‘Permanent Inflation’ Is Here; Economist Reveals Assets To Survive | Mark Skousen

We're headed for a crisis. The stock market is never never commits suicide, but it can be murdered. What's the scenario that could cause a monetary crisis due to excessive debt load? And the answer is nobody wants to buy treasuries anymore and they have to raise rates dramatically. We've entered an era of permanent inflation. I've been hearing these wild statements that gold is going 6,000. I heard the other day it's going to go up to 17,000. Well, if it's a 17,000 folks, we're in crisis mode. The world is in big trouble if gold is at 17,000. >> There's a saying during a gold rush, buy shovels. So, what is the equivalent today? >> Well, certainly I'm pleased to welcome back to the show Mark Scousin. He's a macroeconomist strategist at the Oxford Club, the editor of the Scousin Report, and the author of the new book The Greatest American, which is about Bened Franklin. I've been told, by the way, you told me offline that you're a direct descendant of Ben Franklin, Mark. So, this all makes sense, right? >> Yeah. Six generation direct descendant. So, I'm I'm a little bit prejudiced with my book title, The Greatest American. But it does turn out that Ben Franklin uh had 22 careers. He was a jack of all trades and a master of most. So uh I don't think anybody can really compare to him uh considering all the three what half a billion Americans who have lived in lifetime. I put Franklin right up there. And so the book is done well. The greatest American is uh was a bestseller on Amazon and uh I think subscribers uh your your listeners would enjoy that book. It's not a typical biography. It's uh how to apply Franklin's life as a printer, as a publisher, as a diplomat, as an economist, uh as an investment advisor. Uh he's a pretty interesting character. >> Yeah. You know what? Let's start there. If Benjamin Franklin were alive today, or maybe he were transported forward in time into today's America, what do you think he would say? Well, firstly, he actually said he wished he had been born two to 300 years later because we he would witness the tremendous increase in our standard of living, the technologies. He'd be the first one to use be using a cell phone and uh and into AI and all of this kind of stuff. He would be fascinated and especially communications and travel uh jet setting uh the internet uh I mean he he would be in his own element for sure. At the same time he would be quite surprised and depressed by the level of national debt. He was always a believer in living within your means. uh he said it was always an important uh uh important uh part of life to uh as far as government is concerned to to uh pay off the national debt u you know he's a firm believer in the saver a penny saved is a penny earned to live within your means and but to invest uh in uh in the future of America and he was very much an optimist so he would love the optimism the American dream uh which he helped create is still alive and well. So he'd have mixed feelings about the size and scope of government. Uh one of the quotes from uh the Franklin book, the greatest American is from Franklin who said the system of America is commerce with all and war with none. And if we do that uh we can achieve unlimited success, the greatest empire in the world. And of course, both are being challenged today with the tariffs uh under President Trump and the war in the Middle East and Ukraine and so forth is uh is not not a positive uh uh positive aspect of our uh our country. >> According to many economists on my show and actually surveys as well, the average American is most concerned today about inflation in the cost of living. This wasn't really the case two decades ago or not even two decades ago, a decade and a half ago between right after the uh great financial crisis happened. We had relatively stable price inflation as you recall. And so people more were more concerned about um I guess losing their jobs or perhaps another repeat of 2008. It wasn't until close to CO that we had huge spikes in prices all of a sudden and now people are concerned about whether or not their wages will keep up with the rising prices. Was this the case 200 years ago? Did we have episodes of persistently high inflation such that the erosion of wealth was the primary concern? >> Well, certainly during the American Revolution, in fact, during all wars, wars are inflationary. Um war is the health of the state and you do get uh inflation in every war but uh until up until World War II inflation came back down and our standard of living grew tremendously. Uh our standard of living continues to increase but we've entered an era of permanent inflation since World War II. And I I sent you a chart on that. So, I don't know if you can show it or not, but uh it it demonstrates that inflation went up and down up until World War II uh due to wars. But then after World War II for a variety of reasons, going off the gold standard, the Federal Reserve becoming activist. Yeah, look at this chart. This was done by Reinhardt and Rogoff at Harvard University and demonstrates basically after World War II, we've had this uh this hockey stick pock uh uh dramatic rise in inflation. And even today, the Federal Reserve has a policy of inflation. 