All right, welcome back, joining us now as Mark Thornton is the Peterson Luddy Chair in Austrian Economics and a senior fellow at the mess Institute, and so I wanted to talk to him a little bit about the Mesa's Institute. I refer to their articles frequently, and so I'd like to talk a little bit about you know, what do we mean by Austrian economics? Who was
Lukewig von Mises, and a little bit about the Mesa's Institute. But he also wrote a book that is available at their site, and Skyscraper Curse. And it looks like with a crash and commercial real estate that we're going to be looking at a skyscraper curse coming back their return of the curse. But joining us now is Mark Thornton. Thank you for joining us there, David,
it's great to be on your program. But with government solving all the world's problems, I'm not sure if we're going to have anything to talk about. That's right, If we got a problem we just haven't done by government, but especially at the federal government level, because that's all the problems need to be solved. There, tell us a little bit about the Mesa's Institute. The Mesas Institute is now forty years old. It was founded by mister
lou Rockwell. We're right here in Auburn, Alabama, and we're about economic education really from the perspective of the Austrian School of economics Ludwig von Misis, fa Hiak, Henry hazlitt, Ron Paul and many others. We're the smallest but fastest growing school of economics, and I think it's a you know, it's the science really behind free markets, and we're trying to get it out
to as many people as possible. That's right. Yeah, give us a little bit of an idea of the audience when we talk about Austrian economics. You know, several of the founders were from Austria. Course, but you know, what is it that's different about Austrian economics versus what we typically have with our you know, what people are in college with the macroeconomics or Keynesian economics and things like that. Tell us a little bit about what distinguishes Austrian
economics from that. Well, it was founded in Austria by Karl Menger in the nineteenth century and one of his primary students was Lidwig von Mesis and Lidary von Misis applied Menger's method, which is based on deduction and logic and human action rather than on mathematical models and econometric analysis. Plug in the numbers and
see what comes out, or see what you want to come out. And as a result, you know, the Austrian school was basically able to develop economic principles about the laws of supply and demand, marginal utility, those kind of things, those basic things that you see in an introductory textbook, and everybody can basically agree on them. Most economists, which we call the mainstream, they go off and use their mathematical models and their econometric analysis to come
up with anything they want. But with Austrian economics you have to stay very close to the logic of human action. And through that method that Mesis developed he was able to develop modern monetary theory. In his very first book, he was able to critique socialism in the Socialist calculation debate and prove that pure
socialism was an economic impossibility. And then, of course his magnum opus Human Action basically laid out everything about everything from basic economic analysis to things like the business cycle and fiscal policy and everything else that we wanted basically we talk about today. Uh, he was the person who put forward all of those great contributions, and that's why we celebrate him, and we try to extend his
work and to teach his work here at the Mesa's Institute. And it's still not you know, I know when I was in college and I was taking economics and we would get to macroeconomics and it was like, Okay, forget all the you know, the real physical world of how your budget work and everything, because if we're the government and we make that if we make this thing really really big, then none of those rules apply anymore. And it's
like, something about this seems really fishy. This is kind of like saying, if I get a big enough rock is going to float up into the sky. So it's uh, it was like that just doesn't make any sense to me. And you know, Austrian economics is really, as you point out, it's more focused on on human action on reality than on this obfuscation, this fiction that that this massive that just doesn't matter. But of course that it is not that I think that Kynesy and economics has really been capable
of explaining things because it hasn't. But it's been a useful crutch for the central planners, hasn't it. Oh? Absolutely, you know, we stick
with supply and demand and real world prices for the most part. Kenesy economics, for those who have suffered through it in introductory college courses, God bless you, is more like an exercise in plumbing, where you have a series of pipes and valves, and you have leakages and injections and all sorts of plumbing related problems that seemingly the expert plumber could fix simply by turning the dial
