Subscribe
Share
Share
Embed
Welcome to "This is Health, Wealth, and the Pursuit of Happiness" your source for insightful discussions with economist and author, Dr. Murray Sabrin. Join us as we challenge convention, expand minds, and pursue truth.
Murray Sabrin (00:00.921)
Welcome to another edition of Health, Wealth, and the Pursuit of Happiness. I'm Murray Sabrin, B A A Ph D. There's No B S in My Background, Never Has Been, Never Will Be. And we are going to bring you guests that have no BS in their background either. And I want to remind you, please visit mafieusa.com, A F I USA.com. We have the unfinished business of the American Revolution. We had political independence 250 years ago. We need to have
financial independence from Washington DC. And we will bring you guests to discuss health issues and financial and economic issues. And today's guest is someone who's top of my list of from the e economist world. He's a wonderful economist. His name is Dr. Mark Thornton. Let me tell you a little bit about Dr. Thornton. He's the senior fellow at the Mises Institute where he was the Peterson Luddy chair in Austrian economics from twenty twenty one to twenty twenty twenty-three.
He hosts two podcasts, Minor Issues and Unanimity at Mises.org. He's written a slew of books. One of my favorite ones is The Skyscraper Curse. And we'll talk about that. How Austrian Economists Predicted Every Major Crisis in the Last Century. Dr. Thornton is the editor of the Austrian Economics Newsletter. He's has a PhD from s Auburn University, and he has been a prolific writer and podcast guest throughout the country.
His publications have appeared in numerous newspapers r both regionally and nationally, and he appears his commentary appears regularly at the Mises Daily and Mises Wire. And so it's g it gives me great pleasure to welcome Doctor Mark Thornton to Health, Wealth and the Pursuit of Happiness. Good to see you, Mark.
Mark Thornton (01:47.171)
Hey Murray, it's great to be on your podcast and congratulations for starting your podcast. I mean, this is a great venture and I know you are gonna help a lot of people get information about the things that they're missing, the things that the government has really put a stranglehold on, and we need alternative voices, so I'm so happy to be here with you to help, you know, push this project forward.
Murray Sabrin (02:16.068)
Thanks so much, Mark. I I have a bunch of questions that I've put together because you're the go to guy when it comes to the economy, the Federal Reserve and financial markets. So let's start with the first question. A lot of economic indicators have been released recently. what do they reveal about the health of the economy?
Mark Thornton (02:34.712)
Well, you know, Murray, I w I look at all of the economic indicators and I pay particularly close attention to things that affect the working class, like the personal savings rate, like you know, things like consumer confidence and you know, so I I'm I'm barreling down on the working class, the middle class of America, and what I see really is
a big problem for that group of people, that large group of people, the wealthy, the one percent, are doing just fine. You know, their incomes are up substantially, their consumption is up substantially, their asset portfolios is up substantially. now of course I'm also concerned with entrepreneurship in the economy, but basically all of that should filter out.
into the working class and you know and see things like the creation of breadwinner jobs and again the personal savings rate and things of that nature. And basically you know I see an erosion here because largely of inflation, w which we had, you know, the bottom ninety percent were just really getting by in some respects in terms of their inflation adjusted income.
And inflation, unfortunately, for the last five or six years has really eaten into their purchasing power. And so we see you know credit card debt going up, credit card delinquencies going up, and we see people engaging with these apps where they can, you know, order their dinner online and make four installment payments on, you know
Murray Sabrin (04:29.496)
Mm.
Mark Thornton (04:30.018)
DoorDash deliveries. And so I see that as a very, very bad sign. And that's why I I only look I do look at all of the major economic statistics, but you have to really dig down and dig down deep in some cases to to uncover the real status of the population out there. And I think that debt and the crunch on people's real purchasing power, and I see this.
You know, i i in my hometown, amongst my friends, you know, people cutting cutting back from things that they have been doing for years and years and years, and they've had to adjust their lives because their incomes simply don't go as far as they used to in the past.
Murray Sabrin (05:20.494)
Well the president is telling us that this is the greatest economy in the history of the country. what what's the president missing according to your perspective?
