Republican Party Displacement

Hello and welcome to another episode of the Minor Issues Podcast. I'm Mark Thornton at the Misesus Institute. Well, on July 18th, we took a little look at an important concept for Austrian economists called major party alignment. It's something that Murray Rothbard thought was very important uh both in the real world and for historical analysis particularly uh in his views about the history of the United States. Um, in that episode, not only did we introduce the concept, but we also took a look at what's happening right now to the internal realignment within the Democrat party. Uh, in particularly the rise of Democrat socialism within that framework. Now, of course, in that episode, I mentioned that this phenomenon is not just affecting the uh Democrat party, but it's also affecting the Republican party. And that's what we're going to take a look at most, especially today for important Austrian style insights. So to give a quick overview of the Austrian perspective on the role of politics, uh the key factor there is ideology. uh where political scientists and economists look at interest group politics which is important obviously but ideology ultimately rules the roost so to speak in terms of the long-term outcomes and therefore the actual current standing of politics and the political system and the government itself. So, it's not just special interest groups uh and events that coincide and determine reality for us, but it's also ideological change and political entrepreneurship coming into intersection with events that cause very large changes in politics and the economy. as well. So while many people are distraught over the current capture of our government nearly completely controlled by special interest groups, I must I must admit uh both in the Democrat and the Republican party. um there is um a way out of this in the sense that ideology does matter and it ultimately becomes uh the driving force in society and in politics. So this is a topic that has been um on last weekend I noticed in several media major media outlets and several podcasts they were talking about uh alignment in the political parties but they were narrowly focused on who was going to be the leader of the two major parties. who is going to replace Trump um in after the um midterm elections uh as the leader of the party and the presidential candidate and who was going to step forward and uh be the presidential candidate for the Democrat party and uh what the political platform would be of the Democrat party. Um, and of course I think a lot of people are rightly to conclude that we really have a uni party that Democrats and Republicans really there's not a dime's worth of difference between the two. As George Wallace said many decades ago now uh and it's still true today, they argue over the finer points and uh very limited budget actions um you know that actually separate them. They both support inflation. They both support war. They both support government spending run a muck. They both support a large national debt. Um they both support uh the destruction of the middle class. Uh the elevation of the upper class and uh the sort of the prison type lifestyle for uh lowincome people in the United States. And there's really not much of a difference. Uh they they come to battle uh occasionally to make it look like a a a competition u and over small slivers of the government's budget in in little teeny issues, but there's not much uh difference there. So how does ideology win in a in an environment like this? Well, the Democrat party uh to recap it has traditionally been the people's party and it's a barometer of the American economic and political system through time. The original ideology of the Democrat party was very much libertarian uh for property rights, limited government, states rights and all the rest. And uh the Democrat party dominated and um America went through um an extended period of what I would call extreme prosperity when rates of economic growth were the highest they've ever been when adjusting for population and you know the value of the dollar and all the rest. incomes were rising, economic growth was increasing, standards of living. Uh innovation was at its peak uh back in the 1800s. Uh we think nowadays that innovation is great, but uh it was also great uh back then in terms of the day. Um, so that's the way they started out and they gradually got worse over time in the post civil war. Uh, the the Greenback Party faction sort of invaded the ideological mindset of the Democrats towards more inflation and more spending. Um, in the early 20th century, you had uh large numbers of immigrants uh joining the Democrat party. You had progressives uh who were actually socialists, fascists, and they were really invading both Democrat and Republican party. And then in the 1930s during the Great Depression, um the uh black population generally left the Republican party uh because of Hoover um in his previous roles and joined the Democrat party um and you know and then manufacturing workers who were hard hit by the Great Depression, they joined uh the Democrat party in large numbers and uh you know the democ ocrat party um rose once again to prominence and now we have a fully socialist uh form of democrat party and democratic uh socialist uh form of economic system as well. Um and that was largely driven by the progressives during the progressive era. Now, the Republican party is really not the people's party. Um, the Republican party started out as a coalition, really a coalition consisting of the crony capitalists from the wig party. And uh to that you would add uh things like protectionism uh which is more or less the same thing as cronyism and any kind of people who supported big government spending programs. Uh and then there were the special interest parties, the one issue groups, uh the free soil party which sought uh free government land uh for people and um then there were the no nothings who opposed immigration. Uh there was the anti-slavery movement uh initially in the Republican party and that was fractured up amongst several uh minor parties and interest groups. Um and then there were of course evangelicals were spread around in these uh groups as well as the prohibitionists those people who wanted to make alcohol illegal which was a