560: American Economist and Professor, Steve Hanke, on Rewriting the Rules of Our Financial System

560: American Economist and Professor, Steve Hanke, on Rewriting the Rules of Our Financial System

Central banks in major economies have repeatedly misread inflation trends by relying on models that omit a fundamental economic lever: the money supply. In this episode, economist Steve Hanke offers a detailed critique of prevailing post-Keynesian frameworks and the policy missteps that have followed. Drawing on historical and current data, Hanke underscores the predictive power of the quantity theory of money, a model largely excluded from central bank thinking, and explains how ignoring this leads to erroneous inflation forecasts and misguided interventions.

The discussion outlines how inflation, often attributed to exogenous shocks such as supply chain disruptions or geopolitical events, is more reliably explained by changes in the money supply. Hanke presents evidence that inflation today is the result of decisions made one to two years prior, making it critical to focus on monetary trends rather than short-term data fluctuations. He further contrasts U.S. and Chinese monetary responses, highlighting how both under- and over-corrections in money supply growth have resulted in either recessionary pressures or deflation.

Key insights from the episode include:

- The quantity theory of money remains one of the most reliable frameworks for anticipating inflation, yet is absent from mainstream economic models used by central banks.

- Inflation is always a monetary phenomenon, rising or falling primarily in response to shifts in the money supply, not due to external shocks, which only affect relative prices.

- U.S. monetary policy is currently on a path toward recession, not inflation, due to anemic money supply growth since 2022, a trend Hanke predicts will continue unless reversed.

- Regime uncertainty, policy volatility that undermines business investment, amplifies economic stagnation. Drawing parallels to the New Deal era, Hanke warns that unclear or shifting fiscal and regulatory rules will delay recovery even further.

- Most of the money in circulation is created by commercial banks, not central banks. Post-2008 regulations have constrained these institutions, diminishing their role in supporting economic growth.

Taken together, these points call for a recalibration of macroeconomic policy, placing money supply at the center of analysis and re-empowering commercial banks to function as essential components of the financial system. For senior leaders navigating strategic decisions, the episode provides a timely and data-grounded lens on the structural drivers shaping inflation, recession risks, and economic stability.

Get Steve’s book here: https://shorturl.at/t5uDw

Making Money Work: How to Rewrite the Rules of Our Financial System

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Episoder(499)

134: How to stop blaming Covid and start building revenue growth, with Kent Billingsley

134: How to stop blaming Covid and start building revenue growth, with Kent Billingsley

Welcome to the Strategy Skills podcast, from FIRMSconsulting.com. Today we have a very interesting guest, Kent Billingsley, who is going to talk about sales and the revenue side of management consulting. And about using the tools and techniques that he developed in his consulting career which he now applies in almost any kind of industry. We rarely talk about sales. So we thought it will be nice to do a podcast where we dive into this topic. Get Kent's book "ENTREPRENEUR TO MILLIONAIRE: How to Build a Highly Profitable, Fast-Growth Company and Become Embarrassingly Rich Doing It": https://amzn.to/3dU6aPN

26 Feb 202158min

133: The single biggest strategy shift for the next few decades (Monday Morning 8 a.m. #16)

133: The single biggest strategy shift for the next few decades (Monday Morning 8 a.m. #16)

Hello everyone! This is Monday Morning 8 a.m. (#16), a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

22 Feb 202140min

132: Apple car & Amazon's core strategy (Monday Morning 8 a.m. #15)

132: Apple car & Amazon's core strategy (Monday Morning 8 a.m. #15)

Hello everyone! This is Monday Morning 8 a.m. (#15), a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

15 Feb 202135min

131: Defense is not a strategy (Monday Morning 8 a.m. #14)

131: Defense is not a strategy (Monday Morning 8 a.m. #14)

Hello everyone! This is Monday Morning 8 a.m. (#14), a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

8 Feb 202132min

130: How to create a career strategy for an executive (Monday Morning 8 a.m. #13)

130: How to create a career strategy for an executive (Monday Morning 8 a.m. #13)

Hello everyone! This is Monday Morning 8 a.m. (#13), a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

1 Feb 202137min

129: The nuances of a private equity strategy (Monday Morning 8 a.m. #12)

129: The nuances of a private equity strategy (Monday Morning 8 a.m. #12)

Hello everyone! This is Monday Morning 8 a.m., a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

25 Jan 202130min

128: How to eliminate bureaucratic red tape and bad excuses, with Martin Lindstrom

128: How to eliminate bureaucratic red tape and bad excuses, with Martin Lindstrom

Martin's book THE MINISTRY OF COMMON SENSE: https://amzn.to/3962pE9 Meet New York Times bestselling author Martin Lindstrom (one of TIME magazine’s 100 Most Influential People). We interviewed Martin about his new book THE MINISTRY OF COMMON SENSE: How to Eliminate Bureaucratic Red Tape, Bad Excuses, and Corporate BS. Doesn’t your workplace drive you crazy when you get cc’ed on irrelevant email chains, invited to unnecessary meetings, or forbidden by company policy to do the exact thing your boss commands you to do?  These and many other frustrations stem from the same underlying cause: a lack of common sense! In an interview Martin discusses the most typical roadblocks to common sense: (Bad) customer experience Politics Technology Meetings and Power Points Rules, Regulations, and Policies Compliance and Legal And has remedies for all.  Martin Lindstrom is the founder and chairman of Lindstrom Company, a global branding & culture transformation firm, operating across five continents and more than 30 countries. TIME Magazine has named Lindstrom one of the “World’s 100 Most Influential People,” and for three years running, Thinkers50, has selected Lindstrom to be among the world’s top 50 business thinkers. Among the companies he advises are Burger King, Lowes, Boar’s Head, Beverly Hills Hotels, Pepsi, Nestle and Google. Lindstrom is the author of seven books including several New York Times bestsellers that have been translated into 60 languages. The Wall-Street Journal praised his book Brand Sense as “one of the five best marketing books ever published,” and his book Small Data as “revolutionary,” and TIME called his book Buyology “a breakthrough in branding.”

21 Jan 20211h 17min

127: Fear is not a strategy (Monday Morning 8 a.m. #11)

127: Fear is not a strategy (Monday Morning 8 a.m. #11)

Hello everyone! This is Monday Morning 8 a.m., a weekly newsletter where we distill the insights from all of the distractions, articles, and emails that you receive in your inbox every day. In this newsletter, we’re going to focus on four major themes from last week’s news.    To listen to the audio version of this newsletter, search for “Strategy Skills” in any podcast app. To get a written copy with links to mentioned articles sign up here: www.firmsconsulting.com/promo

18 Jan 202130min

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