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The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network
RWH062: Bubble Warning w/ Jim Grant
02:07:18
William speaks with Jim Grant, who cautions that irrational exuberance may signal a looming market top.
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- [00:01]
William Greene
You're listening to tip. Hi everyone. I'm delighted to be back with you again on the Richer, Wiser, Happier podcast. Today's episode is an important, timely, and extremely thought provoking conversation with Jim Grant. Jim, who's a cult figure in elite investment circles, is the renowned founder and editor of Grant's Interest Rate Observer, a bi weekly publication that he's edited since 1983. These days it costs the best part of $2,000 a year for a subscription, so it's not cheap. But it's widely recognized as an invaluable source of unconventional insights for sophisticated investors. Nassim Taleb, who's not an easy man to impress, has written that Jim Grant thinks outside the box. Please read him Listen to him David Swenson, who ran Yale University's Endowment with huge success for decades, once remarked that Grant's Interest Rate observer is on the must read list of every serious student of markets. One reason for Jim's stellar reputation is that he draws deeply on his knowledge of financial history to issue early warnings about brewing storms that many investors fail to recognize until it's too late. He's never been afraid to point out the wretched excesses of Wall street, those moments when speculative fads get out of hand and when unscrupulous investment firms are selling dross that's dangerous to the financial health of careless or credulous investors. In 1999, for example, at the height of the dot com bubble, Jim warned that it was one of the most perilous periods in investment history and that America was dangling by a thread, financially speaking. A few years later, he was one of the first people to warn about the dangerous mortgage securities that led to catastrophe in the global financial crisis of 2008-9. In the years after the financial crisis, he presciently warned that the Federal Reserve's monetary policies would inevitably spark runaway inflation. So what's Jim saying today? Well, as you're about to hear, he argues quite forcefully that prudent investors would be wise to exercise considerable caution at the moment, given the heightened risks and speculative behavior that he's observing. As Jim sees it at this point in October 2025, there are many unsettling symptoms of euphoria, recklessness, folly, and corruption in financial markets these days, all of which he sees as potential warning signs of what he calls a major market top. Now, the reality is, I have no idea if Jim's right, and he's not sure either. After all, markets are inherently unpredictable, and it's also more or less impossible to get the timing right, even if you're smart enough or lucky enough to predict a major shift in market sentiment. This reminds me of a discussion I had with Howard Marks in Chapter three of my book Richer, Wiser, Happier. Howard told me I don't even think about the timing. In the investment business, it's very hard to do the right thing, he said, and it's impossible to do the right thing at the right time. That said, I think it's well worth listening when someone as shrewd and seasoned as Jim Grant warns that we should be treading with extra care. At the very least, it's worth asking yourself if you're overexposed to risks that you can't afford to be taking. As Howard Marks said to me, it's not about selling everything and suddenly going to cash. It's more about preparing for an uncertain future by asking yourself if you're pushing the envelope too far. For example, if you have too much debt or leverage, or if too much of your money is tied up in speculative assets that might be dangerously overvalued for battle hardened survivors like Jim and Howard, I think one of the great lessons of financial history is that reckless excess and overconfidence is eventually punished, so it's important not to get too carried away during outbreaks of what seem to be irrational exuberance. On an entirely different note, I also wanted to take this opportunity to let you know that I'm launching a new Richer, Wiser, happier masterclass on November 21st. This is a chance to study directly with me over the course of a year as part of a very small group that's capped at a maximum of 20 people. We'll meet once a month over ZOOM and also at a couple of unique in person events. Last year the Masterclass drew an incredibly accomplished group of 20 people from I think seven different countries, including some very successful hedge fund managers, wealth advisors, asset allocators, managers of single family offices, CEOs and entrepreneurs. The people who've signed up for the new masterclass are equally impressive and we only have a few spots left, so if you are interested please do email my friend and fellow podcast host Kyle Grieve as soon as possible and he can send you more details. His email address is Kyle, that's k y l e@theinvestorspodcast.com the masterclass is designed specifically for people who are serious investors and passionate learners and who are really looking to build lives that are truly richer, wiser and happier. So if that sounds like you, I'd love to hear from you and would be thrilled to have the opportunity to study with you over the coming year. And now back to the show. You're listening to the Richer, Wiser, Happier Podcast where your host, William Greene interviews the world's greatest investors and explores how to win in markets and life. Hi folks. I'm absolutely thrilled to welcome back the great Jim Grant to the Richer, Wiser, Happier Podcast. Jim, as you all know, is a brilliant financial historian and a wonderful writer and speaker and also the editor of Grant's Interest Rate observer, which he founded 42 or so years ago. And it's a must read publication for the most sophisticated and well heeled professional investors, partly because it's so expensive, but also because it's so good.
- [06:15]
Jim Grant
Cheap at the price.
- [06:16]
William Greene
Cheap at the price. Exactly. Every time I think about getting my subscription, you put up the price again and I blanch again. But I'm finally going to sell.
- [06:25]
Jim Grant
That's, that's the, that's the business plan.
- [06:28]
William Greene
It's, it's very wise, but it's a.
- [06:30]
Jim Grant
Wonderful publication for an aspirational subscriber. We have many of them.
- [06:35]
William Greene
Well, thank you so much for joining us again, Jim. It's a real pleasure to see you.
- [06:40]
Jim Grant
It's a delight to be here.
- [06:42]
William Greene
Thank you. And well, as Charlie Munger would say, he said, well, it's a delight to be anywhere. You know, he was just glad still to be around for as long as he was. So anyway, I'm happy to be with you and I attended your wonderful annual fall conference yesterday.
- [06:56]
Jim Grant
I know, I was, that was, I was, that was very pleased to see your familiar and shining and welcoming and face in the audience.
