Invading Greenland? Economist Warns Of War Fallout, Fed Chaos & Inflation Surge | Hanke
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Start earning interest in gold: https://Monetary-Metals.com/Lin Steve Hanke, Professor of Applied Economics at Johns Hopkins …
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This is like uh signing a contract under duress. When somebody has a pistol at your head and they say sign on the dotted line, they even if you sign that contract will not be valid. By the way, from a geopolitical point of view, it it's a suicidal thing for the United States. What what has Canada done since January of 2025? They they've been threatened. They're going after him because they want to force a monetary policy loosening. >> We're back now with Steve Hanky, professor of applied economics at Johns Hopkins University. And what a program we have today. A lot of flash points and hot spots around the world we have to comment on. Starting with the annexation of Greenland perhaps. Uh just earlier this week uh Marco Rubio and JD Vance met with the Danish prime uh foreign minister uh rather and uh they had a constructive talk that lasted about an hour. We're going to find out what uh is next for Greenland. Uh Trump is now floating a new tariff idea in a push to acquire Greenland. It would cost roughly $700 billion if this were the path they want to take to actually buy Greenland. Of course, Denmark has said it's not for sale. So are we headed for a military confrontation? If so, what's going to happen to the economy? What will happen to the rest of South America now that uh the Venezuelan president Maduro has been captured? So, all these points and what's going to happen now with the Fed after the uh the Fed chair Jerome Powell just got subpoenaed by the DOJ. So, what does all this mean and what's next for monetary policy? Uh what's next for Fed transparency and independence? Steve Hanky is back. Welcome back, Professor Hanky. Good to see you again. >> Good to see you, David. I want to start with a hypothetical. I know you love these hypotheticals, which is what happens if Trump really wants Greenland and Denmark says it's not for sale and they don't, you know, doesn't matter how much it costs. It's I'll just put this article on the screen here. $700 billion according to an article from CNBC. Uh well, here we go. Cost as much as $700 billion they were to achieve. President Donald Trump's goal of buying Greenland, according to three people familiar with the familiar with the matter. Well, it doesn't really matter how much it costs if this if the whole place is not for sale. So, what happens then, hypothetically speaking, if Trump still wants to pursue this and NATO allies, by the way, earlier this week just put troops in Greenland. So, what's next? Well, I think to put the thing into context that the rationale that Trump has given for uh his concerns about Greenland and and wanting to take it basically. Uh it's it's all wrapped up, he says, with national security. But but it it's a phony premise, a phony argument because we we have treat had treaty since 1951 concerning Greenland and and we we have defense bases there. We we have a we have a license basic basically a treaty that allows us to defend Greenland already. So why why would anyone want to be spending $700 billion for for nothing nothing you need as far as security is concerned? So the security argument like many arguments Trump makes is just a phony argument. We we we have troops there. We we have bases there. We could have more we could have more bases there if we wanted under treaty obligations that we've had for many years. So, so the whole thing is a, you know, in in a way a tempest in a teacup if if you're looking only at national security. So that's that's the starting point. And no, no one seems to be talking much about that. I mean, you know, that >> minerals, he could want it for minerals. >> Oh, yeah. You could you could want it for many other reasons, but the the one reason that he's been given is national security. And and national security, by the way, is a refuge for scoundrels. Samuel Johnson pointed that out many years ago. And it's and so if and and I've told you this on on the program before once once you get into the we need to do this because of national security it's it's very hard to have some kind of logical discussion then because you know nothing is more important than national security and and who has all the information about national security? It's it's supposedly the government, not not the private sector. There's no transparency. No, no one knows what the what in the world he's talking about when he's talking about national security or when anybody else is talking about national security in Washington DC. We don't know what they're talking about. So there's there's no way an economist can get in and argue the benefits and cost of doing something if the rationale thrown up is national security. >> So what is the real reason that you think if not for national security? >> I I I have I have no idea what's running through through his head. I I I don't know. And and I I don't think anyone else does. I if if it's national security, by the way, he he's very misinformed. No, no one's bothered to brief the guy and tell him, "Hey, look, we we can we can put more bases up there, more troops up there and so forth, and under treaty obligations that we already have that that never cost us anything." Whatever the reason may be, professor, he was willing to risk disbanding NATO to acquire Greenland because he did make it very clear military was an option. Yeah. >> Now, this this gets back to the >> the really the the morals he he's mentioned his morals, you know, are governing things. Well, morals the the the basic moral is c cooperation between two individuals or two two sovereign entities e either one. It's it's it's basically free trade and and this is not a a move that would endear anyone uh to cooperate. This this is a threat. So, so he he he he's threatening an ally. Basically, Denmark's in NATO. Den D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D Denmark has had for hundreds of years since the beginning of the United States good rel good good cooperative relations with the United States. Now, now we have a president that's threatening them. He he's basically this is this is like signing a contract under duress. When somebody has a pistol at your head and they say sign on the dotted line, Dave and that that that is e even if you sign that contract will not be valid by the way. >> Yeah. >> So so that you have to think in those terms. This this this is threatening a country and telling them to sign on the dotted line with a gun at their head. >> What do you think is the future of NATO? Let's start there. Well, I think NA I think NATO is is in in you know big big trouble as far as the organization goes visa v the United States. United States is is a member but it seems to be like a difficult member right now. >> Before we continue with the video, let's talk about today's sponsor, Delete Me. Most New Year's resolutions fail because they require constant effort, but protecting your online privacy doesn't have to. Your personal information, like your name, address, and phone number, is often collected and sold by data broker sites. That's why I use Delete Me, a service that helps reduce that exposure. It takes about 5 minutes to set up, and then they handle the work for you all year. They scan for where your information appears and submit removal requests to hundreds of broker sites. I've been using it for more than a year now and they have reviewed over 325 listings to see if any data brokers have my personal information and they continue to check to make sure it stays off. Go to joinme.com/davidlin link down below or scan the QR code here and use David Linn, that's my promo code at checkout to get 20% off all consumer plans. Take control of your online privacy today before somebody else does. Now back to the video. So the this whole fiasco with Greenland, how does it benefit or does it even benefit Russia and China? >> I think I think in I I think it probably benefits both. it be and the reason why the the the reason why I come to that judgment is that Trump is is basically provoking allies and and NATO and and he's which is a defensive alliance which I I'm I think should have been done away with by the way myself NATO shouldn't exist after the Warsaw Pact was dissolved after the Soviet Union fell and and the Warsaw pack they they should have folded up NATO and gotten rid of the thing. So, so that's that's where I'm coming from on the thing. But it it does exist and and they are nominally the members are all supposed to be allies and and Trump is determined to make enemies of allies. It's like Canada. Look, look what just happened to Canada. Very important, by the way. Car Canada had had all kinds of problems with China. Yeah, >> before Trump was elected, they had one problem after another. Canada was on very bad terms. And now Carney, the new prime minister, has is smart enough