or tightening a pipe or soldering something together. And we all know that the real world economy in the US alone is made up of three hundred and thirty million people. The worldwide economy is many billions of people, and they're all doing their own thing. And the Keynesian approach, the Kynesian macroeconomic approach of turning a few dials, overlooks all of the basic problems, overlooks the negative
effects of taxation, the negative effects of regulation. They just assume that, for example, regulations will fix problems at a zero cost and the world will be happy thereafter, when in reality it distorts all sorts of decisions on the part of entrepreneurs, on the part of input suppliers, and on the part of consumers and labors, and basically just gums up the work it works. And so Austrian economists try to stay very close to the real war world and
how it actually works. And as a result, we have a general policy outlook where we want to have the government have hands off as much as possible in every conceivable situation to allow the free actions of individuals that respect property rights and so forth, that that's the way to allow people to achieve their potential. And achieving their potential, they're really serving other people. And it's really you know, economics has thought of is you know, a fierce, cutthroat
competition thing. But ninety nine point nine percent of it is cooperation between employer and employee, between the consumer and the supplier, between whole worldwide webs of networks of the factors of production coming together in order to produce the goods that we want to consume. So it's really much more of the idea that the
economy is cooperation, and competition certainly exists. We all compete on the basis of price, whether it's the price of our products, the price of our labor, the price of the resources that we own, and so forth. We all have to compete at that level, and that profit and loss statements that we all have to measure up to keeps us all in a sense honest
in this game of competition and cooperation. Yeah, that's a good way of putting it, especially like your analogy of it's a complicated plumbing thing I think of it. Maybe they should call it the Rube Goldberg school of economics. Another lovocated bag on the side. Oh, this didn't work. Okay, let's add this other complication to it, as highly analytical, as highly complicated.
It doesn't really work very well. I've always thought of this as I've always thought of the free market as versus canesy and economics as a neural net distributed system versus a centralized computer. It just seems to me that, you know, even if they think that they are the smartest person in the room, there's no way that they've got sufficient information to be able to do that.
That's the the you know, the invisible hand and the open market where everybody is is interacting with each other, and that's the one thing that they haven't been able to to to grasp when we look at the central bank digital currency and the you know, the surveillance aspect and the control aspect of that that they're trying to impose on us. To me, it seems like,
again because it's ultimately authoritarian. It isn't like they're going to look at this and say, well, you know, what be the most efficient way for us to do this or that. You know, now we got more information about what everybody is doing. I think it is simply more of a ham fisted authoritarian, centralized approach. It's not really going to be leveraging technology to even get a better view of what is happening so they can run the system.
They just want to run the system whatever happens. They want to make the system run to their advantage. I think is really what we're looking at. You what do you think about this coming central bank digital currency, the efforts to do that, you know, is are we going into a more centralized control approach and economics? Are they going? You know, certainly that's
what the politicians want. Oh yeah, the central bank digital currency. The only positive is that it's positive for central banks and positive for the government to oversee and be able to check on everything we do. There's no positive economic
benefits to having that type of system. If they really wanted to have a close to ideal monetary system where they didn't need monetary policy at all, where they didn't need the vast bureaucracy thousands of econometricians and tens of thousands of bureaucrats to manage the system, then they would go back to a gold standard that we were established with this country, and silver money and things of that nature.
That is the ideal monetary system for human economy, and the idea that you know, well, you can have digital currency, you can have digital money, but there's no benefit that they can describe that isn't just solely a benefit to the central bank in the government itself and I you know, and it would be terrible for the economy. It would hurt a lot of people.