Mark Thornton (05:28.812)
Well, you know, if you're a billionaire, like President Trump and his friends and his associates in the government and his campaign donors to his campaign who are billionaires, you know, they certainly don't see retail street level inflation. They have no idea of what's going on, you know, in America really and
So they're cut off. And actually a lot of the president's supporters and campaign donors are doing extremely well. People in his cabinet, his advisors, his family are all cashing in in a big way on the president's position in terms of their what they're doing on the side. They're getting inside information, and of course the president is
Murray Sabrin (06:23.972)
Mark Thornton (06:26.05)
Giving out inside information all the time. So if you have just a one-day heads up on what President Trump is going to say that day, you can make a lot of money because he does move markets. He moves the stock market, he moves the price of oil, he moves the price of precious metals and other things in the economy. So but you know, you and I, the people that are listening to this podcast, the average American.
They don't have a lot of assets. They're not manipulating. They're not day trading. they're not starting up, you know, internet companies and cryptocurrency comp companies that have gotten a big advantage from the president. And and so, you know, they're not gaining. This is the whole K-shaped economy, that really it's a new term for what the Austrian school.
Murray Sabrin (07:14.863)
Mm.
Mark Thornton (07:20.61)
Has been talking about with the Austrian business cycle theory for many, many years that yes, there is inflation, prices go up. And yes, there is a business cycle. You know, when the Fed cuts the interest rate, the investment expands, the economy booms, and then later there's a correction, a recession, or a crisis. but there's also
Because of those artificially low interest rates, the people who are in a position initially to take advantage of those positions and make new investments in cutting edge, new products, and to leverage up their entire portfolio to take advantage of higher asset prices. Because when the interest rate goes down, anybody in finance, any banker will tell you.
that real estate prices go up, land prices go up, stock prices go up. That's why, you know, Wall Street is constantly egging on the Federal Reserve to cut the interest rate because it'll it's automatic, you know, capital gains for them. but it doesn't help the average worker out there in on Main Street in hometown America at all.
Murray Sabrin (08:42.445)
So Mark Mark, given your knowledge of the business cycle and you're writing about this for for for many, many years, where do you think we are in the business cycle? Are we at the top of the boom? Is the boom over and we're gonna be sliding into a recession soon? Or are we just in the beginning of or the middle of of a business cycle boom?
Mark Thornton (09:02.156)
Well, I I would say that we're at near the end of an extremely long boom in the economy. And I would date that all the way back to the great financial crisis and the housing bubble, which was of course a long time ago. You know, we're approaching twenty years, but certainly the stock market is in a long expansion that dates back really sixteen, seventeen.
Murray Sabrin (09:13.838)
Hmm.
Mark Thornton (09:31.555)
going on 18 years. And you know, many commentators have referred to this as the everything bubble because until recently bonds went up in price, stocks went up in price, land went up in price, real estate generally was going up in price, although there there was a lot of unusual activity in real estate.
Murray Sabrin (09:33.271)
Mm.
Mark Thornton (10:00.576)
over the since the COVID fiasco. But, you know, basically we've had this very long expansion. And right now people are asking, you know, is is this coming to an end? Right now, in the very short run, of course, the stock market has increased and gone to all time highs. I don't know if this is, you know, the last move and it's you know in terms of sucking in the last
chips on the table or not, but we're definitely at at the at the long end of a very long expansion. And a lot of people have been asking me for signs about, you know, are is the bubble breaking? you know, is it is it going to come to an end this year or or not? And so I think people are starting to think in terms that
Yes, we have been in a tremendous long upward trend in asset prices and that it may be coming to an end. I just heard on the way in to do this interview, I was listening to Bloomberg and the person being interviewed said that they were gonna invest a lot of the money in their fund in international shares because the US stock market is so overvalued.
Murray Sabrin (11:27.257)
Mm.
Mark Thornton (11:27.77)
And and so we're seeing more of that kind of analysis where people in the back room are doing the fundamental financial analysis on the assets that they that they hold, and they realize that, well, you know, if we look at these measures of overvaluation, you know, we are at a historically very high level. another analyst just told me that
his measure of overvaluation or or or valuation in gener in in general is at the second highest level in history. and and so yeah, I mean I th I would definitely issue at least a caution flag, if not a red flag, on it the US stocks and everything that's related to them.
