I'm Charlotte Mloud with investingnews.com and here today with me is Dr. Mark Thordon, senior fellow at the Mises Institute. Thank you so much for being here. Great to have you. >> Oh, it's wonderful to be here with you, Charlotte. Thank you. >> Really good to have you. I'm excited for this conversation and I think that many of our audience members will probably be familiar with you already, but I was thinking since it's our first conversation, maybe you could begin with


a brief overview to your background and the work that you're doing right now. >> Well, um I'm a PhD academic economist. Uh I work for the Misesus Institute and have been with them virtually from the very beginning and you know promoting Austrian economics uh through our web page and through academic uh publications and popular publications and we have one of the world's largest uh economic web pages. We have five uh different podcasts uh that I try to be as much a part of as I can be. I work with the academic


journal. I teach at Auburn University. Um, my research has been on markets in general, but also on the war on drugs and the work of Ludwig van Mises and a bunch of other things, including the American Civil War. So, I I do a lot of different things. >> Clearly, you have a lot going on, and we're going to go down some of those paths today. I was hoping our audience has a strong interest in gold as well as silver. And I wanted to start there because I think it will open up different paths that we can follow.


[snorts] Beginning with gold. We know that the metal has been on a record setting rise this year. Of course, we're currently in a a bit of a pullback, but I'm wondering if you can tell me what you see as the key drivers there. What would you pull out for gold? Well, I think it's important to realize that gold was money until the government took it over. Gold and silver. And the reason the market established gold and silver is money thousands of years ago was because of the physical properties


of those metals made them ideal for money. And the big conclusion is that they held a very stable value versus all other prices. So when we see abnormal prices for gold in terms of fiat dollars, it's all really the result of government intervening in the market, replacing gold, printing up money, endangering economic performance, extracting resources, trade wars, military actions, all of these things. I know that a lot of um commentators on gold and silver, they like to fixate on corrupted markets or


uh the Chinese or war. But really, gold absorbs all of the uncertainties of the world. And when the price lets up a little bit or contracts a little bit, it's the world breathing a sigh of relief. But the general upward movement of gold prices is clearly a result of government overspending and not really caring that they're overspending, borrowing beyond belief and not really doing anything to slow it down and then just printing up money to pay for the borrowing. So, it's really runaway


government spending, borrowing, inflating that's pushing these metal prices uh to record levels really across the board. >> I'm hearing a lot of focus lately on that idea of gold's price move as a warning signal. So, anything further you would add there because I think that's quite an interesting topic to explore for for investors. Uh well, you know, I think the big biggest worry is international conflict. The conflict with the Chinese, with the Russians, now with India, with the


Europeans, even with our US neighbors in Canada and Mexico, with the trade war. Uh but it goes beyond that, you know. It goes to President Biden uh attacking the Russians, taking their treasuries. uh the Europeans doing the same thing. Um and the the trade war, the the trade [clears throat] restricting policies is really an extension of government intervention in our economy, but it's also pushing us uh ever closer to military conflicts. And so I think that, you know, a military conflict would be devastating


to our economies and to the economic lives of everybody um on the planet. And gold is signaling its concern about the trend of where we're going with all that. I think in, you know, everyday American life, we ignore those kind of things in order to pursue our daily activities. But gold doesn't ignore those kind of things. It has to put up with that every day. It's absorbing all of that information and we're getting a daily report card on what our politicians are doing us to us and the threats uh that


they're imposing on us uh as a result of their foreign policy and their imperial designs. Uh and of course, China has very similar um designs. They see themselves as a world economic power. um deserving of a status. Um and you know, countries around the world each have their own objectives and if we forget that and we try to have our way in as far as the United States is concerned, I'm an American um and I'm mostly very concerned about our own foreign policy and what it might do to the global


economy. Well, I wonder if you can say a little bit more about that because people are very focused on the US and what happens internally there and how it can impact global markets. So, what would you add there? Well, I think to add um [snorts] the one of the problems I foresee is I don't see the US economy as healthy as for example the unemployment rate reports or GDP re reports or the stock market reports. One of the things that Austrian economics teaches us is that the numbers can be rigged in a certain


way through the inflation process. So if they print up money, they can increase certain types of investment advanced technology investment things that will push GDP numbers and employment numbers uh electrical usage numbers uh ever higher and it makes the economy seem strong. But in reality, what we know is that the majority of Americans are suffering from declining real wage rates. their budgets are going downhill because of inflation. They're able to buy less and less. I can tell you in my


