 Our guest this weekend is none other than James Grant, the publisher of Grant's Interest Rate Observer, and also the author of the current cover article in Time Magazine, entitled The United States of Insolvency. But some critics, notably Paul Krugman, have weighed in against the article, and we even have Ben Bernanke, the former chairman of the Federal Reserve, telling us that the Fed could, in a worst-case scenario, directly finance the Treasury. Well, we're not buying it and neither is Jim Grant. So stay tuned for a great interview on his recent article in Time Magazine. So your current article in Time Magazine, The United States of Insolvency, Paul Krugman at The New York Times has weighed in very briefly in his blog on your piece. He was a bit unkind here. Did you have a chance to see what he said? Oh, yes. But you know, no matter how nasty he gets, he'll never be as tall as I am. When I read his blog and he talks about low interest rates creating a good environment for deficit spending, I just wonder in the minds of a progressive like Mr. Krugman, do you think that the federal deficit has ever repaid? Do you think the Fed's balance sheet has ever shrunken? No, I think not. I think that the people like Paul Krugman regard the desire to reduce the debt, if not to pay it off, they regard the desire to restore the Fed's balance sheet to something like pre-2008 normalcy. They would regard those things as ambitions of people who don't understand how the world really works. They think that the debt is a balance, a helpful thing. They think that low interest rates are the invitation to incur more of it. They think that the Fed's balance sheet is as large as it ought to be, and they observe in the measured rate of inflation that no one seems really to object to it, and that the burden of proof is in any who would have the Fed do less of what it has done. So I think that they are, as apologists for the fiscal and monetary status quo, they are fat and happy and self-complacent. And as far as the numbers they look at, they are entirely, they would be correct. The stock market is near a high, and the measure rate of inflation is less than 2%. So what's wrong? I think that's the way they reason. Well, some of the criticism of your time article was not simply about the United States government's ability to service its debt or its assets or its solvency, but there almost seems to be this tenor. And I wonder if this is trickling down from progressive, like Krugman, this tenor that it's somehow almost passe, are cliched to be talking about the federal debt because it's this amorphous thing we've lived with for so long. And Ross Perot was clamoring about it in 1992, yet here we are in 2016. I just wonder if there is not a measure of fatigue in the general public to the extent the general public pays attention. Yeah, well, the critics of the debt and of the post-1971 dollar have been sounding off for many years, and they have come to seem, we, I should certainly include myself in that, have come to seem like a Paul Revere without the British. There's been the alarm, but where exactly is the menace? You know, Vice President Dick Cheney came out many years ago and said that deficit has no, you know, no evident, obvious, or even as far as he was concerned, remote connection with the rate of interest. And he wondered what all the shouting was about. So yes, I think that the critics of this time article and of generally of the approach that I took in the time piece, regard my approach to things not only as wrongheaded, but also as anachronistic and indeed as risible. Well, if the debt represents a backward looking approach, what Lawrence Kotlikoff has been talking about in terms of the fiscal gap down the road, that is perhaps even more amorphous to people in terms of expected future tax revenues and expected future entitlement payments. Do you think that do you think that this means that there's that because we can kick the can down the road that there's not really a political solution to this, that the solution has to come from something unpleasant? Yes, I do think that I think that's also the case with respect to the post nine 2007 monetary operations of the Federal Reserve and other central banks, you know, the this almost breakneck pace at which what was once not only kind of unthinkable, but also unimaginable, the pace at which heterodox monetary policy has entered the world of plain vanilla orthodoxy that too, I think must play out until there is an obvious adverse consequence. So again, you know, if you if you just look at the at the basic vital signs of the composite American enterprise, look at the rate of unemployment, look at the measured rate of inflation, look at the stock market, look at mortgage rates. And if you look at those things with the I someone of someone, for example, who was around in in 1979 or 80, when Paul Volcker was just beginning his tenure at the Fed, you'd say, we have arrived at the King of Heaven. I mean, inflation is negligible, at least as they measure it. Rate of unemployment is at least defensible. The stock market certainly is frothy and and mortgage rates are on sale to people, you know, so it's it's it's kind of okay. And people see that it's kind of okay. And they wonder, well, what exactly are these critics saying? And I think that people who have read the Austrian masters and who have penetrated a little bit deeper under the surface of things, no full well that something is wrong and no full well that something is unsustainable. But I think that the critics, I'm going to talk to you about myself, must be patient and must buy their time and have arguments at hand when things do go visibly wrong as opposed to prospectively wrong. You know, on Wall Street, if you if you stake out a point of view that you think is is substantially correct and is in tune with theory and fact, and with value, and everyone agrees with you, you are suspicious of your own reasoning, because, as the man said, successful investing has been having everyone agree with you later. So the the critic of these fiscal and monetary arrangements can take some comfort in the fact that the great and the good are as one in shouting him or her down. I do take some comfort in this. You know, if Paul Krugman can come out and said, God, what a fabulous analysis in Time Magazine, so accessible, so down to earth, and the figures are just you really can't argue with any of it. That would have been worrying. But the universal outcry from people who with whom one would not here to spend much time and friendly discussion about economic matters, the universal outcry against is is is kind of okay, right? It's not exactly pleasant to read all of it. But it's it's it's what you would want if you were contrary minded and forward looking critic of contemporary arrangements. When it comes to contrary minded people, there's been almost a joke circulating for many, many years about Mr. Naki concerning helicopter money. But as you lay out in your article, grants interest rate observer, the road to confetti, you talk about this is is not just a joke about per Naki, but an actual concept called money finance fiscal program that he has forwarded as sort of a possibility between the Fed and the US Treasury. Can you just talk a little bit about this? Is this is this maybe a more honest way than the circuitous way that the Federal Reserve currently monetizes federal debt? Would it be better in a certain sense? Well, it's as you suggest, it's more straightforward. One gets a more honest. I mean, what what helicopter money means is, of course, not literally chucking the stuff out of offering low offering aircraft, but rather of journaling, you know, kind of book entry or digital script into the imaginary Treasury Department checking account. So the Fed, instead of buying securities in the open market, instead of crediting the selling banks with these digital dollars and having the banks lend them into the market, the Fed would cut out the middleman and just credit the Treasury's account with dollar bills. And there will be no addition to the public debt. It would just be creating the stuff out of the thinnest of air. And yeah, there's a certain base appeal to this. Certainly, you know, in a way, it kind of reminds me a little bit of Vivian Kellam's proposition that we ought to stop withholding taxes at the employee level and actually hand the full weekly paycheck to the employee and then take it back from his or her outstretched hand just to let that person know what has been done. And the helicopter money would answer the same, perhaps it would be as pleasing in its way because it would show for all the world to see what is happening, as it is now the Fed's open market operations are obscured and kind of a haze of magic and fairy dust. Well, one final question for you though is, so how did we become the radicals? In other words, I'm not sure that I can imagine Alan Greenspan calling for this, but Ben Bernanke, who's an esteemed person by all accounts and treated as a serious and sober person, is now seen as the voice of reason. I mean, this seems like a Hail Mary type proposition. It seems like something that mainstream people ought to be raising serious questions about. Well, I think it's exactly that. And it's not just Ben Bernanke or the Council on Foreign Relations has advertised this idea and aired it for discussion as the Wall Street Journal did the other day, Greg Yip, its economics columnist laid out the merits as well as some of the demerits of helicopter money and page two of the Wall Street Journal. This idea has entered the mainstream. And again, to me, it's proof positive that radical monetary policy gets more and more radical monetary policy. And those who adhere to classical notions are marginalized as wild haired ones, whereas the exponents of never before proposed indeed hitherto unimagined nostrums. Well, I guess they were imagined, say, at the time of the French Revolution. But the authors of these new schemes are kind of the, they are the new mainstream. And this works until it doesn't work. And I've been around Wall Street a long time. And again, I comfort myself with the recollection of how safe and sound and sane did these subprime mortgage structures seem in 2004 and 2005 and 2006 and into the most 2007. So anyway, I have resolved to try not to lose my mind and retain my patience and measure it with humor and keep on going. Well, that sounds like good advice for all of us and on that note, Jim Grant of Grants Interest Rate Observer at Grants Pub is their Twitter feed. We thank you so much for your time and have a great weekend ladies and gentlemen.