Steve Hanke, Professor of Applied Economics, predicts that headline CPI inflation will return to 2% by year-end 2023, but a recession will hit by Q1 of 2024.
*This video was recorded on June 30, 2023
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0:00 – Intro
0:45 – Labor market
3:40 – 2% inflation by year-end
6:40 – Recession by Q1 2024
8:20 – Social costs
14:40 – Inflation vs recession
22:00 – Ageing population
24:50 – Declining population
#economy #recession #recession…(read more)
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Steve Hanke: There’s A Much Bigger Crisis Than High Inflation
Steve Hanke, an American economist and professor at Johns Hopkins University, is known for his expertise in international economics and monetary policy. While inflation has been a key issue in recent times, Hanke argues that there is a much bigger crisis that needs attention.
Inflation has been a recurring concern for economies worldwide. Rising prices erode the purchasing power of consumers, making it harder for people to afford basic necessities and reducing their overall standard of living. Governments and central banks are often tasked with taming inflation through various policy measures.
However, according to Hanke, the root cause of high inflation is often an extremely unstable currency. In many cases, governments can print excessive amounts of money, leading to a devaluation of the currency and subsequent inflation. This phenomenon, known as hyperinflation, has devastating consequences for individuals and the economy as a whole.
Hanke points out that while high inflation is a significant issue, the real crisis lies in the lack of sound monetary systems across the globe. He argues that the absence of reliable monetary frameworks, such as currency boards or dollarization, is the primary cause of economic instability and hyperinflation.
Currency boards, a system utilized by some countries, fix the exchange rate of their national currency to that of a stable foreign currency, such as the US dollar or the euro. This ensures that the value of the domestic currency remains stable and inflationary pressures are kept in check.
Dollarization, on the other hand, involves adopting a foreign currency as the national currency, thereby eliminating the risk of hyperinflation altogether. Several countries, including Ecuador and El Salvador, have successfully dollarized their economies and experienced increased stability and economic growth as a result.
Hanke believes that by implementing these sound monetary frameworks, countries can avoid the pitfalls of inflation and foster economic stability. However, he acknowledges that the adoption of such systems requires political will and a commitment to maintaining fiscal discipline.
In his research, Hanke has often emphasized the importance of monetary reform as a means to combat hyperinflation and restore economic stability. He has worked closely with governments and policymakers to implement effective monetary policies and has been vocal in advocating for sound monetary systems worldwide.
While high inflation certainly poses significant challenges, Hanke’s emphasis on addressing the root cause of unstable currencies and implementing sound monetary frameworks provides a fresh perspective on tackling economic crises. By prioritizing monetary stability, governments can lay the foundation for sustainable economic growth and improve the quality of life for their citizens.
In conclusion, Steve Hanke argues that there is a much bigger crisis than high inflation – the lack of sound monetary systems. By adopting currency boards or dollarization, countries can avoid the devastating consequences of hyperinflation and pave the way for economic stability. Hanke’s insights shed light on the importance of monetary reform and provide valuable guidance for policymakers around the world.
David is the best economic professor,
he knows all the aspects. The best interviewer !
Can we please highlight how nice Mr. Hanke's tie is? What an intelligent and stylish gentleman.
Many jobs will be going due to ai. Inflation is way worse.
Love this guy, everytime i see him i've gotta watch.
Everyone is right at different times. Bears and bulls take turns being right. Opinions don't change, reality changes. Fast friends go to war. Arch enemies make peace. America is at war with England, Germany, Japan, China, Russia, then they are allies. It flows back and forth. The internet is proving we all have different opinions and no one knows it all. Protect yourself.
Excellent discussion Gentlemen
My goodness, how did this guy become a professor. Maybe just getting old? The cranky old man who can't stop going off topic to complain about something else, or talking in circles or repeating himself? I guess that wouldn't the first aging professor I've had that was like that 🙂 Maybe questions could have been better though.
Conversation with you two is always entertaining and informative. Keep up the good work David.
