US economist Steve Hanke says the US economy is slowing down too quickly to slow down. An interview on YouTube With journalist Julia La Roche.
The Johns Hopkins University professor points to signs of declining economic activity, such as inflation, which has now fallen significantly. At this rate, Hanke predicts that the U.S. consumer price index will fall below three percent by the end of the year and eventually fall below two percent.
He has been warning for months that he is one of the last remaining ‘bears’ on Wall Street. Most analysts think the US will survive the recession.
According to Hanke, that picture is false because the amount of money in circulation is shrinking. He says this will cause economic recession.
Money supply, called ‘M2′It contracted in the past two years and grew at an annual rate of 0.5 percent in early June. Data from the American Association of Central Banks.
By comparison, the US money supply increased by 27 percent at the start of 2021, thanks to stimulus measures aimed at boosting the economy.
‘US interest rates to fall too fast’
If the Federal Reserve wants to keep the inflation rate around two percent, Hanke says, it will have to dramatically ease its monetary policy. He therefore expects the policy rate to fall “very hard”.
The central bank hiked interest rates sharply in 2022 and 2023 to curb rapidly rising inflation. Above 5 percentThe highest level since 2001. And other experts have warned It will shrink the US economy.
The central bank seems to have planned Lower interest rates later this year. According to a recent estimate by the Regional Fed in New York, the U.S 56 percent chance To enter recession by June 2025.