to make a pivot. And why has he made a pivot? Because Trump has made an enemy of Canada. And he's pivoted to China. He's he's been in Beijing. And and and what have what's Beijing want to do? Beijing wants to do business. and they want to do commerce and and Carney now said, "Well, yeah, that maybe that's not a bad idea. Maybe maybe instead of going at loggerheads with China, Canada should be cooperating with them and and trying to do business deals and so forth. >> I'm all for ch uh you know, Canada cooperating with other nations and doing trade and whatnot, but is that really the right move strategically angering the United States more? You're basically cuddling up with the primary competitor adversary of the United States right now that's going to just further incentivize Trump and his allies to want to annex Canada. I mean, if you put >> they're they're not going to an annex can Canada number one that that was another pie in the sky illfunded statement. Uh so I think I I think the move is wise from a Canadian point of view looking at the benefits and cost. I think it's wise to to get out of the fight and tang entanglement with China and say hey we want to cooperate. The principle is you cooperate with people and and you and you go through diplomatic channels and so forth. not not this, you know, gun gunboat diplomacy. You know, what are we going to do? Put ships up there and, you know, tanks at the border and point them at the Canadians and say either you sign on the dotted line and do what you want what we are or ordering you to do or we're going to pull the trigger. We're locked and loaded. That that's not the that those are all agreements and contracts and so forth under duress. and and in a in the private world, by the way, all those things would be invalid. >> But in the international sphere, we have guns and tanks. So, >> well, we we have guns and tanks and and and international law is different than domestic law. And and that that's a that's a big the big difference is that international law is is basically not followed by the great powers, >> including the United States. But the United States blatantly isn't following. Even smaller powers like do you think does it look like Israel follows international law? No. >> They they ignore it and they're they're not even a great power. So So there are a lot of countries that that just ignore it. Uh whatever the international rules are. And why are the international rules set up? The international rules are set up to encourage cooperation among sovereigns. that that's why the rules are there. >> Professor, what happens to the economy if Trump continues to expand northward or perhaps elsewhere? Will Trump add a 51st state to the US? This is from Koshi, a prediction market. I know you like to look at prediction markets. Traders are placing an 18% chance that a 50 51st state will be added to uh the United States before January 20th, 2029. That's nearly a one in five chance that Trump's going to add something or the US will add something. I mean, doesn't have to be Trump. Uh >> I I I I wouldn't bet on it. >> Okay. What will be the 51st day? >> If I if I was if I was a betting man, I wouldn't be in the what is it? 18 percentile. I' I'd be on the other I'd be shorting that. >> Okay, fair enough. What will be the 51st date? These odds aren't high. Greenland is 8%. It's up one now. Canada stays at three. Puerto Rico is at six. Um, interesting. Puerto Rico is higher than Canada. Okay, that I guess that makes >> Well, yeah, but Puerto Rico is a US territory and that that's a longunning debate and uh and so forth. So, so it so at least there's some uh legitimacy in a way to the debate and and the how the vote that that that Puerto Rico would occur not with gunboats but with with votes that that's different than Canada. Canada or or Greenland. I think either one of those would would be gunboats. Well, regardless of how diplomacy is going to happen, Trump wants to acquire Greenland, which means he he's going to push for all sorts of fiscal measures to be able to afford it. He's now floating, like I mentioned earlier in the introduction, a new tariff, uh said Friday, he may impose tariffs on countries just today if they don't go along with Greenland. We need Greenland for national security, so I may do that. Uh the comments show Yeah, go ahead. Th this is using the threat system again. This this is just threats. So he he's making enemies. This this is this is just the best thing for China in the world. All All he's threatening everybody and so forth. They're all going to China. Why why do you think China's exports exploded in 2025 with all this tariff threats going on and so forth? The Chinese have taken the position. We have a communist regime. Okay. But they they've taken a free market Adam Smith lair approach and they they say we just want to do business with you. We want to cooperate with you. Is would you like to join us and and you can see you're you're up there in Vancouver right now and you know very well what what what the Canadian position is. The Canadian position has been a huge pivot. Huge. and and and it's pivoting away from the United States and towards China and that's what they're all doing. So all this from a geopolitical point of view, it it's a suicidal thing for the United States or or to put it more mildly, you know, shooting yourself in the foot. Well, Trump wants, as you know, I I I'm I'm a a free market, free free trade kind of econ >> and and this is just showing up not only in the the fine print of the the economics and the sharp penciling of of balance sheets and income statements, but it but it's showing up big time on the geopolitical uh radar screen because China China is winning. >> Yes, >> we're the US is losing by the way in this >> winning in what? In terms of trade, >> in terms of in terms of influence and and power and and Canada, >> I'm I'm trying to make a simple point actually obvious one. What What has Canada done since January of 2025? They they've been threatened with tariffs and and take over by the United States, one thing after another. And and what's Carney done? Carney's been elected prime minister and and he's leading the Canadians in the direction that, by the way, most Canadians agree with. Most Canadians are a little little bit put off by Trump. I I don't think Trump's very popular in Canada, is he? I can't speak for everybody in Canada, but for the people that I know, no, I don't think I don't think he is. >> Just Just look at the polling data. Trump Trump is in the tank in the Canadian polls. >> Sure. >> Why Why do you Why do you think Carney won the election? Why do you think Carney won the election? It was because of Trump. >> Okay. >> The conser the conservatives surely would have won the election. uh e everyone in Canada that had it with the liberals after Trudeau, 10 years of Trudeau, messing the economy up and wrecking the economy in Canada and and and the the it looked like the Conservatives had had the a shoe in in the election. >> Yeah. And what happened is Trump started the these threats and taking over Canada and so forth and Carney came on like gang busters and won the election. And since then, Trump has continued to threaten and and uh beat Canada over the head. And the Canadians have continued to take Trump down in the polls in Canada. And what has Carney done? He's he's done what the Canadians obviously want and that is he's made a pivot. He said, you know, if the US doesn't want to be friendly with us, you know, may maybe we'll start doing more business and change our position with visav China. So he he had a very successful trip by the way in can in Beijing. Let's take a look at uh what's what's what's what's about. >> By the way, just to interrupt you, David, to make one point, you started you said, let me start with a hypothetical. >> What we what we've ended with is reality. >> Okay. >> Not a this is not a hypothetical. And Canada is the best. My exhibit number one is Canada. What what has the United States gained by threatening Canada with tariffs and uh and a possible takeover as a 51st state? All of this stuff. The US has gained nothing. They they've made a big enemy and and and and Canada. The proof of that is that what has Canada done? They they've pivoted and and and warm warmed up. I'm just saying if Trump wanted to invade Canada like they did with Venezuela or whatever, now who's going to do anything about that, >> right? Let's say China, let's say, again, this is a hypothetical. I'm not saying it's going to happen, but it it's just if if if China were to get too close with Canada and the US then cites Canada as a national security concern. Well, who's stopping the troops to roll up north? I don't I don't No, nobody. >> Well, it certainly wouldn't be the Canadian military because that that's been hollowed years ago. I think >> sure >> they they've got a couple of patrol bow. I I don't think they have any big ships. >> No, definitely not. >> So, >> so it you know what are they going to do? Run the mounted police down there or something like that? You know, it's