- [07:04]
William Greene
Oh, it was great. For people who don't know, this is a very glamorous affair at the Plaza Hotel in New York City and it attracts many of the smartest and wisest people in the investment world, not only as speakers, but actually as audience members. And you said just before we started that you wanted to tell a story about something that came up at the end of the conference. Tell us. I have no idea what this is about.
- [07:28]
Jim Grant
I hope about the indiscreet dwelling. What is journalism for except indiscretion with me?
- [07:36]
William Greene
Exactly. Yeah.
- [07:38]
Jim Grant
So this comes from David Rosenthal, who was a speaker of E commerce and David was the number four hire at Nvidia. And how is that for a credential life? He's an extraordinarily, he's a gifted computer scientist and yet I can't imagine what computer science is not gifted in many departments of mental acuity. But David is a standout even in that formidable crowd. Anyway, this story has to do with a kind of reunion of founding employees of Nvidia, and I guess it was fairly recently. It takes place at an ethnic restaurant, I'm not sure what city, I can't remember. I call it Salvadorian cooking. And there's big tables full of Nvidia employees then and now. And Jensen Huang, the storied CEO, gets up and says, announces for the price. You know, I'm pretty good at fundraising. And what I want you to do, ladies and gentlemen, is after your wallets and give them your cash. So they complied. He said, well, one might in the presence of Nate's CEO and one's colleagues. So CEO Jensen collects all this money, and interestingly, for a Silicon Valley crowd, it's people carrying a lot of cash. And so he has a big wad of bills and he walks over the proprietor. This not four star restaurant. And so we here know a little bit about how difficult the ways of starting business. I want you to take this. Isn't it delightful?
- [09:26]
William Greene
Wow.
- [09:27]
Jim Grant
Isn't that something?
- [09:29]
William Greene
That's really nice.
- [09:31]
Jim Grant
Yeah. Shouldn't we all do that once in our lives?
- [09:33]
William Greene
We should. We should. I thought. I mean, for me, the moment you mentioned David Rosenthal, what comes to mind to me is he. He gave a presentation that I think I only understood about one in five words because it was deeply technical. But what did you make of it? That he was. He seemed to be dismantling the idea that Bitcoin was as safe and private as people imagine. And he's obviously a very gifted computer scientist who has many patents. And as he put it, not only was he the fourth employee at Nvidia, but actually, given that there were three co founders, he was actually the first hire. So this is a very smart guy. And he was saying that basically, as I understand it, that once we get further along with quantum computing, I think he said there are about 20%. 20% of the bitcoins out there are sort of lost or unclaimed, that people have lost their keys or they're in trash piles or whatever, and that a quantum computer might be able to actually relatively quickly figure out how to claim for oneself that missing crypto. What did you make of that? This is way above my pay grade.
- [10:41]
Jim Grant
Yeah, that's exactly the message. I think, as you say, it was deeply technical, certainly over my head in many places. But he was attacking the pretensions, the technologically sophisticated who contended that Bitcoin was useful and safe and somehow inured from infiltration by the likes of the coming quantum computers. He's trying to explode that. Check out the region.
- [11:15]
William Greene
And I think there's a link to this on his blog, which I'll try to remember to include on the show notes for this episode so that people can actually track this down.
- [11:24]
Jim Grant
Something much more accessible. And I bet this is up on our spot. I don't know. There's a talk that David Rosenthal gave to a class at Stanford University, I think electrical engineering in 2021. He was filling in for a professor. It's the most lucid attack on Facebook. I read it. I thought to myself, why isn't this fraud trading it zero. It did not go to zero. So many people know something that even David doesn't know about bitcoin. But I thought he made a very good set of close arguments. He winds up and says rarely, if ever, in the annals of technology, you have the champions of a breakthrough technology gone to such pains to not use it. So he was questioning the utility of it. So you kind of had to be there for that one. And not only did you have to be there, you had to understand much more of the technical issues that I do. But in your summary was got most amazing.
- [12:46]
William Greene
This is a very familiar feeling to me in the financial and technology world that I'm with people who are much smarter than I am and I sort of, I am picking up crumbs as they fall from the table.
- [12:56]
Jim Grant
Think smart is, I think, I think familiar or trained or something. But no doubt every field has its vocabulary. We are all humbled in the presence of astronomers, for example.
- [13:11]
William Greene
Yeah, while we're at it, we should close this subject of cryptocurrencies, because this wasn't in any way where I was intending to go at the start of our conversation. But since we're. Since we're here, I'll ride this horse that we're on. But you spoke at the conference of the pretense of things that are not money posing as such. And it's fair to say if people listen to our last interview on the podcast three years ago, we talked about crypto in some depth. And bitcoin now, I think, is around $116,000 per coin as we speak. Despite a recent sell off. You've written quite a lot about, as you call it, a crypto besotted Wall street that's driven up valuations so that there's now, I think, more than $4 trillion in aggregate value of all cryptocurrencies. And I read on Bloomberg the other day that Bitcoin ETFs now managed more than $142 billion. And that even Vanguard is now weighing the possibility of allowing its 50 million or so clients to trade crypto ETFs, whether it's Bitcoin or ether or whatever. And Jack Bogle, the founder of Vanguard, had famously warned investors to avoid Bitcoin like the plague. And so I'm just wondering what you make of what we're seeing here. Is this just standard, top of the cycle recklessness and folly or is this what, what do you make? I mean you've been, you've been following this world of finance for quite a long time. When you look at this phenomenon, what does it mean?
