Central Banks' Lack of Trust Drives Global Gold Rush

Austrian economist Mark Thornton recently argued in an interview that central banks are no longer trusting each other, and this lack of confidence is driving a global rush to gold.

Thornton, a senior fellow at the Mises Institute, has long been vocal about his opposition to central banking. He claims that it leads to boom-bust cycles, higher prices, and a weaker currency.

The recent collapse of Silicon Valley Bank is just one example of this problem, according to Thornton. The Fed's report on the bank's failure shows that supervisors knew about the problems a year before the collapse but did nothing because they didn't want to admit that their policies caused the damage.

Thornton also pointed out that Chairman Kevin Warsh's recent rate hike is not tightening, as it only brings policy interest rates back up by a tenth of a point above short-term inflation. He believes that this will only lead to higher mortgage costs, business financing costs, and government borrowing bills if inflation accelerates.

Thornton also discussed his signature idea, the 'skyscraper curse,' which suggests that record-breaking towers are often built near the peak of a cheap-money boom. In this cycle, data centers - windowless buildings that consume as much electricity as a small city - are taking the place of traditional skyscrapers.

The financing for these data centers can run decades longer than the hardware inside, leaving taxpayers and consumers to bear the burden if tenants stop paying.