Welcome to Era of Permanent Inflation – New Fed Chair Warsh Can’t Stop It, Warns Mark Skousen

Hi everyone, welcome back to the Daniela Kambone show. Today we have the privilege of welcoming a true titan in economics and investing, a man known far and wide as America's economist. Dr. Mark Skousen is a best-selling author of over 25 books and is considered one of the most influential living economists out there. He's the creator of the gross output vital broader measure of the economy that puts business and the supply chain front and center. He founded FreedomFest, the world's premier gathering of free minds. It's a show that takes place every July and he just launched an exciting new chapter as the macroeconomic strategist over at the Oxford Club with his new monthly newsletter, The Skousen Report. Without further ado, please welcome to the show Dr. Mark Skousen. Mark, so good to see you, my friend. I think as Ben Franklin would say, it pleases my vanity to hear that bio that you just described. I mean, that's just a snippet. Well, it is a pleasure to have kind of the glory days back because back in 1992, I had 75,000 subscribers to Forecasts and Strategies and then the internet exploded and all this free information and CNBC and Kitco and what everybody else is doing. I was down to 7,500 subscribers last year, even though my average investment was up 35%. I was beating the market and everything. I decided it was time for a change. The Oxford Club has, with the SpaceX advertising that I'm doing even on CNBC and so forth, I'm back up to 75,000 subscribers. The glory days are back. Hey, look at that. That's what made us reconnect. I saw you on CNBC and said, wow, I haven't spoken to Mark in so long. Do you want to start there? Want to get your thoughts on that SpaceX IPO? Well, I think it's really re-energized the whole tech sector. Every once in a while, the tech sector seems to fall out of favor, but then it comes back very strongly. SpaceX is the biggest IPO ever, as everybody has pointed out, and $1.75 trillion expected funds they're expected to raise at $1.35. I don't know if it's going to go to premium or not. It's already gone up quite a bit. People are buying it right and left privately. There's a lot of people who do not have the lockup period. Elon Musk is locked up for a year or two before he can sell his position, but a lot of employees can sell their stock right away. They're probably going to take some profits, but then again, it's supposed to be added to the NASDAQ 100 a week from today, a week from Friday. It won't be added to the S&P 500 for quite some time because it has to have certain levels of profitability and all that sort of thing. So, typical of the S&P, stocks are not added to the S&P until they've already had a huge run-up. At the same token, they get rid of stocks that have had a huge falling out. I don't think the S&P 500 is as good as the NASDAQ 100. We could see a bump. We could see a premium rise in expectation that it's going to be added to the NASDAQ 100 a week from this Friday. Okay, Mark, talk to me about the broader economy here. I've had many experts come on saying it's just AI. I mean, I'm not saying anything new, holding up the entire economy, holding up the entire stock market. What happens if it all goes to bust? Do you agree? Yeah, but I still think it's a little bit like the dot-com boom and the artificial. I mean, these AI stocks are all selling at extremely high multiples. There's great expectations that it's going to do great things, and of course, it is doing great things. But I think it's bringing in earnings of $50 billion and the market cap is in the trillions. So, I'm a little bit more cautious right now. I mean, I'm using AI in my classroom at Chapman University. Everybody's using it for one thing or another. It is a great source of information, mostly accurate, not always, but mostly accurate, and it's getting better in that respect as well. So, I do think it's revolutionary. So, I would buy into the bulls, and we're recommending a lot of AI-related investments. But it is interesting, in the case of SpaceX, XAI, which is now part of SpaceX, lost $1 billion last year. I mean, they're losing money. SpaceX has actually lost money last year because Elon Musk added XAI to the portfolio. So, we're spending a lot of money on AI, but the question is, are we going to be able to bring in that revenue from AI? You know, I thought of you, I watched the Harvard graduation ceremony, and I don't remember the actor's name who gave the speech, but basically, he was anti-AI saying, your job is actually to kill AI within the next decade, he was telling the graduates. And I sort of agreed with him on this point. Actually, I do agree with him on this point 100% is that we've lost the art of creating. The creativity is part of the process. We should want to be part of it instead of just saying, create script for me, create dialogue for me. Do you not agree with that, Mark? It does make it easier. The other day, I said- It does make it easy, but that's where the beauty lied before, right? Was the creation process. Well, that's true. It's funny because I said, create a four stanza rhyming poem to invite people who are very busy to come to Freedom Fest in July in Las Vegas. And it came up instantly within 10 seconds. It had four or five different stanzas and all rhyming, encouraging people to come to Freedom Fest. And I thought to myself, wow, that's, I mean, how does that happen? That's really, so why even bother writing rhyme poetry? Danielle, if you wanted to write something to your husband and- Keep me romantic. Very romantic. You just whip it out with AI and your husband will be so blown away that it'll be bliss. Just remember to delete the footnotes that they add. Would