2% inflation is a year and they they they don't even wait for inflation to come down to 2% before cutting rates. So, uh, we're entering an era of permanent inflation since World War II. It's not going away. The affordability crisis is the one issue that I think will derail the Republican Trump MAGA movement in November. uh where they will be on their heels and they will lose control of the house. mainly because the Federal Reserve has been too active in printing money since uh since 2020 since the u the pandemic. Uh money supply increased 40% in uh 2021 2022. And uh so we've come back down now to 3 or 4% rate, but still not down to price stability, which is what the Fed mandate is supposed to be, but instead they've chosen a 2% rate. really it's 3 to 4%. Uh and we've seen over and over again the persistence of inflation. Once inflation gets going, it's really hard to stop. So I tell all my investors and I'll tell all your listeners uh you need to make 10% uh increase in your earnings, in your wages, in your salaries, and your investments just to keep up with the rising cost of living. Before we continue with the video, let's talk about a problem that comes with owning gold. Now, gold has long been treated as a store of value. But the catch is that sitting in a vault, it doesn't pay you anything. So, that's where today's sponsor, Monetary Metals, comes in. They offer investors a way to earn a yield on gold paid in physical gold. Through their leasing platform, investors can earn up to around 4% annually with yield paid monthly in ounces rather than dollars. So your holdings are measured in gold itself, not in fiat currency terms. The gold stays your asset throughout and it can be redeemed at any time. Thousands of investors are already earning a monthly yield in gold through monetary medals. So visit the link down below monetary-medals.com/lin or scan the QR code here on screen to learn more and get started today. Was this a result of this this hockey stick chart here? this this yeah >> 45 degree blue line was that a result of Breton Woods uh sorry not not the Breton Woods but the end of the gold standard in 1971 do you think? Well, the two authors from Harvard say, "Of all the um well, look, uh in fact, I asked my students at Chapman University and at the Oxford Club, my subscribers, uh I say, so what is the cause of this hockey stick because it didn't happen prior to World War II?" And the and the answer is m there there are a whole bunch of factors all working in favor of inflation since World War II. One is neverending wars. We've had five or six of them. Uh, another is creation of the Federal Reserve which is the engine of inflation. Uh, going off the gold standard twice in 1933 and 1977. And in fact, you'll look on the chart 1971 when we went off the gold standard completely. You see a uh an acceleration in the inflation rate. We kind of lost that discipline. also Keynesian economics, the adoption of Keynesian economics, which says when any there's a threat of a recession, uh a downturn, you run a deficit, and we're running deficits even today. And then last but not least, the Brenton Woods agreement 1944, which made the fiat US dollar the world's currency. It was backed by gold initially, but no, no longer. So, we're we're at sea without rudder in that respect. And the only thing that's keeping inflation from ex excessive growth is that we return to normaly. The Fed is adopting a more fight inflation policy and the stock and bond markets hate inflation. Uh they are the only discipline that we have left uh to keep things uh uh in in in a reasonable level of inflation. But if you think inflation is over, think again. It's just not happening in our lifetime. >> Yeah. CPI has been down, by the way, uh for I think two consecutive months. This morning's >> number not actually down. You're just saying the rate has declined. >> That's right. The rate. Yeah. The the the >> C still inflationary prices are still rising. They're just not rising quite as fast. >> That's right. So, uh take a look at this chart here from the BLS. um 12 month change in prices. We peaked around 3 No, we peaked around May in May 4.2%. And now it's at 3.4%. So the inflation rate has been coming down. Uh are you are are are you are you looking at this and saying to yourself, well that was a one-off. Inflation the the spike in inflation was a one-off because of