Inflation's Next Move: Economic Collapse? | Steve Hanke

Join us in an enlightening conversation with Professor Steve Hanke, renowned economist from Johns Hopkins University. In this episode, James Connor delves deep into the nuances of monetary policy, inflation, and potential recessions with expert insights from Hanke.
Discover how changes in the money supply could signal significant shifts in the economy and what it means for your investments. Stay tuned as we decode complex economic indicators and prepare for potential market shifts. Watch to learn how you can shield your wealth in uncertain times!
TIMESTAMPS:
0:00 - Introduction
2:12 - Money Supply Explanation
11:16 - Economic Predictions and Historical Analysis
14:03 - Recession Discussion
22:18 - Current Economic Conditions
35:00 - The Fed and Rates
37:37 - Political and Economic Bias
45:04 - Closing Remarks
#podcast #investing #financialfreedom #wealthbuilding #inflation #recession
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There’s no doubt that it's a very challenging time right now for the average investor. Above and beyond the recent economic impacts of COVID, the new era of record low interest rates, runaway US debt and US deficits, and trillions of dollars in monetary and fiscal stimulus stimulus has changed the rules of investing by dangerously distorting the Dow index, the S&P 500, and nearly all other asset prices. Can prices keep rising, or is there a painful reckoning ahead?
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IMPORTANT NOTE: The information, opinions, and insights expressed by our guests do not necessarily reflect the views of Wealthion. They are intended to provide a diverse perspective on the economy, investing, and other relevant topics to enrich your understanding of these complex fields.
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[@Wealthion]

SCHEDULE YOUR FREE WEALTH CONSULTATION with Wealthion's endorsed financial advisors here: www.wealthion.com/

[@DanielMeininger]

Professor Hanke is a great analyst with a clear and rational perspective - thanks.

[@maninderchahal2442]

Prof Hanke is brilliant. Thank you for setting up the interview.

[@Wealthion]

Glad you enjoyed the interview!

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment! I always enjoy speaking with Steve and wish I was back at uni!

[@stevenmix3723]

This was one of Prof. Hanke's more comprehensible explanations of his theory. Thanks for asking him the right questions, to pinpoint it. He is just about alone now in still calling for recession by year end, based on his monetary model. Will be watching closely, to see if he is on target, or too old school.

[@alexisboucher523]

I hear you I've had to hear him several times myself but today was pretty good.

[@davidlai399]

When the government borrows a trillion dollars every hundred days to prop up the economy…

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the positive comment and taking the time to view our content!

[@bs2951]

jibb bh

[@bs2951]

bj bibj bhbj bibj bjii bh i j j j

[@zipper1209]

Best interview if seen in a long time. I really appreciate how the interviewer lets the expert time to explain. Thanks so much.

[@BloorStreetCapital]

It's Jimmy Connor from Wealthion, thanks for the positive comment! We don't get enough of them.

[@RachelCunningham-ut9ks]

loads of respect to hear an expert say "i dont know!" there is something to be said for honesty. and then he pivots to what he can deduce. thank you for the interview!

[@georgeboutwell6069]

Applaud the Professor ❤

[@Wealthion]

👏

[@Oneofthetwelve]

So what’s happening with savings? Aren’t they very low? In Canada it’s an accelerating demolition of the economy by Federal Budget policies

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment/questions! There is $6 trillion sitting in savings and short term money markets in the US so a lot of money sitting on the sidelines.

[@pamdemic7848]

The Best!

[@issenvan1050]

🐐🧿

[@omerarduc7371]

always enjoy prof hanke

[@frenchtelemarketer]

There is no battle. It is like telling .

[@evorealtime]

How does this fit with the bull case for gold as a protection against negative interest rates, inflation and debasement of the money supply?

[@robertharrelson5024]

" My baby does the Hanke Panke." Tommy James and the Shondells.

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment Robert! Now I cant get that song out of my head!

[@mgray3130]

So many good points, including the FED and the party! I love it an F, I'd give them the same.

[@BloorStreetCapital]

It's Jimmy Connor from Wealthion, thanks for the comment! Yes me too!

