WEBVTT

1
00:00:04.960 --> 00:00:09.080
All right, welcome back, joining
us now as Mark Thornton is the Peterson

2
00:00:09.119 --> 00:00:14.800
Luddy Chair in Austrian Economics and a
senior fellow at the mess Institute, and

3
00:00:14.839 --> 00:00:16.879
so I wanted to talk to him
a little bit about the Mesa's Institute.

4
00:00:17.120 --> 00:00:21.920
I refer to their articles frequently,
and so I'd like to talk a little

5
00:00:21.960 --> 00:00:25.480
bit about you know, what do
we mean by Austrian economics? Who was

6
00:00:25.800 --> 00:00:29.440
Lukewig von Mises, and a little
bit about the Mesa's Institute. But he

7
00:00:29.440 --> 00:00:36.119
also wrote a book that is available
at their site, and Skyscraper Curse.

8
00:00:36.320 --> 00:00:39.320
And it looks like with a crash
and commercial real estate that we're going to

9
00:00:39.359 --> 00:00:43.560
be looking at a skyscraper curse coming
back their return of the curse. But

10
00:00:43.679 --> 00:00:47.240
joining us now is Mark Thornton.
Thank you for joining us there, David,

11
00:00:47.280 --> 00:00:50.920
it's great to be on your program. But with government solving all the

12
00:00:50.920 --> 00:00:53.799
world's problems, I'm not sure if
we're going to have anything to talk about.

13
00:00:53.920 --> 00:00:57.280
That's right, If we got a
problem we just haven't done by government,

14
00:00:57.320 --> 00:01:00.840
but especially at the federal government level, because that's all the problems need

15
00:01:00.880 --> 00:01:03.200
to be solved. There, tell
us a little bit about the Mesa's Institute.

16
00:01:04.280 --> 00:01:08.040
The Mesas Institute is now forty years
old. It was founded by mister

17
00:01:08.120 --> 00:01:15.400
lou Rockwell. We're right here in
Auburn, Alabama, and we're about economic

18
00:01:15.560 --> 00:01:22.640
education really from the perspective of the
Austrian School of economics Ludwig von Misis,

19
00:01:23.480 --> 00:01:30.400
fa Hiak, Henry hazlitt, Ron
Paul and many others. We're the smallest

20
00:01:30.959 --> 00:01:34.920
but fastest growing school of economics,
and I think it's a you know,

21
00:01:36.079 --> 00:01:41.280
it's the science really behind free markets, and we're trying to get it out

22
00:01:41.319 --> 00:01:44.599
to as many people as possible.
That's right. Yeah, give us a

23
00:01:44.599 --> 00:01:47.959
little bit of an idea of the
audience when we talk about Austrian economics.

24
00:01:49.040 --> 00:01:52.200
You know, several of the founders
were from Austria. Course, but you

25
00:01:52.239 --> 00:01:57.560
know, what is it that's different
about Austrian economics versus what we typically have

26
00:01:57.719 --> 00:02:00.640
with our you know, what people
are in college with the macroeconomics or Keynesian

27
00:02:00.920 --> 00:02:07.400
economics and things like that. Tell
us a little bit about what distinguishes Austrian

28
00:02:07.439 --> 00:02:12.479
economics from that. Well, it
was founded in Austria by Karl Menger in

29
00:02:12.520 --> 00:02:19.560
the nineteenth century and one of his
primary students was Lidwig von Mesis and Lidary

30
00:02:19.599 --> 00:02:25.800
von Misis applied Menger's method, which
is based on deduction and logic and human

31
00:02:25.960 --> 00:02:34.159
action rather than on mathematical models and
econometric analysis. Plug in the numbers and

32
00:02:34.199 --> 00:02:38.240
see what comes out, or see
what you want to come out. And

33
00:02:38.439 --> 00:02:42.879
as a result, you know,
the Austrian school was basically able to develop

34
00:02:43.800 --> 00:02:50.680
economic principles about the laws of supply
and demand, marginal utility, those kind

35
00:02:50.759 --> 00:02:55.400
of things, those basic things that
you see in an introductory textbook, and

36
00:02:55.560 --> 00:03:01.560
everybody can basically agree on them.
Most economists, which we call the mainstream,

37
00:03:02.120 --> 00:03:07.919
they go off and use their mathematical
models and their econometric analysis to come

38
00:03:08.000 --> 00:03:14.840
up with anything they want. But
with Austrian economics you have to stay very

39
00:03:14.840 --> 00:03:22.280
close to the logic of human action. And through that method that Mesis developed

40
00:03:23.520 --> 00:03:27.960
he was able to develop modern monetary
theory. In his very first book,

41
00:03:28.639 --> 00:03:35.840
he was able to critique socialism in
the Socialist calculation debate and prove that pure

42
00:03:35.919 --> 00:03:43.759
socialism was an economic impossibility. And
then, of course his magnum opus Human

43
00:03:43.840 --> 00:03:53.120
Action basically laid out everything about everything
from basic economic analysis to things like the

44
00:03:53.159 --> 00:04:00.719
business cycle and fiscal policy and everything
else that we wanted basically we talk about

45
00:04:00.719 --> 00:04:05.039
today. Uh, he was the
person who put forward all of those great

46
00:04:05.120 --> 00:04:11.159
contributions, and that's why we celebrate
him, and we try to extend his

47
00:04:11.280 --> 00:04:15.160
work and to teach his work here
at the Mesa's Institute. And it's still

48
00:04:15.199 --> 00:04:18.959
not you know, I know when
I was in college and I was taking

49
00:04:19.000 --> 00:04:23.279
economics and we would get to macroeconomics
and it was like, Okay, forget

50
00:04:23.279 --> 00:04:27.480
all the you know, the real
physical world of how your budget work and

51
00:04:27.519 --> 00:04:30.600
everything, because if we're the government
and we make that if we make this

52
00:04:30.680 --> 00:04:32.879
thing really really big, then none
of those rules apply anymore. And it's

53
00:04:32.879 --> 00:04:36.120
like, something about this seems really
fishy. This is kind of like saying,

54
00:04:36.279 --> 00:04:40.000
if I get a big enough rock
is going to float up into the

55
00:04:40.079 --> 00:04:46.639
sky. So it's uh, it
was like that just doesn't make any sense

56
00:04:46.720 --> 00:04:49.360
to me. And you know,
Austrian economics is really, as you point

57
00:04:49.399 --> 00:04:58.040
out, it's more focused on on
human action on reality than on this obfuscation,

58
00:04:58.959 --> 00:05:02.600
this fiction that that this massive that
just doesn't matter. But of course

59
00:05:02.879 --> 00:05:09.839
that it is not that I think
that Kynesy and economics has really been capable

60
00:05:09.879 --> 00:05:13.240
of explaining things because it hasn't.
But it's been a useful crutch for the

61
00:05:13.360 --> 00:05:16.920
central planners, hasn't it. Oh? Absolutely, you know, we stick

62
00:05:17.000 --> 00:05:23.879
with supply and demand and real world
prices for the most part. Kenesy economics,

63
00:05:23.920 --> 00:05:29.519
for those who have suffered through it
in introductory college courses, God bless

64
00:05:29.560 --> 00:05:34.360
you, is more like an exercise
in plumbing, where you have a series

65
00:05:34.439 --> 00:05:41.800
of pipes and valves, and you
have leakages and injections and all sorts of

66
00:05:42.240 --> 00:05:49.279
plumbing related problems that seemingly the expert
plumber could fix simply by turning the dial

67
00:05:49.480 --> 00:05:55.879
or tightening a pipe or soldering something
together. And we all know that the

68
00:05:55.920 --> 00:06:00.199
real world economy in the US alone
is made up of three hundred and thirty

69
00:06:00.199 --> 00:06:08.680
million people. The worldwide economy is
many billions of people, and they're all

70
00:06:08.680 --> 00:06:15.480
doing their own thing. And the
Keynesian approach, the Kynesian macroeconomic approach of

71
00:06:15.560 --> 00:06:21.399
turning a few dials, overlooks all
of the basic problems, overlooks the negative

72
00:06:21.399 --> 00:06:28.560
effects of taxation, the negative effects
of regulation. They just assume that,

73
00:06:28.759 --> 00:06:34.680
for example, regulations will fix problems
at a zero cost and the world will

74
00:06:34.680 --> 00:06:42.839
be happy thereafter, when in reality
it distorts all sorts of decisions on the

75
00:06:42.839 --> 00:06:46.680
part of entrepreneurs, on the part
of input suppliers, and on the part

76
00:06:46.759 --> 00:06:54.000
of consumers and labors, and basically
just gums up the work it works.

