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A top economist nicknamed the ‘Money Doctor’ gives the Fed a failing grade when it comes to taming inflation and saving the economy

Good morning,

While rumors of a recession seem to have eased in some corners, 56% of CFOs surveyed recently expect a recession in the second half of 2023. A prominent economist agrees – and has a glowing view on how the Fed is managing the economy mishandled, not once but twice.

Steve Hanke, an economist who built a 50-year career as a global “money doctor” advising heads of state and treasury ministers, argues that a root cause of high inflation is how the Fed has handled the money supply in the US. Hanke, a professor of applied economics at Johns Hopkins University, claims that “the Fed caused the inflationary blowout by ignoring the money supply, while producing too much of it,” Fortune’s Shawn Tully writes in a new piece. Tully writes:

“Hanke is a leading advocate of monetarism, a field that holds that changes in the money supply are the primary factor determining the rate of inflation and GDP expansion or contraction. Milton Friedman, his most celebrated champion and a Hanke mentor, had the monetary formula for changes in his four components, MV = Py (money supply times velocity of money equals price level times quantity of goods and services) on his red Cadillac’s California license plate. As Friedman explained, ‘Inflation is always and everywhere a monetary phenomenon, in the sense that it can only be produced by a faster increase in the amount of money than in output.’”

“First, the Fed created an absolutely unprecedented explosion in M2 that chairman [Jerome] Powell claimed it would have no effect on inflation,” Hanke told Tully. He is referring to the sharp increase in the money supply at the height of the pandemic. “The Fed has put up a smokescreen on the causes, all these non-monetary, external factors that should be responsible for the rising CPI. It was the COVID shock, the oil and OPEC shock, the war in Ukraine shock, the supply chain shock.”

Hanke continues, “All those things only affect relative prices, for example how used car prices go up while appliance costs stay the same, not overall inflation, which is about the money supply. You have 785 economists in the Fed system, but no one we know of predicted the inflationary blowout.

Now, according to Hanke, the Fed is “overdoing” — “messing up” the inflation cure by “rejecting and squeezing M2’s interest too hard,” Tully writes. A combination of the Fed’s high interest rates and tightening bank lending will eventually lead to a contraction in the amount of money consumers have available to spend, which will hit M2, argues Hanke. He predicts a painful and unnecessary recession.

You can read more about Hanke’s grim analysis of the Fed’s actions leading up to this point here, along with his assessment of the future of the economy.

Sheryl Estrada

Big problem

New research by the CFA Institute, the global association of investment professionals, and the FINRA Foundation, a nonprofit organization, analyzed the investment-related behavior of Gen Zers with and without investment accounts. Fifty-six percent of Generation Zers (ages 18–25) surveyed reported owning at least some investments. Nineteen percent is currently only invested in crypto and/or non-fungible tokens (NFTs).

Gen Z investors primarily learn about investing and finance through social media (48%) and web searches (47%), according to the report. YouTube is the main source for those who search online. Other popular methods of learning about investing include parents and family (45%), friends (40%), and financial apps (37%). Less than a third learn from financial firms (31%) or financial professionals (30%).

US Gen Z investors are predominantly male (58%), slightly older (age 20 and older), and are more likely to have a college degree. The findings are based on a global survey of more than 2,800 Gen Z, millennial and Gen X respondents from the US, Canada, UK and China.

Go deeper

“Rihanna vocals or an AI-generated fake? The music industry is threatened by the latest buzzy technology,” a new piece from Fortune’s Jeremy Kahn delves into the implications of “musical deepfakes” that have exploded in numbers. “The new reality for the music industry is part of a broader upheaval in the entertainment industry caused by increasingly sophisticated AI,” writes Kahn. “This is a potential nightmare for the record industry. If current trends go unchecked, artists can lose control of their sound and their earnings. Meanwhile, record labels risk losing profits.”


Anna Manz was appointed CFO at Nestlé. Manz is currently CFO for the London Stock Exchange Group (LSEG) and will join Nestlé as CFO once she is relieved of her current duties. At that time, she also joins the board of directors of Nestlé SA as EVP. Manz succeeds François-Xavier Roger, EVP and CFO at Nestlé, who has decided to step down to take on new professional challenges. Roger will remain in his position until the arrival of his successor. Prior to LSEG, Manz was CFO and Executive Director at Johnson Matthey PLC. Prior to that, she spent 17 years at Diageo PLC in a variety of senior roles including chief strategy director, CFO of Asia Pacific and group treasurer.

Graeme Pitkethly, CFO at Unilever, will retire at the end of May 2024. The board of directors is now proceeding with a formal internal and external search for his successor. Pitkethly joined Unilever in 2002 and was previously EVP and Managing Director of Unilever UK and Ireland. Prior to that, he held several senior finance and commercial roles within Unilever, including SVP Finance for Global Markets; global head of M&A; head of finance, pensions and taxes; and CFO of Unilever Indonesia.


“It’s not a bubble yet.”

— Renowned economist Jeremy Siegel, a Russell E. Palmer professor of finance at the Wharton School at the University of Pennsylvania, told CNBC on Monday that he is still optimistic about an AI-fuelled Big Tech boom, despite concerns about demand whether this would lead to a repeat of the dot-com bubble of the late 1990s.

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