it's just not going to the whole thing is not going to happen. It's a hypothetical that it's not really worth wasting our time about. This is this is the kind of stuff you'd talk about at a bar or something. Trump wants to Well, okay, this is this is a reality. Trump wants to raise the defense budget to $ 1.5 trillion up 50%. So, what's he planning for? He's clearly planning for something. >> He's planning for a massive amount of waste, fraud, and abuse. the the the the cost the the the largest department of in the US government is a department of defense and and and it is the the mother load for waste, fraud and abuse. A and uh point number one now getting down to waste, fraud, and abuse. It's very interesting. He he's going after the Department of Justice is let's segue to the Fed here. >> Yeah. and and and the Fed. What what's the latest move we've had with the Fed? Well, we we've have the Department of Justice going after Chairman Pal uh for maybe a criminal in infraction, by the way, over what? Over the renovation to the Fed headquarters, which I think was built, not nothing has been done over there since they were built. There are two buildings and I think one was built in 1931 and one was built in 1932 and not nothing they haven't done anything with the buildings. So there they have a big refurbishment operation. The the the the tab on that is 2.5 billion and out of that there there's a there's a se 700 million of that is a cost over and that's 28%. and and and that's small potatoes by cost overrun standards in Washington DC and the government most and I haven't done a full analysis of this but by the way th this is this is one thing when I was President Reagan's advisor that that was one of one of my big things was cost overruns and and so I I let's put it this way I have some expertise in that area when with regard ard to infrastructure projects and the infrastructure projects 28% overrun would be on the very low end of cost overruns for government the federal government infrastructure projects they they it ranges from around 25% the overruns up to around 200%. Now, if you get into the defense department and and start scratching around there, not not infrastructure projects, but the department of defense procurement and so forth, the numbers are a lot higher. So, so why why have they cherrypicked Powell and going after Powell when when in fact by Washington standards the renovation project is pretty efficient. The cost overruns are only I say only in quotes by the way 28% which is pretty low. They're going after him because they want to force a monetary policy loosening. It It has nothing to do with cost overruns. If if this was the the the case, they'd have to be suing every head of every department and agency in the US government because they're all running with cost overruns that are much higher than 28%. What you're saying is yes. >> So, so, so that's that's the cost overrun thing. That that's a phony premise. >> What you're saying is it's aligned with what Powell said. I just want to play for the audience who may not have seen this clip. Just one minute of what Powell had to say about this. Take a listen. On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings. I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve, is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure. This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role. The Feds through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president. >> I mean, this I I believe was the first time he's been this explicit in what we've all suspected. But I why why this was very strong language for any Fed chair, especially Jerome Pow, who's been up until this point pretty tempered with his words. But why why make it public? Okay, fine. He got subpoenaed. there's this there there's there's going to be a lawsuit back and forth. Why did he have to make a public statement basically slamming the president, nailing him to the wall and saying Trump has Trump has done this because I didn't want to follow his directives of lowering the interest rate. And now he's basically escalated the situation here. >> I think in this case Paul said what he had to say. He he said what he had to say uh and it made it very clear. So I I agree with his statement. Uh and and and I'm remember you have to put this into context for your viewers. I I agree with what Paul's saying, but there I want to make two points. One is that I have been a a firm critic of Paul and the Fed's monetary policy for some time and and my most recent book that I co-authored with Matt Sukki called making money work which came out in May uh three 343 page book is is all all a critique of the Fed and in effect Powell and and the basic critique is that they they ignore the quantity theory of money and and they have testified Paul over and over again that they ignore the quantity theory of money and the quantity theory of money says what changes in the money supply have have a direct impact with a lag on economic activity and inflation. So so I I'm I'm a a critic of the Fed. I'm a critic of Paul and and I've written about this and spoken about it with you many many times over over the years. So so so so that's one p thing. The second thing is that there's a tremendous amount of confusion about the independent so-called independence of the Fed. The the Fed is is not independent and and and never has been. And uh in a way Paul actually acknowledged that when he was talking about accountability remember he said they should be accountable and I think and I have written about this and supported it. I think the idea of of so-called auditing the Fed as they call it is is something that they should be doing. And this audit the Fed thing, it started in 2009, August of 2009. Ron Paul, the father of Rand Paul, was a US congressman and and a friend and he put in something called audit the Fed. It was House uh a HR 1207 was the bill and and it actually passed by 327 to 98 in July of 2012. Now it died in the Senate so nothing happened. But on the Senate side, Rand Paul, Senator Ran Paul introduced in 2015 for the first time an audit the Fed bill. was called the Federal Reserve Transparency Act, Senate Bill 148. And and that that that again was audit the Fed. Now, what is audit the Fed? What do these things really want to do? It it it it gets way beyond auditing a balance sheet or something like that. It's auditing their policies. Why why are they for example they would ask questions like why are you rejecting the quantity theory of money that that Hanky's been proposing and and been writing about with Sukuri in this book making money work that that would be the kind they'd audit the policy and activ all the activities of the Fed and and I'm for that so that but that's something different than a criminal indictment, an investigation for a cost overrun on the renovation of of buildings of fed buildings that are over a hundred years old and have never been renovated before. >> Yes. >> Do you see what I mean? So there there there's a big basis to be criticizing the Fed and and Paul, but the cost overruns I don't think is is one >> because if if that was if that was the basis for this, you you'd have every head of every bureau, agency, and department in the US government under criminal investigation because they they all are running mass massive cost overruns that that are much greater than the renovation of the Fed two Fed buildings that they're talking about. So, it's a it's a ruse and and it's and it's it's trying to force the Fed to loosen up on monetary policy, which I think would be a bad thing because the inflation numbers of the new one for December just came out, 2.7 CPI headline inflation, the same as it was in November, 2.7. And and what's the target? The target's 2%. the 2% is a lot lower than 2.7. And I don't think this loosening will allow the Fed to get back the genie of inflation back in the bottle and get down to the target of 2%. I think that's the real problem and that's going to be a big problem for Trump because they are loosening. By the way, the Fed Fed funds have been going down. In December, the Fed switched from quantitative tightening and shrinking the Fed's balance sheet to expanding it. They they said they were going to buy 40 billion dollars worth of tea bills and they've started doing that. They're they're well into it. I think they've already bought over 30 billion. So, so they're monetizing the deficit as as they were doing in 200 2001 after CO hit and they were n they were monetizing over 90% of the deficit then and that when when we monetize the deficit that increases the money supply. You increase the money supply and and sooner or later what happens? you're gonna get it more inflation >> and and some bank regulations that that I think they should get rid of they're getting rid of in April will give the commercial banks a lot more firepower because they'll have excess reserves and they they can if they have bankable projects and they want to extend credit to those they'll have the ammunition to do so and and that will that that will