do, you know, do I think, you know, prices should just go to $10,000 immediately. That never works out that way. If you look at any price index for any commodity or any stock or any bond, you're going to see fluctuations. And that's what we're seeing right now. The period before that when it went from,00 to 44,400 or whatever it was, uh that was almost a linear up uh period. You know, it was very, you know, there was a period where it leveled off and then it took off again. Um that's unusual. Uh what we're experiencing right now is not um unusual and it's not unexpected when a market when everybody's rushing into a market the way they have been um in the last month or so. >> Yeah, it's it's been very interesting. You know, I used to own a coin shop and now I run a national precious metals dealer as well. And just seeing those prices go as quickly as they have. I've been watching this market for almost 20 years. I've never seen anything like it on the charts. And one of the interesting things that you and I were talking about before we started recording was silver and how silver is different. You've been studying the volatility of silver. Any insights there for our listeners on why silver acts a little bit differently than gold in these types of markets? >> Yeah, I mean silver just now broke through $50, which was the high price in 2011 and 1980, >> you know. So and and gold uh its high price was you know 850 and so forth. Uh we we had already broken through those high prices on gold and but not on silver for so very long. Um but there are a lot of factors that explain that. I mean there there could be manipulation of these markets and there probably is. I mean anybody everybody wants to manipulate markets. uh and some people have been penalized for doing that in silver. But I think the fundamental uh factors play a huge role here as well. And I think that um you know the silver um is we get most of our silver as a byproduct of other metals and the other metals the industrial metals like lead and zinc, copper um and so on. Those metals all experienced a big price rise at the beginning of the housing bubble in the early 2000s. So we had a housing and real estate bubble in the United States, in Canada, and the UK and and other countries. And then we had infrastructure bubbles in places beginning at this same time um in places like China and India. And so all of those, you know, housing and infrastructure required a lot more uh lead and zinc and um copper um in order to accomplish all that. So the price of those metals increased a lot back then. And silver, we get about 70% of silver mining as a byproduct of those industrial metals. And so we've been getting a lot more silver dating back more than 25 years uh as a result of this byproduct production. And lead, zinc, and so forth, copper have been relatively high for the last 20 years. And so I think we've been getting sort of bonus amounts of silver uh since the last price high in silver. And that has been a suppressing factor on silver prices. But notice what happens. And I'm anticipating the economy uh is going to experience a long overdue correction in the overall economy, the overall stock market. And so those industrial metals might not be in such high demand. And so if the those industrial metals fall uh the byproduct production of silver in those metals uh will also fall or be relatively less. And so if you if that headwind uh occurs at the same time that there's an increase in the demand for silver, we should expect the price of silver to outpace any movements in the overall market for precious metals, gold, palladium, u platinum and silver. So, you know, there's a lot of uh, you know, historical knowledge that people in this market have about silver gyating wildly around the price of gold. And I think it's the fact that most silver nowadays comes as a byproduct of industrial metals that explains that variability and uh, and sets us up for what might happen in the in the coming years. to kind of wrap this all up and and and put it in a bow and looking at what we've talked about. Do you think it's possible, Mark, that we could eventually go back to a biometallic standard like we had in our country for so long before the Federal Reserve? And if so, uh would we have to have some sort of debt collapse or jubilee in order for that to happen? This is a question that a lot of my listeners want to know. Can we ever get back to having honest money? Uh is that truly possible? Do you think? I do think it I I do think we're going to get back to an honest mon monetary system. I But getting there could be incredibly painful because right now we're taking baby steps on the road to hyperinflation where the government has to increase the money supply in vast vast quantities and driving down the purchasing power of the dollar much more so today. I mean other countries even advanced countries have experienced these hyperinflations where money becomes difficult to use because you have to use it uh almost immediately. you can't hold money balances because it's losing purchasing power so rapidly >> and under those conditions people will start um to barter and they will start to use gold and silver uh to make exchanges and uh so I think you know if the government doesn't change things around and I'm not I have no anticipation that the current group uh in in charge of things wants to change anything uh then I I can see us being essentially almost forced back onto uh a commodity uh honest money system using gold and silver. And I think you know if we take if we go the painful route it means people are going to resort to barter and it's going to be people uh using uh you know the old constitutional silver and uh and gold for large purchases. Um because money is just not going to be holding its value uh on the current if the current trends continue. >> Yeah, I agree with you on that. And Dr. Thornton, thanks for joining the program. We'd love to have you back if you'd like to come and uh for those uh that are interested in your work and hearing more from you. Where can they reach out to you maybe to access your podcast and other work that you have? >> Yeah, I'd love to come back on the show. uh love your work >> and uh our web page is one of the largest web pages in the world. Everything's for free. There's no registration mis.org. And we're running a a special where you can get a free copy of uh a new book of it's a collection of essays by Freda Hayek who is Mises's student won the Nobel Prize uh for his work on the business cycle theory. uh he actually hinted at the development of cryptoc currencies. >> Um so just put uh Hayek in a comment uh below in the show and we'll uh we'll get you a copy uh of this uh very interesting book. Uh you know, we're here. I know a lot of people are uh down on young people and why they don't know solid economics, but that's what we specialize >> uh here at the Misesus Institute. So, I encourage everybody to check that out. I >> appreciate that very much. I appreciate the Mises Institute for that. You know, I have two kids that one's 22, one is 16, about to be 17, and they're having to learn how things work, but they're they've got a front row seat, Mark, to the problems. And I think this type of research and education would be hugely beneficial to that generation and learning what potential solutions could be. So we thank you for doing that and definitely we will make sure that everybody that puts in Hayek in the comments will get a copy of that and that's very generous of the institute and again thank you for coming on. We'll definitely have you on again in the future. >> Thank you Rob. It was great. >> 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 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 Hyek who won the Nobel Prize and Murray Rothbard a Native American and the 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 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 ju 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 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 in in 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 based 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 retali 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. And 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 minerals 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 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 like talking theory and it's 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 can 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 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? 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 the 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 uh 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 Russian 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's 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 the 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, 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 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 Champa 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 there 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 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're 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 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 cut back 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 set back. 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, mises.org. 