the Iran war and perhaps we're going to get a normalization of the inflation rate following uh what happened earlier this year. Is that what's happening? or do you think um this is only the beginning of higher inflation here? >> Well, no. The Federal Reserve has come back down to some a sane policy and Kevin Wars, the new Fed chairman, is fighting inflation. At least his rhetoric is very strongly anti-inflation, kind of a Paul Vulker kind of attitude. But again, he's accepted the 2% inflation rate to bring that down not to zero, not to real price stability. Uh, by the way, The Economist just recently came out with a survey. Uh, it's called the hamburger survey or the barbecue survey, the barbecue index. And they basically say on a July 4th event where you have hamburgers, uh, uh, chips, and a drink for four people will cost $81. That's a 12% increase. A 12% increase from last year. So, I'm not sure I really buy into the CPI index. I think the the direction of the index is uh is is very important, but I think as an index as the cost of living is rather defective and underestimates what the cost of living is. And when you spend time in the grocery store and at the gas pump, you realize inflation is a very serious problem and it's going to derail the Republican uh control of Congress and and the and the White House perhaps. uh uh well in mid in the midterm. So uh this this has definitely has an effect by allowing inflation to get out of hand. Even though it's coming down, it's not coming down fast enough. It's very um stubborn. It's a stubborn inflation. Uh fortunately, the economy is doing better with that inflation. I'm very bullish on uh on Wall Street. uh the technology sector is still very much alive and uh it's an an exciting era. I call this the golden era of the roaring 20s. It's another 100 years later, the roaring 20s in technology. >> That's what's saving us. >> Well, what what follow the 20s was a great depression. Hopefully, we don't get that. Is that uh any signs that this is going to be a repeat of the 20s and 30s in the last century? Well, we have learned some history from uh from the 1930s, but yes, I think the 1920s uh is u the 2020s is a replay of the 1920s, the roaring 20s. And there are charts that show that that the NASDAQ is moving in the same pattern uh like it was in the 1990s uh we're halfway there. And in fact in 1995 uh when Allan Greenspan talked about the stock market being at a irrational exuberance a level of ex irrational exuberance I said the NASDAQ would double and then double again and it did and I think that potential is still there with what is happening with AI with uh space technology with the drones and defense spending there's all kinds of examples where we are just booming in terms of uh new technologies and uh stocks that are doubling and tripling uh in a year or two. It's a it's a very exciting era and I think we're only halfway there. And yes, at the end it's probably going to be a pretty big bubble when it's all through and we could get similar to the the 2000 2003 era where the NASDAQ fell 70%. Did you know that 70% >> after the.com boom? So >> we could see that kind of a fallout again once this uh golden era of technology has uh kind of reached a plateau. Uh but I don't think we're there yet in this growing 20s scenario. Um why is it that inflation is going to stay persistent? And I think more importantly, when you say inflation is going to stay persistent, what kind of inflation rate are we talking about? Is it is because 2% is the Fed's target. Are we are you referring to 2 to 5% above 5%. What is the rate that that that we're looking at here that worries you? Well, one thing that I think is really helpful is that Kevin Worsh is uh to to to quite a extent a supply cider and a monitorist bringing back. You know, JP Pal decided not to not to look at the money supply at all. They don't even they didn't consider it in the Fed uh meetings. That's changed under Worsh Wars, I think, is a much better candidate to fight inflation. And so if he can push the inflation rate down to 2% and keep it down then and and and if he can keep the price of gold down and silver which are now rallying again the threat is very real that inflation is here to stay. But it's all based on Fed policy and to some extent the pressure from the Trump administration of running these huge deficits and defense spending, war spending is really out of hand and this war is lasting much longer than than expected and it and the tariff didn't help uh which is raising prices. So uh there's a lot of still strong inflationary pressure in the system. I don't think it's going up beyond 3 or 4%. Because you have Worsh who's now a semi- monetrist. I think you'll see the money supply. Maybe he'll bring the money supply growth rate down uh to that two two to three for maybe four or five% at