Latest news with #SteveHanke
News18
31-07-2025
- Business
- News18
US Consumers Will Be Paying A Large Sales Tax On All The Imported Goods : Steve Hanke #brasstacks
US Consumers Will Be Paying A Large Sales Tax On All The Imported Goods : Steve Hanke #brasstacks Last Updated: July 31, 2025, 22:49 IST Videos World | Trump reserves the right to change the terms of the deal since nothing is in writing. American consumers will be paying a large sales tax on all the imported goods. It is a disaster for US consumer: Steve Hanke American Economist n18oc_worldWatch News18 Mobile App - homevideos US Consumers Will Be Paying A Large Sales Tax On All The Imported Goods : Steve Hanke #brasstacks CNN name, logo and all associated elements ® and © 2024 Cable News Network LP, LLLP. A Time Warner Company. All rights reserved. CNN and the CNN logo are registered marks of Cable News Network, LP LLLP, displayed with permission. Use of the CNN name and/or logo on or as part of does not derogate from the intellectual property rights of Cable News Network in respect of them. © Copyright Network18 Media and Investments Ltd 2024. All rights reserved.
Yahoo
02-07-2025
- Business
- Yahoo
3 bearish market veterans explain why the S&P's latest highs could be short-lived
The S&P 500 has rebounded to record levels as investors cheer a brighter horizon. Some market watchers say the rally in stocks could stall as a recession and other risks loom. David Rosenberg, Gary Shilling, and Steve Hanke are all skeptical of the bounce in stocks. Relieved investors have fueled a record-breaking rally for the S&P 500 and are betting on further gains. They could be left disappointed, veteran market watchers say. The benchmark US stock index plunged nearly 19% to below 5,000 points between February 19 and April 8 as President Donald Trump's tariff threats stoked fears of a trade war and recession. The S&P has rallied about 24% from that trough to fresh highs of around 6,200 points this week, marking a roughly $10 trillion increase in market value within three months. The comeback reflects investors "pricing out bad news," David Rosenberg, the founder and president of Rosenberg Research, said in a client note on Monday. The risks of a "global trade war, World War III coming out of the Middle East, or falling off the fiscal cliff in 2026 all appear to have been resolved," he wrote, referring to the Trump administration striking trade deals, Iran and Israel reaching a tentative ceasefire, and Trump's "big, beautiful bill," which the Senate passed Tuesday. However, in an X post last week, the former chief North American economist at Merrill Lynch underscored just how ebullient investors are by ticking off the many assumptions being priced into stocks: Rosenberg outlined in his Monday note some of the reasons he's wary of the resurgence in stocks. The S&P's forward price-to-earnings multiple has expanded by four points in three months, which has only happened 0.3% of the time since 1990. At 22, it's about 20% above the average over the past decade, despite real interest rates of 2.1% being much higher now than during previous market booms, he said. "Nothing is to say that the rally can't last, but does it make sense? No," Rosenberg told Business Insider. "A 4 point P/E multiple expansion from any level over a three- month time span is a four standard deviation event. Steer clear!" The index's Shiller PE ratio, which uses inflation-adjusted earnings over the past 10 years to smooth out short-term volatility, has reached 37 — close to its December high and not far off its record 38.6 reading in November 2021, per Gurufocus data. The Buffett indicator, which divides the total value of the US stock market by quarterly GDP, reached 198% as of Tuesday's close, Wilshire Indexes told BI. The measure is named after investor Warren Buffett, who once said buying stocks when the gauge exceeds 200% would be "playing with fire." In his note, Rosenberg flagged recent declines in economic data, including new home sales, housing starts, goods exports, building permits, retail sales, real consumer spending, and industrial production. He also said the US average tariff rate is now nearly 16%, or six times its level before Trump took office. He added that this was equivalent to a $2,000 