77
00:06:54.040 --> 00:07:00.480
And so Austrian economists try to stay
very close to the real war world and

78
00:07:00.480 --> 00:07:08.680
how it actually works. And as
a result, we have a general policy

79
00:07:08.720 --> 00:07:14.079
outlook where we want to have the
government have hands off as much as possible

80
00:07:14.600 --> 00:07:23.959
in every conceivable situation to allow the
free actions of individuals that respect property rights

81
00:07:24.000 --> 00:07:30.560
and so forth, that that's the
way to allow people to achieve their potential.

82
00:07:31.360 --> 00:07:38.680
And achieving their potential, they're really
serving other people. And it's really

83
00:07:39.480 --> 00:07:44.639
you know, economics has thought of
is you know, a fierce, cutthroat

84
00:07:44.680 --> 00:07:51.639
competition thing. But ninety nine point
nine percent of it is cooperation between employer

85
00:07:51.920 --> 00:08:01.040
and employee, between the consumer and
the supplier, between whole worldwide webs of

86
00:08:01.199 --> 00:08:09.079
networks of the factors of production coming
together in order to produce the goods that

87
00:08:09.120 --> 00:08:15.240
we want to consume. So it's
really much more of the idea that the

88
00:08:15.319 --> 00:08:22.600
economy is cooperation, and competition certainly
exists. We all compete on the basis

89
00:08:22.639 --> 00:08:26.920
of price, whether it's the price
of our products, the price of our

90
00:08:28.040 --> 00:08:31.639
labor, the price of the resources
that we own, and so forth.

91
00:08:33.879 --> 00:08:37.639
We all have to compete at that
level, and that profit and loss statements

92
00:08:37.639 --> 00:08:43.120
that we all have to measure up
to keeps us all in a sense honest

93
00:08:43.240 --> 00:08:48.960
in this game of competition and cooperation. Yeah, that's a good way of

94
00:08:48.960 --> 00:08:52.960
putting it, especially like your analogy
of it's a complicated plumbing thing I think

95
00:08:54.000 --> 00:08:56.799
of it. Maybe they should call
it the Rube Goldberg school of economics.

96
00:08:58.159 --> 00:09:01.440
Another lovocated bag on the side.
Oh, this didn't work. Okay,

97
00:09:01.519 --> 00:09:05.879
let's add this other complication to it, as highly analytical, as highly complicated.

98
00:09:07.360 --> 00:09:09.600
It doesn't really work very well.
I've always thought of this as I've

99
00:09:09.600 --> 00:09:16.559
always thought of the free market as
versus canesy and economics as a neural net

100
00:09:16.639 --> 00:09:22.200
distributed system versus a centralized computer.
It just seems to me that, you

101
00:09:22.240 --> 00:09:26.399
know, even if they think that
they are the smartest person in the room,

102
00:09:26.759 --> 00:09:31.480
there's no way that they've got sufficient
information to be able to do that.

103
00:09:31.480 --> 00:09:35.639
That's the the you know, the
invisible hand and the open market where

104
00:09:35.639 --> 00:09:39.919
everybody is is interacting with each other, and that's the one thing that they

105
00:09:39.960 --> 00:09:45.639
haven't been able to to to grasp
when we look at the central bank digital

106
00:09:45.639 --> 00:09:50.120
currency and the you know, the
surveillance aspect and the control aspect of that

107
00:09:50.120 --> 00:09:52.799
that they're trying to impose on us. To me, it seems like,

108
00:09:54.120 --> 00:09:56.960
again because it's ultimately authoritarian. It
isn't like they're going to look at this

109
00:09:58.279 --> 00:10:00.840
and say, well, you know, what be the most efficient way for

110
00:10:00.919 --> 00:10:03.600
us to do this or that.
You know, now we got more information

111
00:10:03.679 --> 00:10:07.120
about what everybody is doing. I
think it is simply more of a ham

112
00:10:07.200 --> 00:10:15.440
fisted authoritarian, centralized approach. It's
not really going to be leveraging technology to

113
00:10:15.440 --> 00:10:20.080
even get a better view of what
is happening so they can run the system.

114
00:10:20.200 --> 00:10:22.440
They just want to run the system
whatever happens. They want to make

115
00:10:22.440 --> 00:10:26.039
the system run to their advantage.
I think is really what we're looking at.

116
00:10:26.279 --> 00:10:30.960
You what do you think about this
coming central bank digital currency, the

117
00:10:31.000 --> 00:10:35.519
efforts to do that, you know, is are we going into a more

118
00:10:37.200 --> 00:10:41.200
centralized control approach and economics? Are
they going? You know, certainly that's

119
00:10:41.200 --> 00:10:46.120
what the politicians want. Oh yeah, the central bank digital currency. The

120
00:10:46.159 --> 00:10:54.360
only positive is that it's positive for
central banks and positive for the government to

121
00:10:54.759 --> 00:11:01.759
oversee and be able to check on
everything we do. There's no positive economic

122
00:11:01.840 --> 00:11:07.360
benefits to having that type of system. If they really wanted to have a

123
00:11:07.440 --> 00:11:13.720
close to ideal monetary system where they
didn't need monetary policy at all, where

124
00:11:13.720 --> 00:11:22.480
they didn't need the vast bureaucracy thousands
of econometricians and tens of thousands of bureaucrats

125
00:11:24.559 --> 00:11:26.840
to manage the system, then they
would go back to a gold standard that

126
00:11:28.159 --> 00:11:33.720
we were established with this country,
and silver money and things of that nature.

127
00:11:33.039 --> 00:11:39.960
That is the ideal monetary system for
human economy, and the idea that

128
00:11:41.159 --> 00:11:43.159
you know, well, you can
have digital currency, you can have digital

129
00:11:43.200 --> 00:11:50.480
money, but there's no benefit that
they can describe that isn't just solely a

130
00:11:50.519 --> 00:11:56.679
benefit to the central bank in the
government itself and I you know, and

131
00:11:56.840 --> 00:12:03.840
it would be terrible for the economy. It would hurt a lot of people.

132
00:12:03.240 --> 00:12:07.960
There's means going around on social media
of all the harms it would due

133
00:12:09.120 --> 00:12:15.600
to certain groups in particular, As
is typical with policy, it would hurt

134
00:12:16.000 --> 00:12:20.399
the most disadvantage groups in society,
from the paupers and the poor people,

135
00:12:22.039 --> 00:12:26.639
the beggars, to people who live
hand the mouthed, to the people who

136
00:12:26.720 --> 00:12:31.679
don't have bank accounts. What are
those people supposed to make of this central

137
00:12:31.720 --> 00:12:39.679
bank digital currency that are completely shut
out all sorts of transactions that we make

138
00:12:39.440 --> 00:12:48.919
on well in the fringes of society
to the streets of Manhattan. Cash transactions

139
00:12:48.000 --> 00:12:56.799
are absolutely necessary and required. It's
really the only way to conduct business of

140
00:12:56.840 --> 00:13:03.399
any sort for those particular groups.
And of course it helps large corporations,

141
00:13:03.399 --> 00:13:07.960
it helps the government, it helps
the taxing authorities, it helps the central

142
00:13:09.000 --> 00:13:13.120
bank. I think they're probably going
to a lure those people, I see.