increase the rate of growth within the money supply because commercial banks produce most of the money. So, so everything is going this is a pivot that that the listeners should be aware of. The Fed has pivoted away already from tightening monetary policy and and getting the inflation down to the targeted 2%. they they have gone from that tightening mode to more loosening mode and I think that loosening mode will continue and that that's what Trump wants. I know you said that uh things like energy contribute to relative price changes but I just want to bring up the fact that Trump says Venezuela will be turning over up to 50 million barrels of oil to the United States. In theory, this could flood the supply, bring down WTI, or at least just prices at the American gas pumps. Would that help with stabilizing inflation somewhat, professor? >> No. >> No. >> Inflation is always an everywhere a monetary phenomenon. You got where where is the money supply going? What's the level of the money supply that that determines the overall inflation rate? And no matter what aggregate you use, whether it's core CPI or PPI or CPI or whe what what there plethora of aggregates measures of price indices and all of those move around when the money supply moves around. >> By the way, what do you think of uh the proposal that Trump made last week uh about um the banks and credit cards? He wants to put a 10% cap on credit card rates possibly as a a way to make well to fight affordability the affordability crisis in the US. >> This he's he's he's taking a page out of the >> Democratic socialist playbook of the New York mandami. This is just price controls and and and by the way, a 10% cap would would essentially screw many people that are have credit cards because those credit cards would be taken away from them. >> Yeah. >> It it's a classic case. If you have price controls, the supply of whatever the controls are dries up and the banks have made it pretty clear that that's going to happen if he puts this cap on. So it's a it's a it's a dumb policy. It's a it's a mandami socialist kind of policy or as Trump would call it a communist policy. >> So I guess we could finish up by asking you about what's going to happen to assets when inflation goes up. So your view is now inflation might heat up because the money supply is now, you know, going up like a hockey stick. Well, gold's already at almost $4,600 today. Silver is a 90 or just was a 90. Um, any other hard assets you think would do well in this environment? >> Yeah, plat platinum is making new highs. Copper is making new highs. All the commodities are going to go up and and and we we have definitely a bubble in the stock market. moving over to the stock market, David, by any way you measure it, we we have a bubble. So, so the question is, well, when when do bubbles pop? And and the only thing we know for sure that with regularity is that bubbles tend if there is a bubble, they tend to pop if monetary policy pivots and starts tightening. And and as we've just said, what did I say? Looks like the Fed has pivoted towards loosening. So that means that means the popping of the bubble, the standard kind of popping doesn't look like it's in the cards. It looks like the bubble's going to stay there. May maybe get bigger. So, so that there there we have we have an an investment advice based on what it looks like the monetary policy is going to be and the quantity theory of money money supply expansion that that's good for hard commodities. So, keeps a secular bull market going in gold, silver, copper, platinum and other things. even other even things like lithium. Remember lithium got bombed out and and it looks like it's bottomed out and it's going up now. So So that's the commodity thing. Then then you you say, "Well, Hanky, you you've been com complaining and warning about the bubble in the stock market now for a year or so, and you've been writing about it, and and and you won't tell us when it's going to pop because you've told us that it's impossible to know when it's going to pop." Well, I've been thinking about the popping part of the thing for a long time. And and the only thing we know is that bubbles pop when monetary policy tightens. And I've now come to the conclusion that with all this pressure Trump is putting on them, the Fed has pivoted towards loosening. And that means that the stock market bubble will probably stay with us. >> Anything you're outright bearish on for 2026. >> Uh tilting, but I'm I'm staying pretty bearish on oil. >> Yeah. and and and and the reason for that it it doesn't really work into this Venezuela thing. Although if Venezuela starts producing more that's that is a bearish aspect. But the key the key thing is the incremental demand in oil no matter what forecast of oil demand you use can be easily met by nonopc plus producers. Point number one. Point point number two, o OPEC producers have a hell of a lot of excess capacity. And point number three, the in inventories are pretty much filled up every place. >> So you got a lot lot of inventories around. nonopc plus producers can meet the demand incremental demand uh for for crude and and you you have a lot of spare capacity of in the in the OPEC plus producers. So, it's so it's all everything looks pretty bearish, but there are things that could happen. And one thing that could change that scenario is if the US and Israel go to war with Iran. They're they're clearly I think they will shut the Gulf of the Straits of Hermuz and the Gulf uh production of oil would be cut off from the world. Now, that that would change the bearish picture. By the way, the Gulf produces a lot of oil. >> Right. >> Right. >> And if they can't sell it and get it out of the Gulf, the price is going to the supply demand picture changes dramatically. >> Mhm. And I guess that also impacts trade as well and um >> potentially markets. >> So, so there are things that could come into the picture. I I I think they're low probabilities but but non-trivial and and something worth paying attention to. So I'd say the base case my base case scenario for oil would be bearish but there are things that could change that base case scenario and I just gave you one of them. >> Thank you very much professor. Let's uh leave it here today. Uh we will uh follow up next time. Don't forget to submit questions to Professor Hanky if you'd like. uh for the next episode. We can put his email down below as well as my own. And um some of you have already been doing that. So, thank you very much. And also comment down below. >> We we've been responding to some some of these are highly technical and not almost not suitable for podcast but rather >> a graduate seminar room or something like that. And and David will attest to the fact I I answer all these things that >> Yes, that's right. these technical questions and you copy in if you write copy in David Lynn so Lyn Lynn and I are both on the same page and I I respond and and you can follow me on X at steve_hanky and by the way speaking of oil and and Venezuela we didn't get into the weeds on Venezuela too much but they they they do have the highest inflation in the world. I'm measuring it every day. >> Yeah. And uh it it's running over 800% per year inflation in Venezuela right now. >> We didn't talk too much about South America. We got hung up on Trump getting hung up on Greenland. So um we can save that discussion for the next episode. I I like to see if there's more developments. Basically he's threatened the entirety of South America. So we'll see what happens. I don't I Let's close off here. Do what do you think is going to happen? I mean he's basically threatened Mexico. He's threatened Colombia. Yeah. his his modus operandi it it's not cooperation it's it's threats so how does that work either you do what I I want you to do I command you to do or or I'm going to you know pull a gunboat in there and I'm locked and loaded that that's kind of what's happening but think about it in terms of private cooperation what what happens with a private contract if if you go in to a room and there's a private contract in front of you and and the uh person on the other side of that contract is holding a gun at your head and tells you to sign it, you would be signing under duress and that contract would not be valid. >> Yeah, >> that that's how to think about these things. You you got to get realistic. I I'm a realist. >> I I wonder if it's the US versus the entire world now. Yeah. Right. If that's if that's the kind of world we live in today, >> that that's the kind of world we live in today. And and the reason that it's happening is because the United States is is basically ignoring international law. >> Well, let's leave it here. So, yes, follow Professor Hanky down below. We can continue that conversation next episode. And uh I I do want to put you on a panel with Mark Scousin, so that that that'll be fun. But >> that'd be great. >> Yeah. So, stay tuned for that. And uh yeah, don't forget to write us and follow Professor Hanky links down below. Thanks for watching. Don't forget to like and subscribe as well.
