Gold, Socialism, and the Crisis of the Dollar

On August 15th, I will be appearing at the Mises Institute conference "Gold and Silver: Prospecting for Liberty" in Albuquerque, New Mexico. We have a great lineup for that conference including Ryan McMaken, J.P. Cortez on the legislative front, uh Kevin Duffy who's an expert on the financial issues related to this topic and then I will be speaking on how economic theory connects us between gold and money. I will also be appearing a little bit later on September 12th in Greenville, South Carolina for another Mises Institute Circle "Why Government Schools Don't Want You to Learn Economics." And we've got a really great lineup for that one as well. And really we're touching on two very important issues relating to your freedom directly as well as bigger global context. All right. So, in this week's episode, um I'm going to be presenting a triple header. And to lead us off this weekend, I'm going to be replaying my appearance on Rothbard Radio with Ryan McMaken and we take on a variety of topics in a very short interview, but it's uh the central point of the interview and the episode was explaining the K-shaped economy uh and how it really integrates with our daily lives. Um and then I'm going to be replaying an an interview that I did with on Wall Street Bullion with host Ivan Ba Baoki. And also we'll close up with a interview I did on Freedom Works radio show with Paul Malloy. And we discussed the factors that are encouraging or getting younger adults in America interested in democratic socialism. I've known Paul for many years. I've been on his show uh many times and we have a great short discussion which I feel brings some common senses to why so many people are attracted to what otherwise we would consider a failed system. So we're not really talking about why socialism fails but why people are so attracted to it. Um and if you're in the Tampa Bay area, uh Paul's show runs 3 days a week. So look for that as well. Thank you for tuning in to the Minor Issues podcast and as you go and watch some of these episodes, uh of course it's very helpful to the Mises Institute uh if you comment if you like an episode uh if you share it with your friends, but particularly the comments on uh what you think of uh the episode and what you think of our appearances on various podcasts across social media. So thanks again for being a listener and a subscriber to the Minor Issues podcast. >> [music] >> Welcome back to Radio Rothbard. I'm Ryan McMaken, editor in chief at the Mises Institute and this is our one annual live episode of Radio Rothbard coming to you from Mises University here at the Mises Institute. My guest today is Mark Thornton, who I haven't had on lately, but certainly if you're a devoted Radio Rothbard listener, you know all about Mark. Uh you also know about his own work at the Mises Institute. He's a senior fellow at the Mises Institute, has been for a very long time, probably more than 30 years going on or about that. And so I have Mark on here today, and we're going to talk about several different issues, but I always like to talk to Mark in terms of uh economic trends. Mark keeps uh an eye on things like inflation, employment, money, gold, a lot of those sorts of topics. So we'll cover some of that uh today. But first, Mark, thanks for joining me today. How are you? >> Ryan, I'm doing great, and it's a pleasure to be back on Radio Rothbard with you today, and I was really glad that I showed up early for your talk on the French Revolution, because I think it was really spot-on. And you know, we're entering a I think a revolutionary type era of where society is a little bit unstable, and where there's a lot of grievances, and where there's a lot of division in society. And in my sense, the the theory of revolutions is that very often it's the good guys that start the revolutions. They see the problems, the moral and economic problems. They want to do something about it, but ultimately there's a coup in the revolution, which you pointed out very uh wonderfully, uh and then the bad guys take over, and the revolution ends in uh in a terrible end result. Uh like with the communist Soviet Revolution, with the French Revolution, and even with the American Revolution, you know, it was the real good guys, the anti-federalists that really led the charge for change um, in America. Uh, but ultimately, you know, as you got there was a coup uh, during the American Revolution afterwards, and we ended up with the worst possible end result of the ones that were being put forward at the time. So, we don't really want revolutions, and I think everybody um, in here and out there can contribute by, you know, helping us make the moral case for the free society to point out uh, the problems with government in our lives, and also to provide solutions. So, there's a lot of work ahead. >> Well, you pointed out that we're in a period where where people have a lot of grievances, and uh, especially uh, if you have um, young people in your life, like I have couple grown children now, right? They'll be looking for jobs, they're dealing with things like inflation. And so, I'm sympathetic, to say the least, to a lot of these challenges that people now face, especially driven by inflation, asset price inflation, especially in home prices, rents, that sort of thing. And you will note, right, with in all of these cases, the French Revolution, the Russian Revolution, which is really just a coup, the American Revolution, economic factors are always playing a very big part. Because after all, if everybody feels fine economically, why have a revolution? Right? You feel good, you're getting richer, there's no problem. But, that a lot of people don't feel that way right now. And I think it would be nice to talk about like some of those issues that I think they're really affecting people and I think the topic that keeps coming up is inflation. >> Yes, and inflation is at the heart of the matter, but I think particularly young people are right to be upset given that my generation has accumulated 40 trillion dollars in debt. My generation has bankrupted the social security system. My generation has made housing prices unaffordable with various subsidies to themselves. And now housing is unaffordable for a lot of people and higher education also where government provided all these subsidies and drove up the cost of higher education and drove down the quality of it just like they've done with health care. They've driven up the cost, driven down the quality, and now all of a sudden all these young people are looking at the bill for all of these things. Well, of course, all of those bills are going to come due in the form of inflation. And of course that's the government in the Austrian paradigm inflation is the government printing up too much money and you know, it's either at the Fed, the Treasury, through the banking system. They expand the money supply ever all the time in order to finance spending, but also to refinancing the national debt and of course the health care, social security, and all of those other things feed into the general expense that government has to turn over our our resources in the form of the paper that they print out. And then, of course, we only know about it as taxpayers and consumers and just people in America in the form of higher prices. So, it's not surprising that the government and the Federal Reserve and all of the mainstream economists out there, they want to label, first of all, inflation as the effect, as rising prices rather than what the government is actually doing, which is printing up money, um and forcing prices higher eventually. Um and then they want to do all sorts of things like um adjust the