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 podcast and right now we're offering a 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. >> I'm Charlotte Mloud with investingnews.com and here today with me is Dr. Mark Thornton senior fellow at the Mises Institute. Thank you so much for being here. Great to have you. >> Oh, it's wonderful to be here with you, Charlotte. Thank you. >> Really good to have you. I'm excited for this conversation. And I think that many of our audience members will probably be familiar with you already, but I was thinking since it's our first conversation, maybe you could begin with a brief overview to your background and the work that you're doing right now. >> Well, um, I'm a PhD academic economist. Uh I work for the Misesus Institute and have been with them virtually from the very beginning and you know promoting Austrian economics uh through our web page and through academic uh publications and popular publications and we have one of the world's largest uh economic web pages. We have five uh different podcasts uh that I try to be as much a part of as I can be. I work with the academic journal. I teach at Auburn University. Um, my research has been on markets in general, but also on the war on drugs and the work of Ludwig van Mises and a bunch of other things, including the American Civil War. So, I I do a lot of different things. >> Clearly, you have a lot going on, and we're going to go down some of those paths today. I was hoping our audience has a strong interest in gold as well as silver and I wanted to start there because I think it will open up different paths that we can follow. Beginning with gold, we know that the metal has been on a record setting rise this year. Of course, we're currently in a a bit of a pullback, but I'm wondering if you can tell me what you see as the key drivers there. What would you pull out for gold? Well, I think it's important to realize that gold was money until the government took it over. Gold and silver. And the reason the market established gold and silver is money thousands of years ago was because of the physical properties of those metals made them ideal for money. And the big conclusion is that they held a very stable value versus all other prices. So when we see abnormal prices for gold in terms of fiat dollars, it's all really the result of government intervening in the market, replacing gold, printing up money, endangering economic performance, extracting resources, trade wars, military actions, all of these things. I know that a lot of um commentators on gold and silver, they like to fixate on corrupted markets or uh the Chinese or war. But really, gold absorbs all of the uncertainties of the world. And when the price lets up a little bit or contracts a little bit, it's the world breathing a sigh of relief. But the general upward movement of gold prices is clearly a result of government overspending and not really caring that they're overspending, borrowing beyond belief and not really doing anything to slow it down and then just printing up money to pay for the borrowing. So, it's really runaway government spending, borrowing, inflating that's pushing these metal prices uh to record levels really across the board. >> I'm hearing a lot of focus lately on that idea of gold's price move as a warning signal. So, anything further you would add there because I think that's quite an interesting topic to explore for for investors. Uh well, you know, I think the big biggest worry is international conflict. The conflict with the Chinese, with the Russians, now with India, with the Europeans, even with our US neighbors in Canada and Mexico, with the trade war. Uh but it goes beyond that, you know, it goes to President Biden uh attacking the Russians, taking their treasuries. uh the Europeans doing the same thing. Um and the the trade war the trade restricting policies is really an extension of government intervention in our economy, but it's also pushing us uh ever closer to military conflicts. And so I think that, you know, a military conflict would be devastating to our economies and to the economic lives of everybody um on the planet. And gold is signaling its concern about the trend of where we're going with all that. I think in, you know, everyday American life, we ignore those kind of things in order to pursue our daily activities. But gold doesn't ignore those kind of things. It has to put up with that every day. It's absorbing all of that information and we're getting a daily report card on what our politicians are doing us to us and the threats uh that they're imposing on us uh as a result of their foreign policy and their imperial designs. Uh and of course, China has very similar um designs. They see themselves as a world economic power. um deserving of a status um and you know countries around the world each have their own objectives and if we forget that and then we try to have our way in as far as the United States is concerned I'm an American um and I'm mostly very concerned about our own foreign policy and what it might do to the global economy. Well, I wonder if you can say a little bit more about that because people are very focused on the US and what happens internally there and how it can impact global markets. So, what would you add there? Well, I think to add um the one of the problems I foresee is I don't see the US economy as healthy as for example the unemployment rate reports or GDP re reports or the stock market reports. One of the things that Austrian economics teaches us is that the numbers can be rigged in a certain way through the inflation process. So if they print up money, they can increase certain types of investment advanced technology investment things that will push GDP numbers and employment numbers uh electrical usage numbers uh ever higher and it makes the economy seem strong. But in reality, what we know is that a majority of Americans are suffering from declining real wage rates. their budgets are going downhill because of inflation. They're able to buy less and less. I can tell you in my hometown, the restaurants that were filled to the brim a couple of years ago, uh, are now, you know, no reservation required. You can see that slack in the real economy right on Main Street. So I don't think the economy is very healthy and I think that uh you know uh politicians become even more aggressive and they very often use military actions as a way of covering up for the fact that they've screwed up the economy. And I think one of the things in particular that I'm looking at is these these aerial attacks on these little fishing boats off of Venezuela. And that seems like it's a prime case where politicians are setting themselves up to engage in a faux military conflict in order to support their reelection campaign um on the horizon. But you know uh Venezuela is allies with China. they're allies with Russia and Cuba. Uh if we attack them, that's going to escalate in those circles as well. So, this is a very dicey uh situation, I think, and it's one that the American people don't really even know about or care about. Uh you know, they don't have know anything about Venezuela and uh they don't care to know about Venezuela and they like Venezuela just fine. You know, we have lots of Venezuela immigrants into this country and I love them. Uh, love their food, etc. But we don't want to get the United States in a global conflict because that would bring down the world economy. >> So potentially these events unfolding internationally distracting from what's happening in the US itself. I know from reading some of your writing that you see the US moving into a hyperinflationary scenario. So, I'm wondering if you can outline, I know this is a big question, but outline how we we get there from where we are right now. I know we just got those latest CPI numbers showing 3% and of course you've already talked about how those numbers can be fudged. So, what would you what would you lay out here? >> Well, you know, the circumstances do have to be very particular to get into a hyperinflation. It happens on a fairly regular basis and it even happens to worldleading economies. I mean France and Germany have suffered from hyperinflations. We had a hyperinflation in colonial America. So it's not out of the question. It can happen uh in mostly around wars though and that's why I bring that up. Uh I told you I don't predict gold prices and things like that but uh one of the first presentations I ever gave um they asked me to comment on these other predictions and I said well ultimately the the uh price of gold in terms of fiat dollars is going to go to infinity whenever we get into a hyperinflation. And what that takes uh to engineer a hyperinflation is uh of course largecale government spending, largecale government borrowing, a huge national debt which cannot be paid. And then of course the politicians continue to print in order to finance the deficit. And you know, of course, we the United States is running a trillion dollar multi-t trillion dollar deficit and the interest payments are already uh $1 trillion a year. It's one of the biggest budget items. It and it's scaled to go much higher in the future, especially if interest rates goes up, which is related to what people think about the dollar and its rate of depreciation. And we have just going through a year in which the dollar has depreciated uh considerably in terms of double digits against the other fiat currencies. So um we've got to be concerned about that. If the United States was to go into war and having to spend a lot of money on military armaments um to devote a lot of the labor force into the military, the economy would shrink. the government would grow and the need to finance that with printing would be enormous. And of course, if if that resulted in a a loss in the um people's perception about the future of the dollar, then they would start dumping dollars into the American economy and that would further exacerbate the decline in the value of the dollar, the rise in global commodity