 We are greatly honored to have James Grant with us today to present the Henry Hazlet Memorial lecture, which is sponsored by James Rodney The title of this lecture is fittingly enough Hazlet my hero Actually, all you need to know about Jim is that he writes with the clarity and economic insight of Henry Hazlet But there's much more to tell Jim Grant is a financial journalist and historian and the founder and editor of Grant's Interest Rate Observer a Twice monthly journal of the investment markets Among other books. He's the author of five books on finance and financial history including money of the mind The trouble with prosperity and mr. Market miscalculates that was written in 2008 Okay, and I think you know the point of that His at John Adams party of one a biography of the second president of the United States was published in 2005 Um forthcoming In the fall is the depression that cured itself the last laissez-faire depression 1920 1921 This I eagerly await this this book because this is a great unknown depression That the Keynesians will never tell you about or if they do they'll lie about it Mr. Grant's television appearances include 60 minutes the Charlie Rose show CBS Evening News and a 10-year stint on Wall Street week His journalism has appeared in a variety of periodicals including Financial Times Wall Street Journal foreign affairs Mr. Grant is a former Navy Gunners mate Not packing now are you? And and the Phi Beta Kappa alumnus of Indiana University He earned a master's degree in international relations from Columbia University and began his career in journalism in 1972 at the Baltimore Sun He joined the staff of Barron's magazine in 1975 where he originated the current yield column I mentioned that Jim Grant was in line for the Fed chairmanship had Ron Paul won the election So without without a further ado, it is my great pleasure to introduce to you Jim Grant spontaneous photo very candid Well, I thank you Joe. I thank you James Rodney You know I stand before you lit by the luster of the great name Haslett You know exactly how honored I'd feel if you were a science reporter who had been asked to deliver the Einstein lecture Or if you were a baseball writer who had been summoned to speak at Cooperstown It is a privilege and a pleasure to be here Financial journalism of which Haslett was the non-pariah mid 20th century American practitioner Is an especially ephemeral branch of a famously perishable trade Not only generally Is it not for the ages? the proliferation of texts and tweets and instagrams has made it Increasingly not even for the next hour Believe me when I tell you that when you stand at the pinnacle of financial journalism You are standing at sea level Now there have been giants the elder Badgett the Victorian polymath He was a second editor of the Economist having married the Daughter of the first editor of the Economist Badgett was one a great man of letters as well as a great journalist William Peter Hamilton who edited the Wall Street Journal about the time that it hired Henry Haslett in the 19 teens Certainly was a formidable character and standing head and shoulders over most practitioners in the mid 20th century was my mentor at Barron's Robert M. Blyberg who Stood for the things that Haslett stood for and also John Chamberlain who should be mentioned in the same breath My plan today is to Deal with mr. Haslett and his legacy in the three parts. I want to tell you who he was and I would like to tell you a little bit about the Signal cyclical event that he lived through 1920 and 21 And then I want to touch on the relevance of his ideas today, but I want to frame the discussion about finance With a little sidelight on Compound interest this is at the heart of of investment markets Now I want someone here Perhaps one of you students who has a either a very good internal calculus or a Calculator or a computer to double check me. I'm gonna do these numbers in my head This is this is to set the scene I'm going to describe for you what might have been if the human race were only a little bit more adept with money All right. Okay. Now Cleopatra died in the year 30 BC. I say this on the authority of Wikipedia 30 AD no 30 30 BC is what they say and Let us say that One herver loyal servants had the presence of mind to liquidate $100 worth of her bangles and make a perpetual deposit at 2% interest in the Bank of eternity in Alexandria Okay, someone some I'm not going to deputize anyone particular but I want you to okay, so 2% That's 30 BC They call it that 2044 years right at 2% per annum Let's see carry the three Yes, that would be five 37 comma 90976404731520000 that's the sum of money that would be Available to we human as human beings now it's a that's an awkward song That's before tax. So let us reduce this to something Before tax and depredations Let us reduce it to a little more manageable say per capita That would be five point three billion dollars per capita which as the former middleweight champion Jake Lamotta used to say as a lot of money even when you say it fast Perhaps you have read The somewhat downcasting news that