'Barrelling Towards An Economic Crisis At Year-End' Unless This Happens | Steve Hanke

Summary

Steve Hanke, Professor of Applied Economics at Johns Hopkins University, discusses the US economic outlook under the incoming Trump administration, focusing on tax policy, inflation, tariffs, bond yields, and China. He argues that money supply growth is too slow, expects inflation to fall, and is bullish on US 10-year Treasuries because yields should decline. He is bearish on the Chinese yuan because China's stimulus focuses on interest rates rather than money supply growth, and he warns that tariffs and trade retaliation are negative-sum games.

• Hanke favors renewing the 2017 tax cuts and cutting government spending, with a preference for a flat tax.
• He says M2 growth is below his 6% golden rate, so inflation should continue falling.
• He expects US 10-year Treasury yields to decline and is bullish 10-year Treasuries.
• He argues broad tariffs act as a tax on imports and are a negative-sum game, not an aggregate inflation driver.
• He advises Canada not to retaliate against US tariffs because both sides would lose.
• He is bearish on the Chinese yuan, citing anemic money growth, zero inflation, and ineffective stimulus focused on interest rates.