Murray Sabrin (12:24.161)
Let's let's go on and talk about some of the things you written about that relates to this. b briefly, give us an overview briefly so people can go and get your book, The Skyscraper Curse. What's that all about?
Mark Thornton (12:35.874)
Well, it's the unusual correlation between the construction of a world high record skyscraper and a subsequent economic crisis. I know that sounds crazy and it doesn't mean that the actual building of a building can cause a world economic crisis, but the it's a symptomatic of what is going on
throughout the overall economy where people because of an extended period of low interest rates, they're engaging in highly speculative, highly forward looking investments. And of course, real estate is a part of just about every business cycle and every economic crisis, but the the fact that people are building
buildings to heist that have never been done before, indicates to me, and I've gone back and look at the historical detail, and the correlation goes back into the nineteenth century. So i if we go back into the nineteenth century, every time there was a record setting skyscraper, there was also a corresponding economic crisis
Murray Sabrin (13:48.951)
Mark Thornton (14:00.948)
in North America, if not the entire world. Okay, so the correlation is pretty good. And
Murray Sabrin (14:07.842)
So what what what skyscraper's being built now that gives you some paw pause that they're w we're on the cusp of another economic downturn?
Mark Thornton (14:16.844)
Well, sp yeah, pause is the right word. it's in Saudi Arabia, it's called the Jetta Tower, and it was originally ski it was originally drawn out to be a skyscraper that was going to be one mile high. And the engineers came back to the builder and said, No, the crust of the earth would crack.
through was because it would be so heavy. And so they they scaled it back to one kilometer tall. they started construction in 2017 and we anticipated its completion and the crisis in 2020 but for political reasons in Saudi Arabia with the new prince taking over power and
Murray Sabrin (14:44.814)
no.
Mark Thornton (15:13.23)
all the political intrigue that was going on at the time they stopped the project in twenty nineteen so it never it it did get off the ground but it never really went very far. And then at the beginning of January of last year, they started construction again. And and so this Jetta Tower is proceeding
With adding one new floor, and I don't know how the war situation over there has affected construction. There's very little reporting from the kingdom over there, especially under the wartime conditions. so I don't know what's going on right now, but according to my calculations, it would have reached a record setting top later this year, and then that would signal.
Murray Sabrin (16:09.528)
Mm-hmm.
Mark Thornton (16:11.352)
an economic crisis. So it's in the right region. you know, to fit the storyline, it would definitely set a world record h height. And the connection between these world record setting skyscrapers and the Austrian business cycle theory is that every time you go just a little bit higher, you have to come up with all sorts of new technologies, new innovations.
new ways of building, new ways of designing all of the systems within the building, such as air conditioning, elevators, escalators, moving water and sewage throughout the building, all of that becomes a brand new engineering problem. It becomes a whole new design problem because of those record setting heights. And so all sorts of new technologies are built.
are are have to be implemented like moving the concrete, as you can imagine, moving concrete straight up for a kilometer is quite a feat and requires an inordinate amount of power to get that material to the top of the building. And and so that it's those kind of changes that are actually occurring throughout the economy.
Murray Sabrin (17:22.136)
Mm.
Mark Thornton (17:40.057)
That we don't really get to see, that we're not really privy to or aware of. they're in some sense, they're kind of mundane, but it's entrepreneurs and scientists and engineers hard at work creating this new technology, developing new factories and new production techniques and facilities. and so it's a pervasive effect, even though
Murray Sabrin (17:42.446)
Mm.
Mark Thornton (18:08.8)
Symbolically it's just in that one building.
Murray Sabrin (18:12.034)
Terrific. let's talk about the Fed. Kevin Walsh, the president's nominee to be Fed Chairman, who was a previous Fed governor, was just voted out of committee, which means he'll probably get the nomin the the position soon when there's full Senate votes on it. will this have any impact on monetary policy? Because the the Fed chairman only has one vote on the Federal Open Market Committee that sets interest rates. So give us your assessment quickly on on what the Kevin Walsh
Fed will mean for the monetary policy in the US economy.
