Limits of Fed Intervention and 'Buy the Dip'

Stijn Schmitz welcomes Dr. Mark Thornton to the show. Dr. Mark Thornton is Economist and Senior Fellow at the Mises Institute. The discussion centers on the current state of precious metals, monetary policy, and economic systems, with a particular focus on gold and silver’s role in the global financial landscape. Thornton argues that gold is fundamentally money, and governments have only recently forced their way into replacing commodity money with fiat currency. He suggests that the current precious metals market is still in its early stages, with central bank buying and distrust in the US dollar driving significant interest. The gold and silver markets are experiencing growing pains, with increasing investor attention and potential for further price appreciation.

The conversation delves into the fundamental differences between Austrian and Keynesian economics. Thornton criticizes Keynesian economics as a state-controlled ideology that promotes government spending and manipulates interest rates, whereas Austrian economics advocates for market-driven monetary systems and private property rights. He highlights how central bank policies create economic bubbles and exacerbate wealth inequality by favoring asset-rich individuals. Thornton sees potential for a significant monetary transformation, potentially triggered by the current precious metals bull market. He believes the collision between Western and Eastern financial markets, coupled with the rise of cryptocurrencies, could lead to a fundamental restructuring of monetary systems.

The possibility of a return to a gold standard or a gold-backed settlement currency is discussed as a potential future scenario. The economist also warns about potential economic bubbles in artificial intelligence and private equity, arguing that the Federal Reserve’s monetary policies have created unsustainable conditions across various sectors. He believes that while central banks have been able to temporarily extend economic cycles, their power is not infinite, and a significant market correction is inevitable. Thornton concludes by emphasizing the importance of understanding Austrian economic principles and encourages listeners to explore the works of economists like Friedrich Hayek to gain deeper insights into monetary systems and economic dynamics.

Timestamps:
00:00:00 – Introduction
00:01:19 – Gold as Money
00:04:21 – Central Bank Distrust
00:05:52 – Bull Run Early Stages
00:09:35 – Historical Parallels 1980s
00:14:15 – Return to Gold Standard
00:18:16 – Bond Markets Unraveling
00:24:07 – Austrian vs Keynesian Economics
00:31:19 – Flexible Inflation Targeting
00:33:53 – Silver Monetary Role
00:45:46 – AI Private Equity Bubbles
00:51:11 – Future Recession Outlook
00:55:41 – Concluding Thoughts

Guest Links:
Website: https://mises.org
X: https://x.com/DrMarkThornton
E-Mail: mailto:mthornton@mises.org
YouTube: https://www.youtube.com/results?search_query=mark+thornton+minor+issues
Book-Hayek: https://mises.org/library/book/hayek-21st-century-essays-political-economy

Dr. Mark Thornton is a Senior Fellow at the Mises Institute and formerly held the Peterson-Luddy Chair in Austrian Economics. He hosts the podcasts Minor Issues and Unanimity and is Book Review Editor of the Quarterly Journal of Austrian Economics. His books include The Economics of Prohibition, Tariffs, Blockades, and Inflation, The Bastiat Collection, and The Skyscraper Curse.

Dr. Thornton has been featured in major outlets such as The Economist, Forbes, New York Times, Wall Street Journal, and USA Today, along with numerous international and regional newspapers. His commentary appears regularly on the Mises Institute’s platforms and on programs such as Boom-Bust, the Tom Woods Show, and the Scott Horton Show.