Invading Greenland? Economist Warns Of War Fallout, Fed Chaos & Inflation Surge | Hanke
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Start earning interest in gold: https://Monetary-Metals.com/Lin Steve Hanke, Professor of Applied Economics at Johns Hopkins …Transcript
This is like uh signing a contract under duress. When somebody has a pistol at your head and they say sign on the dotted line, they even if you sign that contract will not be valid. By the way, from a geopolitical point of view, it it's a suicidal thing for the United States. What what has Canada done since January of 2025? They they've been threatened. They're going after him because they want to force a monetary policy loosening. >> We're back now with Steve Hanky, professor of applied economics at Johns Hopkins University. And what a program we have today. A lot of flash points and hot spots around the world we have to comment on. Starting with the annexation of Greenland perhaps. Uh just earlier this week uh Marco Rubio and JD Vance met with the Danish prime uh foreign minister uh rather and uh they had a constructive talk that lasted about an hour. We're going to find out what uh is next for Greenland. Uh Trump is now floating a new tariff idea in a push to acquire Greenland. It would cost roughly $700 billion if this were the path they want to take to actually buy Greenland. Of course, Denmark has said it's not for sale. So are we headed for a military confrontation? If so, what's going to happen to the economy? What will happen to the rest of South America now that uh the Venezuelan president Maduro has been captured? So, all these points and what's going to happen now with the Fed after the uh the Fed chair Jerome Powell just got subpoenaed by the DOJ. So, what does all this mean and what's next for monetary policy? Uh what's next for Fed transparency and independence? Steve Hanky is back. Welcome back, Professor Hanky. Good to see you again. >> Good to see you, David. I want to start with a hypothetical. I know you love these hypotheticals, which is what happens if Trump really wants Greenland and Denmark says it's not for sale and they don't, you know, doesn't matter how much it costs. It's I'll just put this article on the screen here. $700 billion according to an article from CNBC. Uh well, here we go. Cost as much as $700 billion they were to achieve. President Donald Trump's goal of buying Greenland, according to three people familiar with the familiar with the matter. Well, it doesn't really matter how much it costs if this if the whole place is not for sale. So, what happens then, hypothetically speaking, if Trump still wants to pursue this and NATO allies, by the way, earlier this week just put troops in Greenland. So, what's next? Well, I think to put the thing into context that the rationale that Trump has given for uh his concerns about Greenland and and wanting to take it basically. Uh it's it's all wrapped up, he says, with national security. But but it it's a phony premise, a phony argument because we we have treat had treaty since 1951 concerning Greenland and and we we have defense bases there. We we have a we have a license basic basically a treaty that allows us to defend Greenland already. So why why would anyone want to be spending $700 billion for for nothing nothing you need as far as security is concerned? So the security argument like many arguments Trump makes is just a phony argument. We we we have troops there. We we have bases there. We could have more we could have more bases there if we wanted under treaty obligations that we've had for many years. So, so the whole thing is a, you know, in in a way a tempest in a teacup if if you're looking only at national security. So that's that's the starting point. And no, no one seems to be talking much about that. I mean, you know, that >> minerals, he could want it for minerals. >> Oh, yeah. You could you could want it for many other reasons, but the the one reason that he's been given is national security. And and national security, by the way, is a refuge for scoundrels. Samuel Johnson pointed that out many years ago. And it's and so if and and I've told you this on on the program before once once you get into the we need to do this because of national security it's it's very hard to have some kind of logical discussion then because you know nothing is more important than national security and and who has all the information about national security? It's it's supposedly the government, not not the private sector. There's no transparency. No, no one knows what the what in the world he's talking about when he's talking about national security or when anybody else is talking about national security in Washington DC. We don't know what they're talking about. So there's there's no way an economist can get in and argue the benefits and cost of doing something if the rationale thrown up is national security. >> So what is the real reason that you think if not for national security? >> I I I have I have no idea what's running through through his head. I I I don't know. And and I I don't think anyone else does. I if if it's national security, by the way, he he's very misinformed. No, no one's bothered to brief the guy and tell him, "Hey, look, we we can we can put more bases up there, more troops up there and so forth, and under treaty obligations that we already have that that never cost us anything." Whatever the reason may be, professor, he was willing to risk disbanding NATO to acquire Greenland because he did make it very clear military was an option. Yeah. >> Now, this this gets back to the >> the really the the morals he he's mentioned his morals, you know, are governing things. Well, morals the the the basic moral is c cooperation between two individuals or two two sovereign entities e either one. It's it's it's basically free trade and and this is not a a move that would endear anyone uh to cooperate. This this is a threat. So, so he he he he's threatening an ally. Basically, Denmark's in NATO. Den D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D Denmark has had for hundreds of years since the beginning of the United States good rel good good cooperative relations with the United States. Now, now we have a president that's threatening them. He he's basically this is this is like signing a contract under duress. When somebody has a pistol at your head and they say sign on the dotted line, Dave and that that that is e even if you sign that contract will not be valid by the way. >> Yeah. >> So so that you have to think in those terms. This this this is threatening a country and telling them to sign on the dotted line with a gun at their head. >> What do you think is the future of NATO? Let's start there. Well, I think NA I think NATO is is in in you know big big trouble as far as the organization goes visa v the United States. United States is is a member but it seems to be like a difficult member right now. >> Before we continue with the video, let's talk about today's sponsor, Delete Me. Most New Year's resolutions fail because they require constant effort, but protecting your online privacy doesn't have to. Your personal information, like your name, address, and phone number, is often collected and sold by data broker sites. That's why I use Delete Me, a service that helps reduce that exposure. It takes about 5 minutes to set up, and then they handle the work for you all year. They scan for where your information appears and submit removal requests to hundreds of broker sites. I've been using it for more than a year now and they have reviewed over 325 listings to see if any data brokers have my personal information and they continue to check to make sure it stays off. Go to joinme.com/davidlin link down below or scan the QR code here and use David Linn, that's my promo code at checkout to get 20% off all consumer plans. Take control of your online privacy today before somebody else does. Now back to the video. So the this whole fiasco with Greenland, how does it benefit or does it even benefit Russia and China? >> I think I think in I I think it probably benefits both. it be and the reason why the the the reason why I come to that judgment is that Trump is is basically provoking allies and and NATO and and he's which is a defensive alliance which I I'm I think should have been done away with by the way myself NATO shouldn't exist after the Warsaw Pact was dissolved after the Soviet Union fell and and the Warsaw pack they they should have folded up NATO and gotten rid of the thing. So, so that's that's where I'm coming from on the thing. But it it does exist and and they are nominally the members are all supposed to be allies and and Trump is determined to make enemies of allies. It's like Canada. Look, look what just happened to Canada. Very important, by the way. Car Canada had had all kinds of problems with China. Yeah, >> before Trump was elected, they had one problem after another. Canada was on very bad terms. And now Carney, the new prime minister, has is smart enough to make a pivot. And