143
00:13:13.320 --> 00:13:18.000
I think they're probably gonna lure those
people in with lure of welfare payments

144
00:13:18.000 --> 00:13:22.000
and healthcare, because that's what they've
already done in India. You know,

145
00:13:22.399 --> 00:13:26.120
take the number and you get this
stuff. Because it's all about dependency,

146
00:13:26.399 --> 00:13:28.879
you know, and they can you
know that that really is a key way

147
00:13:28.879 --> 00:13:31.799
that they want to pull people in. I think they'll use that dependency to

148
00:13:33.200 --> 00:13:37.480
rope in the poorest people and to
get them to take the id to take

149
00:13:37.519 --> 00:13:41.159
the central bank digital currency. I
think that's you're right. They're going to

150
00:13:41.240 --> 00:13:45.639
victimize them. They'll be the first
ones inside the open air prison, being

151
00:13:45.679 --> 00:13:50.240
surveilled and controlled with everything you know, they could make the argument that hey,

152
00:13:50.320 --> 00:13:54.320
we'll be able to we'll be able
to have more visibility about the metrics

153
00:13:54.320 --> 00:13:56.919
of the economy and we'll be able
to fine tune it and do that better.

154
00:13:58.360 --> 00:14:00.639
They may make that case, but
that's not why they're doing it.

155
00:14:00.679 --> 00:14:05.279
They're just doing it for simply for
control, right, Yes, And I

156
00:14:05.440 --> 00:14:11.039
anticipate that they're going to cause some
crash of the system where people are going

157
00:14:11.080 --> 00:14:16.039
to lose access to their money and
lose access to their accounts and won't be

158
00:14:16.120 --> 00:14:20.879
able to transfer money, and whether
or not the government can solve it immediately

159
00:14:22.039 --> 00:14:28.960
with central bank digital currencies, they
will implement a central bank digital currency,

160
00:14:28.080 --> 00:14:35.399
or they will attempt to implement a
central bank digital currency as a consequence of

161
00:14:35.480 --> 00:14:39.879
them crashing the system in some way. And we're already seeing little hints of

162
00:14:39.919 --> 00:14:48.480
this where transactions between banks and settlements
between banks are getting gummed up at various

163
00:14:48.639 --> 00:14:56.399
points in the system. And I
think that a comprehensive crash of the system

164
00:14:56.120 --> 00:15:05.039
would you would scare people into accepting
this idea of a central bank digital currency,

165
00:15:05.159 --> 00:15:09.840
and that's something that they could pull
off really at any time. And

166
00:15:11.440 --> 00:15:16.240
even if they didn't do that of
their own volition. Of course, we

167
00:15:16.320 --> 00:15:22.000
are talking about government and they have
screwed up everything else, and so they

168
00:15:22.000 --> 00:15:26.440
can certainly manage to do something like
that as well. I agree absolutely by

169
00:15:26.519 --> 00:15:30.799
accident, Yeah, I agree.
I got a comment here from Guard Goldsmith,

170
00:15:30.799 --> 00:15:35.000
who has a liberty conspiracy and he
says, when I was teaching Austrian

171
00:15:35.000 --> 00:15:39.120
economics here in New Hampshire, it
was great to see how many students got

172
00:15:39.120 --> 00:15:43.559
it and then continued their education by
watching mesa's media and getting Mesa's institute documents.

173
00:15:45.639 --> 00:15:48.360
That's good, and of course I
want to talk about that as well.

174
00:15:48.639 --> 00:15:50.440
And I want to talk about your
book, which is available for free

175
00:15:50.679 --> 00:15:56.720
right at the mesas dot org.
Of course people can also get an audiobook.

176
00:15:56.759 --> 00:16:00.759
There's a fee for the audiobook,
but you have it in various pdf

177
00:16:00.840 --> 00:16:03.399
and e book and things like that
for free. And I want to talk

178
00:16:03.440 --> 00:16:08.440
about how that really seems to be
folding into another big problem that's come into

179
00:16:08.480 --> 00:16:14.240
the economy. But before we get
into that, Guard also commented about Lugwig

180
00:16:14.679 --> 00:16:18.120
and he says, misus almost didn't
make it out of Nazi territory. He

181
00:16:18.159 --> 00:16:19.320
and his wife were trying to make
it to France. I believe, and

182
00:16:19.360 --> 00:16:23.679
almost were arrested by the SS.
Richard Eveling did great work in the nineteen

183
00:16:23.759 --> 00:16:27.679
nineties and saving a lot of his
work that the Soviets had sullen at the

184
00:16:27.679 --> 00:16:33.279
close of World War II. Amazing
stories related to his work in life and

185
00:16:33.320 --> 00:16:37.600
his economics. That's interesting, you
know, I wonder why these centrally controlled

186
00:16:37.639 --> 00:16:41.440
economies like the Nazi Germany and the
Soviet Union would want to have his works,

187
00:16:41.440 --> 00:16:47.919
except perhaps to destroy them. Right. Yes, When the Nazis invaded

188
00:16:47.960 --> 00:16:52.879
Austria, one of the first things
they did was send a crack troop of

189
00:16:52.919 --> 00:16:59.000
intelligence officers to Mesus's apartment to get
him and his papers and forth, but

190
00:16:59.039 --> 00:17:02.480
he had already left the cory.
They took his papers, they took his

191
00:17:02.559 --> 00:17:07.279
furniture and everything and brought it back
to an intelligence lab uh in Germany,

192
00:17:08.039 --> 00:17:14.440
and we thought the papers were lost, but Richard Albiling and others found the

193
00:17:14.480 --> 00:17:22.720
papers in an intelligence warehouse in the
Soviet Union. So when the Soviet Union

194
00:17:22.960 --> 00:17:30.079
invaded Germany, they took all of
Mesus's materials, thinking because Mesus had discovered

195
00:17:30.599 --> 00:17:37.400
that pure socialism, which both the
Nazis and the Kami's both advocate. You

196
00:17:37.440 --> 00:17:41.240
know socialists. Yeah, the Nazis
are the national socialist that's right. Yeah,

197
00:17:42.880 --> 00:17:48.880
So they both wanted this complete totalitarian
socialism. Mesas said, no,

198
00:17:49.000 --> 00:17:53.359
that's impossible. You have to have
property rights, you have to have prices,

199
00:17:53.400 --> 00:17:56.680
you have to have money, uh, you know, wage rates and

200
00:17:56.720 --> 00:18:03.119
all those kind of things determined in
market place. And so the Nazis thought

201
00:18:03.480 --> 00:18:08.200
that Mesus had held back some secret
of how you solve the problem of socialism,

202
00:18:08.640 --> 00:18:15.599
and then the Russians the Soviets also
thought that Mesis had hidden that problem.

203
00:18:15.680 --> 00:18:19.839
And of course there was no solution. Mesis didn't have the solution to

204
00:18:19.920 --> 00:18:25.599
socialism except to get rid of it, to abandon it. And of course

205
00:18:26.119 --> 00:18:30.599
the world has seen not only was
Mesis right about the fallibility of any kind

206
00:18:30.640 --> 00:18:38.319
of socialism, but they've also seen
that throwing off the socialist yoke in Eastern

207
00:18:38.359 --> 00:18:45.200
Europe and the former Soviet Union and
to a large extent in communist China.

208
00:18:45.960 --> 00:18:52.920
Once they once you throw off this
yoke of complete totalitarian socialism, production starts

209
00:18:52.920 --> 00:18:57.720
happening. People are better off,
people live longer, people are happier,

210
00:18:59.720 --> 00:19:04.640
you know, and all of these
things that Misis predicted about the economic system

211
00:19:04.759 --> 00:19:10.759
came true. You know, and
we could do that here in the United

212
00:19:10.839 --> 00:19:15.079
States. You can do that anywhere
in the world. Just reduce the amount

213
00:19:15.119 --> 00:19:21.279
of socialism and government in your economy
and you'll get the benefits of the free

214
00:19:21.319 --> 00:19:23.640
market economy. Yes, yes,
And of course this isn't the theory.