fully 36% of Americans Nearing retirement age have saved $1,000 or less Now I put it to you ladies and gentlemen the difference between 5.3 billion per capita in the world and less than a thousand dollars is the measure of the difficulty We have buying low selling high and keeping our hands off other people's money All right, that's by way of let us now Return to the subject at hand Henry Haslett who had to deal with the same foibles the same human Propensity for error with respect to money that we do to this very day So haslet was born in 1894 in the second administration of Grover Cleveland a most propitious Political woman it was Cleveland who said the government The people should support the government, but the government should not support the people now I know it at the measly Institute They agree with the second part of that In any case Henry Haslett was born the year was 1894 the city was Philadelphia He and his family moved at length to New York. He grew up in New York in somewhat straight in the circumstances. He went to go to Harvard Got on the wait list at Auburn and they said to heck with it. He was not to go to college at all No, but he did not go to college He's he said something having to do with a shortage of funds precluded me so he was an Autodidact he taught himself except for a couple of semesters at city college He taught himself what he knew and he set out to be a philosopher and He he published his first book as a teenager. He was certainly a prodigy And then he did what so many Accomplished and good-looking people have done since then he set his sights on a career in financial journalism So having published thinking as a science at the age of 22 This is 1916. He got a job in the Wall Street Journal. He had to support his mother and He thought the journalism would help him do that that was his first miscalculation, but he persisted From the Wall Street Journal. He went to the New York Evening Post That was Alexander Hamilton's paper Hamilton had by then retired And not long after joining the New York Evening Post. He went to work writing a monthly financial letter for something called the Mechanics and metals National Bank in New York now if you haven't heard of the bank It's because it never took tarp money in 2008 Well that gig lasted not much longer than others has let seems to have been rather a job hopper But he came as this bank Economist have a proper disdain for financial prophecy He got this at a young age. It's taken me 40 years in the business understand that no one can know the future I Can't imagine where I'd be today if I understood it at the age it has let did but he did understand it He said quote too many factors must be known and no one can know them now in those few short Words is a great deal of truth So he persisted with the New York Press he got a job in New York Sun He was a commentator and he was a literary editor. He became a literary editor at the nation. This shows Haslitz a great The breadth of his talent a little like Walter Badgett the eminent Victorian Haslet could write about criticism and culture as well as about finance and None other than HL Menken for whom has presently went to work declare that has it was Was rare if not unique in that he was a cultural critic Who almost alone among the human beings who have ever been known to Menken could actually write well and It was indeed to haslet that Menken turned in 1933 to take over the editorship of the American Mercury Presently again Haslett moved on he went to the New York Times in 1934 and he began to write editorials now Paul Krugman was not then on the staff And the times lined up very much in the Mies in kind of Lou Rockwell ring of American thought well not quite Lou but it was more in that direction than in the direction for which it's known today and and And Haslett continued writing editorials at the Times until 1946 and he wrote some wonderful editorials Examining analyzing condemning The arrangements set up in 1944 and 45 to govern the world's monetary affairs after the close of the second world war The World Bank and the IMF were those arrangements and they came within his gun sights and he let them have it 1946 he makes his last career move going to Newsweek magazine where for the next about 20 years He writes a column called business tides Until the mid-1960s when Newsweek decided that it had to get with it and it hired Milton Friedman So what was it about Haslett that that that sets him apart well first and foremost Is the wonderful organization of his mind He set out propositions in a way that were instantly Clear to a lay reader he wrote a book called economics in one lesson in 1946 that Sold about 700,000 copies before the publishers ran out of stock they would it was translated into many many languages and I can only imagine how bad things would be today if he had not written it There's something that that my man my hero Haslett must answer for and I think it's better to make a clean breast of these things rather pretend They never happened Haslett got a letter from Paul Samuelson and The letter said this he said a writer never