- [14:40]
Jim Grant
Well, one is, is, is forever humbled by the ways and wiles of the market. You know, I, I still don't understand what people see in it. Maybe there's a divide of some kind of limbic system divided. People say, oh yes, bitcoins, I want some of that for the price of a house. What is it? Can you see it? No. No. If you can't see it, what's it now? What are you going to use it for? Well, it's going to appreciate. No, I just pay yield. No, what's its functionality? Well, I'm not so sure about that. Right. It has done well, hasn't it? Yeah. So I'm no longer on certain cable TV stations that I used to be on regularly. And I humor myself or I try to run, I try to comfort myself by saying it's not age, it's not the over familiarity with the arguments that fall from my lips. No, it is my anti maga Republican, country club Republican line that grants. And it is also the last words that I spoke of this particular cable channel when asked about Bitcoin. I said the most efficient price in zero. And my God, this administration is all in on crypto. It's the scammiest thing, the connection between bitcoin and, and the bitcoin promoters and the President and his family and these coins. And it began before his inauguration, had missions, Trump coin and it was kind of a rug pole thing and lost one. I think it's shocking and contemptible, but these cryptos are being heavily promoted by the administration Boses overtly and indirectly by the regulatory approach it has taken for them. And as to Wall street, no, it's monkey see, monkey do. Especially when that monkey is moving upward and to the right, a stock chart. And Bitcoin's genesis was in pseudonymous, right? Yes. So then you could go and Procure whatever you wanted to, whether it was drugs or surface to air missiles or something a little bit more wholesome or. Yes, if you were living in a benighted country that didn't allow you to take money out, you could take your money out through bitcoin. It was more wholesome. But in any case, it was off the grid and outside the pale of conventional Wall Street. Now look vanguard, for Pete's sake. You know, it's, it's right down the middle of the fairway. So the establishment which could not abide it could be. Oh, God, now it's, yeah, Bitcoin, it's a thing. Let's, let's, let's start the next etf, you know, So I still think the most efficient price at Bitcoin is zero.
- [17:54]
William Greene
Well, that's good. So now, now that we've very efficiently offended half our audience in the first 10 minutes, politically or financially, we can, you know, we can be much.
- [18:06]
Jim Grant
Let's, let's get the other half.
- [18:07]
William Greene
Let's get the other half.
- [18:08]
Jim Grant
The other half.
- [18:09]
William Greene
So by the time we come around to talking about your book in an hour or so, nobody will be left except for my mother.
- [18:15]
Jim Grant
Well, they should buy the book. They should buy the book, right?
- [18:18]
William Greene
I bought the book and I very much enjoyed it. Although I have to say it's 400 and something pages long and I'm still, and I'm about 20 pages from the end, so I'm ashamed that I didn't quite finish it last night.
- [18:32]
Jim Grant
I'm not going to tell you how I wound up.
- [18:35]
William Greene
Did it all end happily? Like most of history. So anyway, we'll get to the book later. But the thing that I wanted to start talking to you about, except for the fact that both of us digressed for 15 minutes to insult half the country, is I found yesterday at the conference, your conference, it was a fascinating day and also a slightly unsettling day. And what struck me, I think, was the divergence between the current mood of euphoria in the markets and the acute skepticism and wariness in the room among your speakers, who are a savvy, battle hardened bunch. And so, for example, there was a credit investor named Victor Khozler who manages something like $22 billion, who said markets are very bubbly and there are lots of problems under the surface. For example, he said there are entire areas of private equity that are in deep trouble and lots of companies within private equity that are defaulting on their debt and going bankrupt. Can you give us a sense for people who weren't at the conference of the mood there and what it reflects about the financial environment today because yeah.
- [19:46]
Jim Grant
I'll be happy to do that. First of all you have to for the listeners you have to understand that this is a self selected group of people and grants has made its living buildings only two odd uses. We're yes but people in a gee whiz world people say we're always bearish. That's not actually true but we are almost invariably skeptical doubting Thomases and this is a market of credulity and conformity actually nothing succeeds life success anywhere. But especially on Wall street people I think it was George Soros himself said we'll see a bubble just jump on to get there early and you know you will get in time. No just I'll tell you when or you'll know but there are so many ways to make money on Wall Street. I happen to have cultivated a following that what is innately skeptical and so that line and link take away people walk out of these conferences oh my God, how can I get tomorrow morning but it's it's.
- [20:57]
William Greene
Yeah I felt I should go in fetal position in the bathroom at lunchtime.
- [21:02]
Jim Grant
It's it's a. Yeah we had we I was. It was a good fair mix of people. For example even within credit you've mentioned you know Victor Koestler and there was a guy named then guy named it was Jonathan Fluent diameter manager capital manager who rather said well things aren't so bad. Look at this. You know the things are much better than you'd think by looking at a few soft spots. So there was always disagreement. And John Hughes talked about investing in great companies and not selling. It's a fair diverse that speaks to the variety of ways in which people have different sensibilities and different intellectual terms or different turns of mind can find a place under the big tent of investing. It's kind of nice in that way isn't it? And we had innate copper car. We had the pure specimen of the bear. And to me it's a very fetching buy in the set. He was a perfect example of an avatar of the sell first, buy later approach to securities trading and investment. He exhibited the rueful humor of someone who was prepared to be wrong about 90% of the time in anticipation of being magnificently and all by himself magnificently right. 6 or 8 or 10% of the time.
- [22:38]
William Greene
Yeah. He said something lovely about you asked him impertinently in the way that only a journalist can why do you do this? An existential Question about being a short seller. And he said, well, for the 15 minutes when you're right, it's so delicious. And it just made me think, you know, I mean, some people, really, they're so smart, and they make life very, very difficult for themselves by picking a particularly hard way to play the game of investing.