There's means going around on social media of all the harms it would due to certain groups in particular, As is typical with policy, it would hurt the most disadvantage groups in society, from the paupers and the poor people, the beggars, to people who live hand the mouthed, to the people who don't have bank accounts. What are those people supposed to make of this central bank digital currency that are completely shut out all sorts of transactions that we make
on well in the fringes of society to the streets of Manhattan. Cash transactions are absolutely necessary and required. It's really the only way to conduct business of any sort for those particular groups. And of course it helps large corporations, it helps the government, it helps the taxing authorities, it helps the central bank. I think they're probably going to a lure those people, I see. I think they're probably gonna lure those people in with lure of welfare payments
and healthcare, because that's what they've already done in India. You know, take the number and you get this stuff. Because it's all about dependency, you know, and they can you know that that really is a key way that they want to pull people in. I think they'll use that dependency to rope in the poorest people and to get them to take the id to take the central bank digital currency. I think that's you're right. They're going to
victimize them. They'll be the first ones inside the open air prison, being surveilled and controlled with everything you know, they could make the argument that hey, we'll be able to we'll be able to have more visibility about the metrics of the economy and we'll be able to fine tune it and do that better. They may make that case, but that's not why they're doing it.
They're just doing it for simply for control, right, Yes, And I anticipate that they're going to cause some crash of the system where people are going to lose access to their money and lose access to their accounts and won't be able to transfer money, and whether or not the government can solve it immediately with central bank digital currencies, they will implement a central bank digital currency, or they will attempt to implement a central bank digital currency as a consequence of
them crashing the system in some way. And we're already seeing little hints of this where transactions between banks and settlements between banks are getting gummed up at various points in the system. And I think that a comprehensive crash of the system would you would scare people into accepting this idea of a central bank digital currency, and that's something that they could pull off really at any time. And
even if they didn't do that of their own volition. Of course, we are talking about government and they have screwed up everything else, and so they can certainly manage to do something like that as well. I agree absolutely by
accident, Yeah, I agree. I got a comment here from Guard Goldsmith, who has a liberty conspiracy and he says, when I was teaching Austrian economics here in New Hampshire, it was great to see how many students got it and then continued their education by watching mesa's media and getting Mesa's institute documents. That's good, and of course I want to talk about that as well. And I want to talk about your book, which is available for free
right at the mesas dot org. Of course people can also get an audiobook. There's a fee for the audiobook, but you have it in various pdf and e book and things like that for free. And I want to talk about how that really seems to be folding into another big problem that's come into the economy. But before we get into that, Guard also commented about Lugwig and he says, misus almost didn't make it out of Nazi territory. He
and his wife were trying to make it to France. I believe, and almost were arrested by the SS. Richard Eveling did great work in the nineteen nineties and saving a lot of his work that the Soviets had sullen at the close of World War II. Amazing stories related to his work in life and his economics. That's interesting, you know, I wonder why these centrally controlled economies like the Nazi Germany and the Soviet Union would want to have his works,
except perhaps to destroy them. Right. Yes, When the Nazis invaded Austria, one of the first things they did was send a crack troop of intelligence officers to Mesus's apartment to get him and his papers and forth, but he had already left the cory. They took his papers, they took his furniture and everything and brought it back to an intelligence lab uh in Germany, and we thought the papers were lost, but Richard Albiling and others found the
papers in an intelligence warehouse in the Soviet Union. So when the Soviet Union invaded Germany, they took all of Mesus's materials, thinking because Mesus had discovered that pure socialism, which both the Nazis and the Kami's both advocate. You know socialists. Yeah, the Nazis are the national socialist that's right. Yeah, So they both wanted this complete totalitarian socialism. Mesas said, no,
that's impossible. You have to have property rights, you have to have prices, you have to have money, uh, you know, wage rates and all those kind of things determined in market place. And so the Nazis thought that Mesus had held back some secret of how you solve the problem of socialism, and then the Russians the Soviets also thought that Mesis had hidden that problem. And of course there was no solution. Mesis didn't have the solution to
socialism except to get rid of it, to abandon it. And of course the world has seen not only was Mesis right about the fallibility of any kind of socialism, but they've also seen that throwing off the socialist yoke in Eastern Europe and the former Soviet Union and to a large extent in communist China. Once they once you throw off this yoke of complete totalitarian socialism, production starts
happening. People are better off, people live longer, people are happier, you know, and all of these things that Misis predicted about the economic system came true. You know, and we could do that here in the United States. You can do that anywhere in the world. Just reduce the amount of socialism and government in your economy and you'll get the benefits of the free market economy. Yes, yes, And of course this isn't the theory.
