The Julia La Roche Show #228 Steve Hanke: 'It's Going To Be A Year Of Investing Dangerously' — Bubble Detector At Highest Levels
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Jan 23, 2025 
Steve Hanke, a Professor of Applied Economics at Johns Hopkins University, shares his insights on the U.S. economy and financial markets. He warns that 2025 may be a year of risky investing due to overvalued markets, indicated by his bubble detector. Hanke discusses the impact of past monetary policies on inflation and asset prices, as well as the dangers of rising government debt. He advocates for a reduced government role in the economy and shares thoughts from his latest research and books, focusing on financial simplification.
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Quantity Theory of Money
- The quantity theory of money posits that money fuels the economy, and excessive "fuel" leads to inflation.
- This theory explains how changes in money supply impact asset prices, economic activity, and inflation.
Money Supply and Inequality
- Increased money supply during the pandemic caused asset prices to soar, exacerbating income inequality.
- The wealthy, who own most assets, benefited disproportionately, while the less affluent struggled.
Economic Slowdown and Inflation
- The Fed's tightening monetary policy and the contracting money supply are expected to slow down the economy.
- Inflation is predicted to drop below the Fed's 2% target.