- [23:06]
Jim Grant
Yeah, he's chosen the highest degree of difficulty, and there aren't many left. I mean, these markets run over the skeptical mind. Have you read the documents? What, Doc? What's the valuation? It's going up. That's the valuation. So, yeah, Nate, his talk had to do with private equity and with AI and all the privates. Private credit, you think, be a sergeant at least, or a corporal or that's the next. But no, it's all privates. And he pointed out it was a magnificent tour de force and tour of the horizon of what's wrong in finance, having to do with the structure of things, with the underlying fragility of debt and with the consequences of all those years of suppressed rates of interest, which, of course interests me. I'm still sore that interest rates were not a thing for so many years. Publication is called Grants Interest Rate Observer. You can't see them. It's not good for business. So I'm still nursing a grudge against the Fed for that.
- [24:22]
William Greene
But now you have your 15 minutes, so all is. All is well for you And Nate, he also pointed out, I mean, I. I thought one of the. I think it was in his talk. One of the most striking things that was a recurring theme that I think is relevant to a fair number of our listeners is that we should be deeply skeptical of the world of private equity as they try to democratize it. And I think it was. It was. Nate Kop said that in finance, whenever you hear the word democratizing, hide your wallet. And he said it's like Chanel marketing itself to Walmart. Can you talk about that? Because that seems like a. A really beautiful example of sort of this ebullient time where Wall street is dreaming up new and better ways to separate us from our money.
- [25:12]
Jim Grant
Well, the hypocrisy is delicious. Or as Nate to put it, you know, the private equity people at first did everything they could to distance themselves from a common man. Their shoes were bespoke suits, magnificent. You know, they called their worships extensive. And they would deal with the institutional world and not all of that. And lo and behold, interest rates did not remain at. On your zero after 2021. And the valuations that were acceptable, the regime of, like Nothing. Interest rates suddenly became very precarious and indeed those valuations went away at a time when kind of began to normalize. So these companies, these private equity companies, 20 something thousand up in the world were capitalized for prosperity and more meaningfully capitalized for a regime of very, very easy money. So suddenly, instead of paying, I don't know, say 3% interest on their debt, they were now paying 8% or 10 or 12. Makes a difference. And so what to do whether these the investors not just well to do endowments. Well, their endowments were among the the elite institutions to which the private equity people sold. So they would go around to mimicking the famous Yale University model of.
- [26:47]
William Greene
David Swanson.
- [26:48]
Jim Grant
Yeah, yeah, David. And they go around and to these endowments colleges, what have you and say yielded this. And what it did was to carve out a very big niche in this portfolio for venture capital and private equity. And you won't be susceptible to adverse marks that reflect cleaning out the unreasoned volatility of public markets. Rather the marks that we give you are virtually correct. And marks meaning mark to market or not.
- [27:32]
William Greene
So not Marx as in the sense of a Ponzi scheme where you've identified Marx.
- [27:39]
Jim Grant
Yes, right. Yes, I did ask made about Ponzi schemes and you said that the term seemed a little bit. Seemed unnecessarily brutal for this sophisticated audit. But so private equity sold overwhelmingly to such institutions. And now such institutions, having budgeted for return of their capital are finding that it's not being returned, nor are the dividends or the interim payments they'd expected quite up to snuff. So they are being, they're being pressed by their, by the presidents of colleges, Ely masonry institutions, museums had to where exactly is the money we need for the draw this year Draw on the endowment week of the endowment farms. And they're hard pressed to collect the money. So some of them are turning to the secondary market for shares in these private equity companies. They're getting peeled off and sold like you sell a used car. And it's not what the buyers originally counted on. So private equity, I think that Nate demonstrated is in trouble. And it's in trouble because it has neglected to honestly value its assets as interest rates began and now it's stuck with assets that are being carried at unreasonably high prices and the assets are not returning in cash that the investors need. So what to do? So they go I know we will. The dear public. The dear public. So hence it's like a long time to get to this, so this is where democratization comes in. Shouldn't the little guy have a piece of this marvelous asset class private credit? Private equity credit by the way is a word that has none of the overtones of debt. It's kind of the same thing. Private debt meaning not privately traded but not publicly traded. So not publicly marketed. And you can see it in the unwavering line of capital appreciation with these funds and these assets have delivered to investors supposedly anyways being marketed to the public as a safe and non ulcer inducing alternative to sometimes tumultuous public markets. Nate correctly says, I think that this is not a sign of the, of the benevolence of the promoters but rather a side of their increasing desperation.
- [30:33]
William Greene
I think it was also interesting that he said that they have this reputation for being super sophisticated and obviously in some cases they really are super sophisticated. But he said when you look at the record of many private equity firms they've shown as he put it, maximum aggression at periods of maximum risk. And so he said really they have a tremendous record of momentum chasing. And so for me it was kind of a reminder that often we fall for the illusion that the smart money is incredibly smart and way smarter than us and is going to protect us from turmoil that can come.
- [31:14]
Jim Grant
Yes, well in the audience was my friend Emmanuel Dermot. Lionel German is a Bell Labs caliber physicist who made a career change to Wall street who became a renowned practitioner of a quantitative finance. We called him Quants of course and he worked at Goldman Sachs for a time and other such high ranked institutions in the Wall street red tables. And you wrote a book called My Life is a Quad. A great memoir. Never mind My Book by David Emmanuel Dermen's book, I think it was published in 2003 or 4. I left his quad anyway at one point Emmanuel harks back to the Long term capital management affair. 1997 I think 98, 97 it was the. The now fabled then frightening collapse of a hedge fund that was run by literally by Nobel laureates. So in his memoir Emmanuel Dorsey says that he was on a call with other Goldman Sachs people talking with the principles after the. After the blow up occurred and he said he was startled and deeply impressed by the depth of sophistication on the part of these so called failed. Well failed but of the authors Lichelle Europe's Long term Capital Management and they knew much more and asked much better questions about valuation and the composition of the assets and the hedge technique than did the Goldman Sachs traders who were trying to value this Stuff. So, and Emmanuel takes away from this that, you know, sheer, sheer mental power, sheer mental acuity is not invariably the road directions you have. It's not necessarily the equipment that gets you where you want to go. So it was, I don't think he used the word humbling because he was. But it gave him pause for thought, you know, and a lot of times, I think a lot of times on Wall street, that simple common sense. I don't get it. Tell me again. So you're telling me that you put all these sub investment grade mortgage tranches together, slap them together and if ones at the 40 40th percentile of the stack have been transmogrified and to AAA securities, is that where I can this time more slowly?