really big issue actually in the 1840s and 1850s. It uh the alcohol prohibition at the state level passed in many states. uh it rose to prominence and then of course the experience was so awful that it it was uh quietly repealed and left uh the scene and leaving the prohibitionist party which was had been rising uh in need of a home. So they formed the Republican party uh were elected under Lincoln, came to power uh reset the landscape politically and economically uh in the United States. And that coalition is not unlike the coalition that we see today. The Republican party is dominated by crony capitalists and protectionists, people in big business uh and their workforce who are seeking special government privileges, special government favors. They want to benefit themselves to the detriment of the rest of the population. Uh and that's still true today. And that so the protectionist element in the Republican party supporting President Trump was very strong and helped him win election the first time. Biden continued those policies and it helped get President Trump elected the second time. And of course that quickly, you know, the the protectionist tariffs of Trump uh quickly burned and failed. And uh it's been a miserable failure as usual. Um, but that is really the core, the old wig party core uh of the Republican party. And then to that you add uh the Republicans have to sucker in um other groups uh where they'll say various things. the party leaders of the Republicans, they'll say various things to try to lure in uh single issue parties and groups um and minor parties and groups um you know and so uh Trump was able to sucker in the libertarians and the anti-war crowd and the you know limited government crowd, the constitutionalists and just a bunch of um groups out there that have that want to really maintain ain their own individual ideological identity. They don't want to be labeled a party and who can blame them. I mean both parties are widely hated according to the opinion polls uh today. So Trump put together a massive amount of these um single interest and special interest um ideological groups. not bis uh not special interest in terms of you know wanting to suck out money for yourself from the general population. So that's where the Republican start party uh looks today and that's very much in doubt because President Trump uh has already lost a lot of those special uh groups and those single interest groups. um the whole mega uh support group for his campaigns um has melted away completely essentially and uh and of course President Trump himself uh is an add-on to the Republican party. Um, a lot of Republicans I talked to, they like to hearken back uh to people like Ronald Reagan and Donald Trump um as their heroes, but those two people uh were like old-fashioned Democrats who were, you know, fiscally conservative and socially liberal um people and uh uh that's their background and uh they've they've just migrated over time in order they they migrated over time in order to win elections essentially. So where is all that going? Well, in the backdrop of all this of course is that the government, the state itself has created all sorts of barriers to entry into politics. So, it's very hard for minor parties to uh qualify for elections and to compete with the massive amount of campaign money by the special provided by the special interest groups. And there are all sorts of voting regulations and of course uh they've stopped increasing the size of the House of Representatives um almost a century ago. Uh so that it's very hard to get single even a single member of a third party into the House of Representatives. Uh and then there's gerrymandering and all sorts of manipulations um of of the political system at the local, state, and federal level that makes it very very hard to uh realign these parties along the lines that are dictated by the fundamental ideologies of the American population. Um, and so we haven't had a major party realignment uh for a while now. Um, I would say that uh Ronald Reagan's capture of the evangelical prolife movement from the Democrat party in 1980 uh was effectively at least a minor variation on the major party realignment. Uh but major party realignment is important. Um, and I'm going to link in the description to an excellent article um by Patrick, Dr. Patrick Newman in the Quarterly Journal of Austrian Economics that talks about uh a lot of these political facets uh of American society. uh in the show notes. I'm also going to excerpt an um uh something from Murray Rothbart himself on this issue. And finally, I'm I'm going to link to a new article by David Brady um on placing Murray Rothbard, his life in terms of modern politics and it gives you somewhat of a a little good flavor of where we are today in that whole uh mess of things. Now, the the problem with the special interest groups making politics harder um to um have these realignments and for ideology to uh connect with actual elections and people representing us. um is that that uh is not a is not a long run guaranteed uh protection scenario for these groups. Um eventually uh that can cause problems to build up within the system and instead of political competition on election byelection basis uh restabilizing political outcomes or the occasional generational political party realignment. Um again realigning the actual ideology of Americans with their uh vote with their representatives and with the political system. Uh if that's for stalled for too long of course you get into a revolutionary scenario and that's very very dangerous because it's like war that I've been talking about the last couple issue uh episodes. Once you get once you get something like that started, once you get a war started or once you get a revolution started, generally there might be some logical basis uh for those for starting those processes. But once they're ignited, uh there's nobody controlling those processes and they very often get out of control and they um result in catastrophic new conditions rather than improvements. Um, and just to uh give you a hint about the import of all this, uh, if you take a look at the Russian Revolution, the French Revolution, and the American Revolution, uh, what you'll see is that in all three cases, the political are oligarchy, um, the political elites that I refer to who actually control society, if they become smug about their position. If they become uncompetitive behind the barriers to political competition that they're erecting to get into our way of getting the representatives that we think best represent our ideology. Um that's when the revolutions occur. So the uh Russian oligarchs uh the Zars and so forth, they become they they became smug behind uh the power and the authority that they had and the re and they were actually making reforms and they thought that they were the good guys and that they were doing the right thing. Um but that smuggness ultimately undid them because they weren't listening to the people. The same thing very much with the French monarchy. They became smug in their position. Uh the the French monarchy had been in place for hundreds and hundreds of years. Um and they were grand and glorious and they thought that they were all knowing and all powerful. And of course they were undone by a people's revolution starting with a bajgeois revolution but ultimately ending in a radical uh deadly uh revolution. And even the our own American revolution, of course, uh Americans know this all too well is that the king of England uh was smug and powerful and uh wasn't going to have any of these bratty colonists telling him what to do or what they thought uh the king of England should be doing. Uh because, you know, they were smug about their positions of power. They thought that they were insulated from the ideology that existed in the colonies. Uh not realizing that these were all people who had fled the old world and wanted to get away from the old world ways. And here the king of England is trying to reimpose it um on them. And um and as a result um three very unlikely uh events were set off set in motion by the good guys. Uh but ultimately they the the revolutions themselves did not really turn out um the way that everybody had hoped and that everybody anticipated. And um so this is a really uh important concept moving forward. Um, I think that knowing all of this information, knowing the points that Austrians have made about by Rothbart and and Mises and Hume and Hayek and all the rest who think ideology is the real driving force. um and that manipulating the political competition uh is going to have those negative um consequences just as manipulating the economy is going to have negative consequences. So it's on the one hand it provides for some optimism about the future that the these special interest groups cannot forever uh stand behind the scenes and manipulate uh the economy and the political sector uh forever without consequences. uh but the road down that path uh to improving society in contrast of uh the road of just letting the uh free market economy uh improve society. You know, there's a lot of pitfalls and dangers uh with reforming the political process, but it can be done. And uh this is, you know, just some information about how that may turn out moving forward. So, thank you for watching this episode of the Minor Issues Podcast. Again, thank you for liking and subscribing and sharing uh episodes of the Minor Issues Podcast on social media. It's very much appreciated. And we will have uh sideb uh is a recent uh interview that I've done uh on on a different podcast. Uh but uh yes, so please enjoy that as well. Uh it'll come up after this. >> Welcome back everyone to a new episode of Little by Little. And um very very excited to bring back a returning guest, Mark Thornton, senior fellow at at the Misesus Institute and one of the foremost voices in Austrian economics. and um with so much uncertainty in today's economy and that is for sure. I can't think of a better guest to help us connect the dots um very excited to welcome in Mark Thornton. Mark, welcome in my man. Good to see you. Great to have you and I've been looking very forward to this. How you been? >> It it's great to be back on your show and uh I've been great. We've had a great summer here at the institute with uh undergraduate students and students coming in and people visiting and we're getting ready for a very active fall to uh you know go around the country and around the world with the good news of Austrian economics and free markets. >> Yeah. And I think of people even well educated people typically educated in in US um higher education facilities home colleges universities it's focused on the um Kenzian form of economics and and even highly educated people in that field don't quite understand what Austrian economics are. It's a breath of fresh air. It's an eyeopener. People should um check out the Mises Institute for sure. changed my life early on and um I I think if more people understood it I think it would change theirs as well. You know Mark, we're we're living through as the Chinese curse says may you live in interesting times which is a curse. These are fascinating and especially the important macro events maybe the biggest of our lifetime. I do mean that that we're seeing things change at a level no one's ever seen before. So let me start with the big picture. You know, you set you spent your career studying business cycles through the Austrian lens. And I'm curious when you look at today's economy, where are we? Are we still in the boom? Or has the bust already begun perhaps and most people just don't recognize it yet? Well, I think the even bigger picture and one that makes all the other smaller picture including the business cycle clearer to everyone is the fact that we are in the early stages of what might one day be called World War II because the world is in conflict um pretty much everywhere you look. And uh that's certainly true with our quasi war in the Ukraine and Russia. And it's very obviously true with the situation in the Middle East uh where we're battling uh with Israel, the uh state of Iran. Uh but really the conflict is uh domestically, you know, created by the United States to a large extent. and it's focused on oil right now. Um, you know, with the Middle East certainly a big part of that with uh shutting off of Russia and the pipeline from Russia. Um, our takeover of the Venezuelan economy which is unnoteworthy except for one thing and that's oil and it was oil that they were selling to China. And so this seems to be a just a general tactic in the background running through