Dont forget the very biggest scam:the vaccins, the suppression of alternatives like ivermectin because it would not allow EUA.
I respect Dr Hanke but sometimes I get the impression he is living on another planet. Not nearly as much progress has been made against inflation as he is saying. US inflation is being held down by a stubbornly strong dollar and the Fed is way behind in their money supply tightening plan.
I’m here for Hanky
Recession is only way to bring affordability back, burning of access in money supply, debt burden, inflation in hard assets, and helping those who have done everything right in their conduct. It is high time to do things right.
Gov and fed are on different track , Gov is spending a lot more than Fed would like and really appreciate, this would make Fed task even more difficult.
Overpopulation is a problem… if everyone starts living like professor, we would need 4-5 earths
Another economist that doesn't really know what he's talking about. No better than Elon Musk blurting his own opinions on twitter.
.. he doesn’t realise we’ve past it, he’s still squeezing…
its too much for me
That old dude is a trip! I love watching his interviews
Come on Professor !! If, as you say, the golden growth rate of money supply is 5% the jump in imports would be huge which would eventually mean a higher trade deficit and a higher national debt burden. Needless to say that a higher growth rate of money supply would allow banks to keep on lending on corporations that are really zombie corporations and even allow more mergers and more equity buy backs !!
The trade unions would then pursue industrial action to restore the lost purchasing power their members have experienced in the last 3 years !!, OOPS!!
That could lead to more inflation !!!
How long do you think those stones should last?
Hanke gets more irrelevant as time goes on.
I enjoy the interchange between you, Professor Hanke and others. Great host!
This is a really great discussion. Thank you, David, for having Prof. Hanke on this program. Take care. Stay safe. God bless.
This recession is overdue. It should have happened prior to covid. There's too many unprofitable businesses still open. Inflation is a bent measure of the economy. We all see an economy in recession. People have no money after bills are paid. Profits are down at the beginning of the high season. Businesses will fold in the fall after a bad summer. I hope they keep the money supply low. High rates and inflation have driven this stress after too many years of cheap money and quantitative easing.
How did the Dow go from 18000 to 35000 without anyone saying a word about it.
The answer to declining populations is clear: Encourage the activity that creates new people.
Disagree with a lot of what he said about population, he has a very limited view about overpopulation as he can only correlate it to our monetary system. The fact is the resources on this terrestrial realm are finite but our economic system depends on infinite population growth and infinite consumption, the two are not conducive to an extended quality of life on our planet. At some point the well runs dry and we cannot draw enough to continue to sustain our quality of life.
David, you raised an interesting topic, the level of population, and unfortunately, instead of discussing this topic, your guest responded with "bluster" , and ridiculous examples. I would enjoy seeing a few intelligent people have a serious discussion of the level of population…. should it be what it is, …. lower….. higher ….. by how much ….. over what period of time and why.
great analysis and clear insights
There is overpopulation in the world. And children are expensive.
Nice content David ❤
Professor Henke is completely right, EXCEPT. He assumes that growth in real goods and services is fixed at 4% (6% ideal money supply growth = 2% inflation and 4% real growth). Big mistake!! Climate change shows us this big mistake. You have to start with real growth and then decide what the money growth is.
24:50 declining population is NOT a threat! Government's systems which rely on increased populations are the threats! Ponzi schemes are threats!
The fed chairman like all US politicians are the some of the world's biggest crooks and liars
Uh, saving lives by shutting down transportation wouldn't make up for the massive loss of life due to the supply chain collapsing. This guy is a clown.
The 'greenies' want:
1) only few humans.
2) No driving, or moving about.
3) Full central control.
4) People confined in high rises in small cities.
5) A primitive life for the masses – Minimum energy use, etc.
Typical government, they want just an inch, wait, they need another inch, then another and another… Pretty soon they will just do whatever they want… And, they will hide behind the Patriot Act, or say it's classified… How do we stop government overreach? How do we get back to the We the People…?