In this Kitco News interview, Mises Institute senior fellow Mark Thornton argued that cheap money is once again building things that should never have been built, that the Federal Reserve is not truly tightening, and that the global rush into gold is the clearest sign yet that the paper-dollar system is breaking down.
Thornton, who called the housing bubble in 2004 and spent years being told he was wrong, framed the moment in characteristically blunt terms. “Austrian economists are always ahead of the curve because we rely on economic theory rather than observation or measurement,” he said. “I have been subjected to belittling, criticism, neglect, and ridicule, and I have almost been threatened and assaulted at local speaking events.”
The Fed’s own report, and a rate hike that isn’t tighteningThe conversation opened with a rare Federal Reserve report on Silicon Valley Bank. Supervisors knew - or should have known - about the problems a year before the collapse. One reason they did nothing, the report said, was that doing nothing felt safer for the employees personally than acting and being wrong.Thornton called that a story about bureaucracy, not just one bank. The Fed had driven rates to zero and encouraged banks to load up on government bonds. When rates later rose, those bonds collapsed in value. “This was entirely expected,” he said. Inspectors did not want to raise an alarm because that would have been an admission that Fed policy itself caused the damage.
Chairman Kevin Warsh’s first rate hike in three years was not real tightening, Thornton argued. Policy is still only a tenth of a point above short-term inflation. “The Federal Reserve… is a socialist bureaucracy with central planning.” If inflation accelerates, the Fed may have to keep hiking, raising mortgage costs, business financing costs, and the government’s own borrowing bill. Thornton does not want to pick the “right” rate. He wants the institution abolished. Central banking, he said, produces boom-bust cycles, higher prices, and a weaker currency. “We oppose the entire establishment.”
Data centers as the new record-breaking towerThornton’s signature idea is the “skyscraper curse”: record-breaking towers tend to be announced or started near the peak of a cheap-money boom. The buildings usually finish after the trouble has already begun. The signal is the decision to pour the foundation, not the ribbon-cutting.This cycle’s towers, he said, are AI data centers - windowless buildings that can consume as much electricity as a small city. “Data centers are the skyscrapers of this cycle.”
The financing often runs decades longer than the hardware inside. When a tenant stops paying, someone still has to cover the power plants, the grid upgrades, and the long-term bonds. “I suspect that many of the arrangements that have been made will ultimately result in taxpayers and consumers unfairly bearing a large part of this burden.” Utility customers, in particular, are in the firing line as regulators decide how much of the buildout lands on household bills. Factories are shrinking while power demand soars. That mismatch is another warning.
A pipeline in a straight line across the desertThornton also discussed the drone attack on Saudi Arabia’s East-West pipeline that cut Aramco supply to European buyers. The line was treated as a lifeline for the kingdom and the oil market. It was also, he said, an easy target. “It stretches in a perfectly straight line across the desert with no means of defense against drones and missiles.” The vulnerability can be hit again. Geopolitical shocks and monetary distortion, in his view, now travel together.
Gold, distrust, and paper assetsThe title line of the interview is the one Thornton treats as bullish for gold: central banks no longer trust each other. They are buying physical metal instead of each other’s paper. Poland and China have been among the most aggressive buyers since 2022. That is not a gold standard - a gold standard would require redemption and giving up the printing press - but it is a vote of no confidence in the postwar dollar system.“I do take it as a good sign that central banks no longer trust other central banks,” Thornton said. “That part of the system is breaking down.”
Governments will not surrender the printing press willingly. “You can’t get politicians to say we’re wrong and you guys were right and we’re going to give up all of our power and glory.” What survives honest money, he argued, is the thing that cannot be printed. Everything denominated in paper dollars faces a difficult future.
Thornton’s closing posture is the same one he has held for decades: the crisis is not a failure of regulation or of the “wrong people” in office. It is the predictable result of a century of central planning in money. When the bust arrives, he hopes the public blames the intervention - not the market that was never allowed to work.
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