Mark Thornton (18:45.036)
Well, Kevin Warsh was applied appointed by Trump. The that the appointment was announced simultaneously when gold and silver prices cratered back at the very end of January. His nomination came out really simultaneously with that market meltdown. he's thought of as a monetary hawk, someone who'll be hawkish.
Murray Sabrin (19:03.256)
Mm.
Mark Thornton (19:13.166)
and will want to constrict the money supply and keep interest rates near their market levels rather than lower artificially lower rates that are supposed to some you know stimulate the economy. and so but you know very often that's a c the case. I mean Jay Powell had the same reputation maybe not
Murray Sabrin (19:31.128)
Yeah.
Mark Thornton (19:42.595)
Quite as hawkish as Kevin Walsh, but they all go in and they all want to set an example, they all want to set the stage that they're gonna be tough on monetary policy, but almost always they become more and more dovish over time, and they come become more and more subservient to the needs of Wall Street.
And the demands of Congress to finance all the debt and all the spending that they're going through. So, you know, initially Walsh, you know, he does come in with that persona the and a bit of a reputation for being hawkish. But remember, I mean, he was Ben Bernanke's right hand man during the breakdown of the housing bubble and the financial crisis, you know, helping to design
He actually designed and implemented the great bailout of the banks. So you know, he's he's definitely an insider. And he's not you know, I'm I'm I'm praying for the day that we get an outsider in there that really is above and be all all else beholding to the American people, and their long run
Murray Sabrin (20:48.898)
Murray Sabrin (20:59.201)
Yeah.
Murray Sabrin (21:07.722)
Yeah.
Mark Thornton (21:10.382)
standard of living and long run economic stability, not you know, the mandate of the Fed Marie that we're constantly ta it's constantly in the news. The Fed has to balance the unemployment rate on the one hand and economic growth and inflation on the other hand. You know, there's this dual mandate. But if you look at history seriously,
Murray Sabrin (21:35.052)
Right.
Mark Thornton (21:39.125)
the actual dual mandate that the Fed follows is that it's there to help finance government debt, to roll over the debt, to help the government spend more than it takes in, and to finance the government on the one hand. And also the other hand, they're there to bail out Wall Street, to help stimulate Wall Street's business.
Murray Sabrin (21:48.437)
Mm-hmm.
Mark Thornton (22:08.022)
And then to bail them out when things get tough. and you know, neither one of those prerogatives is really puts the interests of the American public first and foremost. and you know, the the interest of the American public is in no inflation whatsoever and long run economic stability.
Murray Sabrin (22:23.405)
Mm.
Mark Thornton (22:36.314)
is the other. Those are the two things that are good for American households, for American families. That's what they need, and that's what they're not given by the Fed, because the Fed is, you know, there to help out the government spend more money than they take in, and it's there to promote the business of Wall Street and bail them out. Bail out the banks and the financial houses when they're over leverage
starts crumbling there and they start losing profits.
Murray Sabrin (23:07.937)
So basically we can sum it up this way. The Federal Reserve is the enabler of the plop profligate spending of Washington and the and the and the if you will the the drug dealer the of of f free and and low cost money to Wall Street to juice up asset prices. So the Fed, as some people have called them, is one big engine of inflation, inflating the money supply to make sure that Washington can keep on spending, the federal government can keep on spending.
And Wall Street could make these oodles of money at the on the on on the backs of the American people for all intents and purposes. Let's shift gears for a minute. You mentioned about the financial markets that you're fairly cautious on the stock market. I made a presentation three months ago where I said that given the data that I looked at the nineteen twenties and the twenty twenties, in the nineteen twenties we had a blow off stock market boom from twenty seven
nineteen twenty seven to nineteen twenty nine. Could we see something like this over the next couple of years that the stock market goes really crazy? Because your colleague, Ryan McMakin, the editor of Mises dot org, just posted an article showing that the money supply has been really skyrocketing the last few months. So a any any c perspective on that possibility.
