War With Iran: How Will Economy, Markets React? | Steve Hanke

Summary

Steve Hanke joins David Lin to discuss the economic and market implications of the Israel-Iran conflict, sanctions, and US fiscal and monetary policy. Hanke argues the Fed is too tight and that tariffs do not drive inflation, while warning that regime uncertainty will push the US into recession and deflate an overpriced stock market. He recommends holding some gold and points to Berkshire Hathaway as well positioned with its large cash pile. The conversation also covers defense spending, the Big Beautiful Bill, and education/career advice.

• Hanke criticizes US involvement in Middle East wars and says cutting US financing would quickly end the conflicts.
• He calls sanctions ineffective and cites collateral damage to Europe and Germany.
• Hanke expects an ongoing US slowdown and recession due to regime uncertainty and weak money-supply growth.
• He says tariffs are not inflationary and expects inflation to continue falling toward or below the Fed's target.
• He argues the Fed should stop quantitative tightening and focus on money-supply growth rather than interest rates.
• Hanke views the US stock market as a bubble and sees P/E multiples compressing in a recession.
• He suggests holding gold for uncertainty and says Berkshire Hathaway is well positioned with Buffett's cash pile.
• He opposes the Big Beautiful Bill due to deficits, debt, and higher defense spending.