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Steve Hanke, Professor of Applied Economics, discusses the surprise invasion of Russia by Ukrainian forces and the economic impact, as well as the theory that the Treasury is rigging the election results by manipulating interest rates using debt issuances.
*This video was recorded on August 12, 2024
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0:00 – Intro
1:30 – Ukraine’s incursion into Russia
18:25 – Is Treasury manipulating interest rates?
32:50 – National debt breakdown
39:19 – Fiscal deficit and money supply
#economy #ukrainewar #investing
47 Comments
What's next for the Ukraine war?
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Submit questions to us for the next episode!
Steve Hanke's email: hanke@jhu.edu
My email: david@thedavidlinreport.com
USA warmonger government is deeply Evil.
Hanke talks as though M2 is some sort of proxy for the money supply, it isn't. He also seems to think that the CPI is a measure of monetary inflation, which it REALLY isn't!!! The guy has learned nothing on 40 years…
Don't banks control the money supply through lending and isn't that largely a function of interest rates?
This is all a joke, fellow has no idea whats going on, has no expertise in the subject and his talking points are “Russia Strong, Russia Win” with no supporting information.
Proffesor "Tobarish Haenke"… It smell like rubles
I don’t understand why it’s the CHANGE in the money supply and not the QUANTITY of money that he is primarily concerned with. I get it that if there’s a superabundance of money injected into the economy, it’ll cause inflation. I don’t understand why that then becomes an instantaneous reset level from which supply must be added to.
i bet this has way more likes than 1.2k…..they will inflate our money into oblivion….its what all corrupt empires have done. i cant imagine what could come out of a constitutional convention with these crooks in charge wed end up in a fascist dictatorship even worse than we are by default already now.
SH is the master of Money Supply.. I’ve noticed the M2 Money Supply is rising again, not contracting.. Quite significantly as a matter of fact..!!!!
Thank you David and Professor Hanke 🙏
We ALL know that NATO is leading zelensky soldiers into a suicide mission….as a publicly stunt to help FJB & Kamala look good for the November election 😂😂😂
My confusion is as follows: Hanke says the debt is not inflationary if the buyer is other than the fed, so no change to money supply. But when asked what is the solution to the debt, it’s three options, increase taxes (not on horizon), reduce spending (also not on horizon) or inflation. So there is a disconnect, or a missing link, in these two explanations. What is it?
39:20
Deficits and debt sold to non-banks does not reduce the money supply as Hanke says..
Yes, it pulls money from non bank deposit liabilities,. temporarily,.. but then what does the government do with that cash it received?
It spends it,. and it does wind up in the checking accounts of the general economy.
The only way the money supply can shrink is if the government pays off some of its debt. Or it reduces deficits below or to a percent no more than the real growth in the economy as Hanke mentioned earlier.
I do agree that when the primary dealers buy debt from the treasury and then the Fed buys it from the primary dealers in exchange for Fed deposit reserves,.. that that does not necessarily cause inflation because,.
1. those reserves cannot leave the banking system, they're not accessible to the general public and economy,.. unless the bank uses those reserves to generate a loan.
Those loans have an obligation to be paid back and therefore ebb and flow with economic activity.
And much of why Japan doesn't have price inflation within the country,.. (and why US inflation was relatively low between 2009 and 2019).. although on the other hand it's destroying the yen relative to other currencies.
But Japan also has a trade surplus.,.. It brings in reserves from other countries,.. . where the US has a trade deficit sending dollars out to the world market where they are placed in reserves in foreign banks..
Which are used as a medium of exchange for transactions in the eurodollar market and/or to invest in US treasuries.
When the Fed reduces rates,…the cost of US imports will go up as demand for US dollars contracts.
Back to inflation,…
2. Just because there are Fed reserve deposits available to the primary dealer banks,.. doesn't mean the money will get loaned out to increase the money supply.
This is kind of like the saying that came out of the GFC,… the government can try to stimulate, but at some point it's like "pushing on a string" if no one wants or can afford or has the qualifications to borrow.
If inflation is not considered a function of US debt, because it's not included in money supply due to double counting or something (I'd have to think through that),.. then US debt and it's growth is a great proxy for inflation,.. or at least the portion of the debt not on the Fed's balance sheet.
David , you need to push back looks to me that M2 is going up
Professor Hanke is absolutely correct that the only way to restore fiscal sanity and sustainability is to adopt a Fiscal Responsibility Amendment to the Constitution through an Article V Convention of States, if necessary.
Awesome job guys
David when you are talking with Hankie, don't you feel you are in school and not doing David lin show. You are the best in the business now
Professor Hanke is the BEST there is! Thanks for interviewing him @David!
Gotta love this delusional man 😂 Im surprised that Russia couldnt defend against couple of thousand man. BUT NOW MY PUTLER WILL CRUSH THEM!😂 "How is russian economy goin.." "MY PUTLER IS DOING GREAT EUROPE IS TOASTED" 😂
Mongols did it, Pols did it…before Napoleon
David, your geopolitical curiosity is admirable, BUT you are way way away from understanding what is going on and the games being played. I would say that Professor Hanke is also a novice, but at least he says that he doesn’t know. The media is lying even more massively than what they do on the financial/economic front. I can give you a whole breakdown of why, what, and how. But it would take many hours before you can see enough of this rabbit hole to not be totally lost. If you are interested in understanding more, look up the channel of Judge Napolitano. His guests are not politically motivated and are true experts in this matter. Happy discoveries!!
