Jim Grant: "Central Banks Have Over-Egged The Financial Pudding"

Tyler Durden's picture

The anchoring bias in the world's major sovereign bond markets (most notably those that have printing presses) is tremendous. As Jim Grant notes during this interview with Lauren Lyster, the blind indifference to the possibility of rising interest rates now is extremely similar to the indignance to the possibility of interest rates falling during the 1970s and 80s. In a broad and insightful few minutes Grant sheds a critical light on the similarities between then and now and fears that our unshakable confidence in the ability of the PhDs running our world monetary policy is false and that the market will eventually win out. The fear that is dominant among central bankers is indeed that of deflation and there is little to no fear of inflationary concerns and notes that there is a less than small probability that the world falls out of love with the US government's financial position. The truly humbling lesson of cycles past, he notes, is that they don't issue a press release (or ring a bell) at the turning point. "Things can remain seemingly excessive, until you turn your back and the reversion to some sort of mean begins." Grant believes we are approaching that, if not having already begun, that path back to reasonableness in interest rates. Grant continues with a discussion of potential income-generating ideas, his views on Bernanke's miscalculcations and most recent regime shift, the concerning idiocy of Japan (who seemingly can "neither procreate, nor re-inflate"), MMT 'price controls', and the path to total central planning.

 

The interview with Grant starts around 3:00 in with a discussion of the market's psychological similarities to the 1970s and 80s...

...at around 9:00 Grant explains some ideas on generating income via leveraged loan funds

...at around 11:45 Grant considers Bernanke's regime shift (with a critical insight that "The Thing You Want To Measure Somehow Disappears When You Try To Measure It" - to wit inflation's anchor during the 2000s when house prices were going sky-high...

...at around 17:00 Grant discusses the craziness of world central bankers and especially Japan with their new leader (about to be elected) - quote of the day "The Japanese, seemingly, can neither procreate or reinflate"

...at 20:00, Grant reflects on the endgame and Bernanke's proverbial helicopter drop and how Japan is the leading indicator

...at 21:10, Grant addresses the MMT crowd... and extends on at around 23:00 to discuss the path to broad-based central-planning - which has all too much in common with what we used to call 'Red China'