hometown, the restaurants that were filled to the brim a couple of years ago, uh, are now, you know, no reservation required. You can see that slack in the real economy right on Main Street. So I don't think the economy is very healthy and I think that uh you know uh politicians become [clears throat] even more aggressive and they very often use military actions as a way of covering up for the fact that they've screwed up the economy. And I think one of the things in particular that I'm looking at is


these these aerial attacks on these little fishing boats off of Venezuela. And that seems like it's a prime case where politicians are setting themselves up to engage in a faux military conflict in order to support their reelection campaign um on the horizon. But you know uh Venezuela is allies with China. They're allies with Russia and Cuba. Uh if we attack them, that's going to escalate in those circles as well. So, this is a very dicey uh situation, I think, and it's one that the American people don't


really even know about or care about. Uh you know, they don't have know anything about Venezuela and uh they don't care to know about Venezuela and they like Venezuelans just fine. You know, we have lots of Venezuela immigrants into this country and I love them. Uh, love their food, etc. But we don't want to get the United States in a global conflict because that would bring down the world economy. >> So potentially these events unfolding internationally distracting from what's


happening in the US itself. I know from reading some of your writing that you see the US moving into a hyperinflationary scenario. So, I'm wondering if you can outline, I know this is a big question, but outline how we we get there from where we are right now. I know we just got those latest CPI numbers showing 3% and of course you've already talked about how those numbers can be fudged. So, what would you what would you lay out here? >> Well, you know, the circumstances do have to be very particular to get into a


hyperinflation. It happens on a fairly regular basis and it even happens to worldleading economies. I mean France and Germany have suffered from hyperinflations. We had a hyperinflation in colonial America. So it's not out of the question. It can happen uh and mostly around wars though and that's why I bring that up. Uh I told you I don't predict gold prices and things like that but uh one of the first presentations I ever gave um they asked me to comment on these other predictions and I said well


ultimately the the uh price of gold in terms of fiat dollars is going to go to infinity whenever we get into a hyperinflation. And what that takes uh to engineer a hyperinflation is uh of course large-scale government spending, largecale government borrowing, a huge national debt which cannot be paid. And then of course the politicians continue to print in order to finance the deficit. And you know, of course, we the United States is running a trillion dollar a multi-t trillion dollar deficit and the interest payments


are already uh $1 trillion a year. It's one of the biggest budget items. It and it's scaled to go much higher in the future, especially if interest rates goes up, which is related to what people think about the dollar and its rate of depreciation. And we have just going through a year in which the dollar has depreciated uh considerably in terms of double digits against the other fiat currencies. So um we've got to be concerned about that. If the United States was to go into war and having to


spend a lot of money on military armaments um to devote a lot of the labor force into the military, the economy would shrink. the government would grow and the need to finance that with printing would be enormous. And of course, if if that resulted in a a loss in the um people's perception about the future of the dollar, then they would start dumping dollars into the American economy and that would further exacerbate the decline in the value of the dollar, the rise in global commodity prices, oil, metals, grains, etc. and uh


the inflation would proliferate into American life and we would look back on 3% as the good old days um relative to what we might get under that type of scenario. And then once we get into that scenario um you know then you have to depend on politicians seeing the seeing the light and and and realizing what they've done and asking for forgiveness and reforming the economy. But that is very difficult. That almost never happens except in in during periods and acts of great desperation on the part of politicians.


So it's a lot of trouble and enormous uncertainty that could be revealed to us in the months and years going forward. [clears throat] >> Definitely. I could see the way you lay it out there. So So this could happen, not guaranteed to happen. You mentioned this needs a a quite particular set of circumstances and I know earlier this year there was I don't know if optimism is the right word but there were some conversations around Doge and Elon Musk coming in maybe they're going to clean


things up. Do you that seems to have fizzled at this point but do you see do you see a scenario where we get something a little bit a little bit more optimistic? >> Well, yes. And you know the Doge thing there was never any promises. There was never any consensus. Uh Elon Musk and his team never had really much in the way of authority. And as a matter of fact, their authority was questioned right and left and still is being questioned in the courts today. So there wasn't much punch behind that. But


we have had periods where we've gotten into inflation in the 70s and uh and and other periods and the US uh has made more formal uh declarations. They've passed legislation. uh they bought brought in Paul Vulkar in the late 1970s and they made um what appeared to be a good faith effort to at least cut back or reform the system and the value of the dollar uh strengthened as a result. So if the politicians commit to sounder money and make a legislative commitment, uh if they commit to balancing the