We've had massive experiments to prove it. Just take a look at East versus West Germany, or North versus South Korea. The same people, you know, exactly identical. And what you do is you cut the country in half and you have half of them living under a centrally planned economy. The other half have a freer economy, if not a very free economy. See the
same thing with communist China versus Hong Kong. And of course Milton Friedman did a long series fore to Choose where he spent a lot of time talking about Hong Kong and how things at that time were very free in Hong Kong. So we've had the experience and we know exactly what this looks like over and
over again. If you had a satellite picture. I've seen this over and over again, satellite picture of South Korea at night, and it's all lit up in North Korea, it's all dark because there's nothing there and they just completely destroy everything with their economic system. There was something that was I can't remember the name of it, and trying to think of the name of it as we started the interview here came to mind. The economic theory that's being
put out by the Biden administration these other people. That was really kind of the basis of their so called Inflation Reduction Act. There was a woman who came up with this and she kind of rejected the technical aspects of kingesy and economics. She kind of simplified it and everything, but it's still just an excuse for the government to do whatever they wish. Maybe you remember the name
of it. I can't remember what else. Modern monetary theory. That's modern monetary theory, I MMT and I used to always call them the the magic money tree. You know, that's what earlyer stands for, is yeah, modern monetary theory. Yeah, that's a little bit about it. Yeah, that's a long established fable that goes back for centuries really, and it is the basis really of our monetary policy. The idea that you can print up pieces of paper to create economic prosperity, that you can take ink and paper
that are very well and good and productive. Put them together in the form of a dollar bill or a million dollar bill or a trillion dollar bill, and somehow or another, that's going to create more resources. It's going to create more workers. It's going to create more energy, and more productivity and
more products, goods, and services. It's always been thought of as a fable by economists, except now that we get to more recent times where economists are so unhinged from reality that they believe, well, maybe this does have something to it. Maybe we can just print up money and put unemployed resources to work. And so modern monetary theory basically says that you can borrow, you can print, and you can spend to keep the economy on an upward
and always upward trajection. That any shortfall from full employment, any shortfall of GDP growth from trend, you can just make up by borrowing and printing money and then having the government spend it. But actually, you know, right now, I think is a good case in point, because right now the
government statistics tell us that GDP is growing at a fairly brisk pace. And yet when you look around the country, and I'm sure many people in your audience right now are suffering from inflation and lower rages and things of that nature. Why all the economics suffering in an economy that's growing at a brisk pace. Well, the problem is is that they've been printing up money. They've been borrowing money, and the government has been spending it on programs and subsidies
that don't make sense in the family budget. It's not food, clothing, shelter, electricity that they're producing. They're actually doing things that actually undermine the production of food, clothing, shelter and so on. And so that disconnect of economists and the implementation of that disconnect, that modern monetary theory disconnect, we're seeing that in real life today. Yes, the government is borrowing, the government is spending, the government is printing up money to pay for the
whole thing. But what happens in the real world is that we're not getting the things that we actually need. We're just getting entries in national statistical accounts that don't put bread on the table. Yes, yes, yeah, We've never had a more centrally planned economy where they're planning to shut down our energy infrastructure or change all of our transportation system, and they don't have anything that
works to take its place. It's all just rewarding their friends. And I look at this modern monetary theory, like you point out, it's just taxes and printing money. And you can't replace applying demand with taxes and printing. But that same to be what they think they can do. And you look at the the inflation reduction taxig or whatever they called it in you know, they decided that, you know, they give all this when they print this money up, they give it to their friends, and there are things to
get out of control. They raise taxes on their enemies. You know. It's really kind of the way this thing works and practice, and so just another excuse again for what it is that they want to do, you know, and so they use it as kind of they use these economic theories.