prices, oil, metals, grains, etc. and uh the inflation would proliferate into American life and we would look back on 3% as the good old days um relative to what we might get under that type of scenario. And then once we get into that scenario um you know then you have to depend on politicians seeing the seeing the light and and and realizing what they've done and asking for g forgiveness and reforming the economy. But that is very difficult. That almost never happens except in a in during periods and acts of great desperation on the part of politicians. So it's a lot of trouble and enormous uncertainty that could be revealed to us in the months and years going forward. >> Definitely. I could see the way you lay it out there. So So this could happen, not guaranteed to happen. You mentioned this needs a a quite particular set of circumstances and I know earlier this year there was I don't know if optimism is the right word but there were some conversations around Doge and Elon Musk coming in maybe they're going to clean things up. Do you that seems to have fizzled at this point but do you see do you see a scenario where we get something a little bit a little bit more optimistic? Well, yes. And you know, the Doge thing, there was never any promises. There was never any consensus. Uh Elon Musk and his team never had really much in the way of authority. And as a matter of fact, their authority was questioned right and left and still is being questioned in the courts today. So there wasn't much punch behind that. But we have had periods where we've gotten into inflation in the 70s and uh and and other periods and the US uh has made more formal uh declarations. They've passed legislation. uh they bought brought in Paul Vulkar in the late 1970s and they made um what appeared to be a good faith effort to at least cut back or reform the system and the value of the dollar uh strengthened as a result. So if the politicians commit to sounder money and make a legislative commitment, uh if they commit to balancing the budget or you know reducing the deficit um in some formal way that would uh really um throw the brakes on the precious metal markets and strengthen the value of the dollar, probably reduce interest rates and spur real economic growth Because if the money is not going to the government, it can go to the economy. It can go into small business. They can buy capital and and and uh computers and uh productivity enhancing devices so that Americans can be more productive and more competitive on the international uh economy and on the international scale. And so you can get periods of improvement and we have experienced uh probably three or four bouts of that uh reformmindedness. I mean not reformmindedness enough to bring us back to the gold standard, but at least um good talking points and in in some cases legislation or personnel changes at the Fed, uh things of that nature. So yes, >> I think it's it's good to look at the flip side, especially because when people look at what's happening today, I think a lot of the time they wonder, all right, is this similar to another time in the past? Anything any other time periods that you would say remind you of what we're seeing right now? >> Wow. Um, well, no, I think we're I would I I'm thinking of the current situation as more of an unprecedented place, but I think we could be um you know, the stagflation of the 1970s, it has a lot of parallels. Um, at the Fed, for example, in the 1970s, they didn't believe that the money supply was responsible for higher prices in the economy. And the current Fed uh doesn't believe that their own policies of printing money are responsible for increased prices. And there were some very dovish people appointed to the Fed in the 1970s who allowed politicians to strongarm them into dovish low interest rate policies. And today, you know, we have President Trump and and President Obama and President Biden, they were all appointing more dovish people uh to the Fed to the point where Jerome Powell, who was a dove, is was considered a war hawk on inflation, you know. So um yes I mean in that in that sense there's a direct parallel and we're starting and we have really been feeling the effects of this uh for years now where the adverse effects of inflation are really harming uh middle class America. The Fed and the money printing it causes higher prices. It causes the business cycle. It causes the booms and bust. But it also causes a uh artificial redistribution of income and wealth from the middle class to the upper high income high wealth individuals who can really benefit from those artificially low interest rates because artificially low interest rates push asset prices much higher. So stocks and bonds go up with uh aggressive Fed policy and so the the wealthiest in society benefit, but the working class whose companies can't afford new tools and computers and productivity enhancing devices, their wages stagnate and then they lose uh purchasing power from price inflation. So, we're definitely experiencing that 50 60% of American uh families right now are seeing declining purchasing power of their income. So, I'm talking about people who are working working full-time, maybe working two, three part-time jobs. So, we're talking about working people and they're falling behind. They can't pay their bills. They're running up credit cards and uh you know, and they're being hurt. they're being harmed and they don't know why. And they're they're having to explain to their family why they can no longer afford, you know, this type of cable bill or this kind of internet system or they can't get new phones or, you know, we're going to have to do with less or we're not getting a new car this year. You know, all of those decisions which were built into the family budget now cannot be made because of what the Fed has been doing to us, especially since COVID when they went ballistic with the money supply where they government spent trillions and trillions of dollars where they sent everybody home. Uh so we had an unproductive economy just fueled by the money drug essentially. Well, and the Fed is very timely to talk about right now because we have the the meeting coming up later this week. I'm wondering what you see as the Fed's path forward. So, we got an interest rate cut at the previous meeting. I know widely expected at this one is another cut, but what are you expecting to see? What what commentary and maybe if we look further into the future beyond 2025, what are you expecting? >> Well, you know, the the Fed is a game of confidence. They have one tool. They have one policy. they can print money. And so they want to everybody to believe that they are not responsible for higher prices, that they will come to the rescue if the economy needs saving, but they're ultimately doing the job of undermining the productivity of the economy every day. And I do expect them to cut interest rates. But of course, what do we've been told? We've been told the Fed is data dependent. the Fed has data dependent for years and years and years. And now that the data is not there, they're saying, well, you know, we can do without the data for a little while, you know, and so they they plan on cutting interest rates. I suspect that's uh that policy is going to continue and then the stock market is going to get in trouble and they're going to go bananas um on uh the uh the interest rate lowering. um they're going to stop uh tightening uh you know their their balance sheet and they're probably going to loosen the balance sheet and start buying more assets. Mortgage back securities and go probably long-term government bonds is is the place that they're going to concentrate their effort in over the next couple of years. And uh and then of course President Trump is going to replace Jay Powell as chairman. Uh now JP Pal could stay on longer past the spring of 2026. Uh that's probably not going to happen given the amount of money that he'll be able to charge for speaking fees. Um but he's going to President Trump's going to replace him with another dove who's going to be even more aggressive with monetary policy. And then there's another appointment coming up after that. So, you know, President Obama, President Biden, and now President Trump are loading up the Federal Reserve with monetary doves who um will cut interest rates and expand the money supply at the drop of a hat. And uh and so that's that's also of great concern to me. And I think people involved in uh as consumers, as a purchasers, silver stackers, uh I think that that's what's what's driving their behavior. I think it's driving the optimism in um in the uh mark the the suppliers of precious metals, the investors in in precious metals. I'm sure everybody's concerned about the current dip in prices. Uh, you know, we went through some severe growing pains in the last few weeks where we went from a stable market of silver stackers and central bankers who just bought and held and then all of a sudden the price started moving so fast that speculators and market timers and traders and speculators were all coming into the market and we hit $50 and the whole market blew up. you know, everything was in disarray because of the market experiencing uh growing pains and then as we busted through new record highs in in in all the metals, um you know, everything sort of fell apart and and people started taking profits and and now we're here. But uh the pullback, even though it's been severe, is is a small percentage of the move up from just August of this year. So let's not forget that and uh and so you know the the buyers in this market the participants in this market the suppliers of these metals I think are generally have a very uh longrun bullish um uh attitude towards their