knows what his impacts have been I Can say that know that one of the reasons I decided to go into economics was reading your article about economic argument Sisters and brothers if God can forgive Henry Haslett for this so can we And and and Haslett answered to Paul Samuelson very graciously indeed he said oh We said you know it is so gratifying to get this letter He said you know in my book On the new economics which has let demolished he said We seem to disagree on some things in fact I may have been uncivil in some of my treatment But I and you can see that the older man was immensely flattered and gratified by the attention of the younger one that then eminent and younger one What else did Hayek well that did my man haslet do well for one thing he He brought to the attention of the American public the contributions of the great Austrians of the mid 20th century It was Haslett's review of of a road to serfdom That set Hayek's wonderful book in Commercial motion in 1944 and you know the New York Times book review played that on page one It was thanks to Haslett's agitation that it was not buried on page 33 a haslet was similarly responsible for Bringing the attention of the Yale University Press to Mises's great tract on socialism One of the remarkable features of Henry Haslett's life to me is is how he moved in In the intellectual circles of his day. He was not marginalized as some sort of right wing wing nut At one point he was the chief editor of the American scholar at one point He was his work was reviewed and of all things the American economic review This was at a time when economists didn't only talk to themselves and only speak in garlands of algebra To be sure but nonetheless his work economics one lesson among other things got the serious attention of serious scholars He was in correspondence with economists of all stripes He lived the life of the public intellectual Without sacrificing any of the truly eccentric for his time eccentric beliefs that he held so dear I want to favor you with a couple of passages From Haslett's work just to give you a sense and only a sense or a taste of the delight That his readers enjoyed in reading him hot off the press here. He's talking about Flight capitalists was a big thing. That was a big thing today, too but flight capital I think this this piece dates from 1940s and Here is Henry Haslett writing in the American scholar the journal for the Phi Beta Kappa Institute writing on the somewhat Wonky subject of flight capitalists then the politicians in power and economic writers who reflect their point of view Seek to put the blame not on the government that has made its credit and intentions questionable But on the creditors who question them they call the money of these creditors hot money though It is of course merely money that is trying to leave hot places and And here is the great Haslett Untrade he was now Dueling with Max Lerner Not one of Murray Rothbard's favorite journalists He was dueling with Max Lerner on the subject of economic planning. Ah, yes plan. There's now there's an evergreen And the connection specifically has was dealing with free trade and planning Just what the planners mean by free trade in this connection, I'm not sure But we can be sure of some of the things they do not mean They do not mean the freedom of ordinary people to buy and sell lend and borrow at whatever prices or rates they like and Wherever they find it most profitable to do so They do not mean the freedom of the plain citizen to raise as much of a given crop as he wishes or to come and go At will to settle where he pleases to take his capital and other belongs with him They mean I suspect the freedom of bureaucrats to settle those matters for him and they tell him the fetus Dossily obeys the bureaucrats he will be rewarded by a rise in his living standards But if the planners succeed in tying trying sorry tying up the idea of international cooperation with the idea of increased state Domination and control over economic life the international controls of the future seem only too likely to follow the pattern of the past In which case the plain man's living standards will decline with his liberties This is a remarkable production it's remarkable production for its clarity not a hair on the head of this prose at a place And it's remarkable not least for the courage with which Haslett Advanced these ideas. He was writing in a high time of Socialist thought he was writing at a time the world was Was organized for warfare and of course that means that the state was up in the saddle and digging in its spurs And as I say Haslett managed to To be the most forcible champion of enterprise and of liberty While the same time not giving in to the bitterness of the isolated Individual waging some sort of supposedly futile war against the authorities You might look up if you can in fact one of the wonders of the age Of course is the worldwide web in which the entire canon of human pornography and misinformation and information is Available and you can if you go back to your college campus and go on ProQuest which allows you digital