the most. Uh that's encouraging. That's encouraging. So the the uh the jury is still out as to whether inflation can be brought down to reasonable 2% level. Uh but uh the price of gold going up. This is the critical factor on inflation long-term is where is the price of gold going? And uh it's right near its 200 day moving average. So if it goes above that, it's probably going to keep keep going up for a while. Although I I don't really buy into this idea. I've been hearing these wild statements that gold is going back down back. It's going to go up to 6,000. I heard the other day it's going to go up to 17,000. Well, if it's a 17,000, folks, we're in crisis mode. Our country is in uh Canada, United States, the world is in big trouble if gold is at 17,000 and silver is at $200 an ounce. >> I I hear what you're saying. I hear what you're saying, Mark, but let me just point out that uh when I first started interviewing um several years ago, gold was still around 1,500 $1,700 and people were telling me if gold goes to $5,000, were in crisis mode. Your theory makes sense. However, um that was just a narrative a few years ago and it doesn't look like, like you said, the economy is okay. It doesn't look like we're in crisis mode yet. Was there a reason why gold went from 1500,700 to 5,000 in a span of a couple years without the world needing to implode, Mark? >> Well, that's a good point. Uh, and I actually predicted $5,000 gold, although it went up to 5,600, but I did predict last year it would go to 5,000. But then I thought just like look, >> let's go back to 1980 when inflation was raging and gold went up to $800 an ounce. very briefly and then it collapsed and went into a 20-year bare market. Why did it go into a 20-year bare market? Because of Fed policy under Paul Vulker imposed a tight money policy and raised interest rates sharply. If we do that again, gold could go down and stay down for quite some time. They haven't done it yet. The Fed has not raised interest rates yet. Uh the bond market is saying they should raise rates because the bond market is the 30-year bond rate is at over 5% now. So that does indicate uh a effort by part of the Fed. But golden gold overshoots uh just like the stock market overshoots from time to time and that's what happened without a total crisis. But remember you had 40% monetary inflation in in 202021 and that caused the rise in inflation. It didn't inflation didn't go too high because we can United States is the world's currency. So we can export a lot of our monetary inflation. That's what we've done over the years. So, uh, but really seriously, $17,000 gold, that's got to be a crisis type of situation, especially in today's, uh, environment. >> How does someone's lifestyle change if inflation is, let's say, persistently at 4 to 5% versus persistently at 1 to 2%. Which is what we had about a decade ago. >> Well, you have to have inflation indexing as much as possible with your wages and salaries. Uh I think it does put pressure on unions to force higher wages and maybe cause strikes and that sort of thing to occur which used to be quite prevalent in the 70s and 80s. Uh not so much today but that's certainly uh a way of compensating in that respect. And again you have to be investing. You have to take greater risk in order to make that uh uh beat inflation, beat the market, try to outperform the market. That always requires greater risk and that's what you have to do as an investor. That's what you have to do as a retiree. I mean the social security is going up three maybe 4% in the next year. Uh that's that's not enough to keep up with real inflation. Real inflation is much worse than that. You know the CPI does not include most taxes. is it includes sales tax but not income tax, not capital gains tax, not estate taxes, that sort of thing. So, it's not an actual accurate measure of people's standard of living. But yeah, you just basically have to take greater risks and that's that's hard to do. And especially in today's world where people are afraid to quit their job and start a new job or even find a new job. I feel bad for my seniors at Chapman University because they're struggling to find a job in today's world where AI is making uh making it reluctant and and also the uh the tariff uh the trade war is causing a lot of uh companies to hold off uh uh hiring new people. So it is it is a real challenge in today's world for sure. your investment. You said, "Look, we got to prepare for higher inflation, persistently higher inflation." How should an investor change his thesis during a 5% inflationary inflationary environment versus a 2% inflationary environment or even higher than 5%. >> Well, I'm not actually saying that uh we're headed for higher inflation. All I'm saying is inflation rising prices are permanent across the board. There are always some