statistics so that the rise in price does not look as as bad as it is. Um and of course, the new Federal Reserve Chairman, uh Kevin Warsh, uh one of the big things on his agenda to get us back to the target rate is by just simply changing, getting rid of the old statistic and bringing in his favorite statistic, which happens to be about measures inflation at 50% less than the current rate. And of course, that current rate and the current target of 2%, you know, most people I talk to out there in the economy, they don't want the 2% first of all. But then again, the government and the Fed have not met their 2% target in I don't know, is it 5 years now? >> It's more than 5 years, yeah. >> Um so, you know, it's not surprising that it's all really boiling down uh to inflation and the government uh trying to cover up the shell game that they're, uh, playing on the American people. >> Yeah, we should note that in the Federal Reserve Act that Congress adopted back in the early '80s or very late '70s, it states that the goal of the Federal Reserve will be 0% inflation after 1988. They had a timeframe that they wrote into it back then. And then the Fed just contrary to their legislative mandate decided, "No, it's actually 2%. We're going to do that. We're going to do 2%. We don't care Congress says." And then they can't even hit that, right? It's been years since they hit even the 2%. And instead it's been now it's around 50% higher than that, and it's been a long time. Uh, so that's a significant fact, and we should note too, right? In this context, when we say inflation, we mean monetary inflation if we're just using the word by itself. If we're talking about price increases, we're talking about price inflation. We do make that distinction. Uh, could be monetary inflation, could be price inflation, but if we're just using inflation by itself, we mean monetary inflation cuz that's how Mises would have used the term. But while you're talking, you've been talking about how this is impacting a lot of young people in many cases. So, now I know the answer to this question, but I've asked you, are you implying, Mark, that inflation affects different groups of people in different ways, and if so, how and why? >> Well, I think that's the great advantage of the Austrian approach is that we don't look at the overall aggregates of anything. We really look below those aggregate statistics and look at what's happening, um, with various groups in society to figure out what's actually going on. When you look at the aggregates, you can easily be misled about, you know, if somebody were to tell you, "Okay, gross domestic product for the nation is growing at 2.5% and the stock market is growing at 8% then everything on the surface it must be just fine. Um in reality, of course, things are not just fine. As a matter of fact, the main problem that we're facing in terms of this division as well as working families, working households is that this inflationary process has been very, very beneficial to the most wealthy classes that control most of the assets and most of the wealth in society, whereas the working class is falling further and further behind. As you know, and Ryan's articles on all these things are must-read uh material that come out on mises.org in terms of staying up with um you know, what's going on statistically with the money supply and prices and all that. But um these working households are falling further and further behind because their wages are increasing very little, but the prices of goods and services in the economy uh are rising faster. And the sequence of change from a monetary stimulus by the Fed and of course everybody knows this, but nobody really puts it together. But when the Fed say had a has a surprise rate cut um the the things that it impacts in a positive direction are things like stock prices and real estate prices. So basically the whole wealth category um is gets a big advantage. So that if you have wealth and you can leverage up wealth by uh borrowing more money at those lower rates, then all of a sudden your income your wealth statement, your net worth, is going to go up. But, somebody who doesn't have a lot of wealth, a lot of assets, is going to get no positive uh feedback or very little positive And if you were working in the luxury good uh industries, for example, or maybe in the high-tech industries, you might be advantaged, but basically the broad uh stroke of working households are not going to see any advantage. They're going to get the higher prices for things like gasoline, housing, food, clothing. All of those prices are going to go up. And then the last thing that goes up, and this is, of course, theoretically true, but also historically true, is the last set of prices that goes up is wage rates in the economy. So, the inflationary process is constantly leaving the working class and working households a step behind in the whole process, where that same inflationary process from the Fed >> [clears throat] >> is helping the government finance the debt, yes. Uh but, it's also helping the people who are in the top 1% of wealth or the top 10% of wealth. And it goes down into the uh top 20% of wealth of income households. So, it's definitely uh helping some people in society um and hurting others. Now, in Austrian theory, we start there with the Cantillon effect, which has been discussed at some length um at Mises University, and it's basically the person who gets the money first is the main beneficiary, and then everybody else comes afterwards. So, the first person to receive it, maybe the second or third person to receive it, but if you're down the uh timetable of who gets the money, you're going to end up losing. And then, of course, we've also been talking about the Austrian business cycle theory, which is the same thing except the money in that first step is coming through the Federal Reserve. It's first going to the government, and then going to Wall Street and asset markets and the banking sector. So, you can see that the cards are stacked against the average American, and really the broad stroke uh stroke of Americans um who are working but with um maybe not a lot of assets, and probably with a lot of debt, too. So, it definitely affects people differently. >> And so, this is a factor in that K-shaped economy we hear about, right? >> Right. Yes, it's the it's um the explanation, and of course I do a lot of um podcasts and and as well as my own Minor Issues podcast. And so, on my podcast, I've talked about the Cantillon effect in several episodes going back in time, and I've talked about the K-shaped economy in several episodes going back in time. And so, these podcasters who are generally promoting gold and silver and things like that, investment podcasts um you know, they've seen that, and they realize that the Austrians have an explanation for the K-shaped economy that nobody else has. Uh, if you read articles about the K-shaped economy, there's no discussion of what causes it. They just say, "Well, the wealthy are getting wealthier, the poor are getting poorer. Um, and what we really need is to tax the wealthy and we need to provide various subsidies for the non-wealthy, for the working class." But, if you leave out the cause, you have no idea how to really solve the problem. And so, that has caught on uh, with the people who interview me on other podcasts and it's been kind of a a way for me to get in there and talk about Austrian economics and talk about this little chunk of economic theory that Austrians have that nobody else really does have. Uh, and I found that the audience uh, and the hosts um, find us these pieces of Austrian theory to be very thoughtful. >> Yeah, whenever I hear these economic analyses that in no