It's kind of their court gestures to do whatever they want. But if we get back to the real world, you know, we look at Austrian economics, it looks, you know, in the real world, it's got to follow the same examples that you have if you're running a business or you're running a household or something like that. And so let's with that in mind, let's talk about your book twenty eighteen, the skyscraper curse and how Austrian economists
predicted every major economic crisis of the last century. Now that's pretty pretty large. But you know, we've got this developing commercial real estate problem that seems to have been kicked off by the lockdown and people working from home and the vacancy rates and everything, and even in a booming area like Shanghai, because the Chinese communists wanted to show their power. I think was perhaps their motivation.
I'm kind of reading into what their motivation is, but it seemed to me like it was a power play, kind of like Mao's Cultural Revolution or the Great Leap Forward. He decided that he was going to lock down Shanghai and show his authority there because maybe they're getting a little bit too much freedom and a little bit too much independence. And now you see there and in Guangzho and so many other places that were bustling and unbelievably crowded while I was
there. Now they're ghost towns that are happening, and there's a concern that, you know, even though it's not at the same dire straits that Shanghai is in New York City's got vacancy rates of about forty percent, and you've got a lot of people are holding these high interest rates that are variable, that are just collapsing and turning the back end. How does that current phenomenon, how does that fall back into what you were talking about back in twenty
eighteen. Well, the skyscraper curse is just really an illustration of the Austrian business cycle theory, and the Austrian business cycle theory turns on artificially low interest rates. That artificially low interest rates now cause entrepreneurs to make bad investments,
investments that won't pay off in the future when interest rates rise. And so, of course we had more than a dozen years of artificially low interest rates because of quantitative easing, because of zero interest rate policy, all sorts of Fed mechanisms to reduce interest rates to spur on the economy. They wanted to turn the dial down in order to increase investment and increase employment during a slow
time in the economy. But of course it was slow because of the housing bubble, the previous housing bubble, and things started to look really bad after I published my book in twenty eighteen. In twenty nineteen, the economy was going down the tubes, and it was essentially saved by COVID and the COVID rescue package, which sent interest rates back down to zero, and the FED
soaked up trillions of dollars of government bonds and mortgage securities. So for those couple of years, you could borrow money essentially worldwide at almost no interest at all. And so we had a big boom of additional spending, investment, spending in commercial real estate on top of all of the real estate that had been built over the previous decade. And so we have a massive overhang of real estate, commercial real estate, office buildings, houses, you name it.
We overbuilt it. And now that inflation has forced the Fed's hand and forced them to raise interest rates to try to squelch the price inflation that they in effect caused. Now we're seeing the initial signs of breakage in commercial real estate. Skyscrapers big and small are failing, they're going into bankruptcy. They're being resold at a small fraction of what they originally cost to build, or what they might have been sold for a few years ago. Now they're selling
for pennies on the dollar or quarters on the dollar. And I expect to see much more of that going forward, with the Fed holding interest rates higher and possibly inflation remaining much higher, much longer than anyone in Washington d C. Cares to admit. Well, yeah, that's an interesting way to look at it. I thought about it as you were talking about I never really
you know, we talked about the stimulus checks. You know that they tried to appease people that they locked down and put out of business and put out of work. Well, here's your little stimulus check. But they wrote a really big, gigantic stimulus check to all the big guys, the big players, the big banks and Wall Street people and everything. Gave them a massive
stimulus check to keep this thing going. And it seems like the first bubble, when they created the real estate bubble, the residential real estate bubble, low interest rates, they kept them down for a very long time. You look at that one point, the Federal Reserve just starts raising it, you know, like every every month or whatever quarter of a percent, you know, twenty five basis points. And then they just went and until everything popped
and they crashed. And then they started doing the same thing again, but even bigger. And and then as you point out, you got the stimulus check that's written with a low zero interest rates to all these bankers and businesses and everything as part of COVID, and then they start the whole cycle has been started all over again since the real estate market crash, as you point out, with all the UH, the the the quantity of easing as well
as interest rates and everything. They created it and did it even bigger this time. And then they started when they won, when it came time for them to burst it, they started jumping it about three or four times as much as they did the first time and created massive disruption with this. So as you're looking at this, you're thinking that we're going to continue on with
inflation quite some time. Do you think it's going to go into a hyper inflation type of a scenario like we've seen in Argentina or Venezuela or some other place, Zimbabwe or something. Are we going to go into really really high hyperinflation? How do you see this? Well, I mean, I'm worried about that because it's not just real estate that's been borrowing money, but the federal government has been borrowing, you know, trillions of dollars of new money,
trillions of dollars rolling over of the national debt. And remember they were borrowing, you know, ten year government bonds for less than two percent. Many governments around the world were borrowing money at less than two percent for ten years, and now they're having to start rolling over that stuff. And so interest payments on government debt is rising because everybody's upside down on their portfolios.
