#415 Dr. Mark Thornton: The Bond Market Is Flashing a Warning Nobody in Washington Wants to Fix

Dr. Mark Thornton, Senior Fellow at the Mises Institute, joins Julia to explain why the bond market is the pivotal story right now. The 10- and 30-year Treasury yields are back above 5%, the national debt is over $40 trillion, and deficits are running at about $2 trillion a year. Thornton argues that this is wartime-level borrowing during supposedly good times. It crowds out private investment, weighs on wages, and widens the K-shaped divide between asset owners and everyone else. He explains why he thinks the Fed's recent hike won't be its last. In his view, Chairman Warsh and Secretary Bessent are managing the problem rather than solving it, and a market break or crisis could give the Fed cover to restart money printing. He describes the US as merging onto the "highway to hyperinflation," draws on historical cases from Revolutionary France to Weimar Germany, and closes with why he expects hard assets and commodities to outperform financial assets over the next decade.

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Links

X: https://x.com/DrMarkThornton

Free Hayek book: https://store.mises.org/Hayek-for-the-21st-Century-P11367.aspx

Mises Institute: https://mises.org/profile/mark-thornton

Timestamps:

0:00 Intro: Why bonds are the big worry

0:43 Big picture: 10- and 30-year yields at 25-year highs

4:24 Are we in a new higher-rate regime?

11:48 Wartime deficits in "good times"

18:21 Who wins and who loses from easy money

20:25 Young people, housing, and the K-shaped economy

24:02 Food, energy, and the Persian Gulf conflict

28:10 Are we on the on-ramp to hyperinflation?

34:03 Fed rate hikes: more coming, and what's next

39:27 No consequences: the "magic checkbook"

47:28 How to protect yourself: hard assets

51:28 Where to find Dr. Thornton's work