Professor Steve Hanke Says US Economy Was Flat Over the Last Year, but Stresses ‘It’s Going to Hit South’ – Economics Bitcoin News

Amid the chaotic economy, plagued with central bank tinkering, supply chain issues, and red-hot inflation, the professor of applied economics at Johns Hopkins University, Steve Hanke believes a “pretty big recession” will take place in 2023. Speaking in an interview on Oct. 28, Hanke said that he updated the probability of a U.S. recession to a 90% chance, as he believes the money supply has tightened at an “unprecedented” rate.

Steve Hanke, Economics Professor Says There is a Probability that the U.S. Will Recover The Recession Is Now 90%

Professor Steve Hanke is a critic of central banks around the world and said that he believes a recession was very possible on Friday. Hanke discussed his predictions with David Lin (news anchor at Kitco News) and said that there is a 95% chance of an American recession. “Where we’re going is determined by where the money supply is going,” Hanke told Lin on Friday. “The Quantity Theory of Money is a way to determine national income determination.”

Johns Hopkins University’s professor of applied economy added,

The money supply had been inflated in 2020. COVID was implemented. On average, it was three times faster that what was necessary for inflation to be 2%. We experienced a lot more inflation as a result.

Inflation in the U.S. has been an issue and the U.S. Federal Reserve’s key inflation gauge, the personal consumption expenditures (PCE) price index, increased by 0.5% in September. The September Consumer Price Index (CPI), which showed 8.2% consumer prices, was also reported. Hanke stated that quantitative tightening has become a serious issue due to the significant contraction in the money supply.

“The last seven months, the money supply has actually contracted by 1.1%,” Hanke told the Kitco anchor. “That’s almost unprecedented. That means, of course, you have a big change in the money supply and then there’s a transmission mechanism. There are lags between the thrusts in the money supply, whether it’s going up or it’s going down, and what happens to the real economy,” Hanke added. These factors, according to Hanke, will cause the United States into a severe recession.

Hanke also told the anchor of news:

Some time, in 2023, we’ve got a pretty big recession baked in the cake. So GDP numbers, they’re a great thing and you can celebrate it today, it’s not negative anymore, we had a positive number — the whole picture looks like the economy is kind of flat for the last year, but it’s going to hit south.

Hanke, however, is not a fan of cryptocurrencies like bitcoin and he’s critized the country of El Salvador for adopting bitcoin as a form of legal tender. In June 2021, a few months before bitcoin (BTC) tapped $69K per unit, Hanke explained that “with [Nayib] Bukele at the helm” his country faced “financial ruin.” Bukele shot back at Hanke’s critique when BTC reached $60K per unit in mid-October 2021.

Hanke is a fan of countries creating currency boards, an idea that leverages the use of a monetary authority to maintain a currency’s fixed exchange rate. Bitcoin, by design, is the antithesis of Hanke’s favored currency board solution as BTC’s network is decentralized, and the free market chooses the cryptocurrency’s exchange rate.

This story contains tags
Bitcoin, BTC, Central Banks, consumer price index, Covid, Currency Board, Currency Boards, David Lin, economics, Economist, Economy, El Salvador, Fed, Federal Reserve, GDP numbers, Kitco anchor, Kitco Interview, PCE, Steve Hanke, U.S. Dollars, US economy, USD

What do you think about Steve Hanke’s opinion that says a “pretty big recession [is] baked in the cake?” Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead for News. He also lives in Florida and works as a journalist covering financial technology. Redman is an active participant in the cryptocurrency community from 2011. Redman is passionate about Bitcoin and open-source codes. Redman has contributed more than 6000 articles to News since September 2015. These articles are about disruptive protocols that are emerging.

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