[@johnmatthews7694]

Im strugling to understand the contrast between Hanke's shrinking M2 thesis and Michael Howell's increased liquidity thesis. Is it a matter of timing or do they see things completely differently? I think the latter given Hanke thinks rates are too high and cross border capital think the Fed needs to keep rates where they are. I would love to get them together. Both are so smart.

[@rezsha3798]

In a normal world Janet Yellen would be a janitor in a university!

[@crash4dafun]

Yup 😂, wouldn't even let her teach kindergarten now...

[@BloorStreetCapital]

It's Jimmy Connor from Wealthion, thanks for the comment! Always good to have a sense of humor!

[@jvin248]

Good to see Steve mention the Smoot-Hawley tariff tax instigating the 29 crash and depression.

[@michaels4255]

Wrong! Smoot/Hawley was enacted AFTER the Great Depression was already underway! Furthermore, 80 years of research by economic historians has concluded that Smoot/Hawley had very little influence on the subsequent course of the Depression, and of course no influence at all on events that happened BEFORE Smoot/Hawley was passed.

[@davidhemsted5372]

Changes in asset prices reflexively impact economic growth and inflation after long and variable lags.

[@mattg8431]

Wish someone could explain to me the difference between the money supply (prof. Henke) and liquidity (Michael Howell, Crossborder Capital). Prof Henke is making the case that shrinking money supply always led to recession, but last time it happened was in 1948? Lots of things are different now

[@mountainman9145]

Liquidity: the capacity of money to flow between and within sovereign nations, into and out of financial markets. As liquidity operates on financial markets it has impacts on asset prices. M2 has a small impact on liquidity however it mainly impacts the real economy. Liquidity initially affects financial markets which then,in turn, works its way into the real economy. Due to this lag effect you can have a booming stock market while the real economy can be struggling.

[@ediddysmith2500]

Watch Ted speaks ,he explains everything

[@RichardTN]

Yeah, it's a lot worse now. 😅

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment and great point! I will bring this up with Steve the next time we chat.

[@johnnycactus5140]

​@@mountainman9145 so is this all the euro dollars flooding back in cause we (us) cleanest dirty shirt?

[@pressplay7922]

sure, commercial banks create the bulk of the currency, but they are enabled by the Fed with things like ZIRP and QE. they are even backstopped with things like BTFP. and it's all funneled to the wealthiest first, then they take it to the Wall St casinos. or at least they did. now, they appear to be switching to gold. they're all quite aware of the pending disaster they've engendered.

[@crash4dafun]

Great comment!

[@ronaldvanderburgh8986]

Contraction of the moneysupply is clear. But the deffecit and the national debt now is much bigger. What does that tell us?

[@edwardcotter7096]

For the last ten years or so before retirement, I made loans to rehabbers and landlords. I observed that they would attempt just about any project for which they could get financing. From this I inferred that money equals permission to spend. If you earned it, you can spend on what you want whether wisely or not. If you borrowed it, the scope of spending might be limited. In the aggregate, an increase in money supply gives players in society permission to spend. Hence we see the effects which Dr. Hanke describes. That's my take on money as a former lender.

[@brynduffy]

Over capacity will be the situation where a country over produces products in order to drive competitors out of business so they can eventually gain Monopoly power. It's not that hard.

[@michaels4255]

I love the way economists take their competing schools so seriously! They are like adherents of rival religious sects, it's hilarious! But I really do like listening to Prof. Hanke and hope you can get him on again in future episodes. It would be really fun to hear a debate between a monetarist, a Neo - Keynesian, a Post - Keynesian, a Neo - Paleo - Keynesian, an Austrian, a developmental economist such as Ha -Joon Chang, and an economic historian, but only via video conferencing because if they ever came together in person it might end in a blood bath or some poor economist getting burned at the stake. I am surprised the economics departments of the U of Chicago and MIT have not issued mutual anathemas of one another, but maybe it is only a matter of time.

[@issenvan1050]

Monetarists vs. Eurodollarists

[@davidhemsted5372]

The rate of change in money supply affects asset prices after long and variable lags.

[@sebastienbechard798]

Steve is the Yoda of the modern economy... listen what the master has to say.. “Inflation is the path to the dark side... the key money supply is"

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment Sebastien and I love that quote!

