Economist Steve Hanke: Signs Of 'Big Slowdown' Next

Summary

In this insightful discussion, Professor Steve Hanke of Johns Hopkins University delves into the complexities of economic indicators, monetary policy, and the potential for a recession. He emphasizes the significance of the money supply and yield curve inversion as predictors of economic downturns. The conversation also touches on the impact of AI on the labor market and the inefficacy of sanctions as a foreign policy tool. Additionally, Professor Hanke introduces his innovative proposal for a permanent calendar, which could streamline scheduling and potentially boost GDP.

Takeaways

• 📉 The money supply in the United States has shrunk by about 4.5% since March 2022, indicating a high probability of a recession.
• 🔍 Leading indicators by the Conference Board have been negative for 22 straight months, suggesting a significant economic slowdown.
• 📈 The yield curve inversion, with short rates higher than long rates, signals an impending recession.
• 💹 The Federal Reserve's monetary policy should ideally focus on maintaining a stable money supply growth rate to achieve the 2% inflation target.
• 📊 Inflation rates are trending downward, with the latest figures showing a slight decrease from 3.4% to 3.1%.
• 🤖 The integration of AI into the workforce is expected to lead to structural changes, potentially freeing up labor for other tasks.
• 🚫 Sanctions are generally ineffective and can lead to unintended consequences, such as rallying support for the targeted regime.
• 📚 Scholarly literature suggests that sanctions rarely achieve their intended objectives and often backfire.
• 🗓 The Hanky Henry Permanent Calendar proposes a consistent, unchanging calendar structure to improve scheduling efficiency.
• 🌐 The implementation of a permanent calendar could save a significant amount of time and resources, potentially impacting GDP positively.
• 🔄 The current Gregorian calendar system requires adjustments like leap years to compensate for the calendar year being shorter than the solar year.

Q & A

What does the money supply indicate about the current economic situation?

The money supply has been shrinking by about 4.5% since March 2022, which is a significant contraction not seen since the 1929-1933 period. This contraction in the money supply typically precedes a recession, suggesting that a recession is likely.

How does the yield curve inversion relate to economic predictions?

An inverted yield curve, where short-term interest rates are higher than long-term rates, is traditionally seen as a predictor of an upcoming recession. The current inverted yield curve suggests that the economy may be heading towards a slowdown or recession.

What is the significance of the Conference Board's leading indicators being negative for 22 straight months?

The negative leading indicators for 22 consecutive months suggest that the economy is likely to experience a significant slowdown. The last time such a prolonged negative period occurred was before the financial crisis of 2008.

How does the perpetual calendar proposed by Professor Hanky work?

The perpetual calendar, or Hanky Henry Permanent Calendar, is designed to eliminate the need for different calendars each year by standardizing the date and day of the week alignment permanently.