If the treasury department sells me a bond and I write a check out and give it to the government, how has the money supply shrunk? The government will just spend the money into the economy in a less efficient way than I would have – what am I missing?
A crash and bullish market provides equal high-yield potential, it's all about information and strategy application, I've seen folks make huge 7figure profit in a crashing market and pull it off much easily in a bull market Unequivocally the crash/recession is getting somebody somewhere rich.
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the Russian economy is NOT going well. They are converting their industry to supply the army and in the short term this may stimulate the economy but in the long run it impoverishes the country. If you stop manufacturing tractors to produce tanks that are getting destroyed in a war you are not creating prosperity. Same goes for the conscripts going to the front and dying and the young people fleeing the country. The longer it lasts the worst it is for the regime
Missing point that money is borrowed from current financial assets (investments)and paid out of feds general account for spending on goods or the poor who have a high propensity to spend and not save. Net effect is financial assets (not David’s checking account) liquidated for gov bonds and then gov spends (with deficits) on goods, services, and transfer payments to spenders… equals less capital investments and more dollars chasing limited goods, especially as we are re-shoring production.
David you need to follow Dr Hankes lead.
David, a question for Dr. Hanke, Do you have a "Hanke Panke Index" to use as a Barometer for the overall economic health ???
this is pretty much a free econ class by Mr. Hanke
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Texas requires a balanced budget. We have a surplus “rainy day” fund. It should be returned to taxpayers but compared to other states and US government we are in great shape. Bush cut income tax while increasing spending on a disastrous “preemptive” foreign war, and Medicare Part D, good for me but bad for younger citizens.
Great presentation by Professor Hanke.
Rissia can now legitimately claim NATOs primary intention was a invasion all along..
Having listened to many interviews here and via Kitco over many years…. I am very disappointed, to find an economics professor being interviewed to discover his dubious opinions on military matters. Particularly regarding the matter of an independent nation trying to defend itself from a psychopathic dictator. Steve Hanke is clearly a very intelligent man, however, such a display of pro russian waffle has destroyed any credibility he has in my opinion.
With individuals such as Trump/ Hanke/ and a certain traitorous general (and many others) in the US. I wonder how much 'Kompromat' The Russkies have on these dodgy people.
As a UK citizen I have always been grateful to US people, but now I am inclined to say God Help America and the free world.
Sorry professor, but I disagree with your view on the economy in Russia vs. Europe. Most countries in Europe are doing fine (some better than others obviously). Russia on the other hand has upward trending double digit inflation and their central bank has increased their interest rate to 18%. Their oil and gas revenues are decreasing (even though China and India buy a lot from them) and it seems to me that Russia will not be able to financially sustain a high intensity war effort for very long despite their vast natural ressources. Europe has the energy situation under control and can deal with the cut supply of cheap oil and gas from Russia (thanks to new LNG infrastructure and accelerated green energy transformation).
I'm not a military expert either but I think the level of support for Ukraine from likeminded, democratic nations in the west will largely determine the outcome of the war. Europe (with a few minor exceptions) has been ramping up and are determined for the long haul. I very much hope the same from our well equipped US friends but it seems like it will depend a lot on who wins the presidential election. That is also one of the main reasons why I'm rooting for Harris. Btw. I'm from Denmark which is currently the biggest donor of bilateral support to Ukraine by percentage of GDP. And this has very strong support from the voters. You can see how your country ranks in terms of support here:
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/
It's about time that Ukraine was allowed to hit back at Russia who is the aggressor. Think that with the low morale of the Russian troops and lack of experienced soldiers this was not totally surprising. Although Henke thinks that Ukrainian soldiers are going into the 'meat grinder', it may be the opposite. Russia is still fighting with a WW2 mentality and tactics.
Ukraine has shown the world that it has a far more intelligent and capable military than Russia.
Who would have bet a nickel on Finland standing up to Russia when it was attacked on Nov 30, 1939 by 600,000 soviet troops.
Although Finland was largely equipped with WW1 equipment when the war broke out, soon Russia 'donated' military equipment to Finland so they could fight more effectively.
It was not until the 90's that Boris Yeltsin admitted that the war was an act of Russian aggression.
A correction to the professor: if general public buys freshly issued government debt, the money supply indeed goes down, since the money flows from the public (money holding sector) to the government, which is considered as money "neutral" sector. By the same logic, if the FED buys government debt, there is no change in the money supply, since the newly created government deposit is not included in the money supply (until distributed to the economy).
I don't see how buying a bond reduces money supply. The payment for the bond does leave the buyers account, but the payment goes into the treasury account where the funds are needed in order to be spent back into the economy, either globally or locally. The money supply should increase due to the interest paid on the bond. Please explain where I am mistaken.
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Professor is antiquated in his thinking. The Govt is spending at a much faster rate than individuals and they are taking on much more debt which increases the velocity of the spending.
He needs to retire…..he literally just said that Buffet holds more bonds than Fed…..Fed has about 5 TRILLION! Cmon brooooooo
Delete this video.