exceptions. Technology does lower prices uh on many uh new products, goods and services. There's no question about that. But u uh I do think that the key here is that that you need to understand you have to stay ahead of the game. You you can't afford to be wiped out on your 401k plan and what have you. you've you you don't want to you got to be diversified. So, I'm a big believer in diversification. And my diversified portfolio has uh rising dividend stocks. Um I've mentioned before Main Street Capital, symbol Maine, M A I N, is one of my favorite income stocks. In fact, it's the only stock in the entire universe that pays a monthly and a quarterly dividend. So, people ought to check that out. I like the energy stocks, like enterprise products and the Williams companies. Those are good. And I'm a big believer in the technology. We're only halfway there. So, invest in XLK. That's this uh uh that's the technology fund ETF, the most successful ETF, most popular ETF out there. XLK is the symbol. There's a lot of really good uh uh good portfolios that you can really uh stay ahead of the market. Yeah, this is XLK. Yeah, it's not bad. It's a pretty good chart and right now it's kind of floundering up and down and so forth, but it's looks like it could take off again, which I think it will do at some point. you're not um you you were um your first claim to fame was correctly calling the uh 1987 uh crash and you had been warning your subscribers for many months leading up to that event. Of course, I don't think you knew the exact date and time, but I think you were warning that the signs were building up and it was going to happen quite soon. Now, what can you just help us jot our memory here? What signs did you see back in early '87? >> Yeah, so there was a lot of complacency and there was also a book out there saying how anybody can be a stock broker and make $100,000 a year. That was a best-selling book and mutual funds were being promoted right and left. uh so um and it was also the beginning of uh computer trading and I think that played a role in the stock market crash of October 19th 1987 which turned out to be my birthday by the way so I'm kind of the crash baby but u I still remember um it falling 20 over 22% in in one day and that's never been repeated and never has occurred earlier It's only that one day experience. And I think for two reasons. The two reasons we can have bare markets, but we're not going to have a 22% crash in one day. Uh the most we've ever had is a 5% crash in 2008 uh October, November type of period. So, but you have uh you know, you have the federal government intervening. uh you you've got uh the uh this group that ga gathers together and will intervene into the marketplace to keep that from happening. This was uh this was a committee that was created after the 1987 crash under President Reagan and that's still in existence. So uh that's a possibility. Plus you have uh u uh stop gap measures where the markets will stop trading uh if the market drops a certain percent. So you have two factors at work there that will slow down and keep a crash from occurring. You can't you can't stop a bare market and a bare market can occur at any time. We saw many a bare market in July. Uh but it, you know, that was just a drop in the bucket compared to crashes that we've had in the past. But bare markets of 50% or more are still still very much a possibility. I mean, even even gold stocks can go through those kinds of periods as well. So, um uh they but they're buying opportunities. I mean uh these these bare markets that occur uh those are opportunities to be a buyer not a seller because the long-term upward trend is still very much intact. This new the new golden age of technology is very real and and you need to get on board during these uh periods when the market is uh temporarily in a correction. So the July uh correction uh that brought the XLK down 16% and also the uh semiconductors the SMH index was down uh about 23% in July. Was that the correction or the what the AI bubble pop that people have been talking about for months and months on end? Mark Scott, did Mark, did we just have that? >> No. No, that that's not a that's not a serious bare market. It didn't even fall 20%. you need a 20% for a definition of a true bare market or or serious correction. So, I I think that was a minor correction. Uh don't think it was really that serious. Uh >> and uh it's it's clearly bottomed out and started to move higher again. And in August, which is normally a really quiet time period where the market doesn't really do much. So, we'll see what happens in September and October. Of course, crashes are famous for occurring in October. U so we we may see something like that. But again, I don't uh I don't see uh I think we're halfway through this bull market. It could last until uh 