215
00:19:23.640 --> 00:19:29.279
We've had massive experiments to prove it. Just take a look at East versus

216
00:19:29.319 --> 00:19:34.039
West Germany, or North versus South
Korea. The same people, you know,

217
00:19:34.599 --> 00:19:38.599
exactly identical. And what you do
is you cut the country in half

218
00:19:38.599 --> 00:19:41.880
and you have half of them living
under a centrally planned economy. The other

219
00:19:41.920 --> 00:19:47.039
half have a freer economy, if
not a very free economy. See the

220
00:19:47.079 --> 00:19:52.200
same thing with communist China versus Hong
Kong. And of course Milton Friedman did

221
00:19:52.400 --> 00:19:56.279
a long series fore to Choose where
he spent a lot of time talking about

222
00:19:56.319 --> 00:20:00.599
Hong Kong and how things at that
time were very free in Hong Kong.

223
00:20:00.799 --> 00:20:04.000
So we've had the experience and we
know exactly what this looks like over and

224
00:20:04.000 --> 00:20:07.279
over again. If you had a
satellite picture. I've seen this over and

225
00:20:07.279 --> 00:20:11.160
over again, satellite picture of South
Korea at night, and it's all lit

226
00:20:11.240 --> 00:20:15.519
up in North Korea, it's all
dark because there's nothing there and they just

227
00:20:15.599 --> 00:20:23.720
completely destroy everything with their economic system. There was something that was I can't

228
00:20:23.759 --> 00:20:26.640
remember the name of it, and
trying to think of the name of it

229
00:20:26.640 --> 00:20:30.640
as we started the interview here came
to mind. The economic theory that's being

230
00:20:30.640 --> 00:20:33.799
put out by the Biden administration these
other people. That was really kind of

231
00:20:33.799 --> 00:20:37.799
the basis of their so called Inflation
Reduction Act. There was a woman who

232
00:20:37.839 --> 00:20:47.680
came up with this and she kind
of rejected the technical aspects of kingesy and

233
00:20:47.720 --> 00:20:52.880
economics. She kind of simplified it
and everything, but it's still just an

234
00:20:52.920 --> 00:20:56.160
excuse for the government to do whatever
they wish. Maybe you remember the name

235
00:20:56.200 --> 00:20:59.279
of it. I can't remember what
else. Modern monetary theory. That's modern

236
00:20:59.279 --> 00:21:03.240
monetary theory, I MMT and I
used to always call them the the magic

237
00:21:03.279 --> 00:21:07.200
money tree. You know, that's
what earlyer stands for, is yeah,

238
00:21:07.240 --> 00:21:11.160
modern monetary theory. Yeah, that's
a little bit about it. Yeah,

239
00:21:11.200 --> 00:21:18.519
that's a long established fable that goes
back for centuries really, and it is

240
00:21:18.640 --> 00:21:23.640
the basis really of our monetary policy. The idea that you can print up

241
00:21:23.680 --> 00:21:30.079
pieces of paper to create economic prosperity, that you can take ink and paper

242
00:21:30.160 --> 00:21:34.920
that are very well and good and
productive. Put them together in the form

243
00:21:34.960 --> 00:21:40.799
of a dollar bill or a million
dollar bill or a trillion dollar bill,

244
00:21:41.400 --> 00:21:45.680
and somehow or another, that's going
to create more resources. It's going to

245
00:21:45.720 --> 00:21:52.440
create more workers. It's going to
create more energy, and more productivity and

246
00:21:52.599 --> 00:21:57.359
more products, goods, and services. It's always been thought of as a

247
00:21:57.400 --> 00:22:07.240
fable by economists, except now that
we get to more recent times where economists

248
00:22:07.279 --> 00:22:12.359
are so unhinged from reality that they
believe, well, maybe this does have

249
00:22:12.480 --> 00:22:18.480
something to it. Maybe we can
just print up money and put unemployed resources

250
00:22:18.519 --> 00:22:26.000
to work. And so modern monetary
theory basically says that you can borrow,

251
00:22:26.599 --> 00:22:32.200
you can print, and you can
spend to keep the economy on an upward

252
00:22:32.440 --> 00:22:41.039
and always upward trajection. That any
shortfall from full employment, any shortfall of

253
00:22:41.759 --> 00:22:48.039
GDP growth from trend, you can
just make up by borrowing and printing money

254
00:22:49.000 --> 00:22:52.839
and then having the government spend it. But actually, you know, right

255
00:22:52.880 --> 00:22:57.839
now, I think is a good
case in point, because right now the

256
00:22:57.880 --> 00:23:04.400
government statistics tell us that GDP is
growing at a fairly brisk pace. And

257
00:23:04.519 --> 00:23:08.559
yet when you look around the country, and I'm sure many people in your

258
00:23:08.599 --> 00:23:18.400
audience right now are suffering from inflation
and lower rages and things of that nature.

259
00:23:18.920 --> 00:23:22.759
Why all the economics suffering in an
economy that's growing at a brisk pace.

260
00:23:23.480 --> 00:23:27.720
Well, the problem is is that
they've been printing up money. They've

261
00:23:27.759 --> 00:23:34.240
been borrowing money, and the government
has been spending it on programs and subsidies

262
00:23:34.839 --> 00:23:41.759
that don't make sense in the family
budget. It's not food, clothing,

263
00:23:42.039 --> 00:23:51.720
shelter, electricity that they're producing.
They're actually doing things that actually undermine the

264
00:23:51.759 --> 00:24:00.680
production of food, clothing, shelter
and so on. And so that disconnect

265
00:24:00.759 --> 00:24:07.519
of economists and the implementation of that
disconnect, that modern monetary theory disconnect,

266
00:24:08.400 --> 00:24:14.079
we're seeing that in real life today. Yes, the government is borrowing,

267
00:24:14.440 --> 00:24:18.440
the government is spending, the government
is printing up money to pay for the

268
00:24:18.440 --> 00:24:23.160
whole thing. But what happens in
the real world is that we're not getting

269
00:24:23.720 --> 00:24:30.319
the things that we actually need.
We're just getting entries in national statistical accounts

270
00:24:30.839 --> 00:24:36.799
that don't put bread on the table. Yes, yes, yeah, We've

271
00:24:36.839 --> 00:24:41.640
never had a more centrally planned economy
where they're planning to shut down our energy

272
00:24:41.680 --> 00:24:45.240
infrastructure or change all of our transportation
system, and they don't have anything that

273
00:24:45.599 --> 00:24:48.559
works to take its place. It's
all just rewarding their friends. And I

274
00:24:48.599 --> 00:24:53.200
look at this modern monetary theory,
like you point out, it's just taxes

275
00:24:53.279 --> 00:24:57.599
and printing money. And you can't
replace applying demand with taxes and printing.

276
00:24:59.480 --> 00:25:00.599
But that same to be what they
think they can do. And you look

277
00:25:00.599 --> 00:25:07.400
at the the inflation reduction taxig or
whatever they called it in you know,

278
00:25:07.440 --> 00:25:10.319
they decided that, you know,
they give all this when they print this

279
00:25:10.359 --> 00:25:11.799
money up, they give it to
their friends, and there are things to

280
00:25:11.799 --> 00:25:15.640
get out of control. They raise
taxes on their enemies. You know.

281
00:25:15.680 --> 00:25:19.400
It's really kind of the way this
thing works and practice, and so just

282
00:25:19.440 --> 00:25:23.000
another excuse again for what it is
that they want to do, you know,

283
00:25:23.119 --> 00:25:29.079
and so they use it as kind
of they use these economic theories.

284
00:25:29.119 --> 00:25:32.039
It's kind of their court gestures to
do whatever they want. But if we

285
00:25:32.079 --> 00:25:33.759
get back to the real world,
you know, we look at Austrian economics,

286
00:25:33.920 --> 00:25:37.720
it looks, you know, in
the real world, it's got to

287
00:25:37.720 --> 00:25:41.000
follow the same examples that you have
if you're running a business or you're running

288
00:25:41.000 --> 00:25:45.359
a household or something like that.
And so let's with that in mind,

289
00:25:45.400 --> 00:25:51.880
let's talk about your book twenty eighteen, the skyscraper curse and how Austrian economists

290
00:25:51.880 --> 00:25:56.240
predicted every major economic crisis of the
last century. Now that's pretty pretty large.