budget or you know reducing the deficit um in some formal way that would uh really um throw the brakes on the precious metal markets and strengthen the value of the dollar, probably reduce interest rates and spur real economic growth Because if the money is not going to the government, it can go to the economy. It can go into small business. They can buy capital and and and uh computers and uh productivity enhancing devices so that Americans can be more productive and more competitive on the international


uh economy and on the international scale. And so you can get periods of improvement and we have experienced uh probably three or four bouts of that uh reformmindedness. I mean not reform-mindedness enough to bring us back to the gold standard, but at least um good talking points and in in some cases legislation or personnel changes at the Fed, uh things of that nature. So yes, >> I think it's it's good to look at the flip side, especially because when people look at what's happening today, I


think a lot of the time they wonder, all right, is this similar to another time in the past? Anything any other time periods that you would say remind you of what we're seeing right now? >> Wow. Um, [laughter] well, no, I think we're I would I I'm thinking of the current situation as more of an unprecedented place, but I think we could be um you know, the stagflation of the 1970s, it has a lot of parallels. Um, at the Fed, for example, in the 1970s, they didn't believe that the


money supply was responsible for higher prices in the economy. And the current Fed uh doesn't believe that their own policies of printing money are responsible for increased prices. And there were some very dovish people appointed to the Fed in the 1970s who allowed politicians to strongarm them into dovish low interest rate policies. And today, you know, we have President Trump and and President Obama and President Biden, they were all appointing more dovish people uh to the Fed to the point where Jerome Powell,


who was a dove, is it was considered a war hawk on inflation, you know. So [laughter] um yes I mean in that in that sense [clears throat] there's a direct parallel and we're starting and we have really been feeling the effects of this uh for years now where the adverse effects of inflation are really harming uh middle class America. The Fed and the money printing it causes higher prices. It causes the business cycle. It causes the booms and bust. But it also causes a uh artificial redistribution of income


and wealth from the middle class to the upper high income high wealth individuals who can really benefit from those artificially low interest rates because artificially low interest rates push asset prices much higher. So stocks and bonds go up with uh aggressive Fed policy and so the the wealthiest in society benefit, but the working class whose companies can't afford new tools and computers and productivity enhancing devices, their wages stagnate and then they lose uh purchasing power from price


inflation. So, we're definitely experiencing that 50 60% of American uh families right now are seeing declining purchasing power of their income. So, I'm talking about people who are working working full-time, maybe working two, three part-time jobs. So, we're talking about working people and they're falling behind. They can't pay their bills. They're running up credit cards and uh you know, and they're being hurt. they're being harmed and they don't know why. And they're they're having to


explain to their family why they can no longer afford, you know, this type of cable bill or this kind of internet system or they can't get new phones or, you know, we're going to have to do with less or we're not getting a new car this year. You know, all of those decisions which were built into the family budget now cannot be made because of what the Fed has been doing to us, especially since COVID when they went ballistic with the money supply where they government spent trillions and trillions of dollars where


they sent everybody home. Uh so we had an unproductive economy just fueled by the money drug essentially. Well, and the Fed is very timely to talk about right now because we have the the meeting coming up later this week. I'm wondering what you see as the Fed's path forward. So, we got an interest rate cut at the previous meeting. I know widely expected at this one is another cut, but what are you expecting to see? What what commentary and maybe if we look further into the future beyond 2025, what are


you expecting? >> Well, you know, the the Fed is a game of confidence. They have one tool. They have one policy. they can print money. And so they want to everybody to believe that they are not responsible for higher prices, that they will come to the rescue if the economy needs saving, but they're ultimately doing the job of undermining the productivity of the economy every day. And I do expect them to cut interest rates. But of course, what do we've been told? We've been told the Fed


is data dependent. The Fed is data dependent for years and years and years. And now that the data is not there, they're saying, well, you know, we can do without the data for a little while, you know, [laughter] and so they they plan on cutting interest rates. I suspect that's uh that policy is going to continue and then the stock market is going to get in trouble and they're going to go bananas um on uh the uh the interest rate lowering. um they're going to stop uh tightening uh you know their their


