JHU Econ Prof. Hanke: Inflation Problem ‘Will Last Through 2024’ at Least, Claims Reconciliation Bill Will Help Inflation Are Nonsense

BURNETT I want to ░░░░░░░░ now to Steve Hanke ░░░░░░░░ s professor of applied ░░░░░░░░ at the Johns Hopkins ░░░░░░░░ and one of the ░░░░░░░░ s leading experts on ░░░░░░░░ Professor I know you ░░░░░░░░ been following that in ░░░░░░░░ places right now But ░░░░░░░░ me just give you ░░░░░░░░ chance to set the ░░░░░░░░ because I think it ░░░░░░░░ really important for people ░░░░░░░░ understand the scope of ░░░░░░░░ problem How bad is ░░░░░░░░ inflation situation in your ░░░░░░░░ right now HANKE It ░░░░░░░░ very bad The Federal ░░░░░░░░ has made one of ░░░░░░░░ largest mistakes it s ░░░░░░░░ in the post World ░░░░░░░░ II era since the ░░░░░░░░ crisis began Erin there ░░░░░░░░ really three things to ░░░░░░░░ a handle on I ░░░░░░░░ that I d like ░░░░░░░░ stress One is that ░░░░░░░░ so called supply chain ░░░░░░░░ that Nick was reporting ░░░░░░░░ earlier from Los Angeles ░░░░░░░░ are not a cause ░░░░░░░░ inflation That is not ░░░░░░░░ inflation problem That causes ░░░░░░░░ prices of things that ░░░░░░░░ in the glitch shall ░░░░░░░░ say to go up ░░░░░░░░ to everything else but ░░░░░░░░ doesn t cause overall ░░░░░░░░ The second point I ░░░░░░░░ like to stress is ░░░░░░░░ this is not a ░░░░░░░░ phenomenon So what is ░░░░░░░░ Inflation always and everywhere ░░░░░░░░ a monetary phenomenon too ░░░░░░░░ money Now the supply ░░░░░░░░ just so your viewers ░░░░░░░░ a handle on this ░░░░░░░░ have huge supply chain ░░░░░░░░ in China Japan and ░░░░░░░░ And in all those ░░░░░░░░ the inflation is less ░░░░░░░░ 1 percent a year ░░░░░░░░ is 6 2 percent ░░░░░░░░ last reading we got ░░░░░░░░ the United States That ░░░░░░░░ over three times higher ░░░░░░░░ the Fed s own ░░░░░░░░ target So how does ░░░░░░░░ work What s the ░░░░░░░░ thing The visual that ░░░░░░░░ like to use is ░░░░░░░░ bathtub You ve got ░░░░░░░░ going in the bathtub ░░░░░░░░ you ve got two ░░░░░░░░ that come out of ░░░░░░░░ money bathtub And one ░░░░░░░░ the real economic activity ░░░░░░░░ real growth and the ░░░░░░░░ one is accommodates increases ░░░░░░░░ the demand for money ░░░░░░░░ what s that mean ░░░░░░░░ means as you get ░░░░░░░░ you put more money ░░░░░░░░ your savings account You ░░░░░░░░ more money in your ░░░░░░░░ account You hold more ░░░░░░░░ et cetera et cetera ░░░░░░░░ money in the money ░░░░░░░░ fund and so on ░░░░░░░░ if you take those ░░░░░░░░ drains they have been ░░░░░░░░ about a third of ░░░░░░░░ huge amount of money ░░░░░░░░ s gone into the ░░░░░░░░ out and we re ░░░░░░░░ with two thirds in ░░░░░░░░ tub and that will ░░░░░░░░ go in the overflow ░░░░░░░░ And the overflow drain ░░░░░░░░ the inflation drain There ░░░░░░░░ a lag of about ░░░░░░░░ months to 24 months ░░░░░░░░ the time the money ░░░░░░░░ in BURNETT And that ░░░░░░░░ why you say temporary ░░░░░░░░ t right I think ░░░░░░░░ s important as you ░░░░░░░░ distinguished between what you ░░░░░░░░ as the supply chain ░░░░░░░░ which is real and ░░░░░░░░ but will resolve