Recession Alert: Expert Warns of Looming Economic Doom 🚨

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Well, folks, it seems the writing’s on the wall – the United States is fixin’ to face a recession, and it’s comin’ sooner rather than later. According to Steve Hanke, a professor of applied economics at Johns Hopkins University, we can expect it to arrive by the end of this year. 📆

Now, you might be wonderin’ what’s causin’ this economic ruckus. Hanke says it’s the current tariff policies, which are spookin’ investment somethin’ fierce. And don’t even get him started on the Trump budget bill – it’s a recipe for disaster, he claims. 🤯

The Organisation for Economic Co-operation and Development (OECD) is soundin’ the alarm, too. They’re predictin’ a slowdown in global economic growth, with the US GDP growth expected to drop from 2.8% this year to 1.5% in 2026. Hanke thinks it’ll be even lower. 📉

So, what’s the root of the problem? Hanke says it’s the Trump administration’s unpredictable trade policies, which are causin’ “regime uncertainty.” That’s just a fancy way of sayin’ nobody knows what’s goin’ on or what’s gonna happen next. 🤔

“The fact that he’s gone on kind of a, shall we say, tariff tantrum, is a big thing that causes economic growth to slow down,” Hanke told BeInCrypto.

Tariffs, you see, are like taxes on international transactions. They disrupt the whole shebang and ultimately harm the US economy. It’s like tryin’ to put a square peg in a round hole – it just don’t work. 🤦‍♂️

“What does the tax do? It rips part of that surplus out of the market, takes it, and puts it in the government treasury. As a result, you have fewer transactions. If you tax something, you get less of it, to make a long story short. So international trade will slow down,” Hanke added.

And don’t even get him started on the bond market. It’s experienced a surprising sell-off, despite stable inflation rates. It’s like the whole market is sayin’, “Hey, we don’t know what’s goin’ on, so we’re just gonna sit this one out.” 🤷‍♂️

The Trump Reconciliation Bill: A Recipe for Disaster?

The federal government’s fiscal deficit has reached $1.1 trillion, a 13% increase from last year. And if passed, the latest version of Trump’s One Big Beautiful Bill will only add to the existing deficit. It’s like pourin’ gasoline on a fire – it’s just gonna make things worse. 🚒

Hanke’s got some choice words for Trump’s fiscal policies, too. He calls him a “fiscal nincompoop” who doesn’t pay attention to deficit levels. Ouch! 😳

“Trump is what I call a fiscal nincompoop. He doesn’t pay any attention to the deficit levels… We have a budget that is carrying with it a huge debt load, and the markets are focusing on that. So that’s part of the regime uncertainty. What is going to happen with the federal government’s budget? That’s part of what’s going on,” Hanke told BeInCrypto.

So, what’s the solution? Hanke thinks the Federal Reserve needs to reassess its monetary policy. Instead of focusin’ on interest rates, they should be lookin’ at the money supply. It’s like the engine of the economy – if you slow it down, the whole thing slows down. 🚗

“The big problem is that the Fed does not pay attention to the growth rate and the money supply. They contend that there’s not much of a connection between changes in the money supply and changes in economic activity, which is false,” he said, adding, “It’s like fuel for the economy. If you slow the fuel down going into an engine, the engine slows down.”

So, there you have it, folks. The economy’s in a bit of a pickle, and it’s gonna take some serious recalibration to get it back on track. Buckle up, because it’s gonna be a bumpy ride! 🚨

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2025-06-13 19:46