why has he made a pivot? Because Trump has made an enemy of Canada. And he's pivoted to China. He's he's been in Beijing. And and and what have what's Beijing want to do? Beijing wants to do business. and they want to do commerce and and Carney now said, "Well, yeah, that maybe that's not a bad idea. Maybe maybe instead of going at loggerheads with China, Canada should be cooperating with them and and trying to do business deals and so forth. >> I'm all for ch uh you know, Canada cooperating with other nations and doing trade and whatnot, but is that really the right move strategically angering the United States more? You're basically cuddling up with the primary competitor adversary of the United States right now that's going to just further incentivize Trump and his allies to want to annex Canada. I mean, if you put >> they're they're not going to an annex can Canada number one that that was another pie in the sky illfunded statement. Uh so I think I I think the move is wise from a Canadian point of view looking at the benefits and cost. I think it's wise to to get out of the fight and tang entanglement with China and say hey we want to cooperate. The principle is you cooperate with people and and you and you go through diplomatic channels and so forth. not not this, you know, gun gunboat diplomacy. You know, what are we going to do? Put ships up there and, you know, tanks at the border and point them at the Canadians and say either you sign on the dotted line and do what you want what we are or ordering you to do or we're going to pull the trigger. We're locked and loaded. That that's not the that those are all agreements and contracts and so forth under duress. and and in a in the private world, by the way, all those things would be invalid. >> But in the international sphere, we have guns and tanks. So, >> well, we we have guns and tanks and and and international law is different than domestic law. And and that that's a that's a big the big difference is that international law is is basically not followed by the great powers, >> including the United States. But the United States blatantly isn't following. Even smaller powers like do you think does it look like Israel follows international law? No. >> They they ignore it and they're they're not even a great power. So So there are a lot of countries that that just ignore it. Uh whatever the international rules are. And why are the international rules set up? The international rules are set up to encourage cooperation among sovereigns. that that's why the rules are there. >> Professor, what happens to the economy if Trump continues to expand northward or perhaps elsewhere? Will Trump add a 51st state to the US? This is from Koshi, a prediction market. I know you like to look at prediction markets. Traders are placing an 18% chance that a 50 51st state will be added to uh the United States before January 20th, 2029. That's nearly a one in five chance that Trump's going to add something or the US will add something. I mean, doesn't have to be Trump. Uh >> I I I I wouldn't bet on it. >> Okay. What will be the 51st day? >> If I if I was if I was a betting man, I wouldn't be in the what is it? 18 percentile. I' I'd be on the other I'd be shorting that. >> Okay, fair enough. What will be the 51st date? These odds aren't high. Greenland is 8%. It's up one now. Canada stays at three. Puerto Rico is at six. Um, interesting. Puerto Rico is higher than Canada. Okay, that I guess that makes >> Well, yeah, but Puerto Rico is a US territory and that that's a longunning debate and uh and so forth. So, so it so at least there's some uh legitimacy in a way to the debate and and the how the vote that that that Puerto Rico would occur not with gunboats but with with votes that that's different than Canada. Canada or or Greenland. I think either one of those would would be gunboats. Well, regardless of how diplomacy is going to happen, Trump wants to acquire Greenland, which means he he's going to push for all sorts of fiscal measures to be able to afford it. He's now floating, like I mentioned earlier in the introduction, a new tariff, uh said Friday, he may impose tariffs on countries just today if they don't go along with Greenland. We need Greenland for national security, so I may do that. Uh the comments show Yeah, go ahead. Th this is using the threat system again. This this is just threats. So he he's making enemies. This this is this is just the best thing for China in the world. All All he's threatening everybody and so forth. They're all going to China. Why why do you think China's exports exploded in 2025 with all this tariff threats going on and so forth? The Chinese have taken the position. We have a communist regime. Okay. But they they've taken a free market Adam Smith lair approach and they they say we just want to do business with you. We want to cooperate with you. Is would you like to join us and and you can see you're you're up there in Vancouver right now and you know very well what what what the Canadian position is. The Canadian position has been a huge pivot. Huge. and and and it's pivoting away from the United States and towards China and that's what they're all doing. So all this from a geopolitical point of view, it it's a suicidal thing for the United States or or to put it more mildly, you know, shooting yourself in the foot. Well, Trump wants, as you know, I I I'm I'm a a free market, free free trade kind of econ >> and and this is just showing up not only in the the fine print of the the economics and the sharp penciling of of balance sheets and income statements, but it but it's showing up big time on the geopolitical uh radar screen because China China is winning. >> Yes, >> we're the US is losing by the way in this >> winning in what? In terms of trade, >> in terms of in terms of influence and and power and and Canada, >> I'm I'm trying to make a simple point actually obvious one. What What has Canada done since January of 2025? They they've been threatened with tariffs and and take over by the United States, one thing after another. And and what's Carney done? Carney's been elected prime minister and and he's leading the Canadians in the direction that, by the way, most Canadians agree with. Most Canadians are a little little bit put off by Trump. I I don't think Trump's very popular in Canada, is he? I can't speak for everybody in Canada, but for the people that I know, no, I don't think I don't think he is. >> Just Just look at the polling data. Trump Trump is in the tank in the Canadian polls. >> Sure. >> Why Why do you Why do you think Carney won the election? Why do you think Carney won the election? It was because of Trump. >> Okay. >> The conser the conservatives surely would have won the election. uh e everyone in Canada that had it with the liberals after Trudeau, 10 years of Trudeau, messing the economy up and wrecking the economy in Canada and and and the the it looked like the Conservatives had had the a shoe in in the election. >> Yeah. And what happened is Trump started the these threats and taking over Canada and so forth and Carney came on like gang busters and won the election. And since then, Trump has continued to threaten and and uh beat Canada over the head. And the Canadians have continued to take Trump down in the polls in Canada. And what has Carney done? He's he's done what the Canadians obviously want and that is he's made a pivot. He said, you know, if the US doesn't want to be friendly with us, you know, may maybe we'll start doing more business and change our position with visav China. So he he had a very successful trip by the way in can in Beijing. Let's take a look at uh what's what's what's what's about. >> By the way, just to interrupt you, David, to make one point, you started you said, let me start with a hypothetical. >> What we what we've ended with is reality. >> Okay. >> Not a this is not a hypothetical. And Canada is the best. My exhibit number one is Canada. What what has the United States gained by threatening Canada with tariffs and uh and a possible takeover as a 51st state? All of this stuff. The US has gained nothing. They they've made a big enemy and and and and Canada. The proof of that is that what has Canada done? They they've pivoted and and and warm warmed up. I'm just saying if Trump wanted to invade Canada like they did with Venezuela or whatever, now who's going to do anything about that, >> right? Let's say China, let's say, again, this is a hypothetical. I'm not saying it's going to happen, but it it's just if if if China were to get too close with Canada and the US then cites Canada as a national security concern. Well, who's stopping the troops to roll up north? I don't I don't No, nobody. >> Well, it certainly wouldn't be the Canadian military because that that's been hollowed years ago. I think >> sure >> they they've got a couple of patrol bow. I I don't think they have any big ships. >> No, definitely not. >> So, >> so it you know what are they going to do? Run the mounted police down there or something like that? You know, it's it's just not going