Jim Grant on interest rates… Octavian Report

Richard Hurowitz, Octavian Report, interviews Jim Grant on interest rates, here…

“Grant: We might. Back when I went to Stanford, there was a professor there named John Taylor. A formidable academic and a very respected public servant. John Taylor’s name is among the most frequently mentioned in the transcripts of the Federal Open Market Committee. Why? Because Taylor is the author of the eponymous rule that sets the framework for setting federal funds rates. Right now, the Taylor Rule would have a funds rate of about 9.5 percent. But what is the actual funds rate? Just a little bit more than zero. So, it would take 30-odd quarter-point turns in the rate to get to the Taylor Rule, and we’re currently talking about many fewer. So the Fed has still not confronted the inflation problem, and people are hoping that it’s just going to go away, that the supply chain problems will cure themselves, that the Biden Treasury is going to rein in spending, and so on. But I think that inflation will prove less tractable and altogether more troublesome than most people realize.”