A Recession Is Still On The Way — What The Money Supply Tells Us About The Economy | Steve Hanke

Steve H. Hanke, professor of applied economics at Johns Hopkins University and the founder and co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise, joins Julia La Roche on episode 202 for a conversation on the state of the economy, the money supply, inflation, and the upcoming election.

Links:
Making Money Work: How to Rewrite the Rules of Our Financial System:

Timestamps:
00:00 Introduction and welcome Professor Hanke
02:06 Discussion on China's economy and inflation
04:29 U.S. economy and money supply contraction
07:29 European economic situation
10:41 Focus on money supply vs interest rates
15:59 Discussion on job report revisions and data reliability
21:17 Inflation forecast and bond yields
25:57 Fed's record on predicting economic trends
27:29 Book recommendations on economic theory
31:57 Analysis of upcoming election (polls vs prediction markets)
38:17 Economic policies of candidates
42:40 Industrial policy and protectionism
45:15 Government spending as percentage of GDP
48:40 Parting thoughts and new book announcements
50:22 Closing remarks

[CereneSetliff]

I like Professor Hanke. His arguments make complete sense and are consistent with my pre-2021 understanding of economics.
I applaud him for sticking to what he knows in spite of so much pressure and criticism.

[dalemoreland]

Professor Hanke is the best! Thanks for having him on your show quarterly, Julia.

[dazedhavoc]

I’m convinced the market will only go up. Valuations don’t matter in a managed market. This is not free market capitalism.

[CS]

Jesus! The number of times this man keeps saying money supply is borderline preposterous. I think he said money supply 200 times in one interview!

[wapiti]

Just clicked into this video: The over/under on Hanke mentioning "the money supply" is 25 seconds once he begins to speak!

[littlejohnjp]

This has become one my top channels and gets a thumbs up before even watching. Thank you for your time and your videos, Julia.

[billirons]

Great interview. What a profound observation about the Biden/Harris regime, allowing politicians and bureaucrats to make financial decisions. When they make a bad decision, we pay the price the politicians and bureaucrats as usual get off Scott free. To quote your guest, “it’s stupid “.

[harpoen]

Very good interview where Julia asks very good questions so the professor shares his insights with us. Well done !!!

[spiritofgoldfish]

The classical economists beginning with Adam Smith identified the economic rents (unearned income) extracted by feudal lords as the problem preventing a free market that the government should solve. The neoliberal (Austrian, Libertarian, Chicago School Monetarist) counter-enlightenment led by the super wealthy was to not acknowledge any such problem, as the marketing front for their banks (FIRE, finance, insurance and real estate) whose vocation is rent seeking and who directly employ the modern neo feudal government.

"The classical idea of a free market was one free from economic rent, not free for landlords, monopolists and creditors to charge whatever they wanted without reference to the cost of production. To repeat, the 19th century’s classical economics was all about value, price and rent theory, defining rent as the excess of prices above the socially necessary costs of production. The idea was to minimize rent, not maximize it.

This classical approach to economics has been all but censored from the academic curriculum. The status quo has become so unfair that populations would demand change if economists and their national income accounting format revealed the extent to which wealth is gained in parasitic, predatory ways. What typically is celebrated as wealth today, as billionaires become public celebrities, is actually a form of economic overhead, not part of the production process. It is a cost that classical economics sought to eliminate, or at least minimize. But the study of economics is not what it used to be. The role of today’s mainstream economics is to prevent any change in taxes, anti-monopoly regulation or de-privatization that might threaten rentier wealth. To achieve this anti-classical counter-revolution, the discipline of economics has been turned into an unrealistic and tunnel-visioned caricature of reality."

Michael Hudson. The Destiny of Civilization (Kindle Locations 736-747).

"Rentiers derive income from ownership, possession or control of assets that are scarce or artificially made scarce. Most familiar is rental income from land, property, mineral exploitation or financial investments, but other sources have grown too. They include the income lenders gain from debt interest; income from ownership of ‘intellectual property’ (such as patents, copyright, brands and trademarks); capital gains on investments; ‘above normal’ company profits (when a firm has a dominant market position that allows it to charge high prices or dictate terms); income from government subsidies; and income of financial and other intermediaries derived from third-party transactions."

Standing, Guy. The Corruption of Capitalism: Why rentiers thrive and work does not pay (p. 94).

[richardsacchetti]

I COULD LISTEN TO PROFESSOR HANKE FOR HOURS AND HOURS

[christoschristou]

Thank you Julia & Professor Hanke, magnificent education and greatly appreciate the knowledge transfer. Respect & XAULUCK!

[davidcpugh]

Excellent speakers who are very very knowledgeable.

[DeepakSharma_Tao]

Wise analysis from all perspectives. Thanks Jul🕉🙏🍵🤗

[davidcpugh]

Where is Paul Volker to feed us cod liver oil. Recall it well.

[The_Bond_Guy]

I really enjoyed this high-level discussion of the economy; not a lot of folks talking about the money supply. Simultaneously, there are lot of people talking about the yield on the 2-year Treasury note going below the yield on the 10-year Treasury bond and suggesting this is (historically) the start of the recession. However, most economists agree that historically, recessions have begun after the yield on the 3-month T-Bill moves lower than the 10-Year Bond. They are still quite far away at ~55 bps. Could explain a little of the recent volatility we've in the longer end of the market.

[davidcpugh]

And the obligation on the Fed that isn’t talked about? To a large extent the Fed is pressured to clear the treasury bond market by acting as buyer of last resort. That requires them to buy treasuries in a very large volume to absorb the volume being auctioned. Some interesting cross currents?

[OM-nqdd]

There is plenty of money in the system, the supply of money today is well above the historical trend

[prolific]

Prof wanted no part of a discussion of an in-person interview 😂 he changed the topic both times even mentioning his wife LOL

[bazsmith]

Thanks for the update, keep up the good work. Learned a lot from my market journey, especially the importance of living within one's means. With Flora Monticola’s guidance, my nest egg has grown to a 7-figure sum. My advice - get an analyst for better financial trade decisions and peace of mind

[billirons]

“ the bureaucrats have no incentive to do the right thing…” hello?