Jim Grant And James Turk Discuss The Endgame Of The Keynesian Experiment

Tyler Durden's picture

Two of our preferred commentators, Jim Grant, of Grant's Interest Rate Observer, and James Turk, of the GoldMoney Foundation, sat down earlier today to discuss the history and mission of the Fed, how mission creep has taken it wildly beyond its initial purpose into the territory of QE, ZIRP and other fiat currency experiments. While not breaking ground on any notably new concepts, they talk about "who benefit from zero interest rates and how savers are
penalized by this easy money policy. They explain that the US have been
off the gold standard since 1913, Bretton Woods being only a shadow of
the classical gold standard." The two also discuss the fiscal profligacy of the US government. Alas, they conclude that
every paper currency in history has eventually gone to zero (see earlier piece on Roman hyperinflation). James and Jim also talk about ZIRP and the absence of the bond
vigilantes after over 30 years of bull market in bonds. How traders no
longer care about fundamentals, like balance sheets, but rather focus on
very short time horizons and the spreads between funding costs and
yields. How this situation is unsustainable. They see gold still as a very under-owned, misunderstood and marginal
asset still shunned by institutional investors, with a few notable
exceptions which indicate that the tide could be turning. They see a
gold standard in the future, although timing is always uncertain. At
the end they talk about the history of US post civil war specie
resumption and parallels to a return to the gold standard in the future.

Courtesy of Gold Money: