Central Banks No Longer Trust Each Other: The Global Rush To Gold | Mark Thornton

Austrian economists are always early because we rely on economic theory rather than observation or measurement. And I was belittled, criticized, ignored, laughed at, almost threatened and accosted at local speaking events. >> He says data centers are this cycle's skyscrapers. >> I suspect that a lot of the arrangements that have been made are ultimately going to make a lot of this fall unfairly on the taxpayer and the customer. The utility the utility customers. >> And then one pipeline got hit. >> But I could tell you that that pipeline that they considered a lifeline >> [music] >> for Saudi Arabia and the world oil market was a sitting duck. I mean, it's in a perfectly straight line crossing the desert with no possible defense against drones and missiles. >> Welcome back. I'm Jeremy Safford. Now somewhere near you, there's probably a building going up with no windows in it. [music] The largest of them can draw as much electricity as a small US city. Meanwhile, utilities are building new generation to serve them and in several markets regulators are deciding right now how much of that cost lands on household bills. That building is the far end of a chain that starts with the price of money. This week the Federal Reserve raised rates for the first time in three years and the chairman wouldn't call it tightening. Kevin Warsh said that the Fed removed a dose of accommodation. Inflation has been above target for five and a half years and the Fed's own projections don't get it back to 2% until about 2029. Now my guest today has spent 30 years arguing that cheap money doesn't only raise prices, it it builds things, things that should have never been built. Dr. Mark Thornton, of course, senior fellow at the Ludwig von Mises Institute, author of The Skyscraper Curse. Uh he called the housing bubble back in 2004. Markos, good to see you. Welcome back. >> Jeremy, it's great to be back. >> Uh listen, uh I wanted to start. I would say I'm going to get your take on metals. We're going to talk a little bit about the Fed, but I wanted to start with this new report just out this morning. The Fed published a report uh on itself this morning, kind of rare, and its own supervisors knew or should have known about Silicon Valley Bank problems uh a year before it failed. And And one significant reason nobody moved, in the report's words, is that staff thought doing nothing was personally safer than than acting and and being wrong. Is that a story about the Fed or is that a story about everybody who watches a boom happen? >> That's a story about all bureaucracies. And basically, in this case, you know, the Federal Reserve drove interest rates down to zero, and they were encouraging banks to load up on government bonds. And then, as they started to raise uh interest rates in line with all the, you know, the price inflation that resulted from their own monetary inflation, interest rates started to rise. And quite naturally and quite expectedly, the value of all the bonds that banks were putting on their books fell precipitously and put um all three of those uh medium-size banks underwater in terms of their uh balance sheet. So, it was perfectly to be expected. As a matter of fact, um you know, all the financing that took place uh during COVID and during those ultra-low interest rates, uh people have found themselves, you know, on one side of the coin or the other uh with respect to financing that took place, you know, whether it was you getting a mortgage and having to hold onto your house forever because you don't want to give up your mortgage or banks loading up on US government bonds that deteriorated significantly in value afterwards. And so quite naturally the bureaucrats in the system, the inspectors, the [clears throat] people following and and inspecting these banks, they didn't want to ring the bell because they would be ringing the bell they would be sending the alarm that it was the Fed's own policy that was causing these problems. >> Yeah. Yeah, very interesting report. No doubt there. You know, Bank of America put a number on this on Friday. Their rates team says that the Fed could go back above 5%. Maybe all the way to five and a half. And the reasoning is this the same sentence I kind of opened with. The Fed that doesn't think policy is restrictive keeps hiking until it is. And the market's already moved. I mean, another hike in October is now the base case at about 58% a month ago. It was seven according to the CME Fed Watch tool. And you've argued, you know, that debt makes that impossible. So walk me through what happens to the federal interest bill at five and a half percent. >> Well, first of all, I think Chairman Warsh is absolutely correct. They're not really tightening relative to market conditions. Austrians, you know, we we focus on market conditions. And the Fed is a bureaucratic central planning socialist bureaucracy. Um and so they raised rates, but the rates that they raised them to I mean, we're still only like a tenth of a point above the short-term rate in the economy. So there's you know, there's excuse me. We're just a tenth of a point higher than the rate of price inflation in the economy. So say your money is deteriorating at 3.8% and you know, you're getting 3.9% you're really only getting a tenth of a percent >> Right. >> above price inflation in the economy and the