way include the central bank when they're trying to talk about the problem of capitalism, late-stage capitalism, right? Just kind of the go-to phrase for anti-capitalists nowadays. It's amazing how rarely they even talk about the central bank, which manages and manipulates the most important price in the economy, the price of money. And they're relentlessly trying to force down interest rates. And if you're not mentioning that, I just don't see how you could have any sort of meaningful economic analysis. >> Well, the Fed is a very powerful group. Um, and they have a enormous They dedicate enormous resources to what I would call propaganda. Um, and they basically bought off uh, every economist who works in macroeconomics, monetary theory, money and banking, uh, everybody who's high up in in those areas in the economics profession, um, or works at an academic journal, um, in those particular areas as editors or as members of the editorial board, they've all worked for the Fed or they've all been on a research grant from the Fed. And the Fed pays extremely well. So, you don't want to, um, you know, uh, shut the door on the prospects of being risen up economically and professionally by the Fed and the affiliated institutions. And so, you tend to leave out, uh, those kind of things. I've noticed that there are a few prominent people in the area of monetary economics, and they seem to change their tune as soon as they're retired. As soon as they're not, um, in the rat race of academic journals, all of a sudden they say, "Well, you know, I think those Austrians have a good idea there about the Great Depression or something like that." So, the Fed has an enormous amount of money. They spend an enormous amount of money on staff and, uh, research wings and publications and grants and visiting positions at the Fed, and they try to cover that all up. But if you if you don't include the Fed, you're absolutely right. There's no way you can understand what the problem is. You can't diagnose the problem. And so, the average person, especially in the journalistic accounts, is left accepting the idea that, well, we need new taxes and new regulations and new subsidies. You know, we need more and more government interventions when it's precisely government that's gotten us into the problem in the first place. That's a general rule of government intervention. >> Well, I know from experience that like you, if you go on a lot of these shows that wanted to talk about the issue of money, and often, if they're promoting gold and so on, they want to know, okay, what direction is the dollar going in? And then we get into the more speculative thinking about what's happening in the near future. But let's do that. Let's speculate about where things are going. And of course, the Fed is only one central bank among many. The dollar is only one currency among many. But as long as we've got policy going that is inflationary, where it's forcing down interest rates, which will require some monetary inflation in most cases, isn't that going to then devalue the dollar? Or is that just relative compared to other currencies? What what should we be keeping our eye on in terms of trying to guess about what is going to happen to the dollar in the near future and beyond that even? >> Well, as someone said, the US dollar is the least dirty shirt in the laundry. And the other fiat currencies are very often, with the exception of the Swiss franc, maybe a couple of others, the Norwegian krone, and you know, the there's a few others that are actually better, more stable, less reckless than the US dollar, but basically every other currency is even more reckless. So you can't look at what's called the dollar index, which is just comparing the US dollar to all the other currencies because the main currencies that are being compared are the Japanese yen, who are hyper-inflators, um the British pound, which their economy is going right down the tubes as we speak, um and the euro, which is on a teeter-totter that's likely going to break and crash. So, we're comparing the US dollar against other highly inflationary, highly unstable currencies. And so, the dollar index is actually very misleading, but we do know that if we look at the dollar on the true gold standard, where $20 was equal to an ounce of gold, and now an ounce of gold is equal to $4,000, that our dollar is really only worth about a half a penny of what it used to be on the gold standard. And there's no prospects for that trend to stop falling, and there's no prospects for it to start rising. I mean, there's no indication whatsoever um that the dollar's going to get uh magnificently stronger in terms of its absolute purchasing power. And there's every reason to believe that the pace of decline in the value of the dollar is going to increase because of that $40 trillion of debt, the $2 annual deficit, which is not a a cyclical thing anymore, It's built in. And now the interest on the debt is more than $1 trillion and that's the fastest growing of the three categories. So, you know, you you have to expect that the actual purchasing power of the dollar is going to continue to decline and it's likely to decline at an even faster pace. So, >> Well, and let's just draw those two dots together, too, in case people are unfamiliar with this argument, right? Is the reason that high debt and high debt service leads to a further devaluation of the dollar is because the regime and its central bank, they need low interest rates. So, they can't they can't enter into a hard money situation. >> Right. >> Because they need to keep forcing down interest rates and that leads to more monetary inflation. Because you can imagine, right? They've got to pay interest on a trillion dollars or they're paying interest of a trillion dollars right now at current relatively low interest rates. You can imagine what would happen if they just oh, we're going to let interest rates float. We'll let the market determine interest rates. Even if it just went up 30% that would massively increase the monthly, the quarterly, the annual payments that the government now has to make on its interest and you could you could then see that you would enter then a sovereign debt type crisis where you're not able to pay your your bills, right? So, it's built in because the central government has to have low interest rates, right? So, there's there's really no hope then of seeing a turnaround and embracing some sort of hard money policy. I guess unless maybe they um just simply said they weren't going to pay the debt or pay they were going to pay the debt on pennies on the dollar now, but that would that would come with other problems. [laughter] >> Yeah, that's not very likely either. Uh but we've seen just this week um where the long bond uh the interest rate on the US government long bond has gone above 5% and the negative impact that's had on the stock market. So, in order to really stabilize the value of the dollar the Federal Reserve would have to undertake a policy like it did with Paul Volcker um in the early 1980s uh when I was in college uh and he raised interest rates to 15% and of course, you know, if you think the government is would have a hard time financing the national debt uh before that, you can imagine what it would be like of them trying to roll over the existing debt and the new debt at [clears throat] 15%. It would just blow up the entire world economy uh >> [clears throat] >> posthaste. Um and so, you know, that that is definitely a significant problem. They don't really have recourse to that kind of thing um at the present moment. Floating the interest rates and seeing where they would go is probably about the most radical thing we would expect them to do but nothing