Steve Hanke says we’re going to have one ‘whopper’ of a recession in 2023

CNBC/Abigail Ng/8-30-2022

“The bottom line is we’re going to have stagflation — we’re going to have the inflation because of this excess that’s now coming into the system. The problem we have is that the [Fed Chair Jerome Powell] does not understand, even at this point, what the causes of inflation are and were. He’s still going on about supply-side glitches… [and] failed to tell us that inflation is always caused by excess growth in the money supply, turning the printing presses on.”

USAGOLD note: The gold market’s reaction to Powell’s comments on Friday has been somewhat subdued compared to other markets, perhaps signaling that investors believe significant instability still lies ahead. Steve Hanke, an economics professor at Johns Hopkins University, who has helped several countries establish new currency regimes, says that the United States is headed for a “whopper” of a recession in 2023 coupled with a high inflation rate that will persist into 2024. He blames “sustained inflation” on “excess growth” in the money supply and the predicted recession on its subsequent contraction. One wonders about the staying power of the money supply contraction Hanke mentions. July’s M2 reading is higher than June’s,

M2 Money Supply
(Aggregate, one year)

bar chart showing M2 money over the past twelve months
Chart courtesy of TradingEconomics



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