balance sheet and they're probably going to loosen the balance sheet and start buying more assets. Mortgage back securities and go probably long-term government bonds is is the place that they're going to concentrate their effort in over the next couple of years. And uh and then of course President Trump is going to replace Jay Powell as chairman. Uh now JP Pal could stay on longer past the spring of 2026. Uh that's probably not going to happen given the amount of money that he'll be


able to charge for speaking fees. Um but he's going to President Trump's going to replace him with another dove who's going to be even more aggressive with monetary policy. And then there's another appointment coming up after that. So, you know, President Obama, President Biden, and now President Trump are loading up the Federal Reserve with monetary doves who um will cut interest rates and expand the money supply at the drop of a hat. And uh and so that's that's also of great concern to me. And I think


people involved in uh as consumers, as a purchasers, silver stackers, uh I think that that's what's what's driving their behavior. I think it's driving the optimism in um in the uh mark the the suppliers of precious metals, the investors in in precious metals. I'm sure everybody's concerned about the current dip in prices. Uh, you know, we went through some severe growing pains in the last few weeks where we went from a stable market of silver stackers and central bankers who


just bought and held and then all of a sudden the price started moving so fast that speculators and market timers and traders and speculators were all coming into the market and we hit $50 and the whole market blew up. you know, everything was in disarray because of the market experiencing uh growing pains and then as we busted through new record highs in in in all the metals, um you know, everything sort of fell apart and and people started taking profits and and now we're here. But, uh the pullback, even though it's


been severe, is is a small percentage of the move up from just August of this year. So let's not forget that and uh and so you know the the buyers in this market the participants in this market the suppliers of these metals I think are generally have a very uh longrun bullish um uh attitude towards their markets moving forward and I think they see it as as a long-term proposition and that um I think most uh would be uh shrugging off the the current situation. Um you know, and there's been an intense


desire uh to get their hands on this metal on the part of central bankers and stackers and investors. Um, I noticed right before airtime I I looked at uh because I've actually made a couple of small purchases myself and uh the American Eagles the premium on American Eagle coins were over 20%. So that tells me that not only are consumers wanting the metals badly uh but suppliers are want to get their hands on more of this metal as well. I think I I see some of the same themes among our viewers where many people are


looking at this pullback in the prices as a buying opportunity. So, they feel pretty good about what's happening right now. And then there is some concern among the people about is this it? Is this the end of the run? But I think I think you're right. Most for the most part it seems like it does people do think that it's going to continue. I wonder if we can talk a little bit more about silver. you shared some of your thoughts on the outlook for gold. I know when it comes to silver, you've done


some work looking at the gold silver ratio. So, I'm wondering if you could share your thoughts there and what that tells us about where the silver price go. >> I'm very optimistic about silver prices because it has, you know, it's such a vital metal for um productivity uh going forward in technology. I mean all of the really especially important uh applications um in electronics and technology and energy efficiency um it's just an amazing metal even medical um applications but


you know to the with more respect to the market of course there's good reason why silver moves uh more erratically than gold um and it relates to the mining industry. Most silver mine is a byproduct of lead, zinc, uh gold, copper, and a bunch of other metals. In other words, there are there's been almost no investment [clears throat] uh for decades now in silver mines where the primary goal is to get silver. Uh but there has been a lot of investment uh especially leading up to the housing


bubble in the early 2000s. And so this market analysis dates back to that period say 2003 4 5 6 7. You see explosions in lead prices, zinc prices, copper prices. all of those industrial metals broke out uh from long-term uh low levels that date back for years and years and years and all of those metals moved up and it's not just because of the United States but it's also because of India and China and all of the emerging markets where people were building infrastructure. So, if you're building buildings, you're using,


you know, tall buildings, you're using like 5,000 lbs of copper per floor. Um, you know, if you're using uh uh you know, conveyor belts and uh landmoving equipment and you know, every everything is requires a bunch of lead and zinc, galvanized metal. And so all of those markets broke out back at that time. In other words, the people were investing in lead mines, zinc mines, copper mines, and they were able to extract this extra silver. So you had the supply, extra supply, but you hadn't gotten the


demand yet from things like solar power and uh electric vehicles and artificial intelligence and that kind of thing. So we had the [clears throat] extra supply without the extra demand. And so silver prices remained low or suppressed really by this industrial metal byproduct production. And uh so if the economy and this date goes back to my very first comment, if the stock market crashes and the economy goes down, we go into or even into a war situation or not, just a recession and lead productions, zinc production,