And as a consequence, the interest payments on the national debt have risen very sharply, from a half a trillion to near a trillion dollars now in a very short period of time. And we're adding a trillion dollars of national debt it seems like every few months, and you know, we're on pace to be borrowing trillions more over the next fiscal year with that interest payment on national debt increasing over time. And so and the Fed itself is upside down on
its portfolio. So it is losing money now for the very first time. It's it's lost one hundred billion dollars in the last year. It's probably projected to be losing two hundred billion dollars. And that's added into the government's debt, and so everything is going in the wrong direction and The only thing that has continued to hold up is well, the seven technology companies in the S
and P five hundred. If you take them out, the stock market is either flat or falling and has been if not for those seven giant tech companies, you know. So that's just that's just not a good sign. And
the other thing that's been holding up is the US dollar. The value of the US dollar has been holding up, and it's precisely because all of the other currencies in the world are so weak that people are sending more and more of their money to be invested in the United States as the least worst currency in the world. So that's been holding up. But once that starts deteriorating, and that starts fueling oil prices direct for example. Yes, I mean
we're we're on the path to hyperinflation. We're early enough now that we could do something about it. But you know, there's no stomach in Washington, d C. To make the kinds of changes Slashing government spending, cutting taxes on workers and investors, rolling out or rolling under vast swaths of government bureaucracy, returning those resources, you know, to the productive side of the economy. That's what we really need, and there's no stomach in Washington, d
c. For that. There's no stomach for reducing welfare payments and curbing entitlement programs. All of those things seem to be off the table generally, and those are exactly the types of things that need to be on the table immediately so that we can get off the road not only to hyper inflation, but of course hyperinflation is just one step short of the road to totalitarianism and dictatorship. So this, you know, it's not just that prices go up and
everybody has more money in their pockets and so forth. This is the road ultimately to the destruction of the economy and the destruction of the American way of life and the takeover by totalitarian government. We're all, you know, everybody recognizes that. That's the direction we've been going with the COVID lockdowns and so forth. That's the direction that our politicians have us in the direction of. I agree, Yeah, they want us on the road to serve them because
there'll be the feudal overlords they're going to be running this. I mean, you know, we look at this like, no, we don't want to go to the roads. But they do. And that's one of the reasons why I think this appears to be really kind of a deliberate takedown. You know, I think it was last week. I think they didn't hit the trillion dollars in terms of just the interest payment on the debt. I think I reported that last week it did hit finally trillion dollars because I was like,
wow, it's amazing. But as you point out, they keep going further and further into debt and the interest rates keep going higher, So of course that's going to happen. And the famous saying the Road to serf Them was actually the famous book by F. A. Hyak, who was a student of Ludwig von Mesis and Mesus and Hyak both wrote books in nineteen forty four. Hayak wrote The Road to Serf Them. Mesis wrote the book Bureaucracy,
where you know an omnipotent government as well. Misis wrote and they were warning us that the tendency in American government that far ago was that we were going in this direction where we just felt good about having more government programs, but ultimately you would get to a point where the people no longer had control over their own very government that's right. Yeah, that's the path that it
always takes. You know, when you talked about the fact that the dollar is doing well because we have the least worst of the central banks, it reminds me of you know, we've got I think it's this weekend there's going to be the election in Argentina with Javier Malai, who is a free market economist. I don't know if you know him or if he's connected with you, but that's one of the things he was saying. We got to get rid of the Argentine I think it's peso and we got to replace it with
the US dollary. Says I think all central banks are awful, but said exactly the same thing. He said, you know they're they're not as bad as our central bank. What do you do you know anything about Javier Malay and what is happening There Has there been any correspondence with the Mesa's Institute in him. Well, he's not affiliated with us at this point, but we've written about him on our web page several times and we're following him very carefully.