along the lines of what Paul Volcker did, which temporarily stabilize the US economy and put us on a path to solid economic growth during the Reagan administrations of say the 1980s. Um but yeah, that's that's definitely a problem and uh the problem is I suggested uh they're not really doing anything about any of those problems, um, starting with the spending. Nobody's talking about spending cuts. Nobody's talking about moratoriums on increases in any of the budgets. They're not even really debating the bills in Congress anymore, and they haven't been for quite a long time. They just pass these continuing resolutions where nothing is examined and not Nobody goes through the accounting, uh, in Congress, uh, to see what could be cut, what needs to be saved. They're not doing that basic, uh, financing that everybody else in the world has to do. Uh, every other household has to come to grips with their credit card, uh, debt and their mortgage and the bills that they have to pay. That's what the average American is doing right now. They're having a heck of a time with making their mortgage, making their credit cards, making their bills, paying all their subscriptions. They're having to cut, they're having to shave, they're having to, uh, cancel subscriptions, uh, refinance their mortgage and and all sorts of things, uh, just to stay afloat, but the federal government is engaged in none of that. Just looking at the geopolitical issue, however, do you see So, you noted that the the dollar is the least dirty shirt in the laundry. So, do any of these other efforts at uh, circumventing the dollar, at replacing the dollar as some sort of global reserve currency, right? You hear about the BRICS currency proposed, and, uh, those sorts of efforts. Is Is that really going to have any sort of impact on the dollar? And if not in the short term, maybe in the long term? I mean, what are What are the factors there and and is the dollar really threatened in any way? >> Well, China um and India, Russia, uh and an increasing number of other countries are interested in an alternative. They don't like the fact that the dollar is the monopoly currency. Now, as a trading currency, it's likely that the dollar is going to continue for quite some time. The The BRICS countries are currently introducing a new trading system so that uh international transactions don't occur on the US-dominated electronic system. And they're also establishing um gold trading mechanisms so that these international trades in other currencies can take place and they're backstopped with gold. And so this is all stuff that's going forward. Uh and it's in the self-interest of these other countries. And of course, that's going to hurt the dollar and hurt the position of the United States government. And um and then there's the reserve currency question. The fact that central banks held US government debt as its reserve currencies to back up their own domestic currency. And right now, that is under threat as well as India, China, Russia, Turkey, and a bunch of other countries, you know, around the world, 25 of the top leading economies are all adding gold to their reserves of their central bank to back up their own currency. and gold just became once again for the first time in a half a century the number one reserve on the balance sheets of the central bank. So, that is also moving in that direction. And the third thing I'd like to point out is that this uh I it's it's so stupid that I I I can't even really describe it, but the situation in the Persian Gulf um where the United States has joined Israel in attacking Iran um has set up a situation where it's not only threatening um our oil supplies and chemical supplies and fertilizer supplies and all sorts of other things including diesel gasoline. I hope nobody in here has a diesel gasoline car truck. Uh but we all depend on, you know, 18-wheelers and tractors um harvesting our food and so forth. So, we're all going to be very negatively impacted by that. But in terms of money all of these countries in the Persian Gulf are now they were the ones that supported the petrodollar. They were trading their currency for the US dollar creating a demand for the US dollar. And they are that's, you know, they want to get out of that. And a lot of other countries that have been very negatively impacted across Asia on the periphery and then of course those countries that I mentioned um Japan, China, India, Russia, Turkey uh and so many other countries that have been adversely affected where they've had to shut down factories, they've had to shut down sectors of their agriculture, or plant crops without fertilizer. Um they've had to um stop letting people commute to work. Uh and all sorts of negative in impacts. They're no longer really the great friends of the United States that they once were. And no longer really all that supportive of buying our government debt or holding our dollars. And and of course the same is true with our former friends and not and allies in Europe. So uh that's a very unfortunate thing regarding the future demand and therefore the value of the US dollar. >> Well, as a final question then, what is the role of understanding economic theory and being able to make sense of all of this? I mean, you'll have some people seem to think, well, you can just look at statistics, you can look at trends, and you can come away with that with some sort of understanding. But don't you need good sound economic theory to understand what's really happening with currency, to realize how people are maybe being exploited by the economic system? There's There's no substitute for good theory here, right? >> Well, for me, there's certainly not. I mean, if I didn't have the use of economic theory, I don't think I'd be invited on to any of those podcasts. Um you know, if cuz I don't have anything different, it could be just anybody showing up and talking about the statistics and uh and then venturing guesses as to how that's going to affect the precious metals markets and that kind of thing. So, I've personally found it um uh it's increased the demand for my services because it's a unique um contribution to their audience and you know, the hosts even say, "Oh, that was a very thoughtful conversation." What does that mean, very thoughtful conversation? Well, it means that the host and the audience has to think about it. And that's really what economic theory asks us to do. The theory of the law of demand, for example, you have to in your mind you you you immediately go to, "Well, at high prices we buy less and at low prices we buy more." Okay, so that's the most fundamental component of economic theory. Uh we have to think about it and we all realize it's true. And so, these audiences realize that what I'm telling them about the Cantillon effect or the K-shaped economy is actually the explanation. Um and so, I found it very helpful and as we've been pointing out, these uh journal purely journalistic accounts really don't tell us the causal factors um and therefore they can't generate any um solutions um to the problem uh because there's a disconnect really uh or there's no connection, I guess, between the problem and the solution. And so, um I found it uh very helpful in what I do, certainly, and that's what I do in the classroom uh as well as focusing on economic theory as it if as it affects policy in the current day or in back in time in economic history, uh it's the big crucial advantage um of Austrian economists because, you know, we can't possibly know everything there is to know about economics and all the sub-disciplines and keep up with all the statistics and the econometric modeling and everything else. It's theory that guides us so that Austrian economists can