everything that's going on is that uh the United States is trying to use oil uh to somehow fight off uh China and u you know cut it off uh from oil and and raw materials and things of that nature. uh but China is very well uh endowed with a lot of resources and refining capacity for everything and uh you know they're 89% um energy independent one of the you know the most significant countries manufacturing countries with almost 100% energy independence. Now of course built into that scenario is the business cycle and the business cycle is really driven by the behavior of central banks which have been inflating keeping interest rates real interest rates uh very very low for a very very long period of time and we have stock markets particularly in the United States at significant all-time highs highs and historic all-time highs as far as overvaluation and that manipulation by our central bank and it's true for other central banks as well. Everybody's inflating. Uh there's no question about that. Um but you know below the surface you know the on the surface you see our gross domestic product continuing to rise our aggregate unemployment rate still in a normal uh range and stock markets at or near all-time highs. So on the surface it sounds fine and good but below the surface you have twothirds of American households which are experiencing negative uh increases or real decreases in their purchasing power. And so you have twothirds of Americans who are suffering from one degree to another from higher and higher prices uh in the economy and um you know that's been a continuing process now for several years actually. Some of it's being covered up by the internal activities of the central bank. some of it's being covered up by um the statistics that they use. Uh but there's no question um given the fact that consumer sentiment uh measures and and polls in the United States are at the lowest level they've ever been since they started taking those polls. Uh and then we look at the real inflationadjusted wage rates in the United States, not the overall income which includes you know assets and dividends and and wealth uh producing forms of income profits. Uh but if we look at just wage rates and adjust them for inflation that's falling. So um you know it's a bifurcated divided economy uh where the vast majority are doing poor poor and their prospects for improvement are diminishing. Certainly the wealthy are you know riding high on the wave of the stock markets as well as other assets that they are the primary holders for. So, uh, you know, it's, uh, you know, and then of course, uh, what happens, uh, to all of the macro moving pieces when that stock market reverses itself. Uh, it's sustainable for a long period of time, but it that period of time is not infinite. They can only stretch the financial balance sheets so far before it breaks. And I have a feeling that we're very close to breaking points when it comes to corporate and individual balance sheets. Uh mom and pop balance sheets. um the bond market which is of course superers sized um in comparison to the stock markets and even in the stock markets the leading edges in high-tech uh data centers uh private equity and private credit all of those things appear to be uh the way they phrase it is rolling over um again and what happens when all that breaks and Again, of course, the list of these financial factors uh would also include the national government deficit um which would balloon under those conditions. I mean, we're running um World War style budget deficits in the federal government right now and um there's increasing pressures on that. And what happens when an economic and stock market crisis happen is that unemployment goes up. So government benefits have to increase. Uh taxes collected by the government have to go down and the deficit balloons. And if it balloons into the current bond market, US government bond market, as well as Japan and Europe and so on and so forth, it looks like a huge crisis coming to me. >> Yeah, well said. I agree. Um, a lot of what you said in my mind centers around one word and that is trust or lack thereof. You mentioned things like inflation, unemployment. I don't know how many people trust the official narrative coming out of the Bureau of Labor Statistics. There have been a lot of times I thought they should just pull the L out and call it BS, but the the long-term Treasury yields, the bond market, you know, I've always believed that the bond market is smarter than the economists or even the Federal Reserve. I think, you know, we're conditioned to believe that inflation expectations mean the Fed can't accommodate and lower rates. Therefore, if rates remain elevated, we will attract money into the bond market. But if the world stops trusting not only the way we measure inflation and unemployment, if they stop trusting our fiscal irresponsibility, um, and and began to really stop trusting us in terms of our ability to be fiscally responsible, um, our geopolitical and our our foreign policy around the world, I think that is what the bond market is is hinting at. And to that point, long-term Treasury yields continue to climb even though everyone seems to be expecting lower rates. Mark, what do you think the bond market is trying to tell us to your point here that the rest of the market might be missing? Well, I it's at your basic point. I think you're absolutely correct that fundamentally all of these activities and all of these feelings out there point to a general distrust distrust. Um and in opinion polls again um Americans do not trust their political institutions. They do not trust Congress and the political parties. Uh twothirds of Americans are actively opposed uh to our government right now. Uh and of the remaining third, there's really only a small sliver that positively support the American government. So, and and of course, a lot of those people went out of their way in the most recent polling to indicate that inflation is enemy number one. It's really harming their households and their budgets uh and their family life. Uh they feel inflation as a tax that's building every paycheck and taking more and more of their purchasing power. So it's a general distrust and then once you get that level of distrust up higher in the income and wealth categories of of the population the people who are you know bond holders uh who are investing money in companies and in government debt around the world I mean there's one country after another seems to be slipping um from favor of this class and that would certainly include Britain and uh Japan and many other countries but it's happening here in the United States because we're stretching the limits of trust with investors and that's really showing up in the government bond market. uh the 10-year US government bond is at a as in a recent high level, which means the prices of those bonds are falling. Uh in the 30-year government bond, which by the way, they're not really issuing much in the way of new long uh 30-year government bonds. And yet despite the decreasing supply uh the price of those bonds have been falling and which is very atypical and the of course the interest rate has risen and if you look at a chart of the 30 the interest rate on the 30-year US government bond it's actually broken above uh a very high level of I think the the ceiling was over the last several years was about 5% and it's recently broken above those levels which is a very bad sign. Um it's a clear sign I should say uh of the level of distrust that you talked about because uh the bond market in particular is uh it's a matter of trust or distrust for things like how much is the Fed going to inflate? Um how much inflation are they willing to tolerate? And right now if you adjust these nominal market rates uh in the economy for the actual increases in prices, the actual price inflation in the economy, the rate of return, the afterinflation rate of return for bond holders despite the higher interest rates is actually shrunk to a very low level. So they're not they're not getting much of a return after inflation and they're losing trust in the future of these long-term debt instruments. And that's why the Treasury has had to funnel almost all of the new borrowing into very shortterm interest instruments into the economy. >> Yeah, I think you're out of your mind if you own a 30-year Treasury at 5%. I think people are also out of their mind to believe that inflation is under three. John Williams of Shadow Stats simply calculates inflation the way they used to before. They've massaged it to to uh plate their inflationary agenda. And he would say add an 11 before the number they're giving you. And that's closer to where we're at. I mean, you look at Fed Chair Wars wants to strip out the um outliers on either side, which would bring inflation even down closer to 2 and a half%. They haven't hit 2% in I don't know seven or eight years at all. And and to think that that's a an expectation. In fact, I even wonder why we are conditioned to believe 2% inflation um is good. I mean stable if we had negative inflation I think people's lives would be better. Why do we have to believe that the erosion of our money supply over time is a good thing? And uh that's another argument altogether. I had an interesting discussion with Judy Shelton about that and she told me it was Janet Yellen's husband that proposed it years and years and years ago. So that uh you know because if if if you know you didn't have that if you had stable prices you couldn't give your workers uh um a raise or they would cut off the bottom line of the manufacturer. So if we have a 2% inflation and you give people a 1% cost per year increase, while they feel they're getting ahead, they're actually falling behind. And now the way that they've massaged the inflation numbers, a 5% yield is probably a negative real return of five or 6%. We'll we'll we'll couch that one for a moment, but I do agree with you. The bond market is signaling something that, hey, we want a higher yield than you're probably prepared to give. Let's switch gears a little bit. You know, I've followed you now for a while and and I know that you've argued for years that easy money creates the illusion of prosperity. I agree very much so. Suppressed interest rates create that illusion in our 401k, in our house. And this also encourages massive malinvestment and um distortions in in in um assets and um uh you know malinvestment in businesses and all of these things that wouldn't otherwise happen if you didn't have a a suppressed or distorted super low interest rate environment. Now, one of the questions I want to ask you is something that's been on my mind a little bit lately. It's about private credit and we've seen it ex explode over the last few years and it's largely outside the traditional banking system. Um, recently we've seen funds gated and repetitively and stress beginning to show the FDIC just came out and said they're concerned about the exposure even to the big banks uh for private credit because private credit still borrows money from the big banks. One of the things I wanted to ask you is that most recently we've seen the heads of credit, private credit at both Blackstone and Black Rockck, the two big entities that experienced these gating episodes, they both stepped down recently at the same time. Now, maybe it's just a coincidence and maybe it's not. How significant to you is the private credit risk and could it be the next crack maybe that investors should be watching? I'll tell you that I am. Oh yes. I mean I explored uh private credit uh private equity actually um as the next black swan a while back on my own podcast. And this uh form of financing very similar to junk bonds and it emerged in the flood of credit that came into the market during and after COVID. Um and ultimately the market's going to find ways of putting the Fed's funny money uh to work. And uh that's what emerged in 2022 through 2025. And it was a boom of tremendous uh expansion of credit and you know getting into the u financial books of so many different c companies and so many different financial entities. And it was only a matter of time that the results of this type of financing would start to show up. And that happened at the end of 2025 when all of a sudden you know uh private equity uh was couldn't get access to to money to make their deals. the deals started souring and uh private credit was brought in as a way of you know funneling new funds into this apparatus. Um and then at the end of 2025 uh the Fed had to in start uh quantitative easing with it a new program that they said this is not