#055 Jim Grant: Disinflation For The Short Run, Inflation For The Long Run

James Grant (@grantspub), founder and editor of Grant’s Interest Rate Observer, a leading journal on financial markets since 1983, joins Julia La Roche on episode 55.

Jim Grant is also the author of multiple financial history and biography books. His journalism has been featured in Financial Times, The Wall Street Journal, and Foreign Affairs. He has appeared on 60 Minutes, Jim Lehrer’s News Hour, and CBS Evening News.  

In this episode, Jim and Julia covered the monetary realm, the U.S. dollar, the U.S. indebtedness, gold, the Federal Reserve, inflation, bonds, and more.   

According to Jim, the theme in the short run is disinflation, but inflation is for the long term.

"We've boiled this down to a couple of headlines: We think that inflation is for the long term. We think that this is inherently inflationary setup we have with runaway public borrowing and with an unchecked and undisciplined engine of credit creation —the Fed — so inflation for the long run. But for the short term, we think it's things rather disinflationary, meaning the rate of rise and inflation is going to subside. And conditions will tighten for the financial markets,” Jim tells Julia, adding that, "Inflation is never transitory, at least not in the modern era, because prices never come down again, when they go up, they stay up." 

0:00 Intro

0:38 How we got here

1:30 Monetary realm as an area of concern

2:29 Defining the dollar

2:57 Biggest change in sweep of financial history

4:30 Gold standard

5:50 Defining the dollar? How has it evolved

6:50 Weaknesses of the dollar

9:47 Lockdowns wouldn’t have been feasible

10:30 Origins of the great bulge in public debt

13:55 Fed actions during pandemic

16:43 Excesses in our financial and fiscal lives haven’t been fully felt yet

17:37 Rate of growth in debt far outstripping means to service it

20:30 Fed is going to carry us all into the poorhouse

22:00 Worrying about the debt

26:59 Outlook on the U.S. dollar

28:30 A poisoned chalice

30:00 Better if we lost the world reserve currency franchise

32:57 Gold

36:06 Central bank gold buying

38:20 Higher for longer?

41:00 Why the Fed might retreat?

45:00 Inverted yield curve

49:00 Does the yield curve predict a recession?

51:30 Bond market and interest conundrum

58:00 The Forgotten Depression

1:01:00 Setting up Grant’s Interest Rate Observer