James Grant, founder of Grant's Interest Rate Observer and one of Wall Street's strongest advocates of the gold standard, says it's past time to leave the faith-based dollar. Grant calls the fiat dollar "one of the world's astounding monetary creations.”
“It'll be 40 years next month that the dollar has been purely faith-based,” Grant tells The Wall Street Journal. “I don't believe for a moment it's destined to go on much longer.”
“I think the existing monetary arrangements are so precarious, so ill-founded and so destructive of the economic activity they are supposed to support and nurture, that they will be replaced by something better."
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Grant says tat seeing market values “through the prism of zero-percent funding costs," distorts everything.
“I can't explain the world's infatuation with government securities and negligible yields,” says Grant. “These bonds and notes and bills are denominated in currencies that central bankers are doing their best to depreciate."
Though Grant says he can't exactly predict whether the debt predicament or the printing press is going to get the upper hand, he’s not recommending that investors hide out in gold bullion.
"We can observe that the dividend yield [on many blue-chip U.S. companies] is a match for most points on the Treasury yield curve,” he notes. “But their managements are adaptive, unlike the inert Treasury bond that you buy for so-called safety."
“Look at these impressively adaptive businesses that have managed to make a go of it in every political environment and even today."
The Minneapolis Star Tribune reports that, according to research from Oppenheimer asset strategist Brian Belski, three-quarters of the stocks in the Standard & Poor's 500 now pay dividends.
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