copper production all go down, that means that there's going to be less silver coming out of those mines. um you know [clears throat] at some point um those those industrial metal mining operations will either be curtailed or shut down entirely. So sources of silver uh and there's not a lot of good new sources of silver coming online. Uh I know there's a lot of new investment just recently but um yeah [clears throat] so that makes me think that you know if there's increased industrial demand, increased


investor demand um and yet decreased industrial supply that the price of silver has very good fundamental reasons to skyrocket right past gold prices in a relative sense. and that therefore I would argue that um the [clears throat] gold silver ratio is going to decline from over 100 to now it's around 80 something and I expect that that that is going that gold silver ratio is going to continue to decline and as I pointed out elsewhere if you get into a hyperinflation the gold silver ratio could fall below


20 or below 15 even which was the historical norm of the gold silver currency ratio. So yeah I I I foresee um those types of changes going forward. >> Well [clears throat] it makes sense how you lay it out there and it ties into another point that I wanted to bring up. So in the scenario that you see coming gold and silver we can see that clearly they are places of safety. Are there any other places where investors might be able to go for safety in these times? >> Well, you know that we have to rule out


the US dollar at this point and uh government um bonds, especially long-term bonds. I mean, I think the short-term treasuries earning 3.65% 65% is, you know, decent, but it means you're just treading water and they're going to be reducing interest rates and so that's going to be a less uh good [clears throat] uh uh place of securing your funds. Um I I think that in in addition to the precious metals, I think the price of oil right now um is uh is is very low. And oil uh capital investment into oil and


natural gas has been on the Wayne now for many years. In other words, the the capacity to produce oil has not been added to very much. um certainly since uh President Trump's first term, but even before that there was um you know a lack of interest because of the environmental hysteria and the suppression of natural fuels in favor of, you know, sun and wind and and that and that kind of thing. Um, so I I'm I'm I think that the balance is tipping very much in favor of commodity investments rather than stock


investments. And uh, as a matter of fact, I just reviewed a book about commodity investing over the coming over the next 10 years. And uh, silver was one of the better um, choices uh, that the book had had to offer. But I think um you know you have to be a little bit of your own expertise. you had you need information in uh about particular commodities but looking at their relative prices I think energy has been suppressed uh so that's oil gas coal uranium nuclear um all of those sources have been


suppressed by the government and and now we have um all this artificial intelligence and the, you know, immense infrastructure that they're building and the tremendous demands uh on the electrical grid that they're going to be bringing forth. Um, so we we we probably would be expecting higher electric prices. Um, so you sure as heck wanted to be invested against that possibility. So I think my next best choice would be the broad uh natural energy sources um because their prices are low, the


demand is going to go up and the but the capital investment in those industries uh you know whether it's uranium or oil or natural gas or coal have all been I think suppressed by government policy. >> It makes a lot of sense. I think it's very fair to say that we're going to need a whole lot more energy going forward. And I think overall you've left left us with a lot to think about, but before I let you go, any any final thoughts that you would leave people with at this time? [clears throat]


>> Well, yeah. I mean, I think protection uh is is very important, but knowledge is really, you know, that's why they're coming to your show is to get knowledge. And um I think Austrian economics and our web page misuses.org org is a wealth of knowledge. We have a lot of podcast articles, videos, lectures, uh, and so on. And right now, we're giving away free copies to, uh, FA Hayek, the Nobel Prize-winning Austrian economist and student of Ludig Vameis. We put together a greatest hits of his


articles in it includes um articles about inflation, articles about the prospects of a bitcoin like alternative to fiat money and and also uh one of his classic articles of why the worst always get on top referring to politicians of course. So, if you um put in the comments uh you know, I want Hayek's greatest hits, uh we'll send you the link and you can get a free copy of this book. Uh or multiple copies actually. Uh it's a great place to start learning some Austrian economics. And


Hayek was really the standard bearer of the Austrian school during the stagflation of the 1970s. He's the one that gave the ideological background uh backbone to Ronald Reagan and to Margaret Thatcher. So they both attribute FA Hayek's work on inflation as the reason for their economic success. So there's no better place to start than this great little free book. >> Well, thank you so much for sharing that and for that offer. We'll have your links in the video description so


everybody can check them out. And thank you once again for coming on. This was great. I I learned a lot. >> Thank you. It's my pleasure. >> Of course, and hope to have you back again soon. For now, I'm Charlotte Mloud with investingnews.com and this is Dr. Mark Thornton. Thank you for watching. [music] If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. >> [music]