Hedgeye Podcasts

The Best of Hedgeye: Steve Hanke → Inflation Tsunami: Investing During A Rising Inflationary Tide

May 1, 2025
Steve Hanke, a renowned economist and senior fellow at the Cato Institute, dives into the intricacies of inflation and its impact on markets. He discusses the crucial role of money supply in driving inflation trends, challenging the notion of temporary price increases. Hanke critiques current economic models and shares insights on navigating commodity price surges and the speculative nature of cryptocurrencies. With a focus on effective investment strategies, he emphasizes the importance of recognizing shifts in economic conditions as inflation dynamics evolve.
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INSIGHT

Money Supply Drives Inflation

  • Inflation is fundamentally a monetary phenomenon driven by money supply growth, not just temporary factors.
  • Base effects and supply chain issues are transient, but long-term inflation depends on sustained monetary expansion.
INSIGHT

Supply Chain Issues Are Cyclical

  • Supply chain disruptions cause elevated prices but are cyclical, not permanent.
  • The main driver of ongoing inflation remains the massive expansion of the money supply fueling rising demand.
INSIGHT

Interest Rates Mislead on Monetary Policy

  • Interest rates are a poor indicator of monetary policy direction because they initially fall when money supply loosens.
  • Eventually, as inflation rises, interest rates increase, misleading many observers.
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