- [34:10]
William Greene
You've written a lot about artificial intelligence in grants and obviously this is one of the things that's been driving the euphoria in the market. And you've talked about the insatiable enthusiasm for anything related to AI. And I was looking at one, one of the, the daily newsletters that you send out from Grants the other day.
- [34:33]
Jim Grant
Daily grants.
- [34:34]
William Greene
Almost daily grants, yeah. And, and it, it was talking about how Amazon, Microsoft, Alphabet, Google Meta, Oracle and Core Weave will splash out $382 billion in capital expenditures this year by Citigroup's count, up more than 50% from 2024 and triple that seen in 2023. And you said that the Magnificent 7 now accounts for 31% of the S&P 500's total capital spending, up from 19% at the end of 2019. And you point out that there are these firms like OpenAI and Anthropic that have raised billions of dollars every few months and are now valued at hundreds of billions. And so you wrote this piece in July about the check writing contest within the world of AI where everyone is basically racing to invest as much as quickly as possible. And I just was wondering, as a battle hardened investor, an observer of craziness as you are, when you look at this excitement, how reminiscent is it of previous booms, whether it's the railroad bubble that ended in disaster in 1873 or the dot com bubble that ended in disaster in 2001. Or is this really different this time? Can you put in in some context what we're seeing here?
- [35:51]
Jim Grant
I think what we are seeing is the promise of a marvelous technology with human characteristics. And those human characteristics happen to have to do with falling out line and doing what others do and if possible doing more of it higher, faster and louder. And so it reminds me A lot of the fiber optics eckwriting contest of the late 1990s, how much of the stuff you put in the ground isn't demand for. Well, there will be. Just go there will be. Or the, as you say, late 1800s, the railroad building contests, as it were, the check writing contest to lay down more track, parallel track to your competitor. But still the contest is worth it. What will beat that? So there's a lot of redundant capital investment then. And these things end invariably with a panic and a crash. I think that's the model for now. One of another points that David made, David Rosenthal made was problem with the capital investment may not be so much in its size, but rather in the demonstrated fact so far that people are not willing to pay for the product of that investment. So extraordinary sums being laid out for data centers, these buildings that in the case of, I think man building something the size of Manhattan island, well and good, except are you going to get paid for it? Will people, young people, college students go away in the late spring and they'll come back into a fall? And will they go away? The demand for AI goes way down because who else has such a deeply deep and persistent need for plagiarism? They have to plagiarize papers to get through the error. So the demand for AI falls off markedly and measurably come the springtime. So I hear myself saying, I saying I get a horse in 1903. It's cars. They stink and they get, look at the tires are blow up all the time. We're steamboats. Steamboats explode and kill hundreds every fiscal quarter in 1840s. But you know, I'm not even talking so much about the technology as the very human response to great technologies and the promise thereof. And don't forget, this is still a promise. And I think the question what comes next? Is it the realization of the promise with the payday or is it the crash that precedes the realization and the payday? I perfectly conceive this stuff is going to do wonders for somebody. But for the time being, people seem not to be willing to pay for what the producers of these large language models are laying out to achieve them and to compete with others achieving them. So I'm all in on comparisons to the busts of yesteryear. I think that's the model for now. Let's take a quick break and hear from today's sponsors.
- [39:11]
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- [43:01]
William Greene
There was a lovely quote that I don't know if I had heard before that your friend Pierre Lassonde, who's a very successful gold bug, quoted from Voltaire where he said history never repeats itself, man always does. And I, I thought that that was quite revealing about the, though what happens with these deals, right, like the, the tendency at certain times in cycles for people to get carried away. And you, you had someone, I think at your other conference, the credit, the credit conference earlier in the year who was saying exactly the sort of, the same sort of thing that basically at times like this there's just this sort of fear of missing out. I think it was Michael Gatto who's head of, of direct lending at Silverpoint Capital. He said when there's a lot of capital and the emotion is greed and there's fear of missing out, bad deals get done. And similarly when there is a lack of capital and the emotion is fear, great deals get done. And so I think this is one of those areas where it's not like we can say what's going to happen with AI and all of this spending, but there's a sort of familiarity to the pattern of human behavior here. Is that, is that fair to say?
- [44:09]
Jim Grant
I think yes, I think it is. When Pierre said history doesn't repeat, he's not going to say, but he's not going to Say. But it rhymes. Don't say that. Not again. So, but Pierre had Voltaire's twist on this, I guess. No, maybe Mark Twain had the twist on. Maybe Mark Twain never said it. I don't know.
- [44:29]
William Greene
I suspect Voltaire didn't say it either. Whenever you are writing a book, you look back and you check the origin of these quotes and you discover very inconveniently that nobody said what we claim they said.
- [44:39]
Jim Grant
He should have said it. Yes.
- [44:41]
William Greene
If Voltaire had been smarter, this is what he would have said.
- [44:45]
Jim Grant
And more cynical.
- [44:46]
William Greene
Exactly.
- [44:47]
Jim Grant
Possible.