access to or access to the digital archives in New York Times and the Washington Channel look up a review of Hayek's of Albert J. Knox book in 1935 our enemy of the state now This is it is a knock was a most curious MacTavish. He was a Devotee of the ideas of Henry George. What knock seemed to want Was the state to seize the land and take for itself the economic rent that land yields and Thereafter to leave us all alone How the seizure might go we never really find out But knock advance this very very to me eccentric strand of anarcho Libertarianism in this book our enemy the state was a fine indictment of the new deal and its works with the backdrop of Henry George And that project of seizing the land So haslet Rather gives the book the back of his hand only Inviting the author to think a little more clearly about what he's about and then to he takes knock to task for knock's peculiar brand of Doomsday fatalism It will never get better nor should we try to make it so because it cannot Come on gotta try right so anyways, so this is haslet Taking on an intellectual challenger from supposedly his side Anyway, that's my hero Henry haslet Naturally the author of a forecoming forthcoming book wants to ram that title into the conversation So I'm going to tell you a little something about the depression of 1920 and 21 because it among other things was the first Formative cyclical downturn through which Henry haslet lived He was a cub reporter is to I guess by that time a rising journeyman reporter and he lived through this What was this? Well? Let me say that Enough bad things happened So that if they had happened today We would have truly QE forever I'm gonna give you a Profile of the difficulties that America faced in the Depression and according to the National Bureau began in January of 1920 now the backstory to this depression was an inflation and The backstory to the inflation was the Great War As you know, World War one ended in 1918 and as you may not recall People braced themselves at the end of the war for what had been a customary war time depression or post-war depression Such had been the case in America after the war of 1812 had been the case in Britain after the end of the Nepal Napoleon I Was gonna say judge judge in the Palatine Wars He is a terrific speaker After the Napoleonic Wars such had been the case in America after the Civil War surely surely There would be a depression in 1918 1919 instead There was just a glorious a glorious inflationary boom It carries so far that almost everyone came to believe it would persist that's the sign of a good moon When you know it will go on forever And adjusting their affairs to the the certain Prolongation of this boom, you know General Motors built the biggest office building in the world and outside Detroit I think it's still standing. It's now government property. No, it's not government's given it back Yes, two entrepreneurs out in Kansas City Fellows named Truman and Jacobson opened up a haberdashery Farmers bought mechanized plows and tractors and The country was on fire with enterprise and with easy money and Then as all things do and especially as all inflationary things do this boom came to an end it went boom and what followed was a Carpenticular decline in just about everything Never before nor since have commodity prices fallen so sharply as they did in 1920 starting at the spring time Before too many months were out the wholesale price index of the time had fallen almost by half as measured and no doubt mismeasured By the Commerce Department subsequently The nation's output Suffered a client of almost twenty four percent in nominal terms eight point seven percent in real terms Industrial production down thirty one point six percent stock prices down almost by half picked a trough and Corporate profits down by ninety two percent nine two percent Unemployment you ask well Contemporary measurements put it at between two million and six million that was the state of knowledge of unemployment. Have you heard of? The great Hong Kong colonial administrator Sir John Copperthwaite he was the The eccentric who in the late 60s early 70s in Hong Kong Insisted that no surveys be conducted to calculate so-called macroeconomic variables lest Those data be put to use for the wrong purposes Well, this was a Sir John Copperthwaite kind of slump because no one knew nothing The macro had really not been invented. I have been through Almost every scholarly journal of the time economic scholar journal and have found exactly no mention of the macroeconomy or Still less of macroeconomic Potentialities for intervention So Unemployment was severe or not severe depending upon the locale in which you talk to people But the high end of the six million person estimate that would imply a jobless rate of about 30 odd percent I think that was way too high, but still it was severe So the adage that the past is a foreign country is nowhere more apt than in economic history But still qualitatively one has a sense that things were all wrong and and very very worrying I Say this I say this because There have been a lot of scholarly