you like me to add more? Would you like me to expand? Yeah. You need to remember that. I'll tell you one other thing that's interesting is that this jobs market came out and, of course, AI is supposed to be destroying all kinds of jobs. And there are layoffs that are related to the AI, but I find it interesting. There's a dichotomy. There's a split in the economy. It's a mixed economy because you are seeing some positive signs with the stock market near all-time highs and job market is coming back and so forth. But I can tell you my graduates at Chapman University out in California are really struggling to find jobs. It's really difficult. And people who have been laid off, they're having a hard time finding jobs. Small business is struggling. The big companies seem to be surviving and prospering, but small business, which is the backbone of our economy, is lagging. And on top of it, my gross output statistic is growing at a slower rate than GDP. GDP is growing at, I think the last figure was 0.5% increase. And we actually had a gross output statistic in real terms that was negative. And B2B spending has been in a minor recession, admittedly, but it's been slowing down and been negative for the last year. I think it's related to the Trump tariffs. I think his anti-globalization America First policy is a gradual disaster. It's kind of like there's an Ernest Hemingway part in The Sun Also Rises where the guys ask, well, sir, how did you go bankrupt? And he said, gradually and then suddenly. And so I do think there are some concerns out there that we're moving in the wrong direction, but you wouldn't know it by looking at the stock market, that's sure. Well, that's why it's all an illusion. Are we talking stagflation, Mark? That's what you've been warning about. Yeah, I think it's a slow growth stagflation, if you will. I'm not saying it's a serious recession. It doesn't seem to be serious. But I do think we're entering a period where we're just not growing at those three to 4% rates. It doesn't matter whether it's Europe, it's China, Latin America, I don't know, any area of the world which is just booming right now. There are sectors in the economy that are booming, no question about that. But I am concerned about the inflation problem. We have entered, I make this point over and over again at all my conferences, we are entering an era of permanent inflation. The Federal Reserve doesn't even wait for the inflation rate to come down to that 2% target before they start cutting rates. They're so anxious to cut rates. So that means more inflation, the money supply is moving up. We're an easy money policy. It didn't used to be that way. But after World War II, we've had a permanent inflation policy. And it's 2% to 3% a year, it's 4%, it's 5%, but it never gets down to 0% price stability, which is what the Fed is supposed to be doing. That's one of their goals, full employment. Okay, we've got full employment, but we're supposed to have price stability. That's not 2%, that's not 3%, that's 0%. And Paul Volcker actually advocated 0%. It was only when Ben Bernanke came along and said, well, let's start with 2%. We think that's the goal. And of course, they never reached that. You don't even reach that goal. So I do think I'm not selling my gold anytime soon. Well, we're going to get to gold. But I was going to say so much for Adam Smith's invisible hand model, Mark, right? Well, it's becoming more and more the iron fist and the visible hand of government, unfortunately. Now, granted, in this AI sphere in technology, Elon Musk still has a pretty open opportunity to do what he wants. And if you've read his biography by Walter Isaacson, he ignores a lot of rules and regulations that are out there. And he just says, why should we bother with this regulation? I kind of like his laissez-faire attitude. I know. I was going to say, you love that. Yeah. No, that's very libertarian. He's very libertarian in that regard. Well, we're stuck with inflation. We're headed towards, I'm going to say it, QE, maybe not even headed towards it. Maybe we've just always been in it. You can make that argument. Let's talk about gold. And are you bullish about yellow metal? Well, short term, it hit below its 200-day moving average, which is bearish, technically. I mean, look, gold has had a huge run up until 2025. And especially the gold stocks, the mining companies finally came alive over the last two or three years. There was a 10-year period where mining shares were really not doing anything, as you know. But they've come alive. And I mean, Kinross Gold, which is my favorite mining company, was up 262% last year. I mean, it was a triple gain, which was my first triple gain that I've had in who knows how long. But it's down this year. And it makes sense. I mean, if you're going to have a run up by that much percent, you're going to have a pullback. And that's to be expected. But the profit margins are there, are very strong. And you're making more money than the cost of gold and cost of the mining per ounce. The cash flow looks really positive in that respect. So I'm willing to hold on to those gold positions. But it may take a while. I mean, there have been periods of 10 years or longer where gold didn't go anywhere. But in today's environment, it seems like it's premature to say gold is topped out and is going to stay down. And definitely, you want to own physical gold, Mark. Well, let me mention one other thing that is a factor that we should consider. And that is Kevin Walsh as the new Fed chairman. He's actually an inflation hawk. And he was opposed to the quantitative easing. That's why he left the Fed. He did not agree with Ben Bernanke. And now he's the new Fed chairman. And it did kind of surprise me that Donald Trump chose him. He