Mark Thornton (24:27.82)
Yeah, I mean that's always a possibility. you know, the the Fed has been increasing the money supply. You know, they're they're depicted by the media as being stingy and tight wads and all that, but you know, they've given up on the quantitative tightening. They unloaded two and a half trillion dollars of reverse repos starting a few years ago, and now they're engaged in
Quantitative easing. They don't want it called quantitative easing because of the memory of you know what happened in the great financial crisis and in and in the COVID fiasco. but that's essentially what they're doing. They're they're calling it a liquidity program, but they're definitely active and it's showing up in the aggregate money supply figures as well as
Murray Sabrin (25:01.313)
Mm.
Mark Thornton (25:27.628)
the Austrian measure of the money supply. So they're definitely injecting and of course, you know, as investors look around, you know, they want to keep up with inflation as well. And so quite naturally they're continuing to put money into the stock market. it's continuing to go up.
You know, and well, even in Venezuela that was experiencing a hyperinflation and the government was printing money like mad, you know, if you didn't adjust for inflation, it looked like the stock market in Venezuela was just going to the moon. you know, even though the the value that that market representing represented was actually declining and the the country was
Murray Sabrin (26:09.888)
No.
Mark Thornton (26:23.146)
experiencing widespread impoverishment, those those shares continue to go up. And so it's it's really you have to know all of the ins and outs of everybody's balance sheet to be able to, you know, say anything definitive about when the stock market is going to break and, you know, when a crash is going to occur. It's very, very difficult.
Murray Sabrin (26:50.036)
Mm-hmm. So given that we only have a few minutes left, Mark, let's sum it up for individuals who don't have a lot of money or may have a a portfolio in their IRA or their four one K, what should they be thinking about doing for the next few months, few years in order to navigate this boom bus cycle that could cause a meltdown in the stock market and
what other asset classes are there that people should consider investing in. And of course with the caveat that you could embrace what Mark is saying, check with your financial advisor, but we're just here to provide educational information. So go ahead Mark.
Mark Thornton (27:32.909)
Yeah, I'm not a financial advisor, of course, but one thing that I follow to tell me a lot about what's going on in the global economy is the price of gold. you know, how much inflation is there in the system? How much inflation is there expected in the future? What are the what's the level of international risk?
and the status of the International Division of Labor and the price of gold has been skyrocketing lately. That's a very bad sign for the overall economy. It even central banks are buying gold. Even they don't trust the US dollar and the U.S. government bonds. So I I you know I think there's we're we're in a period right now where we're transitioning
from a period, a long period where bonds and government bonds have been very profitable to a a longer, higher interest rate environment where bonds are not going to be very profitable. And I think in terms of stock markets, I think we've also changed trends from stocks have been going up in the technology and social media areas and
I think in the future the trend has changed in favor of the stocks that are in the production of real goods and services and in particular commodity producers. there there seems to be those two trends seems to have changed. And of course you wouldn't recognize that if you just looked at the stock market in general, because if one cat at
asset category is not doing great and the other one is doing better, you're not gonna see that in the overall stock market. But I think that bonds are going to underperform over the long haul moving forward. And I think that commodity stocks are going to outperform in the long haul going forward. And I think I'm still analyzing this, but I think foreign stocks
Mark Thornton (29:55.919)
emerging market stocks are going to perform better than other asset categories. Still working on that one, but it's something to to consider and to ask your financial planner about.
Murray Sabrin (30:11.393)
Just one quick question about that, then we'll wrap it up. well actually I have two questions. So let's talk about one. Berkshire Hathaway is having their annual meeting this coming weekend, and Greg Abel is the new CEO of of Berkshire. Warren Buffett stepped down a few months ago. And Berkshire has I think nearly 400 billion dollars in treasury bills out of a value of just over a trillion dollars. So what does it tell you about Berkshire's view of the financial markets, especially the stock market?
Mark Thornton (30:41.12)
He it well, it's it's overvalued. I mean, it's what I just said. I agree with Warren Buffett on that. And you know, he just also said that he doesn't see any good values for he or Berkshire Hathaway to purchase right now. He's gonna wait until values improve and that means either earnings have to increase enormously for a c an extended period of time
Murray Sabrin (31:07.222)
Yeah.
Mark Thornton (31:10.694)
or the price of those assets has to come down significantly. and of course his p their portfolio you know is a broad based portfolio of insurance primarily but also of consumer stocks, Coca Cola and you know, railroads. He has a great diversification money into commodities like oil, you know, and so
Those are the things you know, I'd never discount what Warren Buffett says and I take his thoughts into consideration and the fact that he thinks the entire stock market is overvalued is a great word of caution.