2029, 2030, I think, is a real possibility. uh and then uh there there's some kind of a correction that will need to take place because you have the Austrian theory of the business cycle is really important here. Me's hayak view that easy money and we had easy money for a number of years here due to the pandemic where Fed cut rates really low and that created uh this speculative bubble. But what you're seeing is uh a like the parable of the wheat and the tears. Uh you have the the wheat which is the legitimate uh technology that is benefiting the world and making dramatic changes. That's the wheat and the tears. That's the fake money. That's the fiat money. That's the easy money policy that is causing these AI stocks to be overvalued. Look, I've said for some time the technology stocks can fall in half and still be overvalued. So, uh uh but we haven't reached that point. What will do it? What caused the stock market crash to occur in 2007 2008 was the Fed started making up for its easy money policies by dramatically raising rates to really high levels. And that caused the stock market to crash. And by the way, they did it in 1999. Also, it's one reason the the.com uh bubble popped was because the Fed raised aggressively interest rates during 1999, late 1999, and it finally had its effect, and uh it had a snowball effect. So, I think you'll have the same kind of situation um sometime after this bull market ends. Nobody knows when when it's going to end, but when it does end, it is going to be rather brutal like uh like the NASDAQ falling 70% from 2000 to 2003. And the market really the economy really wasn't that bad during that time period. I mean, you did have 911 and so forth and you had war and stuff like that, but >> the GDP, you didn't really have much of a recession at all until 2008, 2009. >> Just like to point out that the pattern for the S&P is a doubling every four years. And that's I'm just I'm just looking at the chart between 2022, not even four years, it's doubled uh from if you want to take the end point is 2022, then you have to go back to uh 2018. Let's do 2017. From 2017 to 2021, that doubled. And then from 2012 to 2017, uh that doubled as well. Every four years for the last 12 years, the S&P 500 has doubled from the previous four-ear cycle. >> Th this chart does seem to show a little bit of hype hyperbolic move in the market, which is a little bit scary. There's no question about that. But go back to 19, look at the 1990s. 1990s. It's kind of hard to tell there, but look at that. There's a very similar pattern there. >> Very similar pattern. But again, I think it's only halfway there. >> 1990 to 94 only up only up 50%. And then5 that was a dot bubble burst. Yeah. And that was when you know 1995 is when Alan Greenspan talked about irrational exuberance. Even then he thought it was overvalued and if people sold they missed out on a huge opportunity. So I'm staying with it. Uh looking for any indication that the market has topped out. I don't think that July I never felt that was really you know the you know O'Neal Humphrey Neil said it well. He's the father of contrary investing. He says the market, the public is right during the trend but wrong at both ends. But it's just really hard to know what the two ends are. That's a quote from my my book, The Maximums of Wall Street, which by the way has now sold over a 100,000 copies. Maximums of Wall Street. So, it's definitely a a long-term bestseller. >> Yeah. Mark, uh, two observations I have. The first is that um if you see the if you look at this chart, the S&P has only corrected by the order of 50% during crises or external shocks. But on its own, uh the market isn't just going to correct more than 20%. Um even if investors think it's overvalued. So my my theory is this, and I want to get you to evaluate this, please. We're never going to get another 40 to 50% correction or more unless there is a major financial crisis or not even a recession. I mean, there was technically a recession in 2022. It went down 30% sure, but that wasn't on the scale of 2008 or the financial where the dotcom bubble burst. COVID was another example. So unless we have some sort of global shutdown or global financial crisis or an external shock that would really uh move aggregate demand down significantly, the S&P or the market overall is not going to correct uh significantly um more than 20%. Beyond a bare market, the minimum threshold for a bare market. What do you think? >> Well, I'll give you another quote from Wall Street. stock market is never never commits suicide but it can be murdered >> and the murder uh can take place by by these crises that you mentioned. It can be a fiscal crisis. We certainly look uh we have 30 what we're approaching $40 trillion on our national debt in the United States. uh uh Treasury has to refinance $7 trillion every