markets moving forward and I think they see it as as a long-term proposition and that um I think most uh would be uh shrugging off the the current situation. Um you know, and there's been an intense desire uh to get their hands on this metal on the part of central bankers and stackers and investors. Um, I noticed right before airtime I I looked at uh because I've actually made a couple of small purchases myself and uh the American Eagles the premium on American Eagle coins were over 20%. So that tells me that not only are consumers wanting the metals badly uh but suppliers are want to get their hands on more of this metal as well. I think I I see some of the same themes among our viewers where many people are looking at this pullback in the prices as a buying opportunity. So, they feel pretty good about what's happening right now. And then there is some concern among the people about is this it? Is this the end of the run? But I think I think you're right. Most for the most part it seems like it does people do think that it's going to continue. I wonder if we can talk a little bit more about silver. you shared some of your thoughts on the outlook for gold. I know when it comes to silver, you've done some work looking at the gold silver ratio. So, I'm wondering if you could share your thoughts there and what that tells us about where the silver price go. >> I'm very optimistic about silver prices because it has, you know, it's such a vital metal for um productivity uh going forward in technology. I mean all of the really especially important uh applications um in electronics and technology and energy efficiency um it's just an amazing metal even medical um applications but you know to the with more respect to the market of course there's good reason why silver moves uh more erratically than gold um and it relates to the mining industry. Most silver mine is a byproduct of lead, zinc, uh gold, copper, and a bunch of other metals. In other words, there are there's been almost no investment uh for decades now in silver mines where the primary goal is to get silver. Uh but there has been a lot of investment uh especially leading up to the housing bubble in the early 2000s. And so this market analysis dates back to that period say 2003 4 5 6 7. You see explosions in lead prices, zinc prices, copper prices. all of those industrial metals broke out uh from long-term uh low levels that date back for years and years and years and all of those metals moved up and it's not just because of the United States but it's also because of India and China and all the emerging markets where people were building infrastructure. So, if you're building buildings, you're using, you know, tall buildings, you're using like 5,000 pounds of copper per floor. Um, you know, if you're using uh uh you know, conveyor belts and uh landmoving equipment and you know, every everything is requires a bunch of lead and zinc, galvanized metal. And so all of those markets broke out back at that time. In other words, the people were investing in lead mines, zinc mines, copper mines, and they were able to extract this extra silver. So you had the supply, extra supply, but you hadn't gotten the demand yet from things like solar power and uh electric vehicles and artificial intelligence and that kind of thing. So we had the extra supply without the extra demand. And so silver prices remained low or suppressed really by this industrial metal byproduct production. And uh so if the economy and this date goes back to my very first comment, if the stock market crashes and the economy goes down, we go into or even into a war situation or not, just a recession and lead productions, zinc production, copper production all go down, that means that there's going to be less silver coming out of those mines. um you know at some point um those those industrial metal mining operations will either be curtailed or shut down entirely. So sources of silver uh and there's not a lot of good new sources of silver coming online. Uh I know there's a lot of new investment just recently but um yeah so that makes me think that you know if there's increased industrial demand, increased investor demand um and yet decreased industrial supply that the price of silver has very good fundamental reasons to skyrocket right past gold prices in a relative sense. And that therefore I would argue that um the gold silver ratio is going to decline from over 100 to now it's around 80 something and I expect that that that is going that gold silver ratio is going to continue to decline and as I pointed out elsewhere if you get into a hyperinflation the gold silver ratio could fall below 20 or below 15 even which was the historical norm of the gold silver currency ratio. So yeah I I I foresee um those types of changes going forward. >> Well it makes sense how you lay it out there and it ties into another point that I wanted to bring up. So in the scenario that you see coming gold and silver we can see that clearly they are places of safety. Are there any other places where investors might be able to go for safety in these times? >> Well, you know that we have to rule out the US dollar at this point and uh government um bonds, especially long-term bonds. I mean, I think the short-term treasuries earning 3.65% 65% is, you know, decent, but it means you're just treading water and they're going to be reducing interest rates and so that's going to be a less uh good uh uh place of securing your funds. Um I I think that in in addition to the precious metals, I think the price of oil right now um is uh is is very low. And oil uh capital investment into oil and natural gas has been on the wing now for many years. In other words, the the capacity to produce oil has not been added to very much. um certainly since uh President Trump's first term, but even before that there was um you know a lack of interest because of the environmental hysteria and the suppression of natural fuels in favor of, you know, sun and wind and and that and that kind of thing. Um, so I I'm I'm I think that the balance is tipping very much in favor of commodity investments rather than stock investments. And uh, as a matter of fact, I just reviewed a book about commodity investing over the coming over the next 10 years. And uh, silver was one of the better um, choices uh, that the book had had to offer. But I think um you know you have to be a little bit of your own expertise. you have you need information in uh about particular commodities but looking at their relative prices I think energy has been suppressed uh so that's oil gas coal uranium nuclear um all those sources have been suppressed by the government and and now we have um all this artificial intelligence and the, you know, immense infrastructure that they're building and the tremendous demands uh on the electrical grid that they're going to be bringing forth. Um, so we we we probably would be expecting higher electric prices. Um, so you sure as heck want to be invested against that possibility. So I think my next best choice would be the broad uh natural energy sources um because their prices are low, the demand is going to go up and the but the capital investment in those industries uh you know whether it's uranium or oil or natural gas or coal have all been I think suppressed by government policy. >> It makes a lot of sense. I think it's very fair to say that we're going to need a whole lot more energy going forward. And I think overall you've left left us with a lot to think about, but before I let you go, any any final thoughts that you would leave people with at this time? >> Well, yeah. I mean, I think protection uh is is very important, but knowledge is really, you know, that's why they're coming to your show is to get knowledge. And um I think Austrian economics and our web page misuses.org org is a wealth of knowledge. We have a lot of podcasts, articles, videos, lectures, uh, and so on. And right now, we're giving away free copies to, uh, FA Hayek, the Nobel Prizewinning Austrian economist and student of Ludig Vameis. We put together a greatest hits of his articles in it includes um articles about inflation, articles about the prospects of a bitcoin like alternative to fiat money and and also uh one of his classic articles of why the worst always get on top referring to politicians of course. So, if you um put in the comments uh you know, I want Hayek's greatest hits, uh we'll send you the link and you can get a free copy of this book. Uh or multiple copies actually. Uh it's a great place to start learning some Austrian economics. And Hayek was really the standard bearer of the Austrian school during the stagflation of the 1970s. He's the one that gave the ideological background uh backbone to Ronald Reagan and to Margaret Thatcher. So they both attribute FA Hayek's work on inflation as the reason for their economic success. So there's no better place to start than this great little free book. >> Well, thank you so much for sharing that and for that offer. We'll have your links in the video description so everybody can check them out. And thank you once again for coming on. This was great. I I learned a lot. >> Thank you. It's my pleasure. >> Of course, and hope to have you back again soon. For now, I'm Charlotte Mloud with investingnews.com and this is Dr. Mark Thornton, >> Manco 64, home of alternative economics and contrarian views. Today I have the pleasure of speaking with Dr. Mark Thornton. He's a senior fellow at the Mises Institute in Auburn, Alabama. Uh the Mises Institute is a proponent of the Austrian School of Economics and uh I have to say uh the Austrian School of Economics changed the way I I think and uh I've been following it uh probably since late 1999, early 2000. So uh welcome to the show uh