and ░░░░░░░░ think it s important ░░░░░░░░ give those other countries ░░░░░░░░ an example Our rate ░░░░░░░░ much higher and that ░░░░░░░░ because in your view ░░░░░░░░ monetary supply So when ░░░░░░░░ keep talking about the ░░░░░░░░ coming in let me ░░░░░░░░ give people the scope ░░░░░░░░ it Under President Biden ░░░░░░░░ President Trump the U ░░░░░░░░ government injected 3 trillion ░░░░░░░░ the economy right That ░░░░░░░░ in the form of ░░░░░░░░ benefits right child tax ░░░░░░░░ all sorts of things ░░░░░░░░ and the stimulus But ░░░░░░░░ this is really crucial ░░░░░░░░ right now President Biden ░░░░░░░░ the Democrats are saying ░░░░░░░░ spending another at least ░░░░░░░░ 9 trillion will help ░░░░░░░░ inflation Specifically they say ░░░░░░░░ child tax credit and ░░░░░░░░ childcare universal childcare will ░░░░░░░░ inflation not increase it ░░░░░░░░ me play what they ░░░░░░░░ Clip starts Biden According ░░░░░░░░ economists this is going ░░░░░░░░ ease inflation pressures not ░░░░░░░░ it ease inflationary pressures ░░░░░░░░ lowering costs for working ░░░░░░░░ REICH Child care would ░░░░░░░░ be a huge relief ░░░░░░░░ a time of a ░░░░░░░░ Buttigieg One of the ░░░░░░░░ reasons why it s ░░░░░░░░ important to get those ░░░░░░░░ care provisions through is ░░░░░░░░ s also going to ░░░░░░░░ with inflation Clip ends ░░░░░░░░ Is this 1 9 ░░░░░░░░ bill going to help ░░░░░░░░ inflation HANKE This is ░░░░░░░░ rubbish what you ve ░░░░░░░░ played Inflation is always ░░░░░░░░ monetary phenomenon It s ░░░░░░░░ much money the Federal ░░░░░░░░ and the commercial banking ░░░░░░░░ is creating And they ░░░░░░░░ got so much money ░░░░░░░░ in the monetary bathtub ░░░░░░░░ now that no matter ░░░░░░░░ they do if they ░░░░░░░░ cut the spigot off ░░░░░░░░ didn t put anything ░░░░░░░░ we d still have ░░░░░░░░ big inflation problem that ░░░░░░░░ last through 2024 We ░░░░░░░░ up at around I ░░░░░░░░ a year ago we ░░░░░░░░ be at 6 percent ░░░░░░░░ the end of this ░░░░░░░░ Well it looks like ░░░░░░░░ re going to be ░░░░░░░░ close to that And ░░░░░░░░ ll have the same ░░░░░░░░ next year and the ░░░░░░░░ number the next year ░░░░░░░░ probably pretty close to ░░░░░░░░ the next year So ░░░░░░░░ have a persistent inflation ░░░░░░░░ And the problem really ░░░░░░░░ back to Chairman Powell ░░░░░░░░ February testimony he had ░░░░░░░░ back and forth with ░░░░░░░░ Kennedy from Louisiana At ░░░░░░░░ point Powell said the ░░░░░░░░ supply doesn t make ░░░░░░░░ difference It s irrelevant ░░░░░░░░ s going on with ░░░░░░░░ money supply So it ░░░░░░░░ incredible The chairman of ░░░░░░░░ Central Bank making a ░░░░░░░░ like that is just ░░░░░░░░ BURNETT All right Professor ░░░░░░░░ really appreciate your time ░░░░░░░░ appreciate your laying this ░░░░░░░░ Obviously the view is ░░░░░░░░ sobering even without spending ░░░░░░░░ that we could have ░░░░░░░░ well into 2024 at ░░░░░░░░ levels that s at ░░░░░░░░ we would be Obviously ░░░░░░░░ s incredibly painful for ░░░░░░░░ Thank you so much ░░░░░░░░ Hanke I appreciate your ░░░░░░░░ and your perspective HANKE ░░░░░░░░ you.”