Fed of course also in line with this report and Warsh's disclosures they foresee inflation being high and higher going out you know, the rest of this year and next year. So they're probably seeing accelerating price inflation and they don't want to you know, cut rates right now because if price inflation continues to accelerate it's going to make them look bad. It's going to make them look like they're not know what knowing what they're doing or not paying attention to market conditions. And so indeed they may have to continue to raise rates with accelerating price inflation and of course this is going to raise mortgages. It's going to raise the cost of business financing and to your point it's going to raise the cost of the government borrowing money in the economy from the economy taking out financing from the private sector they're going to they're going to have to pay higher rates. >> And >> And uh >> Yes. >> No, sorry Mark. I was I was just going to ask you I mean if if if if Warsh is kind of correct here and if your policy still isn't restrictive do you kind of support more hikes from here and and I got to ask because the next meeting is October 28th. The midterms are six days later. Whatever they decide somebody's going to call it political. Is there a move a central bank can it can make in that window that doesn't get read as a choice? >> No. >> [laughter] >> No, I mean cuz you know, we're opposed to the entire institution itself. We don't believe you know, Karl Marx is the one that suggested that the road to the communist revolution requires the existence of a government central bank in the economy and government central banks with essentially price controls on interest rates. It was great for Karl Marx, but it's terrible for a free market economy. It causes these booms and bust. Inevitably, the political consequence is more higher prices in the economy and a decrease a depreciating currency in the economy. So, I don't want to step into that hornets' nest and say, you know, I can predict exactly what the you know, the the equilibrium rate of interest is in the economy because I don't think the institution should exist in any shape or form. And so, what we're witnessing is the [snorts] inevitable consequence of socialism in monetary policy and interest rate policy. And I hope the American people are going to recognize when the really you know, when push comes to shove, I guess we could say on air, and and this thing all melts down and things get more calamitous that we can blame it on too much government rather than what the government has been able to foist off on the American public, which is we just didn't have enough regulation. We just didn't have the right people in charge. But, you know, of course, the Fed has had a century or more of control and they things are getting worse and worse over time. >> Yeah. I got to ask you about something you specialize in here. And for the audience, before we show this graphic, I mean, Marx built a pattern around record-breaking towers. And I want to be careful how it's shown because the buildings usually finish after the trouble starts. The signal isn't the ribbon cutting, it's kind of the ground breaking. It's when the money commits. So, Lou, we can we can show that. I mean, it shows you the Singer building, the Chrysler, World Trade, you know, Jeddah, which is still climbing, and then of course there's AI data centers. So, that that that that that tower was supposed to top back in 2020 and the economists in your school were calling a global crisis off the back of it. Then of course, as you know, COVID happened, $5 trillion showed up, and then the recession never officially happened. It's still going up. So, what happens to a signal when the when the thing it's signaling kind of keeps getting postponed with that money printing? >> Well, I think it still tells us a story because we did have a crisis in 2020. It just turned out to not be uh labeled a skyscraper curse crisis. Uh but we certainly had a crisis. Um you know, we had this tremendous amount of government intervention in all aspects of our lives, including government spending and the money supply. But then, eventually they restarted the Jeddah Tower, and uh they've been building uh very quickly, adding many many floors. But now, look what's happened. Um you know, the uh the situation in Saudi Arabia is deteriorating uh extremely quickly. And my sources on the ground over there um are are disconnected right now, and I don't know what's happening to that building, but I suspect that once again, it's not going to reach the record height um under the current circumstances in the Persian Gulf area. Mhm. But um typically, historically, for 150 years, whenever one of these record-breaking towers gets to a new record height, approximately is when the economic crisis begins, and then it's fully realized and everybody realizes that we've had a crisis. It's been named the housing bubble or the great financial crisis or whatever. Uh when the doors opened for business. And so again, we may never see uh you know, this project come to fruition, but I think we're still going to get a significant crisis because it's ultimately driven by global monetary policy and we're in the midst of a terrible cycle in that global monetary policy. >> And Mark, I mean you've you've been you know, very careful about this before. You've said that the building doesn't cause the crisis. It's