Episode Details

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:hanke@jhu.edu

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.