- [44:48]
William Greene
Exactly. But so. So assuming that AI has been driving a lot of the euphoria in the current US Stock market, you know, there, there is ample reason to be a little wary of what we're seeing in the US Market. And you've reported recently in your newsletter that The S&P 500 is priced at more than 40 times its cyclically adjusted price to earnings ratio. And that back in the fall of 2021 it was at 38.6 times. And you said that that means it's the richest reading in history after the dot com bubble when it was 44.2 back in 1999. Can you put in in context when you look at the market at the moment, when you look at U.S. stocks, this isn't a prediction of what we think is going to happen. But can you give us a sense of why it's wiser to proceed with caution than with our foot as heavily on the gas pedal as possible?
- [45:52]
Jim Grant
Well, everyone has to be in valuations. Show that. But apropos, there are many ways to make money. We heard from John Humes, who is a renowned compounder of capital. He's a very concentrated portfolio and companies that embody the virtues he thinks are that this positively define great investment. They have to deal with barriers to entry and with capital allocation and with management quality and the like. And he holds it through thick and thin and he's done marvelously through all manner of thins. Right. And that's Warren Buffett's counselors too. But with respect to people who are listening, perhaps a lot of this has to do with their age and with their risk tolerance. And if you are starting out and you have a reasonable weight Dirichlight portfolio and near 20s. And I think it's entirely prudent not to pay attention to what I am now saying or to talking about these macro things come and go if the long term America's Great is going to be great. But say you, hypothetically, you're a gentleman of a Certain age and you own a lot of stocks and you might want to pay a little more attention to signs of excessive. And they are at every hand, every hand. Valuation sentiment. The incidents of unmistakable corrupt promotion. The swaggering of newly empowered through wealth. People who know only one thing which is that markets only go up. And it's all here. The whole theater of major financial markets top is on the stage. The theater is opened. And the pageant of top making scenery and actors and script all that is in play. Now the question of timing. Does it have to end now? No. Does it have to end in two years? No, it is not. But end it will. There was a all these a lot of legends of people who got out in time. In 1929 I wrote a book about one of them, Bernard M. Deluc who was a great spectator. He's a subject of my first book way back when like 40 more and the war. The legend has come down to the Bernard Luke sold on the eve of the crash in 1929. Nope, he did not. I had the stock market. He has records to prove it. But what he did do was take the measure of things in 1930 in and get out salvaging. I forgot now like 60% or 70% of his capital in a cycle that would denude the buy and hold investor by up to 95% or so of his capital. And that took 20 years to wear off. That cycle's Dow made a tie in 1929 and made its recaptured its high in 1954. 1954, to put that in context, that was the year the Giants were in the World Series. It was a most extraordinary. Now it was dividends or counted. That market came back before then. But if you just look at the dow, it was 20. I guess that's 25 years, right? 25, 1929, 1954. And my mentor and boss at Barron's, Robert M. Blyberg was a kid. He was a depression child and he had quite vivid memories of the crash and its aftermath and was very, very cautious in 1954. What he did not say in 1954 is although he was a great markets man, very good instincts and I went back and read his stuff in 1954. What he did not say was we are on the eve of one of the greatest eras of marathon prosperity and investment success that you won't be able to believe. It's all in front of us. There will be bumps in the road, but consider that put away those memories down old days. They are not too many so. But yes, I. I Think that this is a major top in formation. I'm with, with Nate Copper Car and I dealt with others and with myself. I don't need anybody else to help me along with this. But Nate did a good, such a good job in exposing the underside of things, the point of view of credit and private markets. So it will come unstuck and you'll have me on the show and I am not going to gloat at all. You know why? Because I have been around the block. And the important thing is recall at moments like those were able to expect themselves is that just recall how full of beans you were and they've run up to the moment of crowning success. Just remember that.
- [51:22]
William Greene
It's a very difficult game. Right. I was listening to an interview that David Tepper, who I've never interviewed before, but he's obviously very smart, very successful guy, he had done on CNBC when he said, we're having a really good year and I'm so miserable because I still own the market and I can't stand that I own the market. But he said, I'm not ever fighting this Fed with all these expectations of interest rate cuts coming before the end of the year. And he said, you've got to stay for some of the party because the punch bowl is still there. They haven't taken it away yet. So how do you.
- [51:54]
Jim Grant
It's an approach. He is a consummate, consummate successful speculator. I remember watching him on CNBC in 2010. Bernard Ben Esperant, Ph.D. wrote the piece in the Washington Post saying, we are going to institute QE and this will infuse the net worth of the people who have equities and America will be growing again because the stock market will be rising again. That was essentially the argument. I remember David temporary. I remember he was sitting on the cnbc. It was a chair. He was going like this and nervous about back and forth like this. And he was exactly explaining how this was going to happen. And it happened exactly as he said it would. And so he's someone to pay attention to. I think if he were listening to, he'd probably say, I'm miserable because I know full well all the odds are against much more of this. Except he's also in the business of not getting off the train prematurely. That's fomo, because he's rather too sophisticated for that. Although I dare say as a human being, he's not immune entirely from it. But he knows also that things go on so much longer. You would think they would or if you're a moralist should happen to be a moralist should. So he is getting on the Fed as I suppose I often bet against the Fed. I can't stand this adage. I don't fight the Fed. I've made my life throwing left hard jabs and left hooks the Fed and occasional overhang right. The Fed, they never hit back except sometimes I feel the blow.
- [53:43]
William Greene
Yeah. People will be shocked if I don't ask you very briefly about the Fed. We talked at great length about it last time on the podcast and your lack of tremendous enthusiasm for the way the Fed is run. But if you could just give us a sense of how you expect the Fed to handle what's really a very challenging economic situation at a really important juncture with I think Chairman Jay Powell's term expires in May 2026. And you interviewed Kevin Walsh yesterday, who served on the board of governors of the Fed until 2011 and who a lot of people are saying could be Jay Powell's replacement. Obviously there are a lot of demands for the Fed to lower interest rates and the like. And when you look at this institution and its position at this very interesting juncture, what do you see? What should we be thinking about?
