Professor Steve Hanke Says US Economy Was Flat Over the Last Year, but Stresses ‘It’s Going to Hit South’ – Economics Bitcoin News

Amid the chaotic economy, plagued with central bank tinkering, supply chain issues, and red-hot inflation, the professor of applied economics at Johns Hopkins University, Steve Hanke believes a “pretty big recession” will take place in 2023. Speaking in an interview on Oct. 28, Hanke said that he updated the probability of a U.S. recession to a 90% chance, as he believes the money supply has tightened at an “unprecedented” rate.

Economics Professor Steve Hanke Says Probability of a U.S. Recession is Now 90%

Professor Steve Hanke has been critical of the central banks worldwide and on Friday, he said the chances of a recession is very likely. Hanke spoke with the news anchor for Kitco News David Lin, and explained that he upped his prediction to a 90% chance a U.S. recession will occur. “Where we’re going is determined by where the money supply is going,” Hanke told Lin on Friday. “The Quantity Theory of Money is a way to determine national income determination.”

The professor of applied economics at Johns Hopkins University added:

We had the money supply being goosed in early 2020, when COVID hit, we had the money supply growing, on average, about three times faster than it should have been growing to hit a 2% inflation target. As a result, we had a lot of inflation.

Inflation in the U.S. has been an issue and the U.S. Federal Reserve’s key inflation gauge, the personal consumption expenditures (PCE) price index, increased by 0.5% in September. Furthermore, the September consumer price index (CPI) report had shown consumer prices jumped to 8.2%. Hanke says quantitative tightening is now a big issue as the money supply has contracted significantly, the economics professor stressed during his interview.

“The last seven months, the money supply has actually contracted by 1.1%,” Hanke told the Kitco anchor. “That’s almost unprecedented. That means, of course, you have a big change in the money supply and then there’s a transmission mechanism. There are lags between the thrusts in the money supply, whether it’s going up or it’s going down, and what happens to the real economy,” Hanke added. The economics professor opined that he thinks these factors will lead the U.S. toward a large recession.

Hanke further told the news anchor:

Some time, in 2023, we’ve got a pretty big recession baked in the cake. So GDP numbers, they’re a great thing and you can celebrate it today, it’s not negative anymore, we had a…