Steve Hanke, Professor of Applied Economics, predicts that headline CPI inflation will return to 2% by year-end 2023, but a recession will hit by Q1 of 2024.

*This video was recorded on June 30, 2023

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0:00 – Intro
0:45 – Labor market
3:40 – 2% inflation by year-end
6:40 – Recession by Q1 2024
8:20 – Social costs
14:40 – Inflation vs recession
22:00 – Ageing population
24:50 – Declining population

#economy #recession #recession…(read more)

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Steve Hanke: There’s A Much Bigger Crisis Than High Inflation

Steve Hanke, an American economist and professor at Johns Hopkins University, is known for his expertise in international economics and monetary policy. While inflation has been a key issue in recent times, Hanke argues that there is a much bigger crisis that needs attention.

Inflation has been a recurring concern for economies worldwide. Rising prices erode the purchasing power of consumers, making it harder for people to afford basic necessities and reducing their overall standard of living. Governments and central banks are often tasked with taming inflation through various policy measures.

However, according to Hanke, the root cause of high inflation is often an extremely unstable currency. In many cases, governments can print excessive amounts of money, leading to a devaluation of the currency and subsequent inflation. This phenomenon, known as hyperinflation, has devastating consequences for individuals and the economy as a whole.

Hanke points out that while high inflation is a significant issue, the real crisis lies in the lack of sound monetary systems across the globe. He argues that the absence of reliable monetary frameworks, such as currency boards or dollarization, is the primary cause of economic instability and hyperinflation.

Currency boards, a system utilized by some countries, fix the exchange rate of their national currency to that of a stable foreign currency, such as the US dollar or the euro. This ensures that the value of the domestic currency remains stable and inflationary pressures are kept in check.

Dollarization, on the other hand, involves adopting a foreign currency as the national currency, thereby eliminating the risk of hyperinflation altogether. Several countries, including Ecuador and El Salvador, have successfully dollarized their economies and experienced increased stability and economic growth as a result.

Hanke believes that by implementing these sound monetary frameworks, countries can avoid the pitfalls of inflation and foster economic stability. However, he acknowledges that the adoption of such systems requires political will and a commitment to maintaining fiscal discipline.

In his research, Hanke has often emphasized the importance of monetary reform as a means to combat hyperinflation and restore economic stability. He has worked closely with governments and policymakers to implement effective monetary policies and has been vocal in advocating for sound monetary systems worldwide.

While high inflation certainly poses significant challenges, Hanke’s emphasis on addressing the root cause of unstable currencies and implementing sound monetary frameworks provides a fresh perspective on tackling economic crises. By prioritizing monetary stability, governments can lay the foundation for sustainable economic growth and improve the quality of life for their citizens.

In conclusion, Steve Hanke argues that there is a much bigger crisis than high inflation – the lack of sound monetary systems. By adopting currency boards or dollarization, countries can avoid the devastating consequences of hyperinflation and pave the way for economic stability. Hanke’s insights shed light on the importance of monetary reform and provide valuable guidance for policymakers around the world.

Steve Hanke: The Crisis of High Inflation Is Just the Tip of the Iceberg appeared first on Inflation Protection.