He considers himself an Austrian School economist and a student of Murray Rothbard, who was really the great modern Austrian economist and our first vice president for academic affairs. So he's very much in our camp. He's very obviously intelligent person and he's got the right instincts with respect to policy, and he doesn't want to make the US dollar the currency of Argentina. That's just a transition policy
away from their hyper inflationary tendencies down in argent Argentina. They've tried these kind of measures in the past and ultimately they've come back to fail, and that's why he views dollarization as a temporary transition policy back to a sound monetary system of gold and silver, where everybody out there in the economy their money is gold and silver coins, something the central bank can't do anything about, something
the government can't do anything about. If we hold money that has an intrinsic value and cannot be printed at the whim of a central banker or at the whim of some economist or a politician. Yeah, so he's definitely from the Austrian school. We have very high hopes that he'll do well and he'll be able to implement a lot of his reforms, but basically he wants to cut
a lot of government spending down there. I mean, they have a bloaded government sector down there, which forces the current government to print money to pay for it. If you cut the government sector significantly enough and you open up the free market economy, then you simply don't need the printing press, and
sound money is really a prerequisite for sound government. That's a point that mesis Mate made a long time ago, is that he was considered a medallist because he believed in gold and silver coins in the hands of individuals as the most significant guardian of the pre market society that prevented government from in effect taxing the population through the printing press. Yes, and so, and of course that's
right. You know, the American founders experienced that. That's why they say, you know, it's going to be gold and silver, and it's going to be minded. But because they'd lived through a continental dollar that was just a worthless piece of paper, worthless than a you know, not worth a continental and so they wanted the same type of thing. He's living through one
hundred and fifty percent inflation. It was interesting. I found a book that was done by Axel Axual Kaiser called street Economics, very much like what you're talking about that Mesus did, taking practical examples out of everyday life and saying, you know, this is how the world works, and this is why we need to organize ourselves this way economically and so forth, as opposed to, you know, the Keynesian abstraction and saying, you know, no,
everything works differently when the government is doing it. That's become a very very popular book in South America. He knows Javier Malay and he just recently got it translated into English. But yeah, it is interesting to see, you know, whether they're going to come back to their is or not. It seems like the biggest obstacle to him coming back is they're trying to throw a
Taylor Swift against him. I mean, he's got a big popular following there, and right before they're going to have the election, she's going to be there for the opening concert, and she and the lefties that are following her are already starting to make noise about However, Malisa, we'll see if he can beat Taylor Swift and all this. But let's get back to your book here. The Skyscraper Curves. That's an interesting title. Explain to us what
that means. Well, It's just that there's a long history dating back about one hundred and fifty years now where whenever a world record setting skyscraper is built and completed, right in the aftermath of that is a world economic crisis. And so what this tells us is that when central banks go through long concerted efforts to artificially lower interest rates for a very long time, that eventually somebody comes up with the idea that they're going to build a record setting skyscraper.
It's very difficult technologically, not just the money, but every time you build taller, you've got to come up with completely different and new ways of building a building. Designing a building, all of the elevators and the water system, sewage, air conditioning, everything about it has to change a little bit in order to make a record possible. And so you can go back into the nineteenth century and every time you see these low interest rate periods, a
record setting skyscraper and then a big economic crisis. And so the skyscraper is real really just an illustration of what's going on throughout the economy. Everybody's you know, with the new interests, these new low interest rates, everybody is implementing new technologies stuff that is future related technologies, and we're seeing that today with artificial intelligence, for example, that probably wouldn't have come about for several
years. But because Google and some of these other companies have just tons of money sitting around, they were able to finance those kind of research efforts and bring them online before their time. But the skyscraper, again, is just an illustration of what goes on in the economy except for maybe mom and pop grocery stores and restaurants, where everybody's adapting adopting new technologies before their time.