- [54:44]
Jim Grant
I think we ought to be looking at administration's attempt to conquer it, to subjugate it and to institute its own regime of, of ultra low interest rates at the Fed. Having conquered it. I think Stephen I. Moran, the Praetorian guard of MAGA of the Fed, he came under a question by Elizabeth Warren on the Senate Banking Committee. He was holding his fitness for unique position of chairman of the Council of economic advisors and governor. She said to him, Tell me, Mr. Wood, did Donald Trump lose the 2020 election? He answered, the Senate confirmed Joe Biden as the winner of the election. We know that. Mr. Then Donald Trump lose the election. The Senate confirmed the nisa. So the robotic response to me is a little bit concerning the people around Trump. Some are saying, Mr. President, you had your golf cart sized bottom kit in 2020. May we please move on? I dare say no one at all is saying that to him now. But they also say, Mr. Moranto, the Bureau of Labor Statistics, did they fake these numbers to make the president look bad? The quality of the federal economic data has been declining for some. Yes, yes, yes. Did they intentionally the quality of like that? So it would not be a shock to me that that the president's views on interest rates, which everyone knows lower the better in 2000, whatever it was 2018. His line was well, the Swiss have negative, the Japanese have negative nominal. Why can't we have negative? Why are we paying? What's wrong with less than zero? He still thinks that. And so if he does subjugate the Fed, if he manages to bring his own people in for May, I think we can look for much lower money market interest rates and a much weaker dollar and a much steeper yield curve, meaning that longer dated interest rates, longer term yields, bonds, mortgages will be higher, much higher than short dated money market instruments like T bills. So I think that what Maga believes, but he might be right. Who knows. I gave up servitude a long time ago. But although it may not sound like that something but there is great hope for AI, great hope for transformation of American productivity. Not after the crash that has typically occurred with excess exuberance and investment, but before. So like next year, year after productivity revolution. No, there's going to be a crash first and you'll be sorry. You ever heard the phrase AI? That's how sorry. It's not bad. It's going to be. Yeah, that's fine. But there's hopes for a productivity revolution such that this country could handle much lower interest rates. A much more dynamic as they use the word credit market, where people can access the credit market and defined as affordable mortgages. The housing market's going to take up after this long. People can't afford to move. That'll change. They paint a wonderful picture of what life might be like after the President finds his people and plants in with the Fed. And as Donald Trump himself often says, we'll see or we'll know more in four years.
- [58:53]
William Greene
More than so while we're busy worrying, worrying everyone that we haven't already alienated, let's talk about government debt, which also was a major recurring theme at the conference yesterday. Pierre Lassond, the gold investor we mentioned before, pointed out that the world is drowning in debt, as he put it. And he talked about the fact that there's this overstretched fiscal situation not only in the US but China, the uk, France and elsewhere. He had some amazing statistics. He said that the total global debt has risen from $16 trillion in 1980 to 314 trillion in 2024. And likewise he said that US federal debt has risen from $1 trillion in 1980 to 37 trillion in 2024. You've also pointed out in grants, you said nothing puts the fiat money era in stock of relief than the fact that it took the US 222 years to borrow. What the efforts of Presidents Biden and Trump achieved in not quite eight years. So we're not, I mean we can be equal opportunity and blaming different parties for the history of recklessness here. But can you talk about, you know, give us a very practical economics lesson for people like me who don't understand this stuff. Like you've argued for a while that the fiscal deficit's unsustainable. Can you give us a sense of what's causing the problem, what's likely to happen and most important perhaps what the implications are for long term investors like our listeners and viewers here.
- [60:29]
Jim Grant
Let's take the contrary argument first, which I have to deal with very few people think about it. There was a time when the contrary argument was upper in the minds. Upper. Most minds in that argument held basically that yes, debt is a thing, but so is the income that the debt produces. And for every debtor who may be worried about overindulgence, there is a creditor who is more than happy to buy those ions. And in the case of a country such as the United States, whose currency is sought after and accepted worldwide, there's no limit to what you can borrow. And that particular line of reasoning has held up until this function up to this very moment. So recently speaking, the government I guess is still shut down, was supposed to be shut down. The world hasn't ended with it. The world still seems kind of cocaine with our shenanigans and our debt. And that's because of the they like the dollar established the world's reserve currency, meaning the currency that enjoys the kind of the Coca Cola quality brand name. And people accept it as good money even though they're not sure what is, what's behind it. Is it just the promise of the government or is it something. Okay, so that's the argument against concern, against anxiety in the world, right? So the argument for concern is that the burden of interest and the weight of issuance will exhaust even the friends of this country and the friends of its dollar and those friends both domestic and foreign. And you have seen signs of this already. You've seen in 2019and20 saw a little bubbly anti bubble eruptions concerning the market's willingness to accept bonds. What you saw in 2019 and 20 was discontinuity in the supposed deepest of all world security markets. 2019 it's concerned the money market, short end of the money market, short dated interest rates until suddenly there was crisis about in the funding market for our debt, meaning access to short dated loans with which to buy bonds. That was in the fall of 2019. And in 2020 there was a freight scare in around March and April concerning the world's tolerance for buying more of our longer dated securities at the 10 year and the 30 year bond. And that happened to deal with the pandemic and with the Treasury's evidence plans to borrow a lot of money and the Fed's expressed intention to buy a lot of bonds with money that didn't exist until it was ready to print it. So those were kind of amber lights. So the question really is, what is the ultimate demand for US securities at these rates of interest? Another question, are they marketable at any rate? So if the United States today was going to sell treasuries 10 year note not at 4 something not at 418, 4.18% but rather at 10%, wow, that would be a little bit of all right, right. Or 12%. But consider the also, this is not isolated to the sovereign debt. Consider also the private debts that have been accumulated and to be sure, private bonds that receive the interest on those debts. Right. So it's a two sided argument, pro and con. But the US economy as rest is resilient, as it famously is, has been rendered much less so rather vulnerable by the years of near 0% interest rates that precipitated and encouraged the deal making in private equity and elsewhere. These aforementioned 20 odd thousand, more than 20,000 companies that are now trying to find their footing at a time of interest rates they can't quite handle. So what happens if the world loses its taste for American securities owing to the shambolic nature of the administration, how they so characterize it? And if inflation for example, comes back at unscripted fellowship, the Fed can't lower rates in good faith, but rather must consider raising them. How would higher rate interest rates play in this world of financial fragility, at least that some of us see it? So that's a kind of an attempt at an overview of what's wrong with too much debt. Part of it is the American brand and dollars and debt being corroded and debased by overdoing it by over issuance. And then there's the question of whether in the event of say, unexpected inflation, whether the private sector is going to be badly damaged by the need of the Fed to post higher interest rates. So the reason that people like clean balance sheets is it affords the borrower, the would be borrower, the future borrower with flexibility. That's why companies with clean balance sheets get the imprimatur of AAA or aa. They're emerging triple A. But that's clean balance sheet. That's good because that company can opportunistically invest when the times are difficult. But when the times are difficult in this country, the government famously because of its construct of the welfare state, must borrow much, much more. We are borrowing heavily in a time of a 4% plus rate of unemployment, long thought to be full employment, that we were borrowing at a time of lowering markets. And if a GDP that is rising, according to Atlanta Fed, a rate close to 4% annualized.