actually, you know, uh have something to say in any conversation uh because it's theoretically based and it's adaptable. The law of demand is adaptable to any situation, every situation. It doesn't matter where in the world it is or when it happened. You know, it could be about the long ago past or it could even be about the future. And so it it's a very it's a great tool and of course that's what we spent the whole week on really here. Uh you know, we tell stories and we make applications, but it's basically trying to demonstrate the importance of economic theory in our everyday lives. >> Well, Mark Thornton, thank you for joining me today. We appreciate having you on and uh of course if if you are unfamiliar with Mark's work, be sure and check him out at mises.org. That's m i s e s o r g. He's got a number of books, got his own podcast of course, which I would It's a shorter podcast, so very easy to listen to. So, I would recommend the Minor Issues podcast as well if you haven't been listening to that. So, thank you everyone out there for listening. We'll be back next time with more, so we'll see you then. Hey, we are back on a Wednesday. Thank you so very much for being with us here on Freedom Works. You know, the rise of um the socialist philosophy. Now, socialism has been around for eons, okay? The concept of um redistribution and the idea that those that suffer will be better off if the government takes control of the output of goods and make sure that everybody gets a piece of the action kind of a thing. Well, it's been around for for a long time. But, here in the United States, it's never been We have never been closer in my opinion, at least. Never been closer to having that philosophy start to take control of our culture. Now, we've got something uh this this group the Democratic >> [snorts] >> Socialists of America, DSA, is the largest socialist group in the United States. You know how many people they've got? They've got 120,000 members. That is a large group. And the co-chair uh whose name escapes me has been making the rounds on um the different media networks and talking about some of the things that they want. Um they want to replace the private insurance system with government-funded universal health care. Uh they want to expand the social safety net. They want to raise the minimum wage. They want to tax wealthy earners. They want to have higher taxes on corporations. Uh they seem to be somewhat anti-Israeli. They oppose military aid to Israel. And there's a bunch of other things as well. Well, I can't think of a better person to bring in than Mark Thornton. He is the senior fellow at the Mises Institute in the great town of Auburn, Alabama. He's also the book review editor of Quarterly Journal of Austrian Economics. And Ludwig von Mises, uh for those of you that don't know, was a free market economics guru. Mark, welcome back to Freedom Works. >> Paul, it's so great to hear your voice. >> Oh, it's great to hear yours, Mark. I'm a little worried, Mark, about what's going on with socialism. Boy, if Ludwig von Mises was around, I wonder what he would say about what's going on here in the United States with that that concept which seems to be I don't know, it seems to be taking control of a goodly portion of the Democratic Party. What say you? >> Well, we've been implementing socialism in the United States for over 100 years now. Most of what Karl Marx called for in his 10-point program of the Communist Manifesto. Um but more recently, we've seen uh big city election victories by the Social Democrats and you know, big victories in New York, Washington, D.C. the congressional seat in downtown Denver and in the People's Republican Rep- uh the People's Republic of Madison, Wisconsin. >> Yes. [laughter] >> So, this is you know, more broadly, this is really breaking up and splitting up the Democratic Party. Because you know, the Democratic Party was a coalition of independent, middle-of-the-road Democrats and the liberal Democrats. And they would get what they wanted on the local level, but they would vote straight party Democrat on the national level. And then we've seen, you know, Senator Bernie Sanders and AOC in the House of Representatives, they're two very powerful um social Democrats. And >> [clears throat] >> so, we're seeing this breaking up, the splitting up in the Democratic Party just like we're seeing this splitting up or realignment of the Republican Party as well. >> Mhm. >> And this is showing up in the polls, obviously. >> What also seems to be showing up in the polls, Mark, is a move uh by the general public to accepting socialism more so than it's ever been accepted before. I don't know if you've seen a couple of the polls where supposedly, and I don't know exactly how the question is asked, but do you prefer socialism over capitalism? And surprisingly, a goodly number of people, maybe uh close to 50%, say that socialism is preferred. And as you probably know, the younger generations have a much more positive view of the socialism philosophy than than older people. >> Well, you know, I'm not surprised. You know, in general, we've had a few generations now that have been educated in public schools, so they've been exposed to 15 years of government propaganda, and they've never been really taught to think for themselves the way the original Americans were. Um so, that's very, you know, that's a big problem is this um propaganda, don't think for yourself uh attitude. But on the other hand, I mean, especially the younger generation, they know that they're being put at an extreme disadvantage uh with I mean, they don't watch the mainstream news at all, but they get, you know, very directly information that this nation is $40 trillion in debt, and that's going to fall on their backs. They pretty much know that the Social Security programs are very near uh bankruptcy. And and you know, cuz we've increased all the benefits the last couple of generations. And you know, so they're wondering, are we going to get that? >> Yes. >> You know, um are we going to have to pay for a system which is um now hemorrhaging ready ink all over the place. And you know, so they're they they feel greatly disadvantaged. They see you know, the mega wealthy super prospering. And they um see less opportunity for themselves. They see the current generation fast-tracking artificial intelligence. You know, getting rid of the jobs that they spent the last 15 or 20 years uh trying to prepare for. So, I think you know, they realize and then of course, the younger generation grew up on all sorts of freebies provided by capitalism. You know, everything is free, you know, free internet, free um email uh accounts, free you know, gaming accounts. And you know, all sorts of free stuff that capitalism is providing. So, they're so used to just getting things for free that you know, they they're not they're not you know, if you go back 50, 60, 70 years, you paid for everything. There was hardly anything >> That's true. >> hardly anything for free except television. You watched ads. >> Now, television and the internet That's I was just thinking about that. When I was a little boy, television was the big deal. And um um and you could watch it and you didn't pay anything for it. You watched commercials, of course. And then the internet was kind of the same thing. You didn't pay for it. It was there. Yeah, you had to go buy a computer, well, you had to go buy a TV. Once you got that, you could sit back and watch it. And there would be commercials on it. So, we understood how that worked. There were people willing to pay to get your eyes to look at their products. And so we kind of understood, but that was That's That's kind of beautiful capitalism, right? Social Security, which