kind of a symptom. So what's it a symptom of that an ordinary construction boom isn't? Such as so that our audience kind of understands that. >> Yeah, because it's not just the building of the building but to build a record-setting skyscraper, you've got to do everything anew. You have to you know, the architects have to plan in an entirely different way. The ground has to be prepared in an entirely different way with new technology. The structural steel and cement and all of that has to be reinvented anew. Uh you know, with this tower, they they're worried about desert winds and and the extreme heat of the desert. And then there's the elevators and the escalators and pumping water up to the top and pumping poop down and out through the bottom and air conditioning. All of that requires new products, new technology, new production facilities for those new technologies. And so it's just a uh an incredible um chaos of new technologies and production processes. But that same type of technological change is going on throughout the economy. So, it's happening in computers, it's happening in transportation, it's happening in communications, it's happening throughout, and the skyscraper is just sort of the pinnacle observation of that whole process. But, it's technologically driven, and it's all driven fundamentally or, excuse me, economically by very low, artificially low interest rates over a long period of time that instigates these new technologies into the economy. And, it's really always advanced technologies. Technologies that don't currently exist that are taken off of the shelves and developed and put into place suddenly by many, many firms simultaneously, not just experimenting, but going whole hog in with multiple firms doing the same thing. And, so it creates a boom in the economy at that point. >> You know, Mark, I mean, you called the housing bubble in 2004. It didn't break until 2008. Four years, prices kept rising, everybody got to say you were wrong. It turns out you were not. I got to ask you on this. I mean, when a market keeps moving against you like that, how do you tell the difference between being early and wrong? >> Austrian economists are always early because we rely on economic theory rather than observation or measurement. And, so we see the events and the policies of the world take place to their legislation is enacted, and we make predictions about the future, pattern predictions about the future. Uh but the the implementation takes a long period of time and so uh you know, markets don't keep up with us in some sense. Uh and sometimes things change and obviate um our predictions. Uh but Austrian economists typically are early in the process and we've taken our lumps um as a result. I mean, I was belittled, criticized, ignored, laughed at, um almost uh threatened and accosted uh at local speaking events and um you know, it's just part of the game uh you know, from our school's point of view, but we feel ultimately we feel vindicated and Austrian economists have been accurately predicting the major economic crises uh since the great since before the Great Depression. Uh and that's the second half of my book is to chronicle um all of those [clears throat] correct predictions and simultaneously lump with them this the predictions by the leading mainstream economist at the same time, what they were saying so that people can, you know, see that juxtaposition uh historically. >> Yeah, well said. I guess that brings us to kind of what's being built now because Amazon, Microsoft, Alphabet, Meta are on track to spend around $725 billion between them this year, up 77% according to estimates compiled from their own first quarter earnings. I mean, a large share of that is going into AI infrastructure. So, what makes a server hall the same animal as a tower? >> Well, it certainly fits the bill. It's a very large construction. I'm more talking about, you know, square miles of facilities and we're certainly talking about technology, especially. Um it's just that this particular um phenomenon is not location-dependent. In other words, skyscrapers are location-dependent in central business districts. Um and so they have to go up up up uh as land prices go up. And uh but with data centers, they can go out in the middle of nowhere, so they spread out. Um and then if obviously it's technology, one of our uh one of my colleagues uh Brendan Brown uh recently labeled modern boom-bust cycles as uh techno bubbles because of the fact that technology, going back to the canals and railroads, has always been a prominent part uh of these uh boom-bust cycles. And and so this is definitely the case, and you also see instead of one company uh who's advancing a technology uh taking it off the shelf and experimenting with it, here we have multiple companies uh you know, head over heels um investing billions and billions of dollars. You know, these were all companies that were generating so much cash, uh they almost didn't know what to do with it. And you know, so now they're you know, they've had to cut back their traditional expenditures in order to funnel all of their cash uh into this area. And now we've had these um AI bonds being issued in record amounts. I mean, the all these um hyperscalers, they call them, um you know, they were very little debt, you know, they were issuing less than $30 billion in bonds a year, trivial amounts or or no amounts with some of the