quantitative easing. Of course, it was going to take easing, but they said it was because of illiquidity uh in private equity and private credit and a few other places in the economy. So, they started injecting $40 billion of brand new money uh into the marketplace late last year and they've been doing it every month. Uh and you know, it was supposed to be a shortterm stop gap measure and it's continued on. I expect that it's going to expand uh to a great extent and not contract and go away as a short-term measure uh because the results from private equity continue uh to come out and continue to be uh negative. Whereas when they first started everything was hunky dory. uh none of the uh new financial creations uh was showing losses, but when you're dealing with high risk finance, I mean, it's built in that you're going to, you know, if you have a hundred deals, there's a certain percentage of them that you expect to do badly and you expect to do poorly and not make it. Well, once that started emerging uh in late 2025, uh that's when the Fed came to the rescue. Uh but things have not improved. Things have only gone further south. And when I heard that both of those CEOs mysteriously are stepping down uh in unison, I thought, well, that is really not an indication of what's going on right now, but what is to come in the near future. they don't want to be there or they're being kicked out or forced out in some respect because they threaten the overall brand that their that their operations represent. So that's what I think is happening is that uh they've been displaced or have left because there's more bad news on the horizon and it looks like the case for private equity and private credit as a leading candidate of the next black swan is working pretty well right now. And unfortunately, of course, the tie-ins between uh those two facets of the market and banks, for example, um are going to lead to widespread negative consequences um and make it more difficult for the rest of the market to uh maintain the flow of funds, you know, for for everything from margin debt to financing the federal government. So you can imagine how uh that one black swan which was small and teeny five years ago is now uh uppermost in the thinking on Wall Street, the big banks and uh the US Treasury Department. >> Yeah, especially with margin debt at all-time high. Um it it it certainly is something to for people to ponder and you have a lot of very wealthy families that are loaded into private equity that could very quickly change that dynamic. All of this kind of brings me to gold for a little bit. Um one question on it anyway. You know most of my career people in the mainstream financial advisors would dismiss gold. It didn't pay any interest. Those would call it a bar barbarous relic. for the last nine years, and I've I've screamed about this on my podcast as much as I can, being redundant as as possible, the central banks, which I consider to be not only the the biggest money in the world, but the most well-informed, privy to analysts and information, none none of us will ever see. Maybe you will at the Mises Institute, but most of us won't. And these folks have been buying gold hand over fist. In fact, over the last several years at the fastest pace in modern history. Um in fact this first quarter of this year they it was the largest first quarter purchase ever in the history of central banks um goldwise and in fact they lied about it as the World Gold Council said no you didn't buy 16 tons you bought 244 tons by a factor of 15 you lied. They're keeping it quiet and they show the import export numbers um and were able to say the central banks bought 15 times what they said they bought. Um same thing with China. they uh they way under reported their numbers. Goldman Sachs just said it was under reportported by 10 times or something to that degree. So the m bottom line here is central banks are as fast as they can it seems um purchasing gold all while reducing their exposure back again here to the common theme of US treasuries. I guess I'd like to ask your perspective. Do you think they understand something that the mainstream doesn't as it pertains to gold and to treasuries? And more importantly, as we watch a system of rails being payment systems like SIPs and Embridge, of vaulting systems in Singapore, in Hong Kong, now in uh Dubai, Mumbai, Shanghai, um Brazil, um St. Petersburg, Moscow, the new bricks vault, the vaulting and now the settlement systems in Hong Kong in another currency. All of these things are being built. So my question is not only what do the central banks understand that the mainstream investor or the mainstream market ignores and do you believe that we are witnessing a bigger shift away from government debt as an asset largely through weaponization? maybe that this realization of moving towards real monetary assets instead of US treasuries. Hope hopefully that wasn't too convoluted. Bottom line is what does the market not understand that the central banks do understand and is gold moving towards a new system or is this just simple diversification by the central banks? Well, it hearkens back to my first statement about the status of war in the global economy that we're in inching and moving in that direction around the globe. And I think that the countries involved, which would include of course Russia and Eastern Europe and the Middle East and all of the BRICS countries who have been aiming at an alternative rather than a monopolized monetary global monetary system by the US. So they've been at it for a long time. But now you add these other uh conditions of global economic and military conflict which is really greatly exacerbated uh the situation and admittedly right now it's quasi wars and you know you know the US um censoring or uh censuring uh various countries and their um their holdings and so forth. Uh but ultimately you know gold is money and it works no m under all conditions including war. Uh whereas fiat paper money doesn't work at all. uh especially for the secondary and tertiary uh currencies, they lose um almost all of their value in a global conflict. So um it's not surprising that uh nations, governments are moving in the direction of holding gold, a little bit of silver, more silver as well these days um in the countries that um you know that