is going belly up in the next 5 or 6 years, or we're going to have to completely reinvent it, was created by the >> Yeah, the red ink is starting to run. >> Oh my goodness. That was created by government. And it's a Ponzi scheme. You would think that the younger generations who would look at Social Security and see that it's a failure of socialism. >> Yes, but it's so easy just to get a bullhorn and and cry out for you know, free health care. And of course, housing is another one, Paul. >> Yes. >> this generation, the Federal Reserve and regulators at every level have driven up the cost of housing so much that it's, you know, where people started getting homes when they were 18 or 21 or 25. And now it's they're getting maybe a home, maybe they're sharing a home um at age 28, 32, 35. >> Mhm. >> A- if they ever get a home. I mean, a lot of the newer generations, they've had to say, you know, I just I'm never going to be able to afford a home. I'm just never going to be able to do the upkeep on a car, Um and so everything that previous generations viewed as stepping stones in the story of American progress and freedom and independence, you know, those aren't there for them. >> That's right. >> And that's and that's why they're they're zeroing in on nationalizing health care because they by nationalizing it and not charging the customers as they walk through the door that it's going to be free, which of course that's ridiculous. And also they want, you know, national housing policies, which we just passed the little >> So, they're actually doing themselves in with this philosophy because a case could be made that every single problem that we have whether it's lack of affordable housing or lack of affordable or you know, not being able to find certain kinds of jobs or any of those things if the government had not become so involved uh say in the ethic the loans, federal loans and this that and the other thing all of the things if they were left to the devices of the free market would probably be a lot more gettable or whatever the word is. >> Well, that's exactly right, Paul, and we can see nowadays even in a couple of areas like LASIK eye surgery and plastic surgery um that those are beyond the insurance system, those are beyond the government hospitals and in those two areas the product has gotten much better and much safer and the price has gone down, it's easily accessible, you can get an appointment anytime. >> That's true. >> And the providers are very friendly and service oriented and they take care of their patients and the price has gone down. >> Mhm. >> Whereas in the where the government is controlling everything and forcing people on to these insurance stuff, um you know, it gets more and more expensive, it gets more and more difficult to get an appointment, it gets more unpleasant to be part in that system. And of course they're making all sorts of mistakes and you know, and and and they're not even really health care anymore, they're just uh medical service providers that want to keep everybody sick and in the system. So, you know, with the LASIK and plastic surgery it's one and done, you know, it's kind of expensive, uh but health care is expensive and if we nationalize it, that's not going to stop the cost from rising. >> No, it it's it's anybody that had a I hate to say it this way, anybody that had a brain knew that when that Obamacare thing came up under Obama, that it was going to make everything in health care more expensive. Yeah. I mean, you could see that that that was going to happen. You were having the government take more control supposedly to provide better services to people that wouldn't be able to get the services unless the government said every insurance company has to cover all of these different things no matter what. Well, you know what, if you had left the free market to its own devices, all those people that needed certain kinds of uh coverage, there would be a market for them because we would figure out how to provide that kind of coverage for them much better than the government one size fits all, you know that. >> Yes, it's a basic problem of distinguishing cost side from price side. They'd like to drop drop the price to zero for all of these things, but when you do that, the cost escalate even higher. And you can >> Exactly. >> You can imagine if we had a program to provide free milk or free eggs >> Exactly. >> that pretty soon everybody would be consuming a lot more milk and a lot more eggs. And it would be difficult to produce all that extra milk and all those extra eggs. Right now, we're using the best >> disappear. Look at what Mondani is doing in New York. He wants to have free grocery stores, right? By the way By the way, it's going to take for whatever reason 2 years to build to open a free grocery store. But um you know what's going to happen. It's going You know, first of all, they're going to run out of everything. So, all of a sudden, you'll go in there because people the first group of people that go in there are going to get the biggest shopping cart they can find and stuff everything into it as they wander out the door. So, this concept But somebody's paying for all of that stuff anyway. Well, the taxpayers of New York City would would would be paying for it. There is no such thing as a free lunch, as Milton Friedman always used to say. >> Yeah, and the per the per unit cost is going to rise as people scramble for every ounce of milk and every single egg. And then the Democratic part of Democratic Socialism goes away because Democratic Socialism is really a slogan to lure in voters. In reality, it's a backdoor mechanism to total totalitarian >> There you go. >> ism and totalitarian policies where everybody, you know, is controlled and given allotments and you know, and of course AI is going to be great for the government to do these kind of things to us and monitor everything we do. >> Well, that's another area that of course the the whole concept of now the government will want a piece of AI. In fact, Trump himself has been talking about AI companies um connecting with the federal government and now you got the federal government running AI companies now, but that will that will be great. So, you got you got all kinds of issues with more government involvement, but just quickly getting back to the Democratic Party does it look to you like in November that socialism indeed could be a winning formula for more seats for Democrats? I'm wondering. I'm beginning to wonder if indeed that could occur that could occur? >> Well, yeah, the Democratic socialism is going to be a political banner. I mean, the these are all areas that the Democrats currently control. But with the expansion of Democrats and these liberal Democrats and Democratic socialists and also disaffected people, you know, it shows up in the poll that uh support for these Democratic socialism is also facilitated by what's going on in Gaza, what's going on in Iran um and all of the strong support that both Democrats and Republicans give um you know, for a nation that most of the world hates and um and and a lot of Americans are uh are opposed to including Democrats and Republicans. >> about the the funding of Israel. >> That's correct. >> Yeah, mhm. Yeah, so it's uh you toss that into the mix as well our involvement with overseas. >> Yeah, it's going to be an interesting election. >> It certainly is. Mark Thornton, it is absolutely always a pleasure to to talk with you because you're like a light out in the in the in the wilderness sometimes. Shining the light of No, shining the light of free markets capitalism, Austrian economics. All the good things that will make life better for everybody and just you just got to keep up that good