to the whole thing is not going to happen. It's a hypothetical that it's not really worth wasting our time about. This is this is the kind of stuff you'd talk about at a bar or something. Trump wants to Well, okay, this is this is a reality. Trump wants to raise the defense budget to $ 1.5 trillion up 50%. So, what's he planning for? He's clearly planning for something. >> He's planning for a massive amount of waste, fraud, and abuse. the the the the cost the the the largest department of in the US government is a department of defense and and and it is the the mother load for waste, fraud and abuse. A and uh point number one now getting down to waste, fraud, and abuse. It's very interesting. He he's going after the Department of Justice is let's segue to the Fed here. >> Yeah. and and and the Fed. What what's the latest move we've had with the Fed? Well, we we've have the Department of Justice going after Chairman Pal uh for maybe a criminal in infraction, by the way, over what? Over the renovation to the Fed headquarters, which I think was built, not nothing has been done over there since they were built. There are two buildings and I think one was built in 1931 and one was built in 1932 and not nothing they haven't done anything with the buildings. So there they have a big refurbishment operation. The the the the tab on that is 2.5 billion and out of that there there's a there's a se 700 million of that is a cost over and that's 28%. and and and that's small potatoes by cost overrun standards in Washington DC and the government most and I haven't done a full analysis of this but by the way th this is this is one thing when I was President Reagan's advisor that that was one of one of my big things was cost overruns and and so I I let's put it this way I have some expertise in that area when with regard ard to infrastructure projects and the infrastructure projects 28% overrun would be on the very low end of cost overruns for government the federal government infrastructure projects they they it ranges from around 25% the overruns up to around 200%. Now, if you get into the defense department and and start scratching around there, not not infrastructure projects, but the department of defense procurement and so forth, the numbers are a lot higher. So, so why why have they cherrypicked Powell and going after Powell when when in fact by Washington standards the renovation project is pretty efficient. The cost overruns are only I say only in quotes by the way 28% which is pretty low. They're going after him because they want to force a monetary policy loosening. It It has nothing to do with cost overruns. If if this was the the the case, they'd have to be suing every head of every department and agency in the US government because they're all running with cost overruns that are much higher than 28%. What you're saying is yes. >> So, so, so that's that's the cost overrun thing. That that's a phony premise. >> What you're saying is it's aligned with what Powell said. I just want to play for the audience who may not have seen this clip. Just one minute of what Powell had to say about this. Take a listen. On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings. I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve, is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure. This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role. The Feds through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president. >> I mean, this I I believe was the first time he's been this explicit in what we've all suspected. But I why why this was very strong language for any Fed chair, especially Jerome Pow, who's been up until this point pretty tempered with his words. But why why make it public? Okay, fine. He got subpoenaed. there's this there there's there's going to be a lawsuit back and forth. Why did he have to make a public statement basically slamming the president, nailing him to the wall and saying Trump has Trump has done this because I didn't want to follow his directives of lowering the interest rate. And now he's basically escalated the situation here. >> I think in this case Paul said what he had to say. He he said what he had to say uh and it made it very clear. So I I agree with his statement. Uh and and and I'm remember you have to put this into context for your viewers. I I agree with what Paul's saying, but there I want to make two points. One is that I have been a a firm critic of Paul and the Fed's monetary policy for some time and and my most recent book that I co-authored with Matt Sukki called making money work which came out in May uh three 343 page book is is all all a critique of the Fed and in effect Powell and and the basic critique is that they they ignore the quantity theory of money and and they have testified Paul over and over again that they ignore the quantity theory of money and the quantity theory of money says what changes in the money supply have have a direct impact with a lag on economic activity and inflation. So so I I'm I'm a a critic of the Fed. I'm a critic of Paul and and I've written about this and spoken about it with you many many times over over the years. So so so so that's one p thing. The second thing is that there's a tremendous amount of confusion about the independent so-called independence of the Fed. The the Fed is is not independent and and and never has been. And uh in a way Paul actually acknowledged that when he was talking about accountability remember he said they should be accountable and I think and I have written about this and supported it. I think the idea of of so-called auditing the Fed as they call it is is something that they should be doing. And this audit the Fed thing, it started in 2009, August of 2009. Ron Paul, the father of Rand Paul, was a US congressman and and a friend and he put in something called audit the Fed. It was House uh a HR 1207 was the bill and and it actually passed by 327 to 98 in July of 2012. Now it died in the Senate so nothing happened. But on the Senate side, Rand Paul, Senator Ran Paul introduced in 2015 for the first time an audit the Fed bill. was called the Federal Reserve Transparency Act, Senate Bill 148. And and that that that again was audit the Fed. Now, what is audit the Fed? What do these things really want to do? It it it it gets way beyond auditing a balance sheet or something like that. It's auditing their policies. Why why are they for example they would ask questions like why are you rejecting the quantity theory of money that that Hanky's been proposing and and been writing about with Sukuri in this book making money work that that would be the kind they'd audit the policy and activ all the activities of the Fed and and I'm for that so that but that's something different than a criminal indictment, an investigation for a cost overrun on the renovation of of buildings of fed buildings that are over a hundred years old and have never been renovated before. >> Yes. >> Do you see what I mean? So there there there's a big basis to be criticizing the Fed and and Paul, but the cost overruns I don't think is is one >> because if if that was if that was the basis for this, you you'd have every head of every bureau, agency, and department in the US government under criminal investigation because they they all are running mass massive cost overruns that that are much greater than the renovation of the Fed two Fed buildings that they're talking about. So, it's a it's a ruse and and it's and it's it's trying to force the Fed to loosen up on monetary policy, which I think would be a bad thing because the inflation numbers of the new one for December just came out, 2.7 CPI headline inflation, the same as it was in November, 2.7. And and what's the target? The target's 2%. the 2% is a lot lower than 2.7. And I don't think this loosening will allow the Fed to get back the genie of inflation back in the bottle and get down to the target of 2%. I think that's the real problem and that's going to be a big problem for Trump because they are loosening. By the way, the Fed Fed funds have been going down. In December, the Fed switched from quantitative tightening and shrinking the Fed's balance sheet to expanding it. They they said they were going to buy 40 billion dollars worth of tea bills and they've started doing that. They're they're well into it. I think they've already bought over 30 billion. So, so they're monetizing the deficit as as they were doing in 200 2001 after CO hit and they were n they were monetizing over 90% of the deficit then and that when when we monetize the deficit that increases the money supply. You increase the money supply and and sooner or later what happens? you're gonna get it more inflation >> and and some bank regulations that that I think they should get rid of they're getting rid of in April will give the commercial banks a lot more firepower because they'll have excess reserves and they they can if they have bankable projects and they want to extend credit to those they'll have the ammunition to do so and and that will that that will increase the rate of growth within the money supply because commercial banks produce most of the money. So, so everything is going this is a pivot that that the listeners should be aware of. The Fed has pivoted away already from tightening monetary policy and and getting the inflation down to the targeted 2%. they they have gone from that tightening mode to more loosening mode and I think that loosening mode will continue and that that's what Trump wants. I know you said that uh things like energy contribute to relative price changes but I just want to bring up the fact that Trump says Venezuela will be turning over up to 50 million barrels of oil to the United States. In theory, this could flood the supply, bring down WTI, or at least just prices at the American gas pumps. Would that help with stabilizing inflation somewhat, professor? >> No. >> No. >> Inflation is always an everywhere a monetary phenomenon. You got where where is the money supply going? What's the level of the money supply that that determines the overall inflation rate? And no matter what aggregate you use, whether it's core CPI or PPI or CPI or whe what what there plethora of aggregates measures of price indices and all of those move around when the money supply moves around. >> By the way, what do you think of uh the proposal that Trump made last week uh about um the banks and credit cards? He wants to put a 10% cap on credit card rates possibly as a a way to make well to fight affordability the affordability crisis in the US. >> This he's he's he's taking a page out of the >> Democratic socialist playbook of the New York mandami. This is just price controls and and and by the way, a 10% cap would would essentially screw many people that are have credit cards because those credit cards would be taken away from them. >> Yeah. >> It it's a classic case. If you have price controls, the supply of whatever the controls are dries up and the banks have made it pretty clear that that's going to happen if he puts this cap on. So it's a it's a it's a dumb policy. It's a it's a mandami socialist kind of policy or as Trump would call it a communist policy. >> So I guess we could finish up by asking you about what's going to happen to assets when inflation goes up. So your view is now inflation might heat up because the money supply is now, you know, going up like a hockey stick. Well, gold's already at almost $4,600 today. Silver is a 90 or just was a 90. Um, any other hard assets you think would do well in this environment? >> Yeah, plat platinum is making new highs. Copper is making new highs. All the commodities are going to go up and and and we we have definitely a bubble in the stock market. moving over to the stock market, David, by any way you measure it, we we have a bubble. So, so the question is, well, when when do bubbles pop? And and the only thing we know for sure that with regularity is that bubbles tend if there is a bubble, they tend to pop if monetary policy pivots and starts tightening. And and as we've just said, what did I say? Looks like the Fed has pivoted towards loosening. So that means that means the popping of the bubble, the standard kind of popping doesn't look like it's in the cards. It looks like the bubble's going to stay there. May maybe get bigger. So, so that there there we have we have an an investment advice based on what it looks like the monetary policy is going to be and the quantity theory of money money supply expansion that that's good for hard commodities. So, keeps a secular bull market going in gold, silver, copper, platinum and other things. even other even things like lithium. Remember lithium got bombed out and and it looks like it's bottomed out and it's going up now. So So that's the commodity thing. Then then you you say, "Well, Hanky, you you've been com complaining and warning about the bubble in the stock market now for a year or so, and you've been writing about it, and and and you won't tell us when it's going to pop because you've told us that it's impossible to know when it's going to pop." Well, I've been thinking about the popping part of the thing for a long time. And and the only thing we know is that bubbles pop when monetary policy tightens. And I've now come to the conclusion that with all this pressure Trump is putting on them, the Fed has pivoted towards loosening. And that means that the stock market bubble will probably stay with us. >> Anything you're outright bearish on for 2026. >> Uh tilting, but I'm I'm staying pretty bearish on oil. >> Yeah. and and and and the reason for that it it doesn't really work into this Venezuela thing. Although if Venezuela starts producing more that's that is a bearish aspect. But the key the key thing is the incremental demand in oil no matter what forecast of oil demand you use can be easily met by nonopc plus producers. Point number one. Point point number two, o OPEC producers have a hell of a lot of excess capacity. And point number three, the in inventories are pretty much filled up every place. >> So you got a lot lot of inventories around. nonopc plus producers can meet the demand incremental demand uh for for crude and and you you have a lot of spare capacity of in the in the OPEC plus producers. So, it's so it's all everything looks pretty bearish, but there are things that could happen. And one thing that could change that scenario is if the US and Israel go to war with Iran. They're they're clearly I think they will shut the Gulf of the Straits of Hermuz and the Gulf uh production of oil would be cut off from the world. Now, that that would change the bearish picture. By the way, the Gulf produces a lot of oil. >> Right. >> Right. >> And if they can't sell it and get it out of the Gulf, the price is going to the supply demand picture changes dramatically. >> Mhm. And I guess that also impacts trade as well and um >> potentially markets. >> So, so there are things that could come into the picture. I I I think they're low probabilities but but non-trivial and and something worth paying attention to. So I'd say the base case my base case scenario for oil would be bearish but there are things that could change that base case scenario and I just gave you one of them. >> Thank you very much professor. Let's uh leave it here today. Uh we will uh follow up next time. Don't forget to submit questions to Professor Hanky if you'd like. uh for the next episode. We can put his email down below as well as my own. And um some of you have already been doing that. So, thank you very much. And also comment down below. >> We we've been responding to some some of these are highly technical and not almost not suitable for podcast but rather >> a graduate seminar room or something like that. And and David will attest to the fact I I answer all these things that >> Yes, that's right. these technical questions and you copy in if you write copy in David Lynn so Lyn Lynn and I are both on the same page and I I respond and and you can follow me on X at steve_hanky and by the way speaking of oil and and Venezuela we didn't get into the weeds on Venezuela too much but they they they do have the highest inflation in the world. I'm measuring it every day. >> Yeah. And uh it it's running over 800% per year inflation in Venezuela right now. >> We didn't talk too much about South America. We got hung up on Trump getting hung up on Greenland. So um we can save that discussion for the next episode. I I like to see if there's more developments. Basically he's threatened the entirety of South America. So we'll see what happens. I don't I Let's close off here. Do what do you think is going to happen? I mean he's basically threatened Mexico. He's threatened Colombia. Yeah. his his modus operandi it it's not cooperation it's it's threats so how does that work either you do what I I want you to do I command you to do or or I'm going to you know pull a gunboat in there and I'm locked and loaded that that's kind of what's happening but think about it in terms of private cooperation what what happens with a private contract if if you go in to a room and there's a private contract in front of you and and the uh person on the other side of that contract is holding a gun at your head and tells you to sign it, you would be signing under duress and that contract would not be valid. >> Yeah, >> that that's how to think about these things. You you got to get realistic. I I'm a realist. >> I I wonder if it's the US versus the entire world now. Yeah. Right. If that's if that's the kind of world we live in today, >> that that's the kind of world we live in today. And and the reason that it's happening is because the United States is is basically ignoring international law. >> Well, let's leave it here. So, yes, follow Professor Hanky down below. We can continue that conversation next episode. And uh I I do want to put you on a panel with Mark Scousin, so that that that'll be fun. But >> that'd be great. >> Yeah. So, stay tuned for that. And uh yeah, don't forget to write us and follow Professor Hanky links down below. Thanks for watching. Don't forget to like and subscribe as well.