center around the BRICS countries. So, China, Brazil, uh, Russia, uh, India and so forth, but also Turkey and Poland and other places that are closer and better informed about the nature of the conflict. Now, in Western Europe and in the United States, um all of those countries and nations, the governments and the regular people seem to be completely um out to lunch as far as being informed of the status of this situation and Americans in particular because we've had a dominating currency, they seem completely unaware. So Americans are not really and Canadians and Western Europeans are not really buying uh gold and silver to protect their wealth um under what could be very radically different uh uh environment moving forward. Whereas uh countries that have a better knowledge about the effects of inflation and the status of the current situation uh such as Japan, China, India, Turkey and so forth. uh not only are those nations and their central banks buying gold and silver, but the people themselves are also heavily invested um throughout the whole Asia Minor and Middle East um and throughout Asia from Eastern Europe all the way over to Japan. So, you know, there's some people who are misinformed and governments who are misinforming and um and and so it depends on where you are because it depends on how well the information is available and how much propaganda is working against people acquiring the correct information about the current status of the global economy and what seems very likely to happen uh coming in the future. >> Yeah, I agree. Um very much so, as a matter of fact, and and I do think that gold is being viewed as um kind of as a an alternative to that type of to the sanctioning, to the weaponization, um to the fiscal irresponsibility, to the uncertainty, the lack of trust. Let's um shift gears just a little bit and uh talk about AI. And um I think that everyone agrees it's going to change the world. Um you can see it. Um it's kind of frightening as a matter of fact. But history also teaches us that just about every revolutionary technology, you go, you look at the railroads, which I studied, um, electricity to the internet, all of these massive innovations, revolutionary innovations and technology um, somehow created an investment bubble first before that technology changed the world. And um do you believe we are watching the next great tech revolution or are we still in the great investment bubble phase u as we've seen before? >> Yeah. A key feature of the Austrian business cycle theory is that the bubble forms and the name is given to a certain class of assets and it's almost always associated with so-called advanced technologies. So the cuttingedge technologies are where all of this massive flow of funds and credit, artificial credit from the central bank, where they tend to accumulate the most, whether that's housing uh or in this case artificial intelligence. And the key thing there is misinformation. uh the lack of information on the part of investors about what's really going on. And high-tech is great at duping investors because they're sold these stories about productivity and the productivity is true. It's real. Uh there's no doubt about it that the internet and railroads and canals and you know so many other things uh made life uh for people more productive and better for the for society um as a result. But under conditions of a lot of artificial credit entering the market, it's very easy uh to be lured in by stories rather than, you know, profits and incomes of corporations which are real and sustainable. And so the investment gets overdone in addition to flooding into certain sectors. It gets overdone uh in those sectors as well. And so the valuations of course uh just fly off the page uh in terms of anything related to normal conditions. And so that's a really uh a feature of the Austrian theory of the business cycle of how it uh comes about and uh what the expected results are. And we expect a cluster of entrepreneurial and investment error uh to occur you know sometime in the near uh future with respect to artificial intelligence. But in also in terms of artificial intelligence, we have a very small number of companies that are leading the way and then all of their suppliers uh following in the aftermath. And these are corporations that have very high credit ratings. So they can borrow money at very low interest rates and they know that the real interest rates right now are either very low when you adjust it for inflation or even negative as you correctly suggest. So they're borrowing money almost for free and they're borrowing hundreds of billions of dollars of money and they know they can or they expect that they'll be able to pay the loans off, the bonds off with inflated away dollars. And so they're being lured in uh they're better informed than most people uh and they're better positioned than most people, but they are also succumbing to the lure of the inflationary process. Um and they have prospects of the government bailing them out uh by the Treasury and the Fed and so forth. Uh they've been encouraged by the government um to do all of this. They've been brought to Washington DC by President Trump and given a lot of inside information by the administration and flights around the world and and so on and so forth. Um, and also they've been given a lot of government contracts. One of the things that most people don't realize is that a lot of AI revenue is dependent on government contracts to keep tabs on to spy on and to control the American population. So that's those are things that the government is touting uh in terms of AI is going to help us with jobs and productivity and so on and so forth. But I think the bulk of it is going to help the government uh keep uh tabs on us, make sure we're paying our taxes, make sure we're not, you know, doing negative things about the government or opposing the government just like they do in China, you know, where they they basically suppress people's privacy and they suppress people's uh civil rights, their natural rights, their human rights um on a very large scale. And I think that's why there's such a rush, a mad rush to get this done as soon as possible. >> Yeah. Katherine Austin Fitz, who I've had the pleasure of getting to know a little bit, had lunch with her recently, talks