companies. And then last year they they borrowed 120 to 140 billion dollars and this year already they're up over 350 billion dollars. And so, you know, that the amount of money is is really out of pace with any historical norm. So, we know this is very abnormal and just like in previous techno bubbles, if we go back to you know, the Great Depression stock market crash, if we go back to the tech bubble, if we go to the housing bubble, you know, what we see is the an unusual set of new bonds comes into market. And inevitably everybody says, "Oh, this is great, you know, you can't lose money with these bonds." And you know, they Yeah, I'll buy a 100 a 100-year bond from this company or 30-year bond from this company, even though the bond is financing an asset that's only going to last 3 years. Bad things have come from this kind of financial chicanery in the past and we can anticipate that something similar is going to happen moving forward. >> But Mark, to your point cuz it's the correct one. I mean, these AI-related bonds are being issued in in record amounts. Does that complete the signal for you? Not just a technology boom, but the credit system financing, you know, the physical build-out. And and more so, and I think this is the important one. I mean, then the risk is no longer confined to technology shareholders. Those bonds sit in pension funds, insurance portfolios, I mean, bond funds. Is the AI boom becoming a systemic credit exposure? >> Yes. Well, I mean, you know, under these monetary conditions by the Fed, I wouldn't I I would think that all paper dollar-denominated assets um, facing a very difficult future. And, uh, you know, just the regular financial people, um, you know, when they look at it, they say, "Well, based on the returns in stocks over the last 10 years, we anticipate a very low rate of return on stocks over the next 10 years." And the same thing with bonds, you know, we had a 40-year period where bonds did better and better and better over time. And a lot of those financial people looking at monetary policy and the change in trend see bad things ahead for, uh, bond markets, paper, uh, currencies, and uh, dollar-denominated assets moving forward. And, you know, and then you add in the cyclical element on these AI bonds. Um, and that that spells trouble to me. Uh, because you have the same sort of euphoric um, uh, understanding of the marketplace, uh, today as we did, uh, in these past cycles. >> Yeah, I got to ask you. I mean, Federal Reserve data out this week, showed American factory output fell about 0.3% in August. Uh, first drop of the year when economists were looking for a rise. Capacity use at factories hit a five-month low. So, same report, yeah, I mean, utility production up 1.8% on a jump in electricity demand. So, factory shrinking, power plants running harder. I mean, what are you seeing there? >> Well, I mean, yeah, production is going to suffer in an economy where we have war. And, in particular, where war, in the case of the Persian Gulf, obviously, but also in the Ukrainian situation, uh, where energy is becoming, uh, under attack, essentially. Uh, and where refining capacity is under attack. And particularly, of course, something I've been noting almost since the beginning of the Persian Gulf War, is the problem with diesel fuel and airline and um jet fuel. Uh those particular branches of the energy output streams, but certainly along with natural gas in Europe and so forth, uh that there's a uh big curtailment uh in those areas. And American industry, American Well, no, I not even American, worldwide industry, worldwide transportation, and worldwide agriculture relies very heavily on diesel fuel. And so, all of those companies involved in all those areas are moving are reducing themselves at the margin, maybe not very much at all. Um and and of course, electricity prices in the United States have gone up, too. So, all of the energy bill, which is the you know, the the energy source for production, >> Right. >> uh is being harmed. And so, naturally quite naturally, production is being harmed. That means fewer goods and services in a world where central banks are are issuing more and more paper currency. And that's why I'm also expecting um higher in uh price inflation and currency depreciation uh in the global economy. >> Hey, listen, Mark, I want to jump over to this news out of Saudi Arabia, but this pipeline. Before we do, just on this last point, because I didn't really ask you because I I was reading this report this morning. I mean, utilities are signing long contracts and and building generation around this AI demand as we talked about. So, if the tenants' economic stop working, who ends up holding the stranded asset? I mean, is it the tech company? Is it the the utilities bond holders or the person actually paying the bill? >> Well, it's going to be spread around and you know, my greatest fear is that a lot of this is going to have a negative impact on American citizens and American taxpayers. It It seems to me that the government has been pushing this whole process along, has been allowing the industry to cover all this up and to give them immunity from prosecution, immunity from litigation, allowing non-disclosure agreements to take place writ large. And And so, this is a very closed-off process, you know, where politicians and the companies themselves seem to be completely unconcerned with customers and citizens