Strange economic times are upon us, warns Wall Street guru

Strange economic times are upon us, warns Wall Street guru. From an interview with Jim Grant, author of the iconic Wall Street newsletter Grant’s Interest Rate Observer.

From multi-billion bond buying programs to negative interest rates and probably soon helicopter money: Around the globe, central bankers are experimenting with ever more extreme measures to stimulate the sluggish economy.

This will end in tears … Highly proficient in financial history, Mr. Grant warns of today’s reckless hunt for yield …

For the first time in at least 5000 years we have driven interest rates below the zero marker….

In finance, mostly nothing is ever new. Human behavior doesn’t change and money is a very old institution and so are our markets. Of course, techniques evolve, but mostly nothing is really new. However, with respect to interest rates and monetary policy we are truly breaking new ground. …

Helicopter money is coming soon, or the world economy risks flipping into a depression due to the immense and unprecedented build up of debt globally:

I already hear the telltale of beating rotor blades in the sky. I also hear the tom-toms of fiscal policy being pounded. There seems to be some kind of a growing consensus that monetary policy has done what it can do and that what me must do now – so say the “wise ones” – is to tax and spend and spend and spend. That seems to be the new big idea in policy. …

So what are investors supposed to do in these bizarre financial markets?

I’m very bullish on gold and I’m very bullish on gold mining shares. That’s because I think that the world will lose faith in the PhD standard in monetary management. Gold is by no means the best investment. Gold is money and money is sterile … it does not pay dividends or earn income. So keep in mind that gold is not a conventional investment. That’s why I don’t want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder.