The Julia La Roche Show

#265 Steve Hanke: Regime Uncertainty, 80% Recession Probability & How To Fix Monetary Policy

22 snips
Jun 12, 2025
In this conversation, Steve Hanke, a renowned economist from Johns Hopkins, discusses the looming 80% chance of recession and critiques the Federal Reserve's focus on interest rates over money supply. He proposes a shift to prioritizing commercial banks and advocates for monetary policy 'neutrality' to reduce wealth inequality. Hanke also dismisses Trump's fiscal strategies as irresponsible and calls for a constitutional convention to implement a Swiss-style debt brake. His insights aim to redraw the rules of our financial system for better economic stability.
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INSIGHT

Regime Uncertainty Dampens Growth

  • Regime uncertainty from policy changes discourages long-term investment.
  • It slows economic growth by creating unpredictability around the rules of the game.
INSIGHT

80% Recession Probability

  • The money supply has contracted since April 2022, signaling economic slowdown.
  • Combined with regime uncertainty, Hanke estimates an 80% recession probability by year-end.
INSIGHT

Market Bubble and Complacency

  • The stock market is in bubble territory with inflated valuations.
  • Regime uncertainty causes companies to stop issuing earnings guidance, signaling stress.
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