Stijn Schmitz welcomes Steve Hanke, Professor of Applied Economics at Johns Hopkins University, to discuss global economic trends, monetary policy, and the emerging commodity super cycle. The professor’s outlook suggests a complex economic landscape with potential for significant disruption, driven by monetary policy, geopolitical tensions, and structural changes in global trade and commodity markets.
Hanke emphasizes the critical importance of money supply as a key indicator of economic activity and inflation, noting that the United States is currently experiencing an accelerating money supply that will make controlling inflation challenging.
The discussion highlights several significant global economic dynamics, particularly focusing on commodity markets and geopolitical tensions. Hanke argues that the world is entering a commodity super cycle characterized by underinvestment, supply chain disruptions, and precautionary inventory building. The ongoing conflict in the Gulf region and disruptions to global trade have further complicated commodity markets, with potential oil prices ranging from $100 to $350 per barrel depending on supply constraints.
Geopolitically, Hanke suggests that Russia and China are emerging as significant winners in this environment, while the United States has potentially weakened its global position through its actions. He dismisses concerns about de-dollarization, arguing that the US dollar remains the dominant global currency with limited realistic alternatives. On inflation, Hanke predicts continued upward pressure due to monetary policy loosening, commercial bank lending growth, and federal reserve actions. He emphasizes that inflation is fundamentally a monetary phenomenon, driven by increases in money supply rather than isolated economic events. Regarding commodities, Hanke identifies several sectors poised for growth, including critical materials like lithium and vanadium. He recommends investors be “long everything” in the commodity space, noting significant price increases in various exotic commodities.
Timestamps:
00:00:00 – Introduction
00:00:52 – Key Economic Metrics
00:02:00 – US Money Supply Acceleration
00:03:58 – China’s Inflation Challenges
00:04:56 – Commodity Supply Disruptions
00:05:30 – US Tariffs and Sanctions
00:07:13 – Iran War and Strait Closure
00:11:55 – Iranian Economy
00:12:45 – Oil Price Scenarios
00:13:10 – Commodity Super Cycle Thesis
00:17:00 – Oil Supply Impacts
00:20:44 – Market Complacency on Risks
00:24:06 – Winners and Losers Analysis
00:25:12 – China’s Economy
00:27:55 – De-Dollarization Myths
00:30:36 – Gold’s Geopolitical Role
00:33:15 – Supply Shocks & Infrastructure
00:37:20 – Inflation and Money Supply
00:41:40 – Treasury Demand & Inflation
00:46:40 – Bank Lending & Money Supply
00:48:28 – Commodity Picks & Wrap Up
Guest Links:
X: https://x.com/steve_hanke
Website: https://thegoldsentimentreport.com
Amazon Book: https://www.amazon.com/Making-Money-Work-Rewrite-Financial/dp/1394257260
Amazon Book: https://www.amazon.com/Capital-Interest-Waiting-Controversies-Additions/dp/3031633970
E-Mail: mailto:
[email protected]Steve H. Hanke is a Professor of Applied Economics and Founder & Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore.
He is a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C., a Senior Advisor at the Renmin University of China’s International Monetary Research Institute in Beijing, a Special Counselor to the Center for Financial Stability in New York, a contributing editor at Central Banking in London, and a regular contributor to the Wall Street Journal’s Opinion pages. Prof. Hanke is also a member of the Charter Council of the Society of Economic Measurement and of Euromoney Country Risk’s Experts Panel.
In the past, Prof. Hanke taught economics at the Colorado School of Mines and at the University of California, Berkeley. He served as a Member of the Governor’s Council of Economic Advisors in Maryland in 1976-77, as a Senior Economist on President Reagan’s Council of Economic Advisors in 1981-82, and as a Senior Advisor to the Joint Economic Committee of the U.S. Congress in 1984-88. Prof. Hanke served as a State Counselor to both the Republic of Lithuania in 1994-96 and the Republic of Montenegro in 1999-2003. He was also an Advisor to the Presidents of Bulgaria in 1997- 2002, Venezuela in 1995-96, and Indonesia in 1998.
He played an important role in establishing new currency regimes in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania, and Montenegro.
Prof. Hanke has also held senior appointments in the governments of many other countries, including Albania, Kazakhstan, the United Arab Emirates, and Yugoslavia.
Prof. Hanke has been awarded honorary doctorate degrees by the Bulgarian Academy of Sciences, the Universität Liechtenstein, the Universidad San Francisco de Quito, the Free University of Tbilisi, Istanbul Kültür University, Varna Free University, and the D.A. Tsenov Academy of Economics in recognition of his scholarship on exchange-rate regimes.
Prof. Hanke and his wife, Liliane, reside in Baltimore and Paris.
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