Dr. Thornton. Mario, it's a pleasure to be with you here today in person. Um, I wake up around four o'clock in the morning and when I don't have too much to do, I love to tune in to your show. >> Oh, that's great. Uh, a lot of people say that and, uh, I'm flattered. Uh, thank you very much. Um, I started this channel 10 years ago and uh I'm the home of alternative economics and contrarian views and unfortunately the Austrian uh school of economics view is still alternative but I think uh hopefully more and more people are waking up to it. So may maybe you could tell us a little bit about what the Austrian school of economics is all about before we go into uh what the monetary system is telling us. Well, Ludwig van Mises brought the Austrian school of economics to the United States during World War II. He was chased out of Europe by Hitler and he learned from some of the great Austrian economists that began the school in Vienna. um more than a century ago, Carl Manger and Yugen Bombav. And it's a free market school of economics. It's a very traditional school that has its roots in classical economics, but made a lot of improvements in the classical school and really has brought the fundamentals of supply and demand and opportunity cost and price formation. All the fundamental analysis of markets were created by the Austrian school and you'll see their influence maybe in uh the first few chapters of a economics textbook. Of course, most modern textbooks go off in that at that point into Keynesian economics and monitoriism and a lot of other misleading schools of economic thought. But the Austrian school is grounded in property rights, voluntary exchange, and it's just built up a whole system of economics, including macroeconomics and the business cycle theory, which really helps explain uh the modern world as well as the basic free market um economy that would exist in the absence of government intervention. And then the Austrians then uh explained the impact that government intervention will have uh in our daily lives. >> Yeah. The other thing that the uh Austrian school I guess proposes is sound money and I think that's a a really important part of it as well because >> Oh yes absolutely. You know, sound money, gold and silver, it means that whoever holds the money holds property. It holds a commodity, holds something of tangible value that then they use to exchange for goods and services, labor, and so forth. And so, you know, it's quite natural that if you're grounded in property rights that you would have to be grounded in sound money rather than just pieces of paper uh that can be printed up at will by the government and don't represent anything of tangible value, don't represent anything in terms of real property. And so it's a fundamental distinction because almost all schools of economics other than the Austrian school don't really see it that way. They see it uh paper money as a way for the government to save resources and for the economy to save resources going then that goes all the way back to Milton Friedman's famous article I think in 1960 where he he chided the idea of a gold standard as a waste of resources in the economy. Yeah, it's interesting because Milty Criedman uh is seen as a free market economist, like a hero. But I also heard that when Nixon closed the gold window in 1971, uh he supposedly said that gold would go to zero almost because nobody would want it. And here we are uh over 50 years later and we have $4,000. But one of one of the books that I I really like from the Austria school uh is what government has done to uh our money by by Murray Rothbart. And I've recommended it many times for the viewers because it's not a big book and you don't have to be an economist to read it. So I just wanted to put that out there before we proceed. Um and uh uh Dr. Thornton. Uh I mean looking at the world right now and where the US is and I cover the US a lot of course because it affects the whole world and 45% of my viewers are in the US. Um we I don't think we could be further away unfortunately from uh the uh tenants of the Austrian school. What do you think it will take for people to wake up to um to see that I think the US is going the wrong way? We just saw this big beautiful bill this year and deficit spending has continued to grow. Uh today as we speak it's October 31st and I I heard that uh the US wants to uh bomb uh military facilities in Venezuela which is all part of this fiat system that allows um yeah makes it really easy for uh countries to wage war. Uh what do you think it will take? Well, Mario, I agree that the US is moving in the wrong direction on many, many fronts um in terms of money and the Federal Reserve and the, you know, the macroeconomy, the trade war, uh the government budget, the big beautiful bill. I mean, these are all moves in the wrong direction. And uh and that's what really worries me. uh along with the stock market and the all the male investments that have taken place over the last 15 20 years uh it makes me worried about the fragility of the American economy and especially uh the working class who are experiencing lower real wage rates in the United States. Uh but on that bigger front um you know with Venezuela and the Middle East and Russia and China the the amount of conflict that's going on right now and of course the the trade war by President Trump is creating tensions between the United States people and uh countries around the world. And so the direction certainly isn't good. But on the on an optimistic note, I would think I from my perspective, which is admittedly here at the Misesus Institute uh may be very biased, but I see uh many many more people realizing the error of our ways here in the United States and maybe in other countries around the world. And uh those numbers are very large. um you know so I think and the young people that I see um that are so eager to learn about Austrian economics they've maybe experienced economics classes and they realize there's something wrong and uh and so more and more people for a variety of reasons from COVID and the lockdowns especially the vaccination mandates uh you know the fact that we we shut down the economies and forced vaccinations and you know printed up trillions of dollars to finance that whole crazy zany uh period and then of course the inflation that people have experienced um and the pro rising price of gold. I mean the media does not report on that. They only report um on the gold price when it goes down a lot. So just recently we've had lots of mainstream people reporting um on the that sharp uh selloff in gold and silver but other than that they completely ignore it and uh it it's beyond belief. I remember back in the 1980s the business news would regularly report on things like gold. So the reporting is bad, but I think the the the millions and millions of people who are catching on to the idea that government might be just a criminal syndicate uh that lives off of corruption and other people's money and counterfeiting at the printing press. Uh you know, I think that those ideas are starting to get out there and they're starting to sink in. uh largely because of um alternative uh means such as your channel here um that that it's getting out and uh it's sinking in and you know the great thing is that people are really you know they're turning off cable and the in the mainstream media and they're going to alternative sources and they're getting a whole new set of information and a whole new set of data and this is occurring you know daily in terms of millions and millions of people. So, I'm actually much um more uh optimistic. Uh at the at our recent supporter summit conference in Florida, I gave a talk that uh where I tried to show that everything good in society comes from the bottom up. our services, our goods, our new inventions, uh our new companies, you know, everything uh including the tax base starts from the bottom up and everything that comes from the top down from presidents and the Congress and the Fed and things like that. All of that stuff is bad. And you know, I thought it was a pretty simple idea uh that was really just common sense, but it it even struck home uh with my audience at the supporter summit, which are hardcore Austrian Mosesian followers and believers. And these are people who study these ideas. But when I put it in those simplistic terms, people really realized that everything good in society has to bubble up uh from the from the ground up rather than from the top down. And I think it's happening on a massive scale. >> I agree. And uh here in the UK as well, we're seeing um a lot of people waking up. Uh we have a new political party called reform uh that is really um yeah uh ruffling feathers. So it's encouraging. It's not all all bad and I think a lot of pe like you said the alternative uh media uh YouTube uh people are getting a lot more more information. Um I I wanted to ask you uh because one of my favorite uh topics Not that I I I I wanted, but because uh I uh remember uh well reading and listening to uh Ben Bernankey's uh helicopter speech back in November uh 2002. And by then I just started buying gold. When I when I listened to that speech and read about it, um I was very uh convinced that I I needed to hold on to gold and and keep buying gold because he basically said that the United States has a bas a technology that is uh very uh doesn't cost anything and and they can just fight deflation, just print money and keep uh price levels high, which doesn't make sense of course uh but central bankers in the fiat currency world they they want the inflation but yeah this uh part here in uh and I'll show the viewers the book uh >> is treatis >> treatis sorry yeah treatise uh or yeah on page 4 to8 he talks