⚈ Professor Steve Hanke warns that current market and trade conditions reflect those before the Great Depression of the 1930s.
⚈ He cites protectionism, poor monetary policy and weak leadership as major risks.
⚈ Hanke predicts a 90% chance of an American recession in 2025 without urgent reform.
One of the main American economists, Professor Steve Hanke, warned that commercial prices and the stock market environment are starting to show similarities with the conditions that have led to the great depression.
According to Hanke, the current economic environment resembled in the early 1930s, when the American economy was affected by a combination of contractual collaboration and protectionist trade policies, “he said in an X job April 27.
In particular, he underlined the Smoot-Hawley Tariff Act, which was announced in 1930 and officially promulgated in July of the same year.
The price has increased American taxes on thousands of imported goods to protect the American industries, but rather launched a world trade war, reduces international trade and deepened economic slowdown.
“Financial markets are starting to look like the era of Smoot-Hawley prices in the 1930s. We have already seen this film. If the markets do not change, we are for many problems,” noted Hanke.
Hanke noted that after the announcement of the Smoot-Hawley rate, the stock market began a sharp drop, finally losing 83% of its value between 1930 and 1932.
Impact of the bad monetary system
He warned that current market signals, combined with poor monetary policy and the rise in protectionism, could open the way to a similar collapse if corrective measures are not taken.
“If we come back, by the way, and to the market, what is happening on the market, it relates to something.
Professor in applied economics at Johns Hopkins University also expressed his concern about political leadership, suggesting that economic advisers underestimate the seriousness of the risks facing the financial markets.
Increase in recession rates
Hanke was a vocal critic of the Trump era, criticizing the government for potentially triggered a recession, which he said has a 90% chance of performing in 2025.
The scholar's concerns have accelerated while China and the United States remain the main players in an ongoing battle in the midst of contradictory reports on the question of whether the two parties are about to reach an agreement.
Hanke has strengthened its recession warning, stressing that internal economic weaknesses alone can trigger a slowdown. He warned that a slowdown is inevitable unless there are major changes in monetary policy.
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