and voters and taxpayers. But, of course, in a market economy, the burden would all fall on the companies themselves. I'm not sure what the distribution is of the economic and financial liability between the hyperscalers and And as you move down the food chain, you know, I know that there are a lot of these There's a lot of subcontracting involved here where a lot of the data centers are not directly owned by the hyperscalers themselves. So, that is something that our financial friends are going to have to help us out with, but I suspect that a lot of the arrangements that have been made are ultimately going to make a lot of this fall unfairly um, the taxpayer and the customer. The utility the utility customers. >> Utility customers. Yeah, they'll see it. Um, okay, then let's get back to that power and talk a little bit about oil. I mean, Bloomberg reported this morning Saudi Aramco has told its European customers they'll get no Saudi crude next month under their long-term contracts. And and that decision applies to all of its European buyers. I mean, that is after East-West pipeline was hit by drones. That line's been carrying somewhere between 2.6 and 4 million barrels a day. And you can already see where it lands. I mean, jet fuel's back near its wartime high. And and fuel costs were approximate reason Spirit Airlines shut down in the US for good. So, I mean, one attack in the Saudi desert and an American airline stops existing. Is that a a freak event or or or, you know, is that just what a system without enough slack in it eventually does? Well, you know, it's not a surprise to me whatsoever. And I don't have any military rank whatsoever, but I could tell you that that pipeline that they considered a lifeline for Saudi Arabia and the world oil market was a sitting duck. I mean, it's in a perfectly straight line crossing the desert with no possible defense against drones and missiles. Uh, and it goes for hundreds and hundreds of miles. Um, you know, it was just a matter of time for whenever the Houthi government or the Iranian government uh, decided to snap that type that pipeline. And they could do it in a million different places. Uh, and they could shut it down uh, in the short term by uh, attacking a single section of pipe. Or they could shut it down for a very long time with a single attack by attacking pumping stations. Uh, and so, you know, what might have only taken a few days to fix if the Saudis were actually um ready to do so, uh which is unclear, but um the fact that >> That is an interesting point. I mean, you know, the fact that it is exposed, it's going straight down this line, and you can see it. Was Was that an an intelligence failure or just a conscious decision not to pay for redundancy? >> [laughter and clears throat] >> Well, I mean, I don't know any way you could lay a pipeline that far that that at that distance uh when your enemy has long-range military capacity >> Mhm. >> uh in the world today, I mean, you know, that's obviously something that uh relatively unorganized uh military forces have access to. The Ukrainians, the Houthi government, the Iranians, uh this is something that the world has to face. Um and you know, our politicians have to face. They They can't uh remain in a in a world or in a mindset where they can remain aggressive. They have to be peace-minded. >> Mhm. >> Uh they have to be trade-minded. Um and because our assets uh in the modern world, and it goes well beyond >> Um >> you know, energy and oil and natural gas and that sort of thing, but it this is obviously the case there, and the Iranians and the Houthi government uh can uh snap that pipeline anytime they want. If they If the Saudis fix it, the Houthis can go right back in and blow it back up again. So, >> Yeah. Yeah. >> uh our fate is in the hands uh of our the ability of our politicians to stop uh the conflict over there and to make arrangements where somehow peace can be restored and commerce uh can be restored because the world food supply, the world energy supply international shipping is at risk and that puts everybody in the globe at economic risk. >> Mhm. >> You know, this this brings us directly to to Challenger. Systems optimized for efficiency until one cheap component fails. I mean, believe it or not, in January of 1986, most people watching this program, Mark, uh remember where they were when Challenger came apart and what brought it down was a rubber seal worth a few bucks. I mean, uh Richard Feynman demonstrated the problem at the hearings. He squeezed a a sample of the O-ring material in a small clamp, lowered it into a glass of ice water, and when he let the clamp go, the rubber didn't spring back. Um Peter Orszag, who now runs Lazard, gave a gave a speech in London this week arguing that >> the world economy works the same way. One weak link, he said, can reduce the value of everything else to nothing. Uh you know, and then these six major supply shocks in six years is not a sequence of kind of one-time price effects. So, to a household it feels like it's simply inflation. That feels some someone is, you know, I guess that's someone from a very different tradition landing close to what you've been standing. Fair? >> [snorts] >> Yes, I believe and I think history and uh points out that the market economy is actually very resilient. >> Mhm. >> That the points of breaking uh are inevitably points uh choke points that are controlled by