Submitted by Taps Coogan on the 31st of May 2020 to The Sounding Line.
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Grant’s Interest Rate Observer founder and editor, Jim Grant, recently spoke with CNBC’s Rick Santelli about the Fed’s unprecedented monetary stimulus and what it means for inflation in the coming years.
Cutting to the heart of today’s problem, Rick Santelli asks Jim Grant a plausible hypothetical question:
“Let’s say three years from today we see unemployment at 7% to 8% and we see inflation at 6%. Is the Fed raising rates or not raising rates?”
To which Jim Grant bluntly answers:
“The Fed is not raising rates. Not this Fed.”
In other words, whatever inflation we end up getting, the Fed isn’t going to fight it if that means ‘choking off’ a recovery.
Rick Santelli then notes:
“To me, the equity markets may indeed be the vehicle that takes into account some of that inflation given its price structure… Given a choice maybe you would rather own stocks under that scenario than any of the fixed income products…”
Jim grant also notes:
“I do not intend to insist on a certain outcome, but what I do not understand is this urgency, this almost obsession, to get long these things that almost pay you nothing and which pay you nothing in a currency that the central bankers are doing their best to depreciate…”
Enjoy the full interview above.
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