Jim Grant: Gold is cheap but gold stocks are even cheaper. There are also USA housing opportunities.

Jim Grant, the publisher of the Grant’s Interest Rate Observer says that USA policymakers are the prolonging symptoms of the recession and that Fed should learn from the 1920-21 Depression.

FED got out of the central banking business, but now is in the central planning business. It manipulates all assets and advocates risky activities. FED’s QE will leads us to risky assets and of course the economy will improve in theory, but the theory says nothing about the true functions of the market which is to find value. This is in his opinion the main idea of capitalism. Prices tell us something about nature of value but when it is manipulated it is hard to do rational finds that are long-term stable.

When asked about downside risks he says:

All investors live and work in a kind of mirrors; all is distorted by Central Banks manipulations …. We can’t be dogmatic about deflation or inflation … We need assets with margin of safety …. Housing in most cities in USA is very cheap; we find value in residential and single family houses … that’s where we are looking at now.

When asked about China’s slowdown as he has also been sounding the alarm recently he states:

The credit and banking system is corrupt and corrupting values and prices in China. China will have hard landing but that is not the end of the world. Even though China’s growth will go down, it could mean little to USA. It only means much to the “China’s trade”.

When Jim Grant was asked about his view on Gold he said:

I like it. Gold has more upside due to CB activities. The gold mining shares are even more valuable than the metal.

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: Europe Debt Crisis Means More Money Printing

Jim Grant believes that the ECB is likely to print more money and purchase Italian government bonds.
He then talks about the federal reserve and also says to avoid farmland (in the US) as it is now overvalued in many places and he points out that the current farmland rental yields of around 2 to 2.5%, are the lowest in 40 years.


 

He is worried that the debt crisis may turn to a currency crisis at anytime. In his opinion all major currencies (USD, EUR, JPY and GBP) are racing to the bottom and it's difficult to see which one will get there first. He is surprised by the euro’s strength even though it is in the spotlight but he believes that it might soon start to weaken as ECB punish its value down by money printing and low interest rates.

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: Capitalism Is An Alternative For What We Have Now

Jim Grant is awesome in this important interview with CNBC's Maria Bartiromo. Below are just some excerpts from it:

Maria Bartiromo: "What are the alternatives?"

Jim Grant: "Capitalism is an alternative for what we have now. I highly recommend it."

Maria: "We all do."

Grant: "No we don't."

Maria: "The Federal Reserve may not."

Grant: "We ought to be discussing an intelligent move to a sound currency by which I mean a currency that is based on a standard and not at the whim and the discretion of a bunch of mandarins sitting around Washington D.C."

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 hates bonds and warns investors

As written in the Grant's Interest

Rate Observer

, the U.S. has 3.3 times more Treasury debt outstanding than a decade ago, yet the yield demanded by the market has fallen by two-thirds, from 6.1% to 2%. The market won't always be so accommodating. Someday, when the market demands higher interest rates or, worse still, refuses to buy new debt at any price, USA situation will quickly get out of hand. Still the problem is different in the Eurozone. Because countries such as the U.S. and Japan are obligated to creditors in their own currencies, they would likely prefer the risk of inflation and possible devaluation of their currencies over the option to default. In the Eurozone, because countries issue debt in a common currency that none of them alone controls, there is no easy way out for one overleveraged country: the only choices are to undergo a restructuring (like Greece); a rescue by the European Central Bank (which, at various points, has been a buyer of sovereign debt issued by Greece, Ireland, Portugal, Italy, and Spain); or withdrawal from the Eurozone and reinstatement of their previous national currency.

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).