year and that's going up. The uh interest on the national debt is now exceeding the defense spending in the United States. We're headed for a crisis. So what could what's the scenario that could cause a monetary crisis due to excessive debt load? And the answer is nobody wants to buy treasuries anymore and they have to raise rates dramatically. I'm reminded of the time in Sweden in 1992 when they had their own crisis. They had to raise rates to 500% on a short-term basis in order to keep people from flooding or leaving the Swedish croner. And the and the United States of course is the world's currency. So there's no place to hide except to go to gold or go to Bitcoin, but probably gold. If you notice, central banks are buying gold hand over fist. They own more gold now than they do treasuries. Did you know that? So they're they're planning on trouble that that you know you couldn't get your $17,000 an ounce for gold if you had a Treasury collapse and a no bid on treasuries. And I'm not saying that will happen. But I am saying the Fed may have to raise the Treasury may have to raise rates rather dramatically to get people to buy treasuries. >> Well that is that is the that is an ultimate danger. We know that's a crisis that's coming at some point. We just don't know when. We kick the can down for year after year and nobody cares. Trump doesn't care. Congress doesn't care. They just extend the debt. Let the debt keep rising and rising. But you got to pay the interest. And at some point they may say, "Hey, well, we'll just print money instead of paying interest on principal and and interest on our debt. we'll just start printing money and that's when you get things out of hand. >> Do you think if Japan's yen continues to weaken and depreciate eventually we could have a reversal of the yen carrier trade uh massively unwind and that may push up interest rates so much that we could have a failed treasury auction here in the US? Yeah, I think that, you know, you can have these kinds of black swan events and it can come out of nowhere and the carry trade with Japan that's been taking advantage of low interest rates in Japan for year after year after year and now Japan is raising their rates, right? >> So, the carry trade is not working like it used to and that could cause you just never know what what's going to happen to cause this crisis. I do remember Scott Bessant going into the uh office a year or so ago when uh when you had the liberation day and he imposed all these tariffs and and Besset went into the White House and said, "Mr. President, we're having trouble with the Treasury market. They're not doing well and this could get out of hand really fast. you need to back off your tariffs, your liberation day movement, which he did right away because Wall Street talks, the Treasury Bessant is the smartest guy in the room these days. Uh and and he warned the president, you need to be very careful here. So, the president is engaging a lot of uh excessive spending and wararmongering. It's uh it's a dangerous environment and uh it could backfire at any time. >> So finally, you like the tech space right now. There's a saying during a gold rush buy shovels. So what is the equivalent today for the stock market particularly the tech sector? What are the shovels so to speak for the tech sector? Well, certainly I mean you have many country companies that are small companies that provide services and the supply chain filling the supply chain uh for [clears throat] defense spending like the the people that put together the drones and put together the supplies and that sort of thing that that are are going on these days. I mean if you look at defense spending uh look for the smaller companies that are providing that the in defense spending and also SpaceX uh SpaceX is now public. Uh there's lots of rumors that it's going to uh merge with Tesla to one big beautiful company that Elon Musk will control. Um and uh you know you need all of these different supply chain uh smaller companies uh that are going to produce the electric power that are going to produce the chips uh all of this kind of thing is uh is essential in the marketplace. So uh I don't have any specific companies to give you in terms of names at this point but they are definitely the way to go. Tell us about the actual growth of the economy, the fundamentals driving the stock market boom. Uh GDP is expected to continue growing. Uh but you have another estimate, gross output. Tell us how your estimate differs from the official government GDP numbers. >> Yeah, so gross output is a official government statistic. The Bureau of Economic Analysis, the BEA, does cover gross output. They kind of bury it in the data. So, not too many people know about it, but it's it's the top line in national income accounting. We're measuring spending at all stages