The 'Black Swan' That Wipes 50% Of Market Value | Mark Skousen

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David Lin (0:25)

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Mark Skousen (0:30)

I think we're headed for a potential crisis here. It's a black swan event. You don't have to buy treasuries. You got to talk investors into it. I don't know how long this is going to last, but eventually it has to end up in a major crisis. And over the long term, inflation, the rate of inflation and interest rates tend to move together.

David Lin (0:50)

I'm pleased to welcome back to the show, Mark Skousen, macro strategist at the Oxford Club, editor of The Skousen Report, and the author of The Greatest American. We can check out his book about Benjamin Franklin, link down below. He's also the producer of The Great Freedom Fest Show that happens once a year. I believe it's in Vegas next year again, right, Mark?

Mark Skousen (1:09)

That's correct. July 21st through the 24th, it's our 20th anniversary, so it's going to be quite an event. So I hope your viewers can attend. It's going to be exciting.

David Lin (1:20)

I've been once before, very good event when it was in Memphis. Anyway, let's start with the economy. You have here the gross output number that we're going to share with the audience. But before that, I'd like to play for you a short, brief clip of Treasury Secretary on Fox, talking about the growth of the economy. I want you to get your reaction to this particular clip. Take a listen, please.

SPEAKER_1 (1:43)

An acceleration in the economy, and Americans keeping more of what they make. It's a great setup. And the Atlanta Federal Reserve, GDP now, it's a noisy number, but it is currently clocking over 5% GDP growth for this quarter.

And what's important here, Larry, is that is not inflationary GDP growth. If you look at core inflation away from the volatile energy shock that we've had, core inflation has been very quiescent, and has actually dropped over the past few months. So the energy shock is not moving into core inflation. We will get to the other side of this Iran conflict. My prediction is that oil prices will be much lower.

And then we are seeing, as you said, substantial wage increases for the American people. The wage increases are going to stay. The headline inflation will come down and match core inflation.

David Lin (2:43)

Mark, is he right? What do you think?

Mark Skousen (2:45)

Oh, well, it's really, you know, Scott Besson is considered the smartest man in the room. He's certainly the best appointee, but it's unfortunate that he has to say things that I'm not sure he really believes, because all these White House economists are in denial of to what's really happening in the economy, not in terms of economic growth. They're certainly right about strong economic growth, and my gross output statistic proves that, and it actually anticipates the third quarter GDP going up, because the GO is a leading indicator, and we'll talk about that later. But look, inflation is stubborn. You can't just deny gasoline prices going up. You can't deny the war is lasting a lot longer than anybody expected. This is inflationary. The affordability issue, let's not ignore the fact that it's affecting millions of voters. And I have been predicting for some time that the Democrats, despite the lousy agenda, are still in the driver's seat to win in November, at least the House, maybe the Senate.

We'll see what happens. But I do think that you can't ignore, you can't talk about core inflation because that leaves out all kinds of food and things that are essential for living. So I've never bought in to the core inflation concept. I think we should just look at the total inflation. And even then, the CPI does not fully represent the cost of production, I mean, the cost of living. We know that the shadow statistics show that inflation is 10% a year.

The rise in food prices and rents, commodities in general, this is a clear indication that inflation, we're in an era of permanent inflation. We've shown charts of that before on our show, that we've entered an era of permanent inflation. It's just a question of how much inflation. There's no deflation going on right now.