work. >> I'm so happy to do it, Paul. Thank you very much. >> Thank you, Mark. Look forward to talking with you again. >> Me as well. >> All right, sir. >> Hello everyone. Thanks for joining and welcome back to Wall Street Bully. Before we begin, please hit the like and subscribe button. It helps us grow tremendously. Our guest today is Dr. Mark Thornton. He's a senior fellow at Mises Institute. Mark, welcome back. >> I've been It's great to be back on your show. >> Yeah, it's great to have you down. I wanted to get you down to talk about everything that's happening right now in the markets and silver and gold geopolitically as well. First though, let's start off with silver and gold. You know, it seems that every day I'm checking the silver and gold prices. We're seeming to We seem to be in a correction phase, but it's creeping down quite quite a bit. What is this due to, Mark? Is it due to the war? Is it due to some other factor? What are your thoughts? >> Well, there's the news reaction uh function with gold and silver versus oil and natural gas. And so when the war heats up, the energy prices go up steeply and the speculators get into oil and out of uh gold and silver. So you see that inverse reaction, but the the main thesis with gold, silver, uh real assets, commodities, and so forth. That's all still all intact. The war only makes the situation worse for the economy, and therefore better for precious metals and commodities. >> Mhm. Now, what's the next step though? Are we going to see, uh, you know, is it going to start stabilizing? Like, where do we see silver and gold going from now to the end of 2026? >> Well, I think they're pretty stable where they are right now. Um, I didn't expect them to come down this much. Um, but I I I sort of see this as a as a sort of a bottom phase, uh, to the markets in precious metals. They seem to be bouncing along, uh, the bottom of the charts, essentially. Um, and I I really think that there's not much further. I mean, they certainly they could fall even further, uh, without damaging the the primary thesis about government spending, debt, and monetary inflation. Um, so that's that's all still intact, and gold and silver really have been coming down, and now bouncing off of a bottom, it appears. And I think that I think that the real challenge here is, of course, the news cycle of the conflict in the Persian Gulf, you know, to the extent that that, um, is reduced, uh, that should help stabilize the price of uh, gold and silver, because you'll see the speculators move out of energy and into precious metals. Uh, but the real fireworks are going to start later on, when, uh, we see the, uh, much overvalued stock market have trouble, and, uh, in particular, uh, the inflation issue impacting the market for bonds. The It seems that the Treasury and the Fed are protecting uh the government bond market from higher rates because uh that is starting to create a um a situation where the government can't keep up with the financing of this debt. And so, they're going to have to keep real interest rates uh and I think that's what they're trying to do. They're trying to keep real interest rates. Uh the premium over the inflation rate essentially, which is very small right now. Uh in some calculations, you'll actually end up with a negative number. Uh that interest rates are negative. Um but that is you know, that keeps the stock market flying. Uh that keeps the bond market alive. But there's going to be a push comes to shove moment here uh in the near future where stocks can't be held up and bonds can't be held down. >> Right. >> when gold and silver are going to shine. >> Absolutely. Now, I posted up a a chart on uh on my LinkedIn uh this week about the debt servicing. You know, it's a trillion dollars right now a year on the debt servicing on the on the uh the US debt. Um and it there there was projections of uh 2035 or the 2034 uh uh range, so another 9 to 10 years, that it's going to be around 2.5 to 2.6 trillion a year. How unsustainable is this when we're living in a world where you have that much debt just just the debt servicing alone, and I'm sure uh the debt is going to be way higher than 39 trillion. You know, what happens? Are we running to a hyperinflationary uh world? Are we going to What happens to the US dollar? Can they just kick the can down the road forever? >> No, they can't. I mean, the US dollar has been strong during this intermediate phase here. Uh but over the long haul, it's gotten weaker and weaker. And and that's just, you know, the dollar index is just a comparison with other weak currencies. The purchasing power of the dollar as experienced by your your your audience out there is falling noticeably and it's falling fast >> [snorts] >> um in in the form of consumer prices, asset prices, everything out there. So, uh you know, there it's a push comes to shove moment. Um the government has no sign that it's going to cut spending in any shape, way, or form. And uh the the the interest expense is going to increase and they're just they're not going to pay the interest. They're not going to pay down the debt. They're not going to pay off the bonds as they come due. They're just rolling everything over. If you put this in a similar situation to an individual out there who's maxed out their credit cards, can't make their uh minimum payment, but it are is getting by by magically uh applying for new cards and using the new cards to pay off the old cards. That's the situation we're in right now, where there's no credit rating agency overseeing the whole process and and punishing individuals that behave that way. Uh nobody's punishing the US government for behaving that way right now. Now, of course, my friend David Stockman, who's in charge of the Office of Management and Budget in the 1980s during the Reagan administration said, "We need to balance the budget now." And all of his colleagues were saying, "Well, you know, it's manageable and the uh it's a small in terms of GDP." And it was. It was like 40 per 40% of GDP. Now, it's 120. Um, and interest payments on the on the debt exceed military expenditures. So, it's it's way over the top and David Stockman warned everybody about this and everybody ignored him and that was maybe that was the last chance really to balance the budget. So, we're headed down a very dark hallway and the light switches are off. And and nobody's even talking about viable ways of solving the problem. >> Mhm. It seems like no president or no politician who's at the highest level in the US wants to talk about the the debt issue or the budget or the dollar issue. Uh, both sides, whether it's left or right. It seems like every president that comes in, they try to avoid talking about you know, the massive debt that the US is in. And if you look back, Mark, you know, at any empire, whether it's the Chinese, the British Empire, the you know, the Roman Empire, they all end up collapsing due to a monetary issue. Uh, so do you think the US is creeping up on a collapse of their empire? Would it Is it now to the next 10, 20 years, 30? Can they still go another 100? Well, it doesn't seem on the current path that they can certainly go 100. All it's going to take is one rather catastrophic event, either a hyperinflation or a war. And you know, they they've been on the war path at least since President Biden, um, you know, going against China, going against Russia, Ukraine, Middle East, uh, Venezuela, you know, all around the globe and then protectionism, of course, is war on an economic level. >> Right. >> And and so, it it's not just the United States, it's other countries doing this as well, and they're you know, the forming of trading blocks and the forming of alliances. These are all the