291
00:25:56.240 --> 00:26:00.720
But you know, we've got this
developing commercial real estate problem that seems

292
00:26:00.759 --> 00:26:04.559
to have been kicked off by the
lockdown and people working from home and the

293
00:26:04.640 --> 00:26:11.279
vacancy rates and everything, and even
in a booming area like Shanghai, because

294
00:26:11.920 --> 00:26:17.759
the Chinese communists wanted to show their
power. I think was perhaps their motivation.

295
00:26:17.759 --> 00:26:19.079
I'm kind of reading into what their
motivation is, but it seemed to

296
00:26:19.079 --> 00:26:23.000
me like it was a power play, kind of like Mao's Cultural Revolution or

297
00:26:23.000 --> 00:26:27.880
the Great Leap Forward. He decided
that he was going to lock down Shanghai

298
00:26:29.279 --> 00:26:32.480
and show his authority there because maybe
they're getting a little bit too much freedom

299
00:26:32.519 --> 00:26:34.839
and a little bit too much independence. And now you see there and in

300
00:26:34.880 --> 00:26:41.759
Guangzho and so many other places that
were bustling and unbelievably crowded while I was

301
00:26:41.759 --> 00:26:47.480
there. Now they're ghost towns that
are happening, and there's a concern that,

302
00:26:47.559 --> 00:26:51.599
you know, even though it's not
at the same dire straits that Shanghai

303
00:26:51.720 --> 00:26:56.640
is in New York City's got vacancy
rates of about forty percent, and you've

304
00:26:56.640 --> 00:27:02.240
got a lot of people are holding
these high interest rates that are variable,

305
00:27:02.240 --> 00:27:07.039
that are just collapsing and turning the
back end. How does that current phenomenon,

306
00:27:07.039 --> 00:27:11.480
how does that fall back into what
you were talking about back in twenty

307
00:27:11.640 --> 00:27:18.200
eighteen. Well, the skyscraper curse
is just really an illustration of the Austrian

308
00:27:18.240 --> 00:27:25.480
business cycle theory, and the Austrian
business cycle theory turns on artificially low interest

309
00:27:25.559 --> 00:27:33.279
rates. That artificially low interest rates
now cause entrepreneurs to make bad investments,

310
00:27:33.279 --> 00:27:40.319
investments that won't pay off in the
future when interest rates rise. And so,

311
00:27:40.400 --> 00:27:45.000
of course we had more than a
dozen years of artificially low interest rates

312
00:27:47.200 --> 00:27:55.000
because of quantitative easing, because of
zero interest rate policy, all sorts of

313
00:27:55.119 --> 00:28:00.640
Fed mechanisms to reduce interest rates to
spur on the economy. They wanted to

314
00:28:00.680 --> 00:28:08.720
turn the dial down in order to
increase investment and increase employment during a slow

315
00:28:08.799 --> 00:28:14.240
time in the economy. But of
course it was slow because of the housing

316
00:28:14.279 --> 00:28:19.319
bubble, the previous housing bubble,
and things started to look really bad after

317
00:28:19.400 --> 00:28:23.920
I published my book in twenty eighteen. In twenty nineteen, the economy was

318
00:28:23.960 --> 00:28:30.839
going down the tubes, and it
was essentially saved by COVID and the COVID

319
00:28:30.960 --> 00:28:37.119
rescue package, which sent interest rates
back down to zero, and the FED

320
00:28:37.599 --> 00:28:45.599
soaked up trillions of dollars of government
bonds and mortgage securities. So for those

321
00:28:45.680 --> 00:28:52.519
couple of years, you could borrow
money essentially worldwide at almost no interest at

322
00:28:52.519 --> 00:29:00.000
all. And so we had a
big boom of additional spending, investment,

323
00:29:00.279 --> 00:29:06.000
spending in commercial real estate on top
of all of the real estate that had

324
00:29:06.039 --> 00:29:11.400
been built over the previous decade.
And so we have a massive overhang of

325
00:29:11.559 --> 00:29:18.839
real estate, commercial real estate,
office buildings, houses, you name it.

326
00:29:18.599 --> 00:29:25.160
We overbuilt it. And now that
inflation has forced the Fed's hand and

327
00:29:25.359 --> 00:29:30.920
forced them to raise interest rates to
try to squelch the price inflation that they

328
00:29:32.039 --> 00:29:40.160
in effect caused. Now we're seeing
the initial signs of breakage in commercial real

329
00:29:40.279 --> 00:29:48.799
estate. Skyscrapers big and small are
failing, they're going into bankruptcy. They're

330
00:29:48.839 --> 00:29:53.480
being resold at a small fraction of
what they originally cost to build, or

331
00:29:53.519 --> 00:29:59.880
what they might have been sold for
a few years ago. Now they're selling

332
00:30:00.119 --> 00:30:06.119
for pennies on the dollar or quarters
on the dollar. And I expect to

333
00:30:06.160 --> 00:30:12.359
see much more of that going forward, with the Fed holding interest rates higher

334
00:30:12.799 --> 00:30:21.319
and possibly inflation remaining much higher,
much longer than anyone in Washington d C.

335
00:30:21.960 --> 00:30:25.880
Cares to admit. Well, yeah, that's an interesting way to look

336
00:30:25.880 --> 00:30:29.200
at it. I thought about it
as you were talking about I never really

337
00:30:29.400 --> 00:30:30.960
you know, we talked about the
stimulus checks. You know that they tried

338
00:30:30.960 --> 00:30:34.519
to appease people that they locked down
and put out of business and put out

339
00:30:34.519 --> 00:30:37.799
of work. Well, here's your
little stimulus check. But they wrote a

340
00:30:37.839 --> 00:30:42.680
really big, gigantic stimulus check to
all the big guys, the big players,

341
00:30:42.759 --> 00:30:45.920
the big banks and Wall Street people
and everything. Gave them a massive

342
00:30:47.039 --> 00:30:52.119
stimulus check to keep this thing going. And it seems like the first bubble,

343
00:30:52.160 --> 00:30:56.400
when they created the real estate bubble, the residential real estate bubble,

344
00:30:56.119 --> 00:30:59.200
low interest rates, they kept them
down for a very long time. You

345
00:30:59.240 --> 00:31:02.599
look at that one point, the
Federal Reserve just starts raising it, you

346
00:31:02.599 --> 00:31:04.880
know, like every every month or
whatever quarter of a percent, you know,

347
00:31:06.200 --> 00:31:11.640
twenty five basis points. And then
they just went and until everything popped

348
00:31:11.640 --> 00:31:15.799
and they crashed. And then they
started doing the same thing again, but

349
00:31:15.920 --> 00:31:19.599
even bigger. And and then as
you point out, you got the stimulus

350
00:31:19.720 --> 00:31:26.200
check that's written with a low zero
interest rates to all these bankers and businesses

351
00:31:26.200 --> 00:31:30.200
and everything as part of COVID,
and then they start the whole cycle has

352
00:31:30.480 --> 00:31:34.000
been started all over again since the
real estate market crash, as you point

353
00:31:34.000 --> 00:31:40.960
out, with all the UH,
the the the quantity of easing as well

354
00:31:41.000 --> 00:31:44.240
as interest rates and everything. They
created it and did it even bigger this

355
00:31:44.359 --> 00:31:48.920
time. And then they started when
they won, when it came time for

356
00:31:48.960 --> 00:31:52.480
them to burst it, they started
jumping it about three or four times as

357
00:31:52.559 --> 00:31:57.480
much as they did the first time
and created massive disruption with this. So

358
00:31:57.920 --> 00:32:01.920
as you're looking at this, you're
thinking that we're going to continue on with

359
00:32:02.039 --> 00:32:06.359
inflation quite some time. Do you
think it's going to go into a hyper

360
00:32:06.400 --> 00:32:13.000
inflation type of a scenario like we've
seen in Argentina or Venezuela or some other

361
00:32:13.039 --> 00:32:15.400
place, Zimbabwe or something. Are
we going to go into really really high

362
00:32:15.480 --> 00:32:20.319
hyperinflation? How do you see this? Well, I mean, I'm worried

363
00:32:20.319 --> 00:32:24.440
about that because it's not just real
estate that's been borrowing money, but the

364
00:32:24.440 --> 00:32:30.640
federal government has been borrowing, you
know, trillions of dollars of new money,

365
00:32:30.039 --> 00:32:36.559
trillions of dollars rolling over of the
national debt. And remember they were

366
00:32:36.599 --> 00:32:39.559
borrowing, you know, ten year
government bonds for less than two percent.