tax hike for the average American household. The blow to their real incomes implies an almost 1% drag on GDP growth, matching the estimated impact of immigration curbs and deportation, he continued. Rosenberg said these "various policy moves are tilting the US economy toward a recession." It is "no exaggeration to say that a consumer recession is forming," but there's "absolutely no fear out there in marketland," he added. He's not the only commentator sounding the alarm. Gary Shilling, another veteran economist known for his bearish views, recently told the "Soar Financially" podcast that the S&P is in a "very vulnerable situation" and valuation metrics "tell you that stocks are very expensive." Despite these historical warning signs, stocks have powered through and hit record highs over the last few years. The president of A. Gary Shilling & Co., who was Merrill Lynch's first chief economist, put the chances of a recession in the next year at 60% based on signs of a weakening consumer, flagging job market, and pressure on corporate profits. Meanwhile, Steve Hanke recently told BI that while stocks have historically shrugged off geopolitical shocks, he's skeptical whether investors are right to assume the Iran-Israel conflict is settled following the Trump-brokered ceasefire in June. "I'm not so sure that they are right," he said. The professor of applied economics at Johns Hopkins University added that a "multitude of dramatic policy changes" have fostered the greatest uncertainty for businesses and investors since the 1930s. Read the original article on Business Insider
Business Insider
26-06-2025
- Business
- Business Insider
Steve Hanke tells BI investors are shrugging off serious risks — and Trump is causing historic uncertainty
Investors are brushing off the Iran-Israel conflict as another brief distraction on the road to fresh highs. Steve Hanke thinks their complacency could prove costly. The professor of applied economics at Johns Hopkins University told Business Insider that Israel has been directly or indirectly tied to seven of the 19 major geopolitical events since 1950. Only one of those incidents — the Arab-Israeli War in 1973 — caused "lasting damage" that still weighed on stocks a year later, he said. "So, what's happening now suggests that investors believe that history is a guide," Hanke said. "They see signs of danger, but somehow think that they will escape, as they have in the past. I'm not so sure that they are right." The flagship US stock index, the S&P 500, has rallied almost 2% since June 13, the day that Israel attacked Iranian nuclear and military sites. It closed at nearly 6,100 points on Wednesday, putting it within touching distance of a record high. The rebound came despite the US bombing three Iranian nuclear facilities on Sunday, and Israel and Iran accusing each other of breaking a Trump-brokered ceasefire this week. Hanke, a former economic advisor to President Ronald Reagan, was the president of Toronto Trust Argentina when it was the world's best-performing market mutual fund in 1995. He co-authored a book published in May titled "Making Money Work: How to Rewrite the Rules of our Financial System." The veteran economist and commodity trader flagged several risks that investors appear to be shrugging off. Middle Eastern conflicts and the Russia-Ukraine war were still "up in the air," and neo-conservatives "have their sights aimed at China," he said. "If that wasn't bad enough, the Trump administration is engaged not only in a tariff war but in a multitude of dramatic policy changes that have created what I termed ' regime uncertainty,'" Hanke said. Hanke was describing a situation where individuals, investors, businesses, and other entities are so unsure of regulations, future government policies, and how the economy will fare that they delay long-term planning or investment. "We have not witnessed regime uncertainty since Franklin Delano Roosevelt and the New Dealers in the 1930s," Hanke said. "So, the current context is quite different than the other 19 geopolitical crisis episodes." Put differently, investors should be wary of assuming the stock market will swiftly rebound from this geopolitical shock as it has from many others, given just how uncertain the world is right now.
