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 227 to shares his outlook for the US economy and financial markets in 2025. Applying his famed "quantity theory of money," Professor Hanke warns that the economy is set to slow this year due to the lagged effects of past monetary and fiscal policies. He cautions that it's "going to be a year of investing dangerously," with his proprietary bubble detector signaling that markets are extremely overvalued and complacent, reaching the highest levels ever. Hanke also discusses the risks posed by runaway government debt, advocates for right-sizing government's role in the economy, and shares his latest books and research.
Links:
Twitter/X: https://x.com/steve_hanke
Capital, Interest, and Waiting: Controversies, Puzzles, and New Additions to Capital Theory https://link.springer.com/book/10.1007/978-3-031-63398-0
Making Money Work: How to Rewrite the Rules of Our Financial System:
https://www.amazon.com/Making-Money-Work-Rewrite-Financial/dp/1394257260
https://www.barnesandnoble.com/w/making-money-work-matt-sekerke/1146170520
Timestamps:
00:00 Introduction
01:11 Macro outlook using quantity theory of money
03:38 Impact of Fed policy on asset prices, inequality, and inflation
07:06 How Fed-driven inequality influenced 2024 election outcome
10:43 China's economic troubles and deflationary risks
13:28 Europe's economic stagnation and fiscal woes
15:38 Likelihood of a recession in 2025 under the new administration
17:36 Parallels to the Reagan era and smart economic policies
20:32 Concerns about Trump's mercantilist trade policies and border control plans
23:43 Hanke's bubble detector signaling overvalued, complacent markets
26:46 Runaway US national debt - the lying price problem and moral hazard
30:06 Restoring confidence and implementing a constitutional debt brake
32:00 Right-sizing government to boost economic growth
33:53 Simplifying taxes with a flat tax
35:48 Hanke's latest books and how to follow his work