367
00:32:40.319 --> 00:32:45.440
Many governments around the world were borrowing
money at less than two percent for ten

368
00:32:45.519 --> 00:32:51.519
years, and now they're having to
start rolling over that stuff. And so

369
00:32:51.880 --> 00:33:00.160
interest payments on government debt is rising
because everybody's upside down on their portfolios.

370
00:33:00.200 --> 00:33:05.559
And as a consequence, the interest
payments on the national debt have risen very

371
00:33:05.599 --> 00:33:10.759
sharply, from a half a trillion
to near a trillion dollars now in a

372
00:33:10.880 --> 00:33:15.559
very short period of time. And
we're adding a trillion dollars of national debt

373
00:33:17.200 --> 00:33:22.920
it seems like every few months,
and you know, we're on pace to

374
00:33:22.960 --> 00:33:30.279
be borrowing trillions more over the next
fiscal year with that interest payment on national

375
00:33:30.359 --> 00:33:37.160
debt increasing over time. And so
and the Fed itself is upside down on

376
00:33:37.319 --> 00:33:42.319
its portfolio. So it is losing
money now for the very first time.

377
00:33:42.440 --> 00:33:47.519
It's it's lost one hundred billion dollars
in the last year. It's probably projected

378
00:33:47.559 --> 00:33:53.880
to be losing two hundred billion dollars. And that's added into the government's debt,

379
00:33:54.599 --> 00:34:00.359
and so everything is going in the
wrong direction and The only thing that

380
00:34:00.480 --> 00:34:07.200
has continued to hold up is well, the seven technology companies in the S

381
00:34:07.279 --> 00:34:10.639
and P five hundred. If you
take them out, the stock market is

382
00:34:12.360 --> 00:34:19.559
either flat or falling and has been
if not for those seven giant tech companies,

383
00:34:22.159 --> 00:34:25.840
you know. So that's just that's
just not a good sign. And

384
00:34:25.920 --> 00:34:30.920
the other thing that's been holding up
is the US dollar. The value of

385
00:34:30.960 --> 00:34:36.400
the US dollar has been holding up, and it's precisely because all of the

386
00:34:36.519 --> 00:34:43.280
other currencies in the world are so
weak that people are sending more and more

387
00:34:43.360 --> 00:34:50.039
of their money to be invested in
the United States as the least worst currency

388
00:34:50.079 --> 00:34:54.960
in the world. So that's been
holding up. But once that starts deteriorating,

389
00:34:57.039 --> 00:35:02.000
and that starts fueling oil prices direct
for example. Yes, I mean

390
00:35:02.039 --> 00:35:08.199
we're we're on the path to hyperinflation. We're early enough now that we could

391
00:35:08.280 --> 00:35:16.400
do something about it. But you
know, there's no stomach in Washington,

392
00:35:16.519 --> 00:35:24.400
d C. To make the kinds
of changes Slashing government spending, cutting taxes

393
00:35:24.519 --> 00:35:36.800
on workers and investors, rolling out
or rolling under vast swaths of government bureaucracy,

394
00:35:37.239 --> 00:35:44.719
returning those resources, you know,
to the productive side of the economy.

395
00:35:44.760 --> 00:35:49.119
That's what we really need, and
there's no stomach in Washington, d

396
00:35:49.239 --> 00:35:55.320
c. For that. There's no
stomach for reducing welfare payments and curbing entitlement

397
00:35:55.400 --> 00:36:00.719
programs. All of those things seem
to be off the table generally, and

398
00:36:00.760 --> 00:36:06.880
those are exactly the types of things
that need to be on the table immediately

399
00:36:07.280 --> 00:36:10.199
so that we can get off the
road not only to hyper inflation, but

400
00:36:10.239 --> 00:36:22.760
of course hyperinflation is just one step
short of the road to totalitarianism and dictatorship.

401
00:36:22.880 --> 00:36:25.880
So this, you know, it's
not just that prices go up and

402
00:36:25.960 --> 00:36:30.639
everybody has more money in their pockets
and so forth. This is the road

403
00:36:30.840 --> 00:36:37.119
ultimately to the destruction of the economy
and the destruction of the American way of

404
00:36:37.159 --> 00:36:45.000
life and the takeover by totalitarian government. We're all, you know, everybody

405
00:36:45.039 --> 00:36:50.280
recognizes that. That's the direction we've
been going with the COVID lockdowns and so

406
00:36:50.400 --> 00:36:57.480
forth. That's the direction that our
politicians have us in the direction of.

407
00:36:57.840 --> 00:37:00.039
I agree, Yeah, they want
us on the road to serve them because

408
00:37:00.039 --> 00:37:04.639
there'll be the feudal overlords they're going
to be running this. I mean,

409
00:37:04.639 --> 00:37:06.519
you know, we look at this
like, no, we don't want to

410
00:37:06.519 --> 00:37:07.760
go to the roads. But they
do. And that's one of the reasons

411
00:37:07.800 --> 00:37:12.239
why I think this appears to be
really kind of a deliberate takedown. You

412
00:37:12.239 --> 00:37:14.960
know, I think it was last
week. I think they didn't hit the

413
00:37:15.159 --> 00:37:17.719
trillion dollars in terms of just the
interest payment on the debt. I think

414
00:37:17.719 --> 00:37:22.159
I reported that last week it did
hit finally trillion dollars because I was like,

415
00:37:22.199 --> 00:37:24.599
wow, it's amazing. But as
you point out, they keep going

416
00:37:24.639 --> 00:37:28.199
further and further into debt and the
interest rates keep going higher, So of

417
00:37:28.239 --> 00:37:31.920
course that's going to happen. And
the famous saying the Road to serf Them

418
00:37:32.119 --> 00:37:37.599
was actually the famous book by F. A. Hyak, who was a

419
00:37:37.719 --> 00:37:45.920
student of Ludwig von Mesis and Mesus
and Hyak both wrote books in nineteen forty

420
00:37:45.920 --> 00:37:51.519
four. Hayak wrote The Road to
Serf Them. Mesis wrote the book Bureaucracy,

421
00:37:52.039 --> 00:37:58.920
where you know an omnipotent government as
well. Misis wrote and they were

422
00:37:58.960 --> 00:38:06.599
warning us that the tendency in American
government that far ago was that we were

423
00:38:06.639 --> 00:38:12.800
going in this direction where we just
felt good about having more government programs,

424
00:38:13.360 --> 00:38:17.519
but ultimately you would get to a
point where the people no longer had control

425
00:38:17.760 --> 00:38:22.400
over their own very government that's right. Yeah, that's the path that it

426
00:38:22.440 --> 00:38:25.360
always takes. You know, when
you talked about the fact that the dollar

427
00:38:25.440 --> 00:38:29.239
is doing well because we have the
least worst of the central banks, it

428
00:38:29.239 --> 00:38:32.119
reminds me of you know, we've
got I think it's this weekend there's going

429
00:38:32.159 --> 00:38:37.119
to be the election in Argentina with
Javier Malai, who is a free market

430
00:38:37.119 --> 00:38:42.719
economist. I don't know if you
know him or if he's connected with you,

431
00:38:42.840 --> 00:38:44.800
but that's one of the things he
was saying. We got to get

432
00:38:44.880 --> 00:38:49.760
rid of the Argentine I think it's
peso and we got to replace it with

433
00:38:49.800 --> 00:38:52.880
the US dollary. Says I think
all central banks are awful, but said

434
00:38:52.960 --> 00:38:55.880
exactly the same thing. He said, you know they're they're not as bad

435
00:38:55.920 --> 00:39:00.960
as our central bank. What do
you do you know anything about Javier Malay

436
00:39:01.079 --> 00:39:06.400
and what is happening There Has there
been any correspondence with the Mesa's Institute in

437
00:39:06.480 --> 00:39:10.039
him. Well, he's not affiliated
with us at this point, but we've

438
00:39:10.079 --> 00:39:15.480
written about him on our web page
several times and we're following him very carefully.

