Jim Grant expects bond yields to go up

Jim Grant has called for higher interest rates. Sooner or later bond yields will go up but he doesn't know when. It seems that Jim Grant's view is the same as of Jim Rogers who expects interest rates to start rising and the bond market bubble to collapse.

James Grant originated the "Current Yield" column in Barron's before founding Grant's Interest Rate Observer in 1983. He is the author of five books, one of which is Mr. Market Miscalculates (Axios Press, 2008).

Jim Grant is Ron Paul's Pick to Head Fed, and would offer gold standard

Jim Grant is Ron Paul's Pick to Head Fed, Gingrich's Pick to Study Return to Gold Standard; Grant Waits for Call from Mitt Romney; One Fundamental Mistake by Grant

The legendary Wall Street writer, publisher of Grant’s Interest Rate Observer, has been mentioned by two of the rivals for the Republican presidential nomination. Newt Gingrich said if elected president, he’d name Grant to help run a commission looking at a possible return to the gold standard. And Ron Paul said, if elected president, he’d go all-in and name Grant — one of Wall Street’s best-known gold bugs — as the new chairman of the Federal Reserve.

He is best known these days — to Gingrich and Paul, among others — for his long-standing support for the gold standard. The world has moved in his direction. In 12 years, gold has risen from a derided relic trading at $250 an ounce to a hot investment at $1,750. Everywhere paper currency systems are under challenge. In 2008, the world discovered that you can’t just manufacture endless wealth out of thin air, as the gold bugs had long argued, and it is still struggling with the realization. Grant says paper currencies and our current monetary system are out of date.

When asked what he’d do if he actually were to be named chairman of the FED, he said: “I would then lay out a timeline for the conversion to a constitutional dollar, a dollar as envisaged by the Founding Fathers. “ A dollar, he says, is supposed to be a fixed measure, “like a foot, or a pound,” not something that can be redefined every
few weeks by the Fed.

In his ideal world, says Grant, he would lay out a three-year program to convert back to the gold standard, probably at around $2,500 per ounce of gold. He adds that he would take great care to avoid the notorious blunder made by Winston Churchill and
the British back in 1925, when they went back on the gold standard at too high a
price, and imposed brutal deflation on the economy. Alas, he admits, this would
need an act of Congress.

For good measure, he’d also push for a repeal of a 1935 New Deal law that protected bank investors from runs on their financial institutions. Before the law, he notes, if a bank got into trouble, the investors were on the hook to bail it out: After all, it was their bank. The same was true of the partners in a Wall Street brokerage. The system of taxpayer bailouts, like that of paper money, is a modern innovation.

Source: MISH'S Global Economic Trend Analysis

James Grant originated the "Current Yield" column in Barron's before founding Grant's Interest Rate Observer in 1983. He is the author of five books, one of which is Mr. Market Miscalculates (Axios Press, 2008).