Yahoo
23-05-2025
- Business
- Yahoo
A new book makes the case for putting money supply at the center of the U.S. economy and re-empowering commercial banks
In the path-breaking book 'Making Money Work,' a pair of leading economists present a manifesto for fixing the financial regime that took America on a careening post-COVID ride through rampant inflation, ballooning values of homes and stocks, and spiking income inequality. In a rush to reverse course and tame prices, the pair argues, a clueless Fed clamped down much too hard, and doesn't even know it. To make matters worse, heavy-handed regulation has hamstrung the commercial banking system, slowing the flow of credit just as the central bank's throttling back. The upshot: These dual, wrongheaded policies are already saddling the U.S. with tepid growth, and could easily trigger an unnecessary, self-inflicted recession. Their solution: Putting the long-ignored 'money supply' at the center of U.S. economic policy. To make that happen, the authors say, Washington must recharge the weakened players that create the flow of dollars––the commercial banks––to move this nation back where we should and can be once again: on a path of stable prices and strong, sustained economic growth. The authors are Steve Hanke, founder and professor at the Johns Hopkins Institute of Applied Economics, Global Health and the Study of Business Enterprise, and Matt Sekerke, a fellow there. Hanke's renowned as a hardcore 'monetarist' who won the nickname 'the money doctor' by advising Estonia, Lithuania, Bulgaria, and Bosnia-Herzegovina on establishing currency boards, and Montenegro and Ecuador on dollarization. Those reforms helped successfully smash inflation and establish stability. The book is an extremely intensive, data-rich work of economic analysis, and a must read for anyone interested in how our economic policy has gone rogue since the Global Financial Crisis. For this review, I conducted an in-depth interview with Hanke where he cuts through the details, and highlights the broad sweep of his and Sekerke's template for reform. I also refer specifically to passages in 'Making Money Work,' which I read carefully. But unless otherwise noted, the capsule summary of its themes come from my talk with Hanke. So what is this book all about? 'It's about getting the money supply back into the game. The Fed does not adhere to the quantity theory of money,' says Hanke. The central bank, he charges, incorrectly focuses only on controlling interest rates. He insists that it's really growth in broad money that determines the levels of economic expansion and inflation, just as an altimeter regulates the altitude of an aircraft. 'The Fed's been using post-Keynesian models that ignore the money supply and hence put us on a rollercoaster,' he says. In our conversation and in his book, Hanke argues that the Fed's easy money policies post-COVID hugely inflated all asset prices including land, real estate, and stocks, and eventually created near-double digit inflation. Those policies penalized the middle class and made the wealthy far richer. 'In January of 2020, billionaires held 14% of the wealth in America as a share of GDP,' he says. 'Today, it's 21.1%.' He and Sekerke argue that to get the money supply growing at the correct, steady speed, policymakers need to render commercial banks once again the centerpiece of the financial ecosystem. They point out that these lenders, not the Fed, are the real elephant in the room. About 80% of broad money in the financial system has been produced by commercial banks via their lending to businesses and households. The book takes a new, holistic view of monetary policy as a three-legged stool. Traditionally, the field's narrowly focused on the Fed. But Hanke and Sekerke emphasize and integrate the roles of two key players that typically get left out of the picture: bank regulation and fiscal policy. 'Bank regulation and the Fed are the two most significant legs,' he adds, with fiscal policy still potentially playing an important role. Following the GFC, Hanke argues, the rules went haywire on banking. Two reforms hit the banks hard: Dodd-Frank legislation and the Basel III international regime both forced lenders to hold far higher reserves as a cushion. 'As a result, the banks became strangled and sharply cut back loans,' says Hanke. After going negative in the months following the GFC, loan growth only gradually recovered, but Hanke and Sekerke argue that it's still much too low. 'Banks are not creating enough money,' Hanke told me. 'The growth of their loan books remains relatively anemic, at rates lower than their levels prior to the GFC.' The authors propose two fixes to get the U.S. back on track for steady prices and steady robust growth. The first: dismantling the 'universal bank' model by 'divorcing' the lending business from investment banking. 