[@mohali4338]

I don't understand his point of view regarding the prices of assets. could someone please explain it?

[@mikemarshall35]

does quantative easing increase M2?

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment/question Mike! I don't know the answer to this but I will ask Steve the next time we chat.

[@mikemarshall35]

@@BloorStreetCapital Thanks for a great interview of Professor Hanke!

[@greg7811]

Since there's all these lags shouldn't we include the drastic rise in the m2 before it's slight dip to try to predict future and learn from past? We're not close to the long term M2 trend line, still above it.

[@martinithechobit]

Steve!!!!!

[@davidhemsted5372]

The rate of economic growth impacts the money supply - not the other way around.

[@LunaLapin-ho5tk]

Not when you use accounting methods to hide printed and borrowed money into earned income like the gov't does.

[@user-ol7tl1vf5m]

There is no real battle, just deceit.

[@issenvan1050]

How do you measure the depth of a recession: GDP?

[@aucklandtoday9847]

Would more people in the system soak up money supply?

[@issenvan1050]

“Change money supply by 10%, you’ll get 10% increase in inflation”, or different percentages for different countries?

[@marklydon435]

So 76% of peoples money is in banks, and you wonder why people stay poor.

[@issenvan1050]

Where does the funds rate fall under in Hanke’s monetarist equation?

[@issenvan1050]

So, Volcker grew M2 by 6%, in addition to the rate hikes?

[@bradjohnson233]

Not trying to be disrespectful but what is the value of the wishy washy analysis presented ? Strong or weak recession end of 2023 or end of 2044 now? 12 mos. or 24 mos. lag but maybe longer this time? I can predict this (eventual recession) without a PHD and 30 graduate assistants with some certainty (subject to change with new data). Another good Fed economist candidate which is why we are in the financial quagmire we are in.

[@hrothgar6832]

Tariffs on China are ridiculous. They are building out manufacturing in Mexico. 🤦🏻‍♂️

[@jmwSeattle]

Well Volker used interest rates to do it.

[@jeffl6089]

Who believes the inflation rate as stated by the government? In my world it seems a lot higher!

[@BloorStreetCapital]

It's Jimmy Connor from Wealthion, thanks for the comment and I fully agree! Whatever their number x it by 2 or 3.

[@henrykborecki3600]

Money supply contraction &c. Simply look at the reaction of the people in an ordinary market. When the consumer has less money in his pocket, he can spend less money on the groceries. When the grocer gets less money from the consumer, he must raise his prices to make the same amount of money, or the grocer has less money in his pocket. When the consumer looks at the prices going up, he realizes that he will have less money to spend if he pays the higher prices. When the consumer cuts back, the grocer has to lower his prices, or business stops. When the consumer sees that the inevitable result will be lower prices, he will stop paying the grocer, and "see what happens." Everybody 'wins' with a lose-lose outcome: the consumer eats less, and the grocer goes out of business, and Happy Days are here, for the next generation! What do you think the FED and the banks are afraid of?

[@issenvan1050]

Why should there be a recession if CPI is below-2%?

[@issenvan1050]

How should BTC behave during the next recession & with lower rates?

[@tapptom]

Who are these people who run the FR? Who are these people that are causing war in the ME?

[@ecosignals]

Clearly, big money. It's so insanely geopoli tied now, it's not even funny. "The greatest trick the Devil ever pulled was convincing the world he didn’t exist”-Charles Baudelaire “The second greatest trick the Devil ever pulled was convincing the world he is the good guy”-Ken Ammi It is indeed very sad, that the firms, the rich, and powerful have got us so mind numbingly sheeping around, that we're oblivious to them blatantly DOING all the things they say to be afraid of! Question Gov, ok. But FEAR corps & Wall St.

[@issenvan1050]

1.8% growth in M2 translates to 0.6% CPI, then, for recession?

[@issenvan1050]

Wasn’t the YoY M2 contraction 4.5%?

[@JM-gu3tx]

"suffering"? LMBO They dumped steel and other products at below cost value. That is evil. They don't play by the rules.

[@issenvan1050]

Quantity of money slowed down in Volcker’s time, but didn’t shrink, now?