439
00:39:16.039 --> 00:39:22.239
He considers himself an Austrian School economist
and a student of Murray Rothbard,

440
00:39:22.840 --> 00:39:29.559
who was really the great modern Austrian
economist and our first vice president for academic

441
00:39:29.559 --> 00:39:35.920
affairs. So he's very much in
our camp. He's very obviously intelligent person

442
00:39:37.320 --> 00:39:42.039
and he's got the right instincts with
respect to policy, and he doesn't want

443
00:39:42.079 --> 00:39:47.639
to make the US dollar the currency
of Argentina. That's just a transition policy

444
00:39:49.280 --> 00:39:57.679
away from their hyper inflationary tendencies down
in argent Argentina. They've tried these kind

445
00:39:57.760 --> 00:40:02.400
of measures in the past and ultimately
they've come back to fail, and that's

446
00:40:02.440 --> 00:40:10.599
why he views dollarization as a temporary
transition policy back to a sound monetary system

447
00:40:12.199 --> 00:40:16.239
of gold and silver, where everybody
out there in the economy their money is

448
00:40:16.360 --> 00:40:22.599
gold and silver coins, something the
central bank can't do anything about, something

449
00:40:22.679 --> 00:40:27.920
the government can't do anything about.
If we hold money that has an intrinsic

450
00:40:28.119 --> 00:40:35.320
value and cannot be printed at the
whim of a central banker or at the

451
00:40:35.400 --> 00:40:43.199
whim of some economist or a politician. Yeah, so he's definitely from the

452
00:40:43.239 --> 00:40:49.800
Austrian school. We have very high
hopes that he'll do well and he'll be

453
00:40:49.880 --> 00:40:53.400
able to implement a lot of his
reforms, but basically he wants to cut

454
00:40:53.400 --> 00:40:57.679
a lot of government spending down there. I mean, they have a bloaded

455
00:40:58.599 --> 00:41:04.920
government sector down there, which forces
the current government to print money to pay

456
00:41:04.960 --> 00:41:10.599
for it. If you cut the
government sector significantly enough and you open up

457
00:41:10.679 --> 00:41:15.599
the free market economy, then you
simply don't need the printing press, and

458
00:41:16.760 --> 00:41:24.199
sound money is really a prerequisite for
sound government. That's a point that mesis

459
00:41:24.239 --> 00:41:30.760
Mate made a long time ago,
is that he was considered a medallist because

460
00:41:30.800 --> 00:41:38.920
he believed in gold and silver coins
in the hands of individuals as the most

461
00:41:38.960 --> 00:41:47.480
significant guardian of the pre market society
that prevented government from in effect taxing the

462
00:41:47.519 --> 00:41:54.440
population through the printing press. Yes, and so, and of course that's

463
00:41:54.559 --> 00:42:00.159
right. You know, the American
founders experienced that. That's why they say,

464
00:42:00.199 --> 00:42:02.599
you know, it's going to be
gold and silver, and it's going

465
00:42:02.639 --> 00:42:07.079
to be minded. But because they'd
lived through a continental dollar that was just

466
00:42:07.480 --> 00:42:12.159
a worthless piece of paper, worthless
than a you know, not worth a

467
00:42:12.239 --> 00:42:15.039
continental and so they wanted the same
type of thing. He's living through one

468
00:42:15.119 --> 00:42:22.360
hundred and fifty percent inflation. It
was interesting. I found a book that

469
00:42:22.559 --> 00:42:28.559
was done by Axel Axual Kaiser called
street Economics, very much like what you're

470
00:42:28.559 --> 00:42:34.679
talking about that Mesus did, taking
practical examples out of everyday life and saying,

471
00:42:34.719 --> 00:42:36.599
you know, this is how the
world works, and this is why

472
00:42:36.599 --> 00:42:40.000
we need to organize ourselves this way
economically and so forth, as opposed to,

473
00:42:40.159 --> 00:42:43.800
you know, the Keynesian abstraction and
saying, you know, no,

474
00:42:43.920 --> 00:42:46.840
everything works differently when the government is
doing it. That's become a very very

475
00:42:46.840 --> 00:42:52.719
popular book in South America. He
knows Javier Malay and he just recently got

476
00:42:52.760 --> 00:42:58.320
it translated into English. But yeah, it is interesting to see, you

477
00:42:58.320 --> 00:43:00.840
know, whether they're going to come
back to their is or not. It

478
00:43:00.880 --> 00:43:06.239
seems like the biggest obstacle to him
coming back is they're trying to throw a

479
00:43:06.360 --> 00:43:10.440
Taylor Swift against him. I mean, he's got a big popular following there,

480
00:43:10.440 --> 00:43:13.599
and right before they're going to have
the election, she's going to be

481
00:43:13.599 --> 00:43:16.559
there for the opening concert, and
she and the lefties that are following her

482
00:43:17.079 --> 00:43:21.320
are already starting to make noise about
However, Malisa, we'll see if he

483
00:43:21.320 --> 00:43:25.679
can beat Taylor Swift and all this. But let's get back to your book

484
00:43:25.719 --> 00:43:30.119
here. The Skyscraper Curves. That's
an interesting title. Explain to us what

485
00:43:30.159 --> 00:43:36.400
that means. Well, It's just
that there's a long history dating back about

486
00:43:36.400 --> 00:43:44.639
one hundred and fifty years now where
whenever a world record setting skyscraper is built

487
00:43:44.800 --> 00:43:51.840
and completed, right in the aftermath
of that is a world economic crisis.

488
00:43:52.760 --> 00:43:59.039
And so what this tells us is
that when central banks go through long concerted

489
00:43:59.119 --> 00:44:06.400
efforts to artificially lower interest rates for
a very long time, that eventually somebody

490
00:44:06.480 --> 00:44:10.679
comes up with the idea that they're
going to build a record setting skyscraper.

491
00:44:12.239 --> 00:44:17.639
It's very difficult technologically, not just
the money, but every time you build

492
00:44:17.920 --> 00:44:24.719
taller, you've got to come up
with completely different and new ways of building

493
00:44:24.719 --> 00:44:31.440
a building. Designing a building,
all of the elevators and the water system,

494
00:44:31.639 --> 00:44:37.159
sewage, air conditioning, everything about
it has to change a little bit

495
00:44:37.360 --> 00:44:44.679
in order to make a record possible. And so you can go back into

496
00:44:44.719 --> 00:44:52.800
the nineteenth century and every time you
see these low interest rate periods, a

497
00:44:52.000 --> 00:44:59.760
record setting skyscraper and then a big
economic crisis. And so the skyscraper is

498
00:44:59.800 --> 00:45:07.000
real really just an illustration of what's
going on throughout the economy. Everybody's you

499
00:45:07.039 --> 00:45:12.480
know, with the new interests,
these new low interest rates, everybody is

500
00:45:12.559 --> 00:45:22.639
implementing new technologies stuff that is future
related technologies, and we're seeing that today

501
00:45:22.679 --> 00:45:29.800
with artificial intelligence, for example,
that probably wouldn't have come about for several

502
00:45:29.920 --> 00:45:35.519
years. But because Google and some
of these other companies have just tons of

503
00:45:35.559 --> 00:45:42.639
money sitting around, they were able
to finance those kind of research efforts and

504
00:45:42.679 --> 00:45:47.199
bring them online before their time.
But the skyscraper, again, is just

505
00:45:47.239 --> 00:45:54.039
an illustration of what goes on in
the economy except for maybe mom and pop

506
00:45:54.400 --> 00:46:02.800
grocery stores and restaurants, where everybody's
adapting adopting new technologies before their time.