'The rates of return are higher in investment banking than lending, so the capacity to make loans at the universal banks gets sucked away,' explains Hanke. Second, Hanke and Sekerke avow that Dodd-Frank and Basel III went much too far by imposing onerous 'risk weightings' that mandate excessive and discriminatory reserves, on different kinds of loans. 'The weightings are too high,' says Hanke. 'They're not fine-tuned. The banks should be given much more leeway in determining the reserves. They know much more about their business than the bureaucrats in Washington and Basel.' One such regulation that the book contends greatly increased the burden on banks is the 'Supplementary Leverage Ratio,' enacted in 2014 as part of the extensive post-GFC reforms. It mandates extra reserves on top of the Dodd-Frank and Basel III requirements that impose relatively high weights for holding even super-safe assets such as Treasuries. Secretary of the Treasury Scott Bessent has called SLR reform 'a top priority,' and it's strongly favored by such banking titans as JPMorgan's Jamie Dimon. In 'Make Money Work,' Hanke and Sekerke assert that the SLR 'binds' loan growth, and that reforming it would fit their prescription for unshackling bank lending. By pursuing policies that undermine and distort lending, Hanke and Sekerke insist, the Fed and Congress are curtailing an overlooked gift embodied in the banking system. When folks invest in stocks, bonds or real estate, that 'savings' is channeled through investment banks and other non-bank financial institutions. Those savings are money the investors aren't spending on consumption––that's not going to groceries, cars or vacations. But when banks provide credit, as Hanke puts it, 'they create money out of thin air' in the form of loans. That money doesn't come out of new savings that forces investors to forego buying stuff. 'It's the magic no one understands,' says Hanke. Or as the book puts it: 'The ability of banks to create deposit money out of nothing is one of the great forgotten facts of monetary economics.' 'The banks act as a type of phantom savers that enable good bankable projects to be financed without having to forego consumption,' Hanke says. 'Making Money Work' writes a new chapter in money and banking, and mounts a compelling case for learning from the post-GFC mistakes, letting the money supply rule by putting the banks back in charge. Because to paraphrase the great bank robber Willie Sutton, 'that's where the money comes from.' 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Fox News
13-05-2025
- Business
- Fox News
Billionaires boomed in Biden era as Fed became 'engine of income inequality' powered by COVID policies: expert
The nation's wealthiest residents saw their billions grow even larger in the years following the COVID-19 pandemic due to policies from the Federal Reserve that have deepened the chasm of income inequality, economic experts report. "If you look at the amount of federal regulation, the amount of federal taxes, if anything… the economy has gotten less friendly toward big business, and toward rich people," economist Peter St. Onge told Fox News Digital in a May phone interview. "What's actually been happening is that the Fed has been driving income inequality. And, I think for a long time, Republicans were sort of in denial – not just Republicans, but sort of free market types were in denial – and they didn't want to talk about income equality." "I think they should absolutely talk about it, because what's causing it is not free markets," he said. "It's something that I think everybody should oppose, which is government manipulation of the monetary system." St. Onge was reacting to data showing that billionaires' share of the GDP increased from 14.1% in 2020 to 21.1% in 2025, as reported by Johns Hopkins University economic professor Steve Hanke. JPMorgan Chase's private bank estimated that the number of billionaires in the U.S. increased from 1,400 in 2021 to nearly 2,000 as of 2024, the Wall Street Journal reported in April. The Federal Reserve is America's central bank, which sets monetary policies and oversees banks. It acts independently, meaning it does not require approval from the president or Congress when enacting policies. St. Onge explained to Fox News Digital that "debt is a rich man's game" and that billionaires have benefited financially since the pandemic as the Fed worked to "manipulate interest rates" down below market value, which subsidized loans. "During COVID, you could get a mortgage for, you know, three, three and a half percent, when inflation was running higher than that," he explained. "You were literally being paid to borrow money, which is not a free market outcome.