The Strategy Skills Podcast: Strategy | Leadership | Critical Thinking | Problem-Solving

560: American Economist and Professor, Steve Hanke, on Rewriting the Rules of Our Financial System

Jun 16, 2025
Steve Hanke, an esteemed economist and professor at Johns Hopkins University, critiques central banks for misinterpreting inflation trends by overlooking the money supply. He argues that inflation is primarily a monetary phenomenon, not a byproduct of external shocks. Hanke emphasizes the significance of the quantity theory of money in predicting inflation, revealing that today's financial woes stem from past decisions. He also compares U.S. and Chinese monetary policies, shedding light on the consequences of mismanagement in money supply growth.
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INSIGHT

Money Supply Drives Inflation

  • Central banks ignore the quantity theory of money, leading to poor inflation predictions.
  • Money supply changes are the fundamental driver of inflation, not external shocks.
INSIGHT

Central Banks Blame External Shocks

  • Central banks rationalize unpredicted inflation by blaming exogenous shocks like supply chain issues.
  • They avoid responsibility though inflation is always a monetary phenomenon caused by money supply changes.
INSIGHT

Anemic Money Supply Predicts Recession

  • The money supply should grow about 6% annually to meet inflation targets; currently it's anemic at 4.1%.
  • This slow growth is why inflation is falling and predicts a potential recession.
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