#228 Steve Hanke: 'It's Going To Be A Year Of Investing Dangerously' — Bubble Detector At Highest Levels

Steve H. Hanke, professor of applied economics at Johns Hopkins University and the founder and co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise, joins Julia La Roche on episode 227 to shares his outlook for the US economy and financial markets in 2025. Applying his famed "quantity theory of money," Professor Hanke warns that the economy is set to slow this year due to the lagged effects of past monetary and fiscal policies. He cautions that it's "going to be a year of investing dangerously," with his proprietary bubble detector signaling that markets are extremely overvalued and complacent, reaching the highest levels ever. Hanke also discusses the risks posed by runaway government debt, advocates for right-sizing government's role in the economy, and shares his latest books and research.

Links:

Twitter/X: https://x.com/steve_hanke

Capital, Interest, and Waiting: Controversies, Puzzles, and New Additions to Capital Theory https://link.springer.com/book/10.1007/978-3-031-63398-0

Making Money Work: How to Rewrite the Rules of Our Financial System:

https://www.amazon.com/Making-Money-Work-Rewrite-Financial/dp/1394257260

https://www.barnesandnoble.com/w/making-money-work-matt-sekerke/1146170520

Timestamps:

00:00 Introduction

01:11 Macro outlook using quantity theory of money

03:38 Impact of Fed policy on asset prices, inequality, and inflation

07:06 How Fed-driven inequality influenced 2024 election outcome

10:43 China's economic troubles and deflationary risks

13:28 Europe's economic stagnation and fiscal woes

15:38 Likelihood of a recession in 2025 under the new administration

17:36 Parallels to the Reagan era and smart economic policies

20:32 Concerns about Trump's mercantilist trade policies and border control plans

23:43 Hanke's bubble detector signaling overvalued, complacent markets

26:46 Runaway US national debt - the lying price problem and moral hazard

30:06 Restoring confidence and implementing a constitutional debt brake

32:00 Right-sizing government to boost economic growth

33:53 Simplifying taxes with a flat tax

35:48 Hanke's latest books and how to follow his work