They're changing their structure of production that's not really in sync with the true interest of consumers. And as a consequence, once interest rates start to rise, all of these investments, all of these investments in technology and future technology really
break and it brings the economy into an economic crisis. I'm all, you know, I'm all for technology, and I love futuristic things, but if we do it as a society, we're barking up the wrong tree, essentially, And the skyscraper is just a really good illustration of how that takes place
when we can't really see it in our everyday lives. And I explain how this works using some simple examples for people to understand, and also examples of how the economy develops naturally in terms of implementing new technologies and new production techniques and new structures of production in the economy. So there's a natural way to do this, and there's an artificial way to do this, and the artificial
way leads to economic crisis. That's interesting, that's very interesting. As you're talking about this, I'm thinking, how the you know, they as they build these skyscrapers and they're pushing everything to all new level, going to do
this in a way that's never been done before. I'm thinking maybe it's a tower babble curse that's that's going on there, or the Titanic right way, we got this new ship and it's unsinkable, and because at the heart of it is really kind of a lot of pride that goes before these falls. But it is it is interesting to see that happening as a phenomenon. And as you're talking about this skyscraper curse, you know, one of the things in the commercial real estate, as it's starting to become a real issue,
they have these things called mezzanine loans. Maybe you know what it is, but I'd never seen that before. For the people who aren't in the business, they said, you know, it's called a mezzanine loan because people do this high risk loan because they're not at the top of the capital stack, and so they're further down if things if the skyscraper gets cursed and it collapses, there are a few floors down and they don't get paid right away,
and so it's much riskier and they get a higher loan in it. But there after the two thousand and eight crash, the government prohibited that for the big banks that they bailed out. They said, because it's riskier, so you're going to do safer things, they said. But that's another level of risk that these small and medium sized banks assumed in the interim, which is going to be another thing going to wipe them out, perhaps, because now
these mezzanine loans are really you know, they're collapsing left and right. Yeah, I mean, the idea that the government bureaucrats can regulate financing of investments is just ludicrous, you know. And they they themselves opened up this opportunity by not allowing certain banks to be involved and then yet making funds available in the economy for one or two percent, So naturally somebody is going to come along. Somebody is going to be willing to borrow money at two percent in
order to lend it. Making these mezzanine loans for financing large construction projects and earning ten or twelve percent. Somebody, somebody's going to do that, even though they don't, Yeah they don't. Yeah, that's right. They take the bait, even though they don't have collateral in the building, and even though it's maybe not as long a term loan as the initial investors, the people who are covered with the collateral and so forth. You know, somebody
is going to be willing to take that bait. And you know, and I don't know what the overall figure is, but of course, the the the market as a whole with commercial real estate is trillions of dollars and we're starting to see the cracks in those markets, uh, you know, where projects are failing, right, And it's gonna affect everybody because it's going to it's gonna be a massive curse for the entire banking industry, and that is
going to filterund and affect everybody. Absolutely is. It's been great talking to you, thank you for coming on. Mark Thornton, and he has a senior fellow at the Mesas Institute. You can find his book that we've been talking about. There's a lot in there. You can see that for free as a PDF or an ebook. They have an audiobook that they do sell, but you can find other information, very useful information at Meses dot org, i Sees dot org. Thank you so much for joining us, sir,
Thank you, David. It's my pleasure. Thank you, and thank you everyone for joining us. And thank you dougle log. I appreciate the tip. Thank you very much. Have a good day, everybody. The common man, they created common Core and dumbed down our children. They created common past, track and control us. Their Commons project to make sure the commoners own nothing and the communist future. They see the common man as simple, a sophisticated ordinary. But each of us has worth and dignity created in
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