about the the cracker boom and I've uh put that there are we there yet and uh I've been covering this for a few years and I think we're closer and closer and he talks about here how um the crack of boom is when people finally wake up to the fact that uh inflation is a government policy. It's not because prices go up which is another thing that uh they fool us with uh the saying that uh inflation is rising prices which is not of course it's the consequence. So I wonder uh if we could start here uh and u you could give us your view of where we are and whether you think we we have a danger of a crackup boom where where we see uh the current currency the fiat dollar actually um yeah crash and become like the continental uh dollar back in 1781. >> Yes. I've, as a matter of fact, I've spoken about this recently on the prospects for a hyperinflation in the in this current world on a recent episode of my minor issues podcast. And you know, I think it is relatively close. These things like the business cycle and hyperinflation, they take a lot longer than anybody could imagine, you know, lead in the leadup to these things and then they happen quicker than anybody would ever believe them happening. So, it's almost impossible to really date these things. But I would say that all the preconditions are currently in existence for continued inflation of prices uh continued inflation of the money supply and certainly the potential for hyperinflation. There's a lot of countries that have experienced hyperinflations uh since the ones that Mises wrote about in human action. So these things are periodic. But if you're talking about the US dollar, you're talking about the top dog uh in the world fiat money uh food chain basically uh the most um in demand currency uh in the world. And so it's it hasn't experienced an h a hyperinflation. The United States has not really experienced a hyperinflation for quite some time. Uh but the prospects are there in terms of the preconditions which is runaway government spending which we certainly have a runaway uh budget deficit which we certainly have in the United States and elsewhere and then you have a runaway national debt by the government which we certainly have and the interest payments uh on that national debt growing. in a kind of exponential fashion. And so if those interest payments continue to grow along those lines, uh specifically a larger deficits, larger debt, uh and increasing interest payments where citizens don't get any services, um they only get higher prices. If interest rates are to are going to rise and the inflation factor in interest rates is expected to rise, especially with President Trump's appointments, his attack his attacks on Jerome Powell, his um you know attacks on the Federal Reserve uh inducing auh easy money policy or a more inflationary money policy uh then yes, I I mean all of those preconditions are currently in existence and you know what we have uh right now is that even other central banks around the world do not trust the US dollar and so the US dollar has fallen a great deal so far this year. Um and that's just relative to other paper currencies. So uh you know that's that's a very negative sign. that's a black mark um on this situation and uh and and you know so we can see that the the preconditions are set for this problem which will or could ultimately end in hyperinflation which you know some people call it 50% increases in prices per month. That's the way um statistitians look at hyperinflations. But of course the inflation rates in you know the German hyperinflation uh the French hyperinflation those increases in prices of goods and services were really astronomical. Uh especially if you um calculate them on an annual basis. uh it it almost the the rates are so high that it very quickly becomes almost useless to even use currency uh just because the currency uh is is just so dramatically losing value and at that point of course I expect people to start using silver um in certain dayto-day exchanges so people will start migrating ing over to using silver and barter and that kind of thing. We're still a ways away from that. But like I said in the beginning, um once these things start to happen, the government loses complete control of the situation and what we see right now in the United States is a government that's out of control with its spending. It can't even um you know manage to do legislation on a regular basis. The US government is currently shut down and both political parties have found that it's it reflects positively on them. Now imagine this. It reflects positive relatively positively on both political parties that they've essentially shut the government down out of business. So um you know that's how bad things are currently and that's why we have all-time record high prices in gold and silver around the world is that um you know citizens not just in the US but around the world do not uh do not believe in their fiat currencies. Central banks don't trust other central banks. the South Korean central bank for example uh which is a loyal ally where the US has you know a lot of military presence right in South Korea uh and they're even buying more gold right now so I I think we are in a situation of deep uncertainty uh people have to protect themselves but even central banks uh don't trust other central banks they don't trust other nations. Um and so the preconditions are ripe for um a hyperinflation or at least uh more inflation to come. >> Yeah. Because back uh in 1923 during the German hyperinflation uh the Reichkes Mark was not the uh the major reserve currency. I I don't think we've ever seen a major reserve currency hyperinflate. And usually uh let's say I grew up in Brazil and uh uh we use dollars I if they're local currency hyperinflated we didn't use gold but I I think the c central banks around the world aside from trying to uh let's say diversify from the dollar uh as a polit because the US has used the dollar as a political weapon. I I I can I think they can see the writing on the wall of the uh runaway deficits and spending. So, they're loading up on gold. And u I guess uh even though I'm not really a fan of central banks, I I think in this instance they're right. And you mentioned that hyperinflation uh starts uh I mean it brews the it takes a long time to brew but when it starts it's like uh it's almost like you've it it's so quick that you can't even react to it if you haven't uh exchanged your fiat currency for for uh anything that has value. doesn't necessarily have to be gold and silver, but anything tangible and that allows you to survive. I I think you're Yeah, you you're one day late. Uh so I I've been looking at these two charts u for a while now and I call it disturbing resemblance. And this is the Reichkes mark back uh after World War I. And you and that's the price of uh one gold mark. And you can see that the price was grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going grow going quite gradually and gradually and then all of a sudden here in the summer of 1922 it just took off and then and then by I think the end of 1923 um the the reichs mark collapsed and they had to bring in a new currency I think it was called the rent mark and that was backed by gold and even though uh this chart here on the right is the current a uh dollar price gold. It It's over a longer period, but it looks very similar and uh I think it's really concerning and uh I I think we could uh we could be around here. Um what what's your take on on this? Well, that's exactly the type of thing that I'm concerned about. And uh I've been a coin collector and silver stacker my entire life since I was about 9 years old. And I encourage, you know, if you're on a fiat monetary system, I just think it's, you know, I'm not a financial adviser, but I just think it makes sense that you would save your money or at least a part of your money in precious metals, you know, securely someplace um because of the potential for this kind of thing. So you don't have to worry about that because psychologically it's um it's very very difficult when people start seeing the family budget disintegrate before their very eyes. And uh you know and so you need to be prepared in advance. You know, the time to buy a fire extinguisher is not when the fire breaks out, but when you buy the house or when you move into the house is the time to buy uh your fire extinguisher. And so that's, you know, that's always been my approach. Um, and that's what I've always recommended to people uh because of the situation and because of the psychological damaging effects um and uh you know that that impact people and uh you know in in terms of the dollar um and you mentioned that you know people in Brazil use dollars well people around the world hold part of their uh savings in terms of dollars because they've We've experienced lots of inflation. Now, let's imagine a world where instead of just one year, we see a 10% fall in the value of the dollar versus the dollar index of other fiat currencies. But what happens if these other fiat currencies uh experiencing a loss of purchasing power, which is certainly pos possible with the British pound and the Japanese yen and the euro, and what if the dollar outpaces all of that, and people around the world want to repatriate their dollars back to the US and pick up maybe silver or gold instead. Um, and what happens, you know, if people want to take their investments out of the US dollars and US stocks and repatriate them back into their local economies, and what happens if drug dealers uh, who hold vast hordes of US currency, if they want to get rid of all of that US currency and and get into gold, silver, Bitcoin, or whatever, and what if That all happens in a short period of