attempts subsequent to that depression to To paint it as a kind of a bump in the cyclical road Christina Romer who's a very fine economic historian contends that based upon her reconstruction of the data It was nothing more than Then then especially irksome but not Frightening recession is how I'd characterize it a bump in the road However, what Christina Romer doesn't know is that I have surfaced clinching if not quite econometric evidence to prove her wrong I'm gonna tell you but you can't tell anybody else when the book comes out In 1921 there appeared a hit song called ain't we got fun Now if I could sing I'd sing it as it is I will recite a few of the lyrics Every morning every evening ain't we got fun not much money. Oh, but honey ain't we got fun, etc Now that ladies and gentlemen, I put it to you do they write songs about recessions I Thought so this is a depression Well that did not Mises teach us that we cannot Pretend to be overly quantitative in our analysis okay, so What does the government do? This is this is a massed area, right a pandemic of economic difficulty. What does the government do? Well, the government had been used to doing rather a lot We just been through the First World War Woodrow Wilson Was certainly not averse to government intervention and had been heard to talk Talk about how in the post-war world socialism was the thing but Woodrow Wilson suffered a stroke and His administration was as incapacitated as he was as the cyclical tide turned in 1920 So what the government did approximately was nothing The Treasury Under the management of people who thought the budget should be balanced the Treasury balanced the budget a small surplus actually I Yes, the Federal Reserve was was not quite out of short pants that have been founded 1914 and It was now in the trial run of its first big downturn. How do you suppose it met these sorrows of 1920? Of course it raised interest rates This is the only cyclical episode in American history in which money market interest rates Nominal money market interest rates were higher at the cyclical trough the depths than they had been at the cyclical peak At the worst of it 1921 Real money market rates of interest were probably on the order of 15 or 20 percent Punishing constricting as fixiating real rates of interest. I want to address now a question to Paul Krugman. I know he's watching Dr. Krugman Given the Barbarity of this public policy response to our troubles to 1920 21 Why did the depression ever end? Silence I thought so Well, if you read Alan Melcher's history of the Federal Reserve, he will talk about the real balances effect And I can't understand economist when they speak English I think what he means is that the value of money increased as the price level declined I think that's what he means So that money in one's pocket or one's bank account bought more and because money was more valuable People could see bargains and sees them Prices fell I mentioned that I did not mention but this is equally important wages were allowed to fall Wages fell to sometimes 10 15 sometimes 20 percent Wage declines were not so deep as price declines, but the fact that wages were allowed to fall and did fall Allowed business firms to readjust and to restore their profitability at lower levels of product prices The consequence of all this of course was that the oppression did end but before it ended I want to tell you especially you investors in the audience how things looked at the bottom You know in this day and age The Federal Reserve takes it upon itself to save us From the worst of the consequences of our collective errors and it intervenes before Things come to such a pass as we on Wall Street know them to be value-laden The Fed did not choose to do this in 1921 and here is how things looked at the low point of the stock market in August Many stocks then translated into multiples of 1923 earnings forward earnings of less than five times as deal companies of Course cyclicals they would be selling that cheap but also the kind of consumer products companies that had enjoyed a relatively prosperous depression Has anyone here heard of the Coca-Cola company? I understand it based in Atlanta. It was then new But it was a comer people would see that There were only 500,000 shares outstanding small company Stock market capitalization all of nine and one half million dollars But it was valued at what would prove to be 1.7 times the next year's earnings and Two and a half times 1923 earnings and the shares paid a dividend yield of five and a quarter percent That is called a bargain Gillette safety razor company selling as many razors and blades in 1921 that worst of the Depression year as it had 1920 was quoted in a little bit more than five times for earnings and yielded nine nine and a quarter percent Radio Corporation of America Not yet revealed as one of the great growth stories of the 1920s could be purchased in the market for About as much as it earned in 1923 it was trading at one times 1923 earnings So it was a depression But ladies and gentlemen it ended owing to the resiliency of uninhibited markets Murray Rothbard the great Murray Rothbard Said that in his way, you know without qualification. He said that I Know he said this he said this that the only way the only way to treat a depression is through laissez faire Well, I don't know but let me just say this that the The lessons of 1921 as I read them and the lessons of 1929 and 33 as I read them having read Murray Rothbard Certainly did not disprove this most audacious and most unqualified assertion Herbert Hoover the Secretary of Commerce in 1921 under President Harding Was champion at the bit to do something? Hoover was in fact a great humanitarian But as it turned out the great humanitarians attempt in 1929 30 and 31 To institute a wage freeze was an act not of humanitarianism But of unintended cruelty So anyway, so this was the first formative cyclical event in the journalist a career of the young and rising Henry Haslett Next up I want to I want to try to relate some of Haslett's commanding ideas to the present day to our difficulties and opportunities today in finance and and The first of his ideas is that inflation is something more than a rise in the CPI Haslett was a perennial Worryer about inflation it irked his editors at Newsweek no end, but he wouldn't stop and he was at it in 1946 as he was at it in 1966 and You know I proceed on this question of inflation I think one ought to define terms and to me inflation is not Too much money chasing too few goods, but too much money the thing that the redundancy of money chases is variable Could be things the checkout counter could be things on Wall Street could be office buildings In Park Avenue, it could be farmland in Iowa You don't know but in the past year Central banks have materialized net 1.9 trillion dollars 1.9 trillion dollars that is net of a substantial reduction in the balance sheet of the European Central Bank 1.9 trillion that's more than the GDP of India Now one here is constantly that this money is Is benign it is harmless it is it is merely helping us adjust to the new normal which phrase If I hear one more time, even if I say it I will screen Haslet knew that That redundant money and credit makes mischief the nature of which mischief is variable So here listen if you would please to Henry Hazlet in June of 1946 Declaming against The government which was talking then as it has recently about deflation and Before I quote Hazlet perhaps I should try to define deflation at least from my satisfaction To me deflation is not a decline in the level of prices if that decline can in fact be measured properly Say we live one lived in a time of great material and technological progress just for instance they one lived in an age of robotics and of digital wonders and of the ubiquity of information True false and otherwise say if one did end of globalization as they say and of the division of labor Perfected through digital technology if one lived in such an age might one not expect the cost of producing things to fall And if one did might one not expect the cost of buying things to decline and If one expected those things would one choose to call that deflation or might one choose to call it progress Now the Federal Reserve seems not to notice that most Americans spend most weekends looking for deflation They seem not to mind it So to me at least there ought to be deflation right there ought to be what they call deflation there is progress There ought to be deflation. No there can't be because the central bankers wish to raise up the level of prices Which can't be measured they wish to raise up the level of prices by 2% a year plus or minus By so doing say I The central banks with every good intention Manage to create such an increment of redundant money and credit as to do this chief Now this mission sometimes is is is most most welcome on Wall Street. We call it a bull market So this deflation business is very complex, but I think in its essence is rather simple so enough preface let us hear Henry Haslett in 1946 on Inflation and deflation quote a Washington correspondent of the Wall Street Journal reports that the government economic experts experts Are now convinced that deflation which has let used in sneer quotes deflation and not inflation will be the big problem Six months to a year from now Planners of federal financial policy Make no secret of their belief that the danger of post-war inflation was passed in late spring and that from now on a greater danger Lies in too rapid deflation. This was the year-mine you in which the employment act was passed famous employment act in 1946 Such a belief on the part of the government planners in Washington would not be surprising the whole economic philosophy They have adopted leads them to believe at almost any period that the real danger is deflation Those words in quotation marks the real dangerous deflation whatever the evidence may be on the other side So this has looked 1946 that was 67 years ago and he might have written it yesterday One hears one heard from Ben Bernanke at deflation Almost kneeling before Milton Friedman in 2002 or three Milton Anna on a Schwartz We did it he's speaking on