about this as the digital surveillance, digital ID, the Genius Act, says we're moving towards digital money next January and beyond um this digital infrastructure. um tokenizing all the real world assets is certainly something to u to understand and uh for everyone's sake they should spend a little time researching it it's it's eye opening for sure. Um, finally, Mark, I if if your Austrian view of the world is right, and I tend to lean far more towards the Austrian side than the Kenzian, um, we've spent decades distorting markets would be the theory, with cheap money, suppressed interest rates, excessive debt, which created distortions in asset prices and and malinvestment in in corporations, as an example. um you're speaking in front of a group of young people, a college or whatnot. What's the one piece of advice that you would like to leave people with? If this theory is correct, if we are entering the period of time that you see coming, the result of the distortion of suppressed interest rates, decades of suppressed interest rates, the results of the fiscal irresponsibility, the weaponization of the Treasury market, the possibility of of rates moving higher and what that does to asset prices, all of these things that we've covered today, you got some advice that you would you would leave with a young person or anyone someone who's just trying to figure out what to do in this environment. What might that advice be? >> Well, I'm very optimistic about the future, Andy. Despite everything that I said, I mean, because I deal mostly with young people and their education, um, I can see that most young adults have completely detached themselves from the major political parties and even the political process. So they know that that is not the wave of the future or way to make themselves or society better. Uh I've seen the American population turn against their government uh oppose the government and um you know they do not support the government in opinion polling. probably 10 times as many Americans now um oppose what the government is doing compared to when I was in college. Um and also they've they've disconnected themselves with the mainstream media and they're more likely to be watching your program than watching the six o'clock news on television. So they and they know the problems. They know that my generation has put $40 trillion dollar of debt on their back. They know that my generation has created and expanded this social security monster. Uh and it's already running red ink. Um and they know that you know that uh government uh my generation has gotten government to expand into health care and into higher education to the point where it's beyond um affordable for most people and they've driven the quality of health care and health in America down and education and the value of a college degree down. So they they're very well aware of the current situation and they know because of the cumulative effect of all that that that is not um the government doing the favors. That's the government causing problems. And so I encourage them to be able to learn how to to understand what's propaganda and what's not. And of course, most of all, I encourage them to understand how a free market economy works and the theoretical connections which keep it all together and keep it very well regulated without any government intervention and to realize that a free society is a prosperous society. It's a happy society and that when you see these signs of uh financial and economic unbalances, mismanagement, you can almost always find a government program or regulation or something uh behind the scene that's causing it. And they're very receptive to that. It's very intuitive to them. And so the uh teaching Austrian economics, the economics presented by the Austrian school over the last 150 years has become easier and easier for me over time precisely because of the changes from my generation uh which was you know cold war believe in the state all that kind of stuff to now where they're completely uh questioning everything that gets put forth to them and they're eliminating things that they realize like the major political parties and the old mainstream media that are clearly not worth their time and effort and are misleading. >> Well, Mark, I uh I appreciate your sage wisdom and I'm sure people will get a lot out of it. I understand you have an offer for our listeners and what's the best way for people to follow what you're doing at the Mises Institute? >> Well, it's mises.org and I have a podcast. We have several short podcasts that we do from the Misesus Institute. uh and we're giving away short books uh this entire year in this this coming month is Murray Rothbard's the the case for 100% gold dollar which you know seemed to be completely unrealistic decades ago but now is uh I think within our reach you know as more and more Americans and people around the world really uh actually say you know I'm not holding US dollars. I'm not holding US bonds or bonds. I'm not holding life insurance policies. I'd rather be stacking silver than any of those other things because it's real. Well, that's just the first step until we get to an ideological movement uh that forces the political system uh to help us get back to this uh market form of money where gold and silver are money in the in society and we don't need central banks and all this regulatory state uh to keep us safe. you know, gold and silver coins. Believe me, once you get your hands on them, you feel a lot safer just doing that. >> Well, God bless you, Mark. Thank you for doing what you're doing. Very selfless endeavor and trying to wake up people and young people at that. Education is everything. Information is everything. You can see that in markets, too. Mark, I I once again have thoroughly enjoyed chatting with you, and I hope we do it again before too long. Um but you have my respect certainly in that of the Mises Institute and I hope everyone checks it out. Uh it changed my life 25 30 plus years ago. Actually about 35 years ago changed my life and um and I I wouldn't uh I wouldn't give it up for anything. So thank you once again for joining and I look forward to picking up where we left off. Until then I hope you and everyone else has a wonderful day and uh stays well. Thank you, Andy. I love you and everything you do.