"James Grant, of Grant's Interest Rate Observer makes some thought-provoking
statements in his must-listen Bloomberg Radio interview with
Tom Keene today. While noting America's exceptionalism (h/t Clint Eastwood?), he
perhaps doesn't mean all Americans as he takes the Fed and Treasury to task over
their actions in recent years (and in fact for decades). His long-held view that
rates should be higher and follow generational cycles raises concerns for him
that government intervention is in fact 'prolonging the symptoms' of the
recession. In considering Tom Keene's well-thought-out question of why
the US does not take advantage of low rates and issue exceptionally long-dated
bonds, Grant agrees with the odd premise that they do not but then goes on to
what would be sounder policy. "Why not issue bonds backed by gold
bullion? Gold is a better money and is grounded in something besides the power
of the people that print the dollar bills." The interview goes on to
discuss population growth as a more potent 'fix' for housing in the US than QE,
that the US is a preferable investment environment (given valuations) than
Germany or Japan, the drastic drop in NYSE volumes, and the "leeching
out of excitement, hope, and expectation of improvement (particularly for the
young)." His compare and contrast of the 1920-21 depression to the
current Great Recession (which seems not to end), focused on the fiscal and
monetary actions, is an eye opener that its just possible the
present-day orthodoxy is wrong. Urging that we maintain our
sense of shock at the size of our 'peacetime' deficits, Grant worries that we
are in a secular stagnation..."
at http://www.zerohedge.com/news/jim-grant-gold-backed-bonds-and-hope-leeches
at http://www.zerohedge.com/news/jim-grant-gold-backed-bonds-and-hope-leeches