government. They're the commanding heights in government and the the government is a source of destruction, whether it's, you know, the ongoing negative effects of taxation or where it's the obvious newsworthy events of military intervention. Uh, but it it's really the government that causes these breaking points. Uh, obviously any machine uh, this is the nature of any machine uh, has parts that are inevitably going to break down. I I could give you a tour of my house for example and this this is something that happens on a regular basis, but I'm resilient enough uh, and the people that I depend on, my plumber, my electrician, my handyman, my appliance guy, you know, so on and so forth that we can fix these things. I can be resilient. Uh, I can, you know, uh, have backups uh, and so on and so forth. The market economy is is incredibly resilient on its own. The problem is uh, the choke points and the breaking points that government intervention causes in the government systems that inevitably lead to these breakages which is what we uh, started off this interview with as Fed policy, you know, introducing some unnatural behavior on the part of three banks in the United States, really many banks in the United States, but it was three big ones that ended up breaking as a result of an abnormal, totally ahistorical uh, monetary policy uh, that took place in 2020 when the skyscraper curse uh, would have been there instead. So, yes, uh, the world economy has fragilities, but it's almost always the result of uh, government intervention and government institutions which create choke points and which create breaking points where if some regulator or some government bureaucracy fails to do its job, yes, the whole thing can come crashing down um as a result, just like those so um those uh Saudi Arabia pumping stations. >> Right. Yeah, yeah, I mean, you're describing that world in which one vulnerable link can kind of interrupt an essential supply chain. Gold is the opposite kind of asset. I mean, it doesn't depend on a pipeline, a a tenant, or someone else's promise to pay. Is that why buyers erased that entire post-Fed sell-off by uh just now, Friday? >> Yeah, I mean, you got to really love the resiliency of the gold standard and of gold as a marketplace. Uh humans have been accumulating gold since the very beginning. All All the gold ever produced is still in existence. It's still in the hands of people. You know, gold is dispersed throughout the global economy in the hands of billions of billions of people. And uh you know, so even if all the mines were shut down uh or they all just imploded uh for some strange reason, uh we would still have enough gold to, you know, use as a monetary system effectively throughout the global economy. And uh you know, the market uh for gold is in incredibly resilient, but it's also incredibly adaptive. Gold, you know, a lot of people have been surprised and mad at gold and silver because they haven't done what they thought that they should be doing over the last year, but gold and silver are reacting to everything. All of the risks, all of the central bank inflation, all of the central bank purchases, uh all of the new industries that silver is serving, uh you know, all those markets um you know, work very efficiently other than, you know, there are, you know, disgruntlements about the futures markets and politicians and big banks manipulating uh those markets, but other than that, you know, it's an incredible system. >> Mhm. >> And uh it's going to continue uh to respond and to be resilient to all of these changes moving forward. And I'm afraid uh moving into the future, it it you know, that it's it's going to be tough. It's going to be difficult. Uh and we need to make progress in terms of changing the monetary system from a central bank run paper system, which is obviously unstable, uh to a real-life gold standard where you have a distributed network of gold and gold warehousing um that can uh that that's easily able to maintain the global monetary system and support a global credit system. Uh but we have to we have to think not just in terms of protecting ourselves as individual concerns, but we have to think also, like Ludwig von Mises did, about converting back to the system which took humanity from a primitive almost an- animalistic state to this, you know, amazing system that uh capitalism has provided. It's raised our standard of living and our life expectancy beyond belief. Uh you know, where where you know, it just serves our needs, where we can serve each other's needs. Uh that's what gold has done for us. That's the miracle of modern humanity and the and and the free market system. >> You know, I mean, central bank buying is not a gold standard, obviously. And a gold standard means promising redemption and and surrendering the freedom to print. What crisis do you think, Mark, becomes so severe that a government willingly gives up that power? >> Well, they're not going to come forth and and give it up willingly, for sure, but I do take it is a good sign that central banks no longer trust other central banks. You know, and so that that part of the system is breaking down and a lot of countries are looking for alternative paths away from the dollar monopoly that's been in existence since World War II and and and so, you know, there are some very enlightened individuals that are are moving their thinking towards a return to a