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  2. 048: Steve Hanke on Currency Boards, Moral Hazard and the Benefits of Privatization

048: Steve Hanke on Currency Boards, Moral Hazard and the Benefits of Privatization

Sep 3, 2015

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

Steve is a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C. and a member of the Charter Council of the Society of Economic Measurement and the Financial Advisory Council of the United Arab Emirates.

Previously, Professor Hanke was a Senior Economist on President Reagan’s Council of Economic Advisers and was also an Advisor to the Presidents of Bulgaria, Venezuela, and Indonesia.

In 1998, Steve was named one of the twenty-five most influential people in the world by World Trade Magazine.

In this episode, you will learn:

  • what is a currency board and the reason why a country should resort to one.
  • about Bulgaria’s currency crisis in 1997, how hyper-inflation hit 142 percent per month and what Steve Hanke did to solve the problem.
  • why Bulgaria has one of the lowest fiscal deficits of any country.

 

  • why Montenegro dumped the Yugolsav Dinar for the Deutschmark during Slobodan Milosevic’s presidency of Yugoslavia.
  • how Montenegro will join the euro currency without having to do a currency changeover.
  • if it makes sense to leave a currency board to join a monetary union and giving up fiscal autonomy.
  • why it’s best for Bulgaria to stay outside the eurozone due to the issue of moral hazard.
  • why Greece ran up a fiscal deficit of 12.7% of GDP when the Maastricht Treaty stated a strict adherence to a maximum level of 3%.
  • how a currency board removes the moral hazard of a unified currency area by financing spending with current taxes or the private bond market.
  • if Greece should abandon the euro and set up a currency board and pegging their currency with the euro.
  • about Ronald Reagan’s privatisation programme in the US in the early 1980s.

 

  • what Hayek was like as a person and what he thought of Ronald Reagan, The Intellectual.
  • and much more.
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