Excess Returns The Thunderclap That Ends the Cycle | Jim Grant on the Risk No One Sees
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Dec 4, 2025 
James Grant, founder of Grant's Interest Rate Observer, shares insights from his five-decade career in finance. He discusses the cyclical nature of interest rates and their generational trends, warning that the 2021 bond market top signals major changes ahead. Grant compares inflation to an underground coal fire, driven by geopolitical tensions and capital investment in tangible assets. He also delves into the fragility of private credit markets and predicts gold's resurgence as confidence in paper currency declines, highlighting the importance of patience for investors.
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Interest Rates Move In Generational Cycles
- Interest rates trend in multi-decade cycles and define major market bookends.
- Major tops/bottoms show absurd extremes like trillions in negative-yield bonds or 15% treasuries.
Tangible Investment And Geopolitics Push Rates
- The current bond market is in the early phase of a major bear driven by rising inflation pressures.
- Tangible investment (data centers, defense) and geopolitical tension can push rates higher.
Return To The Tangible Economy
- The economy may be shifting from 'capitalism without capital' to the 'tangible twenties' with heavy investment in physical assets.
- That shift supports upward pressure on interest rates versus the prior decade of asset-light businesses.
