Submitted by Taps Coogan on the 11th of May 2020 to The Sounding Line.

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Grant’s Interest Rate Observer founder and editor, Jim Grant, recently spoke with Yahoo Finance and remarked about the dizzying growth in government debt and monetary stimulus, noting that the US federal government has added as much debt in the last 27 days ($1 trillion) as the first 192 years of the nation’s history. He also warns that we are facing the near term prospect of stagflation.

Some excerpts from Jim Grant:

“It took 192 years for this country to amass its first $1 trillion of public debt. That’s 1789 to 1981 and the latest trillion, we did that in 27 days… Much the same thing is on display in the corporate sector, perhaps not so very dramatic. For example, the Fed has given permission for companies to enter its main street lending program with ratios of debt to EBITDA of six times, which is very high. Because the Fed has fallen in with the present day way of doing business and accounting, as of April 30th, it is now allowing adjusted EBITDA, which allows for the pixie-dust of add-backs and the like. So, whether you are talking about the size of debt or the way we account for debts, we have entered the age of dis-inhibition. The idea of sound finance is kind of out of the window and in its place is the modern monetary theory of functional finance which is that it’s okay as long as it works.”

“I think we are looking at the near term forecast of stagflation.”

There is more to the interview, so enjoy it above.

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