time because of what goes on in Washington DC or what goes on at the Fed. You know what goes what happens if the Fed goes back to a zero interest rate policy? What happens if the Fed decides that it needs to expand its balance sheet? You know, they just said yesterday that they're going to stop the quantitative tightening, which of course we've all been expecting, and I've been expecting um that they're going to go back into quantitative easing. They're going to try to squash down those long-term interest rates by the Fed buying long-term US bonds and mortgage back securities and things of that nature. Um as well as just Treasury bills. uh you know what if all that happens? Well, the value of the dollar is just going to start a cascade uh downwards. And so, we don't know when that's going to happen. We don't know even if that's going to happen. But, you know, in terms of my savings and and other people's savings, I would rather want to be prepared, you know, with my fire extinguisher against government inflation. Basically, I would not want to wait around and hope that, you know, the coin shop is opened or that online dealers happen to have uh supplies on hand. Because what we've seen, you know, during the recent growing pains in the market for precious metals for retail buyers is that they've experienced just the growing pains recently of the new high prices. uh that all of a sudden they may be just totally out of stock or they may be charging like the last time I checked an online dealer they wanted like a um it was like a 20% premium for the US silver eagle. So um you know you want to take advantage of situations uh as they occur over time and be prepared for something. You don't want to try to react um like some s sort of machine trading robot on Wall Street cuz you don't have that. You know, you're not you're not prepared to do that. So, I would get pre-prepared uh for those contingencies. >> Yeah. You you said earlier uh in the interview that uh the mainstream press uh they talk about gold only when it goes down. And uh and the other thing that happens is that people that never cover gold, they come out of the woodwork uh to call it top. and they don't seem to understand how important gold and silver are in terms of uh a a currency uh insurance or like a fire exting extinguisher as you said and that that is really uh well it's worrying for that it's worrying because I I think they're going to be blindsided by by what's coming and I was going to ask you what you think could be the trigger but of course it's difficult to to say but the other thing uh uh Mark that I've been covering and you might might have seen some of my videos about this is that uh hyperinflation is not just like the currency uh losing value because the the central bank and the government uh print and borrow too much but it's also to do with the uh political climate in in the in the country and uh you were saying that you were at a conference recently and you said that everything that's good comes from below and right now everything that's bad comes with co and all the other uh crisis is coming from above and and I think that's important because when people lose uh faith and confidence in their leaders uh they'll lose faith and confidence in the currency that they issued. So, do you see that also a as something that will weigh on the dollar? >> Oh, absolutely. And I think you know the general trigger that I think um is worth considering, but there are many and there are triggers for this as well is uh a collapse in the US stock market. It's the one bright shining star in the world economy. the magnificent seven and you know the AI revolution and all of that that seems to be holding up the US stock market and buoys markets around the world and of course it's created a lot of investment intensity in certain areas of the US economy so you know people think well if that is doing so well then things are probably okay if we start or when we start to see a breakdown in the US stock market and of course we know that Europeans uh have been investing heavily in the US market um in recent years and they hold you know a vast amount of uh investments in the US economy. So I think uh if the US stock market star starts to sink um and people start univer you know diversifying away from that I think that's really uh the trigger and I think you're right. I mean people uh start to lose confidence you know you know and the Fed is of course always playing a confidence game. They're always telling us things are great, things are good. They're um looking out for our safety. They will come to the rescue. Um and so the people are being fed uh all of this confidence, you know, to believe in the system even though the system is clearly ripping off most people basically. I mean, the people are not benefiting from this uh from the system. And it's really just a matter of enough people waking up to the fact that they're getting ripped off by the system and then being able to identify who's doing the ripoff because this is kind of like a shell game that the Fed plays with the spending and the deficits and the debt and the inflation and the Fed buying, you know, government bonds and, you know, bailing out people. It's all kind of a shell game. So, it's hard to catch on. And that's where I think I'm optimistic because I see so many people in my daily life who just disregarded everything I said when I was younger, you know, that they just didn't believe, you know, that Thornton's a crackpot, Thornton's an academic, you know, Thornton is a, you know, wideeyed optimist or pessimist. Uh, both of those two things. and now they realize that well maybe maybe I was right about a few things and u and so people are catching on and I think that's uh the optimistic message but once you know a significant number of more people catch on uh to this game that is being played to their own detriment um and that that's when I see the system uh hopefully reform forming itself uh in the right direction. But even if it doesn't uh you know even if we head down this road to hyperinflation, which I really hope we don't because there's a lot of bad things that can happen um under those circumstances, uh it's still going to mean that people are going to have to rebuild their economy, their local economy, uh from the ground up. and they're going to have to resol resort resort in hyperinflation to going back to gold and silver to barter um you know to local communities, local economies and and things of that nature. Uh so they're going to realize that the uh the top- down solutions uh were there to their detriment and to the enrichment of the political elites. And their salvation did not come from those political elites, but their salvation came from their local circumstances, their friends, their family, their uh business associates. That's where the real solutions are going to ultimately come from. >> Interesting. You uh talked about the um the Fed and I listened to uh Jay Pal the other day, his press conference after the FOMC meeting. Not that I like listening to it, but I I needed to see what he was saying. And he actually admitted that there's like uh two economies. There's the Wall Street and the EAI sector who are doing great. And he even said the bottom 50 is not doing well. So too bad none of the reporters uh asked him a question. Don't you think that's because of you? Right. Because of the Fed, you help out Wall Street and the corporations and the people get left with the Yeah. with the currency that becomes worth less and less which is uh what's the uh the effect? I forgot uh the name now. the uh he was a Irish French economist back back to >> Kention. >> Yeah. Cantilian effect. The Cantillian effect. Yeah. So yeah. Yeah. That the money the people closest to the money spigot they do really well and by the time it gets to the bottom 50% it's become worth less and less. Uh, one thing though I wanted you to explain uh, Mark is because in in that um, little uh, uh, piece of uh, the human action that I brought up von Mises uh, or in inhuman action he talks about the mathematical economists or the if you want to call it the PhD economists nowadays who who don't really consider human action. And I think that's one of the great things about the Austrian school. Uh they look at how humans react. They don't just look at equations and numbers. And one of the books that really helped me was Fiat money inflation in France by Andrew Dixon White. And and I know he wasn't an Austrian, but uh what I learned from that book is once you start down the road of uh printing money, it's really hard to stop. So, do you think this is where we are like uh when there is a a crisis and I think we could be near a crisis. I don't know what could trigger it. U we could see the Fed uh print even more trillions uh on its balance sheet. Um yeah, so maybe you could uh explain to us the difference between the way Austrians think and Keynesians think. Well, of course, the mathematical and Keynesian economists are thinking in macroeconomic terms rather than in microeconomic terms from Canton's day. And I do a lot of my research on Richard Kantion. Um, and he was really the first theoretical economist and an Austrian in a sense. Um but this is yeah this is part of the whole cover up thing uh where you know the Fed will say well we cut interest rates that's going to help the little guy be able to buy a car or buy a house or reduce the credit card interest rate. Uh but of course that's not going to really help the little guy. You're just digging the little guy into more and more debt. Uh what that really ends up helping is the banks, corporate America, the big guys, the political elites, uh are the ones that benefit from those lower interest rates, even if they're on a