of production. GDP is the bottom line. It measures only final output. It it doesn't include the supply chain. And how important is the supply chain? Sadly, most economists ignore the supply chain and most media focus just on GDP. That's final output. But what about all the different stages of production that lead up to it? That's a leading indicator. It's called gross output. And uh for a for over a year, gross output has been growing at a very slow rate, slower than GDP, almost negative. In fact, it was negative in real terms for almost a year. The good news is in the last quarter and we only have first quarter data for gross output. Uh it actually grew faster than GDP. The supply chain is finally coming back to life. I think it was really hurt by the tariffs uh by the trade Trump trade war but it's finally coming back to life. Maybe that's because the Supreme Court has ruled against these tariffs. The president keeps trying to impose them. But uh the so there's some optimism there with gross output and that's the supply chain and that's the technologies that are um are feeding into the final output of these various products. So uh I'm relatively optimistic and one reason I I'm remaining bullish right now in the technology uh sector as long as a black swan event does not occur. When should we use a measure like gross output which measures or uses the supply chain and measures spending versus gross domestic product which measures final output. Um in in which cases would one be better than another? So I see them as complimentary. They're not replacing each other. But gross output is definitely something that has a bigger picture. Uh and in fact as uh as Steve Forbes says uh GDP is the X-ray uh and uh and the um uh gross output is um is like the the um I'm trying to think of the this the term when you go through the MRI and so forth um you get a much bigger picture of the economy because it includes the supply chain. So gross output measures spending at all stages of production. So it's total spending. It's really total spending in the economy. If you really want to measure the total activity in the economy, you want to look at gross output. And it's more than twice the size of GDP. So that's the that's the top line that you should look at. This is like any financial company. Uh no Wall Street analyst is worth his salt if he doesn't look at the top line sales and the bottom line profits. You got to look at both. >> I see. >> You can't just look at the bottom line because you have to look at sales because sales will tell you uh if you can keep paying the profit in the future. Um and as I said right now, uh gross output is starting to grow faster than GDP. And this is a very positive sign for the economy growing. And I think a lot of it has to do with the corporate tax cut that uh Trump pushed through in 2017, lowering the corporate tax rate to 21%. I do you realize corporate earnings are up 40% this year. I mean that's that's historic. Uh that's something that Trump can be proud of and be honest about. Most of the time he's lying through his teeth about about how good the economy is. Well, the corporate pro corporate earnings scene looks really pretty good and that's one reason it's driving stock prices higher. >> Well, Mark, I appreciate your thoughts. Uh that was a very good uh summary of the current situation. Tell us about where we can find you and read your work. Uh your book you mentioned your book uh but you also have a newsletter as well. Tell us uh tell us where. >> Yep. It's called the Scousin Report. Uh for 45 years I wrote forecasts and strategies with Eagle Publishing and I have made the change to the Oxford Club which is about 10 times bigger. They're really a dynamic uh firm and and now I have almost 100,000 subscribers. So it's called the Scousand Report. If you go to oxford club.com you can read all about it. And if you're interested in any of my books, such as The Greatest American by Ben Franklin, or The Maxims of Wall Street, a best-selling book, uh, The Making of Modern Economics, uh, they're listed at scousingbooks.com, and, uh, that's where you can purchase my books at a discount. So, uh hope to uh keep in contact with you in the future because uh we need to know the signs of the times and uh it's it's things are look looking pretty good right now, but there's always those black swan events in the future that we need to prepare for and I've I've made a few calls over the years uh predicting those black swan events. So, uh we'll see how it goes. Thank you. >> Okay. Well, please do check out Mark's work and uh read his book about Benjamin Franklin. Um I'll put the links down below. Thank you. Thank you so much, Mark. We'll speak again soon. Take care for now. >> All right, David. Thank you. Take care. Bye-bye. >> Thank you for watching. Please do like and subscribe.