behalf of the Federal Reserve We did it. We won't do it again. What is he talking about? Milton we're against progress. We're gonna fight it Anyway, that's has a lot on deflation so that's that is one important strain of Haslitz lifetime Lifetime writing that bears a direct and immediate Has a direct immediate an immediate bearing today on our financial lives and our portfolios a second Is the question of interest rates now ladies and gentlemen I have devoted 31 years of my adult life to writing about interest rates, and I gotta tell you I cannot see them anymore They're tiny now. I Mean no one's getting any younger. I need interest rates now But The present era is not the first in American modern American history in which interest rates were You know, you know little people midgets In 1946 as well the Fed Had been enlisted in the cause of public finance and wartime finance and it kept rates that sensibly zero Long bond was two and a half percent or something. They they had nationalized the yield curve then yield curve meaning the alignment of interest rates over time three months Two years five years ten years. That's a yield curve Then is now the Fed was I had its thumb on the scales of finance Here is Haslitz writing on the headline of the other pieces the fetish the fetish of low interest rates and This too is in 1946 from July of 1946 And again, I wish I had written this last week. In fact, I may write it next week All right quote when interest rates are kept arbitrarily low by government policy The effect must be inflationary in the first place interest rates cannot be kept artificially low except by inflation The real or natural rate of interest that's new excel talking not bad for a newspaper guy The natural rate of interest is the rate that would be established if the supply and demand for real capital were in equilibrium The actual money interest rate can only be kept below the natural rate by pumping new money and new credit into the economic system This new money and new credit add to the apparent supply of new capital Just as the judicious addition of water may increase the apparent supply of real milk It wasn't that lovely But the money rate of interest can be kept below the real rate interest only as long as a supply of new money exceeds the supply of new real capital And he winds it this way excessively low interest rates are inflationary in the second place because they give an excessive stimulation to the volume of borrowing Well Well now we come to the year 2014 Interest rates the federal funds rate, which is the rate the Federal Reserve directly Influences has been at zero for well nigh six years six years. That's the date like of our emergency Now there is a doctrine in Finance called a dividend discount model and As you chartered financial analysts know The price of a common stock Is the present value of its future cash flows discounted to the present by a suitable rate of interest? Future cash flows discounted value to the present by a suitable rate of interest now What would happen? To the calculation of the value of that stock if the rate of interest were unsuitable if we're artificial Well haslet actually now that you mentioned it Says this Excessively low interest rates are inflationary because they mean that bonds stocks real estate and unincorporated businesses are capitalized and excessively high rates and Will fall in value even though the annual income they pay remains the same if interest rates rise well This is March 2014 Janet Yellen who was the ruler of America? God bossy I pull a Larry Summers Janet Yellen is the ruler of America in that in so far as the Federal Reserve controls such interest rates as People in markets used to discount the present value of earning assets This is very very explosive business if our interest rates are Artificially low it follows that our values are artificially high it follows further We live in a kind of a valuation hall of mirrors We don't exactly know what things are we don't exactly know where things ought to be We can imagine where rates might be if they were left to Find their own level. You know one wants Natural interest rates, you know free range organic sustainable local But instead we have kind of hot house interest rate, you know tomatoes in February Those are the kind of interest rates we got hot house interest rates So what we at Grants are in the business of trying to do is to is to is to divine Value we you know, I went to India last week to check out what values might lurk there We look we case the the credit markets and the equity markets for things that are mispriced And it's never easy, but it is made all the more difficult By the Federal Reserve's intrusion into this most basic Element of the valuation equation. That is this simple rate of interest In conclusion, I wish to thank once again Mr. and Mrs. Haslett for having given us this remarkable man as well as The Nissan Institute for putting on this lecture for the sponsor of the lecture and for you for being here What a remarkable man was Haslett and how well it would suit us all To live more closely to his example