Steve Hanke: Massive Inflation Ahead & Markets 'Totally Complacent' On Iran War

Why It Matters

Persistent inflation and supply shocks could erode real returns, while a commodity super‑cycle offers both risk and opportunity for investors and policymakers alike.

Key Takeaways

• Money supply growth accelerating, fueling persistent inflation in the U.S.
• Iran’s rial up 13%; oil prices could spike to $350/barrel.
• Commodity markets are underpriced; paper futures lag physical shortages.
• Global recession risk rises as Gulf supply disruptions tighten demand.
• Investors should consider long positions across a broad commodity super‑cycle.

Summary

Professor Steve Hanke warned that the accelerating U.S. money supply and the ongoing Israel‑Iran conflict are setting the stage for a new commodity super‑cycle and a broader inflationary environment.

He noted that commercial‑bank credit, which makes up roughly 80 % of broad money, is expanding at about 7 % annually—well above his “golden growth” rate of 6 % needed for 2 % inflation. The Fed, after months of quantitative tightening, has resumed balance‑sheet expansion, adding another 20 % to money growth. By contrast, China’s money supply is lagging its target, keeping inflation near 1 %.

Hanke highlighted concrete market signals: the Iranian rial has appreciated 13 % against the dollar, Iranian inflation fell from 90 % to under 60 %, and oil could surge to $350 a barrel if the Strait of Hormuz remains closed. He also cited steep price gains in niche commodities—ferro‑vanadium up 90 %, lithium carbonate up 34 %, tantalite up 173 %—and warned that futures prices are still below physical market levels, a gap he says will soon close.

The combined effect is a heightened risk of a global recession, as supply bottlenecks and unchecked money growth push prices higher while demand elasticity remains low. Investors are urged to position for a prolonged commodity rally and to factor war‑related risk premiums into their portfolios.

Original Description

Stijn Schmitz welcomes Steve Hanke, Professor of Applied Economics at Johns Hopkins University, to discuss global economic trends, monetary policy, and the emerging commodity super cycle.

Recorded on: April 21, 2026

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Timestamps:

00:00:00 - Introduction

00:00:52 - Key Economic Metrics

00:02:00 - US Money Supply Acceleration

00:03:58 - China's Inflation Challenges

00:04:56 - Commodity Supply Disruptions

00:05:30 - US Tariffs and Sanctions

00:07:13 - Iran War and Strait Closure

00:11:55 - Iranian Economy

00:12:45 - Oil Price Scenarios

00:13:10 - Commodity Super Cycle Thesis

00:17:00 - Oil Supply Impacts

00:20:44 - Market Complacency on Risks

00:24:06 - Winners and Losers Analysis

00:25:12 - China's Economy

00:27:55 - De-Dollarization Myths

00:30:36 - Gold's Geopolitical Role

00:33:15 - Supply Shocks & Infrastructure

00:37:20 - Inflation and Money Supply

00:41:40 - Treasury Demand & Inflation

00:46:40 - Bank Lending & Money Supply

00:48:28 - Commodity Picks & Wrap Up

Guest Links:

X: https://x.com/steve_hanke

Website: https://thegoldsentimentreport.com

Amazon Book: https://www.amazon.com/Making-Money-Work-Rewrite-Financial/dp/1394257260

Amazon Book: https://www.amazon.com/Capital-Interest-Waiting-Controversies-Additions/dp/3031633970

E-Mail: [e-mail]

Steve H. Hanke is a Professor of Applied Economics and Founder & Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore.

He is a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C., a Senior Advisor at the Renmin University of China’s International Monetary Research Institute in Beijing, a Special Counselor to the Center for Financial Stability in New York, a contributing editor at Central Banking in London, and a regular contributor to the Wall Street Journal’s Opinion pages. Prof. Hanke is also a member of the Charter Council of the Society of Economic Measurement and of Euromoney Country Risk’s Experts Panel.

In the past, Prof. Hanke taught economics at the Colorado School of Mines and at the University of California, Berkeley. He served as a Member of the Governor’s Council of Economic Advisors in Maryland in 1976-77, as a Senior Economist on President Reagan’s Council of Economic Advisors in 1981-82, and as a Senior Advisor to the Joint Economic Committee of the U.S. Congress in 1984-88. Prof. Hanke served as a State Counselor to both the Republic of Lithuania in 1994-96 and the Republic of Montenegro in 1999-2003. He was also an Advisor to the Presidents of Bulgaria in 1997- 2002, Venezuela in 1995-96, and Indonesia in 1998.

He played an important role in establishing new currency regimes in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania, and Montenegro.

Prof. Hanke has also held senior appointments in the governments of many other countries, including Albania, Kazakhstan, the United Arab Emirates, and Yugoslavia.

Prof. Hanke has been awarded honorary doctorate degrees by the Bulgarian Academy of Sciences, the Universität Liechtenstein, the Universidad San Francisco de Quito, the Free University of Tbilisi, Istanbul Kültür University, Varna Free University, and the D.A. Tsenov Academy of Economics in recognition of his scholarship on exchange-rate regimes.

Prof. Hanke and his wife, Liliane, reside in Baltimore and Paris.

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