507
00:46:04.920 --> 00:46:12.840
They're changing their structure of production that's
not really in sync with the true interest

508
00:46:13.000 --> 00:46:16.920
of consumers. And as a consequence, once interest rates start to rise,

509
00:46:17.119 --> 00:46:23.719
all of these investments, all of
these investments in technology and future technology really

510
00:46:24.280 --> 00:46:30.760
break and it brings the economy into
an economic crisis. I'm all, you

511
00:46:30.800 --> 00:46:36.239
know, I'm all for technology,
and I love futuristic things, but if

512
00:46:36.280 --> 00:46:42.519
we do it as a society,
we're barking up the wrong tree, essentially,

513
00:46:43.079 --> 00:46:49.880
And the skyscraper is just a really
good illustration of how that takes place

514
00:46:50.199 --> 00:46:54.199
when we can't really see it in
our everyday lives. And I explain how

515
00:46:54.239 --> 00:47:02.679
this works using some simple examples for
people to understand, and also examples of

516
00:47:05.000 --> 00:47:13.800
how the economy develops naturally in terms
of implementing new technologies and new production techniques

517
00:47:14.440 --> 00:47:19.960
and new structures of production in the
economy. So there's a natural way to

518
00:47:20.000 --> 00:47:23.519
do this, and there's an artificial
way to do this, and the artificial

519
00:47:23.559 --> 00:47:30.760
way leads to economic crisis. That's
interesting, that's very interesting. As you're

520
00:47:30.760 --> 00:47:34.000
talking about this, I'm thinking,
how the you know, they as they

521
00:47:34.000 --> 00:47:37.840
build these skyscrapers and they're pushing everything
to all new level, going to do

522
00:47:37.920 --> 00:47:39.840
this in a way that's never been
done before. I'm thinking maybe it's a

523
00:47:39.840 --> 00:47:45.360
tower babble curse that's that's going on
there, or the Titanic right way,

524
00:47:45.440 --> 00:47:49.679
we got this new ship and it's
unsinkable, and because at the heart of

525
00:47:49.679 --> 00:47:52.719
it is really kind of a lot
of pride that goes before these falls.

526
00:47:53.280 --> 00:47:58.719
But it is it is interesting to
see that happening as a phenomenon. And

527
00:47:59.000 --> 00:48:00.880
as you're talking about this skyscraper curse, you know, one of the things

528
00:48:00.880 --> 00:48:07.320
in the commercial real estate, as
it's starting to become a real issue,

529
00:48:07.800 --> 00:48:10.800
they have these things called mezzanine loans. Maybe you know what it is,

530
00:48:10.840 --> 00:48:15.400
but I'd never seen that before.
For the people who aren't in the business,

531
00:48:15.800 --> 00:48:20.159
they said, you know, it's
called a mezzanine loan because people do

532
00:48:20.280 --> 00:48:24.719
this high risk loan because they're not
at the top of the capital stack,

533
00:48:25.159 --> 00:48:31.400
and so they're further down if things
if the skyscraper gets cursed and it collapses,

534
00:48:31.639 --> 00:48:36.199
there are a few floors down and
they don't get paid right away,

535
00:48:36.320 --> 00:48:40.599
and so it's much riskier and they
get a higher loan in it. But

536
00:48:40.639 --> 00:48:45.719
there after the two thousand and eight
crash, the government prohibited that for the

537
00:48:45.719 --> 00:48:49.679
big banks that they bailed out.
They said, because it's riskier, so

538
00:48:49.719 --> 00:48:52.519
you're going to do safer things,
they said. But that's another level of

539
00:48:53.039 --> 00:48:59.159
risk that these small and medium sized
banks assumed in the interim, which is

540
00:48:59.199 --> 00:49:01.960
going to be another thing going to
wipe them out, perhaps, because now

541
00:49:02.039 --> 00:49:10.480
these mezzanine loans are really you know, they're collapsing left and right. Yeah,

542
00:49:10.519 --> 00:49:15.280
I mean, the idea that the
government bureaucrats can regulate financing of investments

543
00:49:15.360 --> 00:49:22.079
is just ludicrous, you know.
And they they themselves opened up this opportunity

544
00:49:22.760 --> 00:49:30.360
by not allowing certain banks to be
involved and then yet making funds available in

545
00:49:30.400 --> 00:49:35.679
the economy for one or two percent, So naturally somebody is going to come

546
00:49:35.719 --> 00:49:40.199
along. Somebody is going to be
willing to borrow money at two percent in

547
00:49:40.360 --> 00:49:49.599
order to lend it. Making these
mezzanine loans for financing large construction projects and

548
00:49:50.079 --> 00:49:55.440
earning ten or twelve percent. Somebody, somebody's going to do that, even

549
00:49:55.480 --> 00:50:00.239
though they don't, Yeah they don't. Yeah, that's right. They take

550
00:50:00.239 --> 00:50:07.800
the bait, even though they don't
have collateral in the building, and even

551
00:50:07.840 --> 00:50:15.360
though it's maybe not as long a
term loan as the initial investors, the

552
00:50:15.400 --> 00:50:20.519
people who are covered with the collateral
and so forth. You know, somebody

553
00:50:20.599 --> 00:50:23.440
is going to be willing to take
that bait. And you know, and

554
00:50:23.519 --> 00:50:30.719
I don't know what the overall figure
is, but of course, the the

555
00:50:30.960 --> 00:50:37.800
the market as a whole with commercial
real estate is trillions of dollars and we're

556
00:50:37.840 --> 00:50:43.239
starting to see the cracks in those
markets, uh, you know, where

557
00:50:43.280 --> 00:50:46.039
projects are failing, right, And
it's gonna affect everybody because it's going to

558
00:50:46.239 --> 00:50:52.480
it's gonna be a massive curse for
the entire banking industry, and that is

559
00:50:52.519 --> 00:50:55.159
going to filterund and affect everybody.
Absolutely is. It's been great talking to

560
00:50:55.199 --> 00:50:59.400
you, thank you for coming on. Mark Thornton, and he has a

561
00:50:59.440 --> 00:51:01.920
senior fellow at the Mesas Institute.
You can find his book that we've been

562
00:51:01.960 --> 00:51:06.599
talking about. There's a lot in
there. You can see that for free

563
00:51:06.679 --> 00:51:08.760
as a PDF or an ebook.
They have an audiobook that they do sell,

564
00:51:09.719 --> 00:51:15.199
but you can find other information,
very useful information at Meses dot org,

565
00:51:15.679 --> 00:51:17.519
i Sees dot org. Thank you
so much for joining us, sir,

566
00:51:19.199 --> 00:51:22.039
Thank you, David. It's my
pleasure. Thank you, and thank

567
00:51:22.079 --> 00:51:23.800
you everyone for joining us. And
thank you dougle log. I appreciate the

568
00:51:23.800 --> 00:51:37.320
tip. Thank you very much.
Have a good day, everybody. The

569
00:51:37.400 --> 00:51:44.880
common man, they created common Core
and dumbed down our children. They created

570
00:51:44.920 --> 00:51:49.760
common past, track and control us. Their Commons project to make sure the

571
00:51:49.760 --> 00:51:57.079
commoners own nothing and the communist future. They see the common man as simple,

572
00:51:57.519 --> 00:52:02.360
a sophisticated ordinary. But each of
us has worth and dignity created in

573
00:52:02.440 --> 00:52:08.199
the image of God. That is
what we have in common. That is

574
00:52:08.280 --> 00:52:14.280
what they want to take away.
Their most powerful weapons are isolation, deception,

575
00:52:14.880 --> 00:52:19.960
intimidation. They desire to know everything
about us, while they hide everything

576
00:52:20.239 --> 00:52:24.239
from us. It's time to turn
that around and expose what they want to

577
00:52:24.320 --> 00:52:30.480
hide. Please share the information and
links you'll find at the Davidnightshow dot com.

578
00:52:30.480 --> 00:52:39.280
Thank you for listening, Thank you
for sharing. If you can't support

579
00:52:39.320 --> 00:53:00.119
us financially, please keep us in
your prayers. Ddavidnightshow dot com. M

580
00:53:00.280 --> 00:53:12.480
H. If you like the Eagles
on Its Highway, the cars and Heuey

581
00:53:12.599 --> 00:53:17.280
Lewis and the news they say the
Hors, you'll love the Classic Hits channel

582
00:53:17.320 --> 00:53:22.480
at APS Radio, download our app, or listen now at apsradio dot com