… So it makes loans cheap and the rich overwhelmingly borrow money." The average debt for the top 5% of Americans sits at about $600,000, he said, while the average debt for the vast majority of Americans is roughly $74,000. "That's about a nine times difference," he said of the data. "So if you make loans too cheap, you are giving nine times more money to rich people.… If you make loans cheap, you're functionally giving $9 to rich people for every $1 to give everybody else." Assets are even more skewed, he explained, with the top 5% of Americans holding $7.8 million in assets compared to the average American's $62,000 – notching 130 times the difference between the two demographics, he said. "The value of a stock or even a house are based on the future stream of income, and those are all discounted by the interest rate," he said. "And so pretty close to mechanically, if you cut interest rates in half – long-term interest rates – you are doubling the value of stocks." St. Onge pointed to the American economy in the 1970s and the early 2000s, outlining that growth "took a big step down" in the 2000s while asset values, such as housing prices and the stock market, skyrocketed. "The reason is because, since the 1970s, the Fed has very aggressively held rates low, and so this has caused all those assets to go up. So stocks have gone up, housing has gone up. And again, those are rich men's games. Overwhelmingly, people who own stocks are rich. Housing is even more skewed." "So if you've got a nine times difference on loans between the bottom 50% and the top 5%, and then you've got 130 times on assets, then the Fed manipulating rates down – they're not doing it to make rich people rich, hopefully – but that's sort of the consequence of doing that," he said. "Holding long-term interest rates low is to shower money on rich people and to shower it in proportion to which they're rich, right? So the most extreme version of that is going to be billionaires." Economist Steve Hanke discussed how the Federal Reserve has fanned the flame of income inequality through its policies at a conference earlier in 2025 at the Mises Institute, an economics-focused think tank based out of Alabama. "In 2020, billionaires' share of GDP was 14.1%. Now, it's 21.1%. The Fed increased the money supply, asset prices went up, & guess who owns the assets? Billionaires. By ignoring the money supply, the Fed is an ENGINE OF INCOME INEQUALITY," he posted to X in April of his findings. "Take the Federal Reserve's excessive money printing during the pandemic," Hanke said in an interview published by the think tank in April. "The transmission mechanism of monetary policy roughly dictates that changes in the money supply are followed by changes in asset prices in 1–9 months' time, changes in real economic activity in 6–18 months' time, and finally changes in the price level in 12–24 months' time." "Thanks to the Fed's helicopter money drops beginning with COVID, the annual growth rate of the US broad money supply peaked at 18.1% per year in May 2021," he added. "Lo and behold, the transmission mechanism followed – the S&P 500 reached a local maximum in December 2021 (6 months later), and inflation peaked at 9.1% per year in July 2022 (14 months later)." The result, he said, was skyrocketing wealth inequality to the tune of billionaires increasing their share of the GDP by 7.6 percentage points in just four years. St. Onge said the Fed's policies have been political in nature, while remarking he would welcome "naive" Democrats who bang the proverbial campaign drum of income inequality to jump onto the "end the Fed bandwagon." "They have a naive argument where they look at rich people and they say, 'Hey, this is so terrible. We live in this dog-eat-dog jungle of an economy,'" St. Onge said of Democrats who campaign on income inequality. "And that is inaccurate," he added, citing Federal Reserve policies that have amplified income inequality. On the opposite side of the political coin, Vice President JD Vance has railed against the Biden administration and "Wall Street barons" for policies he said have hurt the working class. During his acceptance speech after officially becoming the vice presidential nominee in July, Vance said an affordability crisis is strangling the working class, while touting that the Trump administration would end economic "catering to Wall Street." "Wall Street barons crashed the economy and American builders went out of business," Vance said from Milwaukee in summer 2024. "As tradesmen scrambled for jobs, houses stopped being built. The lack of good jobs, of course, led to stagnant wages. And then the Democrats flooded this country with millions of illegal aliens. So citizens had to compete – with people who shouldn't even be here – for precious housing. Joe Biden's inflation crisis, my friends, is really an affordability crisis." The Federal Reserve Board declined comment when approached by Fox Digital regarding St. Onge's and Hanke's remarks.