market-based, commodity-based, gold-and-silver-based monetary system. I don't you you can't get politicians to say we're wrong and you guys were right and we're going to give up you know, all of our power and glory. What Austrian economists from Ludwig von Mises really going back into antiquity and up into the present, we believe that it's ideology that changes the world and what drives ideology is understanding ideas, reading about economic theory and ideas, and realizing that those theories fit the world and their experience better, they change and you know, and Americans, I mean, they they have not really gone out and bought a lot of gold and silver, but they in recent years, in the last 10 years, just a huge number of Americans no longer trust their government. The approval rating of our government and our president and our Congress are very, very low right now, historically low. Consumer confidence is historically low. So, we do have the opportunity to make that ideological change going forward and hopefully get back to the gold standard sooner rather than later. >> You know, you were chatting about central banks not trusting one another anymore and it's it's interesting. I was reading this morning with my friend Ronnie Stoeferle. He runs the In Gold We Trust report and he put out this tweet this morning and I'll try and find it so we can show it on the program, too. Basically, it it shows all the nations picking up gold and Poland and China have been two of the biggest gold buyers since 2022. Not one G7 country makes the top 10. So, is the G7 missing the trade or are these countries preparing for a world the G7 still refuses to imagine? >> Oh, yeah. The G7 is totally out to lunch. They're all run by socialist governments, including the US for that matter. Ronnie's brilliant. I think Poland and China are two of the most rational. They're the really the two of the smartest nations on the globe today and uh and so they're doing the right thing. They're recognizing the changes that have taken place and they're adapting to it. They're trying to protect their citizens and and Ronnie and his organization have done a lot of great work in laying out a lot of the facts about gold and the gold standard and and the gold market and more people need to know that. They need to turn tune into the show for sure and and but the Poland I think is definitely I mean they have a very strong libertarian cadre. They have a very strong Austrian economics movement in them. I don't know as much about China and of course China is a huge country but their leaders certainly seem to act uh in a fairly rational, peaceful, uh plotting sort of way. Uh sure they want to get their way just like any other country does, and you can uh assign bad motives to all of that, but you know, take the facts as they are, and uh China has been acting uh more rationally than many countries, certainly more rationally than the G7 countries. >> All right, mate. Well, listen, we're almost out of time. Uh before I let you go, I mean uh that's an interesting point. Is the great irony here that central banks outside the G7 are starting to behave, as you called it, more like Austrian economic economists, you know, buying gold, while the countries that build the paper system, I mean, they remain its last true believers? >> Absolutely, you know, and not only is China uh you know, accumulating gold, but they're encouraging their citizenry and some of the banks uh to accumulate gold, uh certain government military bureaucracies in China. Uh Poland is not only adding to its central bank holdings, but it's encouraging its silver mining production. Poland has the largest silver mines in Europe, and they've discovered some new ones uh in Poland, and you know, so they're uh they're doing very well economically. Uh their economy is doing better than average on a worldwide, and they they've taken in millions of people from the Ukrainian debacle. Uh and yet they're still able uh to move forward and think straight and and and pull the right levers uh as time goes on. So, uh I have, you know, even though Poland is in a difficult position geographically, um you know, nestled between the Russian-Ukrainian conflict and the European socialist. I think they're they're really holding their own and I I wish them all the best of luck. >> All right, listen, we got to wrap up but we began with what cheap money built, essentially. Finish this sentence for me. When the price of money finally becomes honest again, if it does, what survives? >> [gasps] >> Well, I mean, with honest money, uh, the world economy grows and thrives and with honest money money the central banks die and, uh, and government consequently has to shrink. Uh, the debt becomes untenable, uh, and military conflict also becomes untenable. And so, Mises supported, uh, honest money because it controlled government spending, it controlled government debt, and it could it controlled overseas adventures, uh, by belligerent governments. >> Hm. All right, Dr. Mark Thornton, thanks for this as always, my friend. I appreciate it and, uh, thanks for making the time. >> Thank you, Jeremy. Loved it. >> Cheap money rewards scale. Systems built for maximum efficiency leaves almost no slack here. You find out where the risk actually landed when something breaks. [music] I'm Jeremy Szafran. For all of us here at Kitco News, thanks for watching. We'll see you next time. >> [music] [music] [music]