should have known that this guy is serious about knocking inflation down. So he could be another Paul Volcker. And if that's the case, gold is going to stay down. Silver is going to stay down. And thank goodness, you know, I've got in my pocket my silver dollar, which I always carry with me. I have it here, right here. My silver dollar. Do you know how many of these were minted last year? 50 million. And where are they? Where are they? They're not circulating, right? Gresham's Law is a place. Bad money drives out good. So this coin is put in your pocket while the greenbacks are spent, right? Bad money drives out good. So these are all in safety deposit boxes, these beautiful coins. But I'll tell you, I'm furious. I have a bittersweet feeling regarding the price of silver, because every year, you know, these silver dollars have the year that they're minted. So I would give these to each one of my students who took my course at Chapman University. And we go out in front of the Adam Smith statue, and I would present them with this coin. But at $100 a coin, you think I'm going to give 53 students this silver dollar? You love them, but not that much. That's over $5,000. That's hardly enough. I mean, there's experts that are calling for $300 silver. Yeah, that's crazy. That's crazy. That kind of reminds me when people were predicting $200 oil, and of course, it moved in the opposite direction. People thought $100 silver was crazy talk. Yeah, and I still think it's crazy. So what is it now? 80 bucks? I can't remember. 70? Well, it's come down a little bit, but it needs to come down to 20 and 30 bucks, like what I used to be able to buy these for. It's not going to happen, but it would be nice. Getting back to your point about Kevin, and I'll challenge the hawkish, because do you really think Donald Trump would tap someone? I mean, sure, they're independent. He tapped Jay Powell. Ended up not liking him. So Kevin refused to cut interest rates. He's not cutting interest rates, right? Let's see. I don't know, Mark. I think if he cuts interest rates- I think we're going to get lower rates. I think we're going to be forced to get lower rates here. Well, the bond market tells you where interest rates are headed, right? And what are interest rates doing? They're going up, folks. They're going up. So how can the Fed cut interest rates? And they only can cut short-term rates anyway. He's going to look like an idiot if he cuts interest rates. The market's not going to buy it. You have to face reality, and the bond market carries the tune these days. The bond market hates inflation. The stock market hates inflation. And every time- look at 2022. Why did stocks drop? Because inflation flared up. Inflation is flaring up now, and so the stock market's struggling. And by the way, the second year of the presidential cycle tends to be very iffy in the stock market. We had a very good year the first year under Trump, but the second year with these midterms coming up and so on, there's a great deal of uncertainty. I'd just be surprised to see the stock market move substantially higher one way or another. I think it's just going to be a sluggish and difficult year. All right, Mark Skousen, good recap, good touching base with you. I wish you luck on the upcoming Freedom Fest. I missed attending those shows. I have to tell you, the last time I was there, you had the late, great George Foreman. You have such an eclectic mix of people, and I have to share this story. I don't think I ever told you. I think my dad's proudest moment of all my interviews, of every single interview, probably over 10,000 of them, was when I interviewed Don King. Let me tell you, you couldn't get Don King off the podium. We had to yank him off eventually, and he was there to introduce George Foreman. If you have a minute, let me tell you my favorite George Foreman story at Freedom Fest. He got up and said, Mark, I am a motivational speaker. I don't get into politics, so please, no questions about politics. He gets up and he gave a great speech, standing ovation, talks about what it was like fighting Muhammad Ali, starting his new grill business. He was a preacher for a while. He was an entrepreneur. Then comes the Q&A. Everybody asked, what was it like to be knocked out by Muhammad Ali? What was it like to become a millionaire, as an entrepreneur, as a preacher? The final question was from a woman who says, Mr. Foreman, what's your opinion of Black Lives Matter? Obviously, a very political question. Foreman hesitates for a while. Then he says, well, I'll tell you what. I grew up dirt poor in Houston, Texas, and became the heavyweight champion of the world twice. Does that answer your question? Wow. Another standing ovation from George Foreman. We've had some big names. Yeah, that's what I'm saying. You've had huge names. That Don King moment, when I interviewed him, my dad called every relative in Italy. I'm like, that was great. He had lawsuits with almost every boxer. Did you know that? I did. I did. Yet, he loves gold. For people who still would like to come to FreedomFest, go to freedomfest.com, July 8th through the 11th in Vegas. It's going to be fun. I was going to say, Oxford Economics was very smart to scoop you up. You can't create that on AI yet, Mark. Well, they may try. But they can't. Well, this has been great. Often duplicated, never replicated. Very nice line. Yes. Let's hope so. My kids are waiting in the wings. You can't go anywhere yet. I look forward to seeing you in person. I need to get back to FreedomFest. Mark Skousen, America's Economist. Everyone loves him. Go to his show if you can, and we'll see you soon. All right. Okay, Daniela. Thank you very much. Take care. Thank you all for watching. We'll have more great content. Stay tuned.