Murray Sabrin (31:58.43)
Mark you recently wrote a piece about four important words. Could you just tell us what they are and then we can direct people to read your essay from Mises dot org. What are those four words that you wrote about?
Mark Thornton (32:11.032)
Well, they're they're actually four letter words. So it was a play on the you know, the the four letter words that you're not supposed to say on television or or the radio, but these are economic words and they're words that if you follow them you'll do well in life and you'll you're you'll be rest at ease that you're accomplishing things.
Murray Sabrin (32:14.389)
Okay.
Murray Sabrin (32:19.468)
Ha ha
Mark Thornton (32:37.464)
That you're moving forward and you're putting forth your best efforts, not worrying about what's going on in New York and Washington or the Middle East, but doing what you're supposed to be doing, and that's working work, read, educate yourself, plan your investments, your spending, and so forth, save, which is very important for everybody to protect yourself against downturns, shop.
Murray Sabrin (32:45.1)
Yeah.
Mark Thornton (33:07.222)
Which we all have to buy things, but do it intelligently. Give, you know, make your charitable donations. you know, study what you think is the best way to go and take solace in the fact that you are contributing to v various good causes. And the final one is pray. Pray for guidance, pray that you're making the right decisions, and and pray and work in the
in good conscience for yourself, your family, and for those around you.
Murray Sabrin (33:40.99)
That is a great sum sum up of the concept of our show, the pursuit of happiness. If people embrace what you just said, Mark, I think the pursuit of happiness will come very easily to to them. Mark, I wanna thank you for giving us your insights into the economy, the the financial markets and those four letter words of wisdom. how can people find out what you're writing about and what you're podcasting about? How do they find that?
Mark Thornton (34:07.736)
Well, I S E S dot O R G, you know, we have articles and lectures, audio, video, podcasts. It's all free. There's no registration. We're trying to teach people from high schoolers to senior citizens why the free market, how the free market works. We're not interested in proselytizing people to be
you know, ideologues for free markets. We want to show people and teach people how and why markets work and why, you know, in a from a theoretical perspective, historical perspective, government always seems to fail. It always seems to mess things up to make things worse. And you know, those, you know, everybody is
either for or against markets and they're for against government, but very often they don't know how either one of those things works. And you can start to learn in small doses by going, and my podcast is called Minor Issues, M-I-N-O-R. And it's a ten ten minute weekly podcast where I address something that's not being discussed in the mainstream media.
Murray Sabrin (35:05.075)
Mm.
Mark Thornton (35:29.21)
Or maybe the issue is being discussed, but it's not being discussed from a free market perspective. And so it's short and it's sweet and it's to the point. And I think you you can start educating yourself. And the more you educate yourself, the more confident you'll feel in understanding the world you live in, and you won't be obsessed with, you know,
what President Trump is doing or, you know, all of these big global issues, but you'll be more concentrated on your own business and making marginal steps in the right direction of self betterment.
Murray Sabrin (36:02.869)
Mm.
Murray Sabrin (36:14.046)
That's terrific, Mark. Thank you for being here with us. And just wanna thank everybody for tuning in and visit Macy's dot org for all the free material on economics and what the free market is all about. next week we're gonna shift gears. We're gonna be talking about health issues with Dr. Alita Eck from New Jersey, past president of the Association of American Physicians and Surgeons. She's also a pharmacist, so she'll talk about
how she treated her patients during the COVID epidemic, pandemic, about medical insurance, and talk about her nonprofit medical clinic in central New Jersey, which goes into line with what Mark said about giving and how nonprofits, good ones, can really be helpful in our local communities. So Mark, stay stay on. We'll we'll be back next week. visit MafiaUSA dot com. We could you can find out what we're doing in order to promote financial independence.
And next week please tune in. this pr podcast will be up on YouTube and Spotify. Tell all your friends about it. And we're gonna continue getting people with enormous expertise in health and wealth. And so until next week, have a good week and tune in to Health, Wealth and the Pursuit of Happiness. Thank you.