same sort of things that we saw before World War I, certainly, but also before World War II. So, I'm very uh as a matter of fact, I I spoke about this on my podcast uh Minor Issues over the weekend about >> [clears throat] >> the dupes of war. And unfortunately, the American people uh may end up being the dupes of war and unleashing the dogs of war and causing one of these catastrophic events where there's very little tax revenue, there's much, much higher levels of expenditure, everything has to be borrowed and inflated, and we might end up, you know, with a much, much worse situation a few years down the line. >> Mhm. Where Where do you recommend people should be looking at right now? Should they just be in getting into assets? Should it be commodities? Should it be real estate? Where should people be parking their their wealth right now? >> You got to think for yourself. Um and you got to build for yourself, and then your family, and your friends, and your relatives. It all has to be a bottom-up solution for you. And a lot of that is, you know, uh strict uh economic and financial decision-making, but it's very important not to invest in paper assets, long-term paper assets. Um you know, like long-term bonds and insurance policies are probably going to be losers going forward, whereas assets um then commodities and real things, like income-earning real estate, your own home, >> Right. >> gold and silver, commodity stocks, oil stocks, energy stocks. I think energy is, you know, even after the war is concluded and hopefully it will be soon, but it doesn't look that way, but I think energy stocks are a long-term um good bet in the sense that you know, during Obama and Biden and even Trump uh there was a lot [clears throat] of discouragement with um environmental policies against investing in metals, oil, natural gas, um you know, all chemical productions, refineries, all of that. So, we're we're behind the we're behind the ball uh in respect to all of those industries and they those are real assets that will appreciate with inflation. >> Absolutely. Now, uh looking at uh looking at, you know, everything that's happening right now geopolitically between US and Iran, uh what happens if this continues like a Ukraine-Russia situation where it starts dragging on for 2-3 years? Uh you know, what does that do to the economy? What does that do to the markets? If we see a long, you know, multi-year uh war drawn out between US and Iran? >> Well, you know, when you start a war, everything looks, you know, they promise you it's going to be over with. Everything's going to be great. Everything's going to be better and that never turns out to be the case. And it's very, very difficult once you're in a war to get out of a war. There's politically speaking, the incentives just aren't there. Everybody has to concede some points and, you know, people at war don't like to concede points >> Right. >> uh to the other side. So, I'm not anticipating any easy solution, any short-term solution. Um I don't think uh you know, when you've got the people Donald Trump has negotiating for him, there's almost no chance. Um and you've got Israel playing an independent um role here, and that's [clears throat] just not going to That's just not going to work >> Right. >> um to come to a good short-term solution uh to this problem. So, I'm not really optimistic about a solution in the short term. >> Mhm. Yeah, I know, same here, uh Mark. It seems like it's uh it's a very strange situation that we're in, and it doesn't look like it's going to end anytime soon. Uh now, what would be your piece of guidance right now for the youth? Uh for someone watching you for the first time on my channel or on uh you know, on the silver and gold community, they're getting in here, they're watching you for the first time. What would be your guidance for 2026? >> Well, that's, you know, that's what we're in business for here at the Mises Institute to help educate, uh to help teach, uh especially young people uh real economics, real scientific economics, uh you know, what you see uh in journalism, typically mainstream journalism, and what you see in university classrooms and high school classrooms is totally politicized. It's got a large element of propaganda in it. >> Right. >> And a lot of good the brighter students recognize that, and they end up coming to the Mises Institute uh or our webpage and learning a little bit of at a time uh by reading daily articles or attending our conferences. Uh but, you know, our story about >> [clears throat] >> the real world out there uh is coming true. And um you know, I think that's going to continue to reveal itself uh as we move forward in time, as we use up um you know, our stockpiles of uh unrefined oil and as we run out of things like lubricating oils and diesel fuel and unable >> [clears throat] >> farmers are unable to harvest their crops or or provide fertilizer for their crops. I mean Mhm. We have some tough things that are likely looking us looking at us from the future. >> Yeah, no, you >> Hi, I'm Michael Petroni, founder and president of CanAm Bullion. >> [music] >> At CanAm Bullion, we are more than just a precious metals dealer. We are your trusted partner in securing your financial future. As an authorized dealer of the Royal Canadian Mint, we take pride in offering only the highest quality [music] gold and silver products. And with our best price guarantee, you can trust that [music] you're getting the most value for your investment. We offer free, no obligation consultations with [music] one of our precious metals experts. Our commitment to excellence has earned us a five-star Google rating, a Shopper Approved Seal of Approval, and an A+ rating from the Better [music] Business Bureau. These accolades reflect our dedication to transparency, integrity, and exceptional customer service. Are [music] you ready to take the first step towards financial security? Contact CanAm Bullion today for your free consultation. Let us help you build a brighter future with the power of [music] precious metals. >> from the future. >> Yeah, no, you absolutely nailed it, Mark. Uh now, I I I want people to connect with you. I want them to follow Mises Institute. Uh is it is it just the the website? Can they follow you on social media? Where can they find your work? >> Well, you can m i s e s dot o r g is the best place to get contact with the Institute and all of its programs and all of its publications. We have several different podcasts. Mine is called Minor Issues m i n o r and it's a weekly Saturday morning 10-minute podcast. I replay our interviews on the backside of the podcast. So you can listen for 10 minutes or go on for >> [laughter] >> for longer. But [clears throat] we have a theoretical a great theoretical podcast called Human Action. We have a political podcast called Power and Market and Rothbard Radio and we have another podcast on the libertarian take public issues. So you know just where we stand and where generally good libertarian stand as well pressing issues of the day and then we have articles and we have books. We have a huge library everything under the sun. It's free. So it's [clears throat] available to you and it's a great use of your time. It's a great investment in your future. If you want to have a bright or a brighter future for yourself. Well, that's fantastic. Highly recommend everyone to check out Mises Institute check out the website put the the link in the description below. But Mark, thank you so much for taking the time out of your day to speaking with everyone in the precious metals community here. As everything develops as always we really love to have you back on soon. Thank you. I love it. Awesome. Talk to you soon Mark. Bye-bye.