[@issenvan1050]

Was Greenspan a monetarist?

[@crash4dafun]

"The facts were changed" - The facts didn't change. There were a few of us who were yelling from the roof tops "higher for longer" this whole time so not to have inflation come back but here we are... Bad players pumped the stock market while tricking retail traders and investors that AI technology was the next big thing. Now the big whales have sold off the top and the market is now dropping leaving retail holding the bag again. Also the increase in money supply started way before the pandemic...

[@issenvan1050]

Stronger or weaker the economy is in a NOMINAL sense, right?

[@issenvan1050]

Why recession EoY, not sooner?

[@issenvan1050]

How does cash “drain out?”

[@issenvan1050]

Is irrational exuberance the “animal spirits?”

[@stephengreen7431]

He sounds like Ben Stein

[@Edgar4T007]

There will be a collapse, he just doesn't know when 😂😂

[@RichardTN]

Yeah, big haha. What if you have terminal cancer and the doctor says, i don't know when you'll go. Don't make plans then since it's real funny.

[@dbehr4869]

well he has sure walked back the major recession he was touting to at least a slow down! A bit more humility is needed professor!

[@brianoleson9224]

its bs , its clear it will happen in the short term 4 years after the pandemic the length before its known in your home and your neighbors home is no longer 5-10- 15 years away

[@georgeboutwell6069]

In spite of the cunning of art- ful political leaders, these three gifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because mankind have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.

[@issenvan1050]

How about RRP?

[@issenvan1050]

Why is 2% important?

[@jeffo.31]

The host said things look pretty good???

[@user-ev9to4xx2o]

America dollars will.only be used in america.no.more.i.m.f or world bank sovereign debt.never ending inflation to failed state.😂😂😂

[@stephengerrard6412]

M2 ignores the trillions in money markets.

[@BloorStreetCapital]

It's Jimmy Connor from Wealthion, thanks for the comment Stephen! I will bring this up during our next chat.

[@ImRickSanchez]

Just love old guys who don't give a crap what everyone else is saying. EVERYBODY is saying rates aren't high enough and cuts aren't coming until 25 or 26. Hanke comes out and says Rates are way too high. Hahaha. He's correct BTW. Rates are getting cut this year. Probably in the next few months.

[@LunaLapin-ho5tk]

Don't underestimate the damage the DC clown show will do. Even if it's not working, the feds will probably keep increasing the interest rate to collapse the real estate market. Our gov't has no problem doing the same thing over and over always expecting a different result.

[@davidhemsted5372]

Except for fiat money printing by sovereign states.

[@user-ev9to4xx2o]

Summer.madness.comming.june.people would see the light of day.civil resulation.to.destution 😮😮😮

[@issenvan1050]

Monetarists vs. Eurodollarists debate

[@andrzejfrancikiewicz9964]

American will get big bobe

[@phillB]

Steve, you are intentionally dismissing the method by which China overproduces. They essentially used slave labor. Yes it’s good for people like you in the wealthy, but what about the working class?

[@FreedomAtRisk]

hes smart but he doesn't manage OPM

[@FreedomAtRisk]

@@geocam2 He's smarter than us.

[@Dieselpwr]

The big reset

[@patrickcourtney796]

Steve Hanke is not trustworthy

[@qake2021]

👍👍🇧🇷🇷🇺🇮🇳🇨🇳🇿🇦➕️👏👏✌️✌️

[@MrXXY-yx8qr]

We must print and type in more money and have price controls

[@JohnReynolds-ni5lv]

Price controls fail every time. Venezuela, Germany come to mind.

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment and taking the time to view our content! I disagree with price controls. You have to let the market dictate prices. If prices are too high people stop buying,

[@LunaLapin-ho5tk]

Printing just increases inflation in every country that has tried in throughout history.

[@MrXXY-yx8qr]

Not if they have price controls

[@LunaLapin-ho5tk]

@@MrXXY-yx8qr Then you have absolutely nothing. Price controls just means that it will not be produced and that includes housing. That just makes the problem worse.

[@richardgash2349]

Lol when will recession begin is a joke question

[@BloorStreetCapital]

It's Jimmy Connor, thanks for the comment Richard! Agreed but always good to put people on the spot.