temporary basis. So it doesn't help the little guy. It's what's led to the fact that the little guy um has lots of debt, is burdened with excessive amounts of uh borrowing and and credit card debt and and and so on. And this is that that whole process has enriched as canon shows it it enriches the people uh who first get the money. Um, and that's Washington DC. That's the big banks. Those are the people who get the money. Those are the people who see their asset prices go up without the price of goods and services going up. By the time the little guy gets the money, everything's already been marked up. And so, the idea that it helps the little guy in any way is just completely backwards. It just digs the holes for the little people. uh the consumers, the workers uh that much deeper. Uh stopping the printing press is politically harmful. Uh you know, Misa says that's the only way to deal with the situation. And of course, politicians, they don't want that because uh the government is the biggest debtor of all. And of course, the political elites and the banks are the ones that are holding a great deal of that the that debt and are leveraging up their own investments based on that debt. And and so when you break it down and you look at who's got the money, who gets the money, when do they get the money, uh you find that the the process enriches the political elites uh and hurts the uh the workingclass people out there in the economy. Uh now if we stop the printing press uh what that's going to cause is uh asset price deflation. If there's no more fuel going into those credit pipelines then asset price deflation is going to take place and that means uh stock prices, real estate prices uh those are the things that are going to fall. It's going to put the government uh like the US government and other governments, it's going to put them in a position of defaulting or into hyperinflation. Uh so that the pain is going to be at least started there at the government level at the high level of the stock market and the high level of the real estate market. It's not going to really cause an end to toothpaste production, for example. It's not going to, you know, uh end um the production of CocaCola, uh you know, things of that nature. That's all going to go on. Electricity is still going to flow. You know it. So it the the pain is going to be felt throughout the entire system. But the most concentrated pain is going to occur right where we want it to which is in government itself and the political elites that control Wall Street that control the government that control the vast swats of the most expensive real estate uh in the economy the skyscrapers and Wall Street and all the rest. So uh that's exactly the way I would prefer to deal out the pain is to put it most heavily on those people who are responsible for creating this massive situation in the first place. >> Yeah. Uh Rowan Paul um I met him uh back in 2002. Uh my wife and I went to the uh 20th anniversary uh of the Mises Institute and he was uh talking about how he got Allan Greenspan to autograph uh the article he wrote in the 60s called Golden Economic Freedom and he asked Greenspan do you still believe in that and he said yes 100%. uh and he said unfortunately the vast majority of people they they like the inflation they they like the government subsidies. So I guess uh if we did stop the printing press it would hurt uh like the elites but it would also hurt a lot of people that are dependent on government. U what what would be the way to like cushion that? I think Ron Paul he spoke about doing it gradually for example so that uh the pe let's say uh seniors and people people who still depend on the system get some help. >> Yeah. I mean um I'm not an expert in that area and I fully agree with the idea that you know we should have some buffers multiple layers of buffers to um to support the people who were not part of the problem in the first place. uh we're not responsible for creating this system uh in the first place and that all of the pain should be dealt out to the people who benefited from the system and created the system and you know h have become massively wealthy um as a result. So and I don't think that the normal channels of the economy are going to completely dry up. So, I don't think electricity is going to stop. I don't think food is going to stop. I don't think toothpaste is going to stop. And uh but you're you you know, Ron Paul is right that uh we have to be ready uh and and able to uh support those that are otherwise completely dependent upon uh the government. And of course we should be working for restoring people's independence right along. Everything we do, everything the government should be doing should be uh working in the direction of restoring people's independence like encouraging them to have gold and silver like encouraging them to have safety savings especially of some sort. uh to to have a job, to develop skills, uh to develop multiple skills in the workplace so that you're you're capable of absorbing the tremendous changes that are going uh to be taking place. um depending upon of course the types of reforms that we get and when we get them. But again, stopping the printing press is going to dole out the pain most uh heavily and most directly on the people who are responsible and who are best able to absorb those pains, the millionaires, the billionaires. And you know, we're fast approaching an era where we're going to have our first trillionaires. And these are people who are not only benefiting from the Fed, but are also benefiting from government contracts, you know, whether that's Amazon or Google or uh Larry Ellison or Planeteer. uh you know all of those government contracts have to go away and the government has to basically completely stop doing most of what it's doing you know including uh you know social security has to morph into a welfare program that helps out people who otherwise have no means of support uh basically um you know in a in a national government bankruptcy situation that's the general general direction uh that things that things would have to take place. So just imagine the government going through a bankruptcy process and a prioritization of the remaining assets and income and expenditures. You know what has to go uh and what needs to stay um is a matter of priorities is a matter of legal obligations uh basically. But um yeah, it's it's going to be painful. But even if you continue, uh to print up money to pay for all these things, that does not reduce the overall pain. It just increases it and spreads it out over a longer period of time. And unfortunately, if we don't do something soon, we're we're highly damaging the current and future generations of economies around the world. People wonder, well, why aren't people having children? Why are, you know, why is the population, why is the working age population shrinking? Well, it's because this generation and previous generations have dumped an enormous amount of obligations onto the future. So, if you're having children, you're birthing them into systems which place enormous burdens on them. And that's got to stop or you know, the entire race is at risk. Um and it we you see the demographic problems that are emerging causing you know strange political reactions in Europe, in the UK, in the United States, um even in China, Japan, uh you know, uh so these have wide ranging effects. It's not just your personal pocketbook issues. the what the Fed has been doing, what central banks have been doing, what the fiat monetary system and this runaway government debt has been doing is really undermining the very basis of human civilization. >> Yeah. No, I I agree. And like you said, uh uh stopping the printing press and bringing the system down is actually not as bad as people think in my opinion because uh there will still be factories out there. There will still be real estate. There will still be people. All you need to do is uh reorganize uh the monetary system into a fair fair and sound money system. I think and uh if we keep uh printing and delaying things, we're just kicking the can down the road. So, I agree with you 100% there. Any >> yeah, all the all the all the physical capital is still going to be there. It's just a matter of who owns it moving forward. And we've seen with these hyperinflations that in the aftermath, people recover very quickly, especially if they're giving a fundamentally sound monetary system and a free market economy. Just look at Germany and Japan after World War II. uh they had their capital all destroyed and their population wiped out but they were given a free market economy and they equip they not only recovered but they became two of the fastest growing economies in the world within the matter of just a decade or two so recovery can be quick and swift and miraculous really >> yeah was the German economic miracle vir um well uh Dr. Thornton, it was uh great speaking with you. We should speak again. Uh let me know when if you have something you want to talk about and uh I love the Mises Institute. And uh yeah, I'm ready to uh talk to you again and other people there. >> I really enjoyed it, Mario. And uh we have a book offer uh right now where you can get HX greatest hits. So, if you put your uh I want Hayek's greatest hits or just Hayek in the comments of of of this show, I'll send you the link where you can get a free copy or actually free copies uh of this book. And Hayek uh was a great student of Ludwig von Mises. He won the Nobel Prize and he was one of the main inflation fighters during the uh stagflation of the 1970s and he was really the ideological backbone for Margaret Thatcher and for Ronald Reagan and uh and so I would encourage everybody to get a copy of this