- [67:07]
William Greene
Wow.
- [67:08]
Jim Grant
We need a 6 or 7% deficit to make things work. That doesn't sound like a well managed public financial operation. NASA operation. So these are latent problems now as I say, I say just look at the screen. The bond market's kind of okay. Credit spreads, meaning the premium of private borrowing costs over public ones is near an all time modern, all time low, meaning no anxiety about private debts. So the arguments against heavy borrowing must be made rather defensively with time being. But listening, I'm pretty confident, I think that the too much debt argument will prevail, that we will rule much of our mismanagement of the public credit and of so much private credit.
- [67:59]
William Greene
I wanted to talk a bit more about inflation and I was reading a back issue of Grants from earlier in 2024 where you connected inflation basically to flaws in human nature and use this as an argument for why we can expect a future of more inflation in what you've described as inflation nation America, that is. And you, you quoted a German economist called Wilhelm Rookke. If I'm. Oh yes, if I'm pronouncing it right.
- [68:29]
Jim Grant
Right, exactly right, yeah.
- [68:30]
William Greene
And I, I wanted to read a little bit of what he wrote in the 1950s because you've said, you wrote. Has anyone said it better? And, and so I'm going to read a few sentences him that maybe.
- [68:41]
Jim Grant
Yes, please.
- [68:42]
William Greene
So, so he, he wrote this in the 50s about inflation as the way a national economy reacts to a tendency towards excess in every sphere and all circles, to a presumptuous overconfidence in oneself, to a frivolous attempt always to draw bigger checks on the national economy than it can honor. And then he said people want to invest more than savings permit. They demand wages higher than the growth of productivity justifies, they want more imports than exports can earn. And above all, the government which should know better, raises its claims on this overstretched economy higher and higher. Thus there is a riot of claims and an insufficiency of goods produced to meet them. And Then he talks about the impact that this tendency in human nature has on money. And he writes this very elegantly. He says, just as there are organs in the human body in which, if consistently abused, ailments slowly but surely accumulate, eventually taking their revenge, so the national economy has its own equally sensitive organ. That organ is money. It becomes feeble and ceases to resist. And it is this enfeeblement which we call inflation, a dilation of money, so to speak, a managerial disease of the national economy. Can you unpack that a little? Because it seems.
- [70:03]
Jim Grant
No, I cannot unpack. Because it's like. Can you unpack the Declaration of Independence or, or Lincoln, the second inaugural address? All I can say is on man. I mean, I think the way puts us elsewhere is it's an overstraining of things. It's an overstraining. And I think what you can read and impute in his writing is that some of what he was saying is there's. This is the way things worked under the gold standard when there was this overstory, money would leave the country, gold being money, would leave the country. And because paper money was unacceptable in the world, acceptable within the boundaries of a nation that could print it, the departure of gold was a deflating force. You were losing the monetary things, you were losing the capacity to issue credit loans, credit debt. And that was how the body politic began to protest. Now, in this age, you have a reserve currency country, America, meaning it's the kingpin monetary kingpin. And there is to date no real hard limit on how much it can do. There are some softer limits than the ones to which Ripka I think was referring. One is the domestic protests against too high rate of inflation. But the Fed is capable of defying that away. It just got this press to digitation, this magician stuff. So now they're saying that that 2.8% is a little bit of always. That's fine. We're going to be vigilant. We won't get away from this. So you watch at 3%, it's going to be a little bit less fine. But we've got this. And certainly Donald Trump is going to say, I'm not sure he's going to use the word transient, but I think he might say, it's going to go away. AI will wipe it from the slate. But what a beautiful succession of sentences you wrote describing what I think is exactly the. Almost exactly this dynamics of inflation. And notice as well that inflation under a paper money system, that the dollar never regains the purchasing power, it loses to inflation. Now we met Chesney Martin, longest serving Fed chairman said that 1950 something the dollar never regains the purchase loses to inflation. In times past they were being prices would go up and then go down business cycle no more. So one of the things that I think helped Donald Trump get elected in 2024 was that people saw inflation even when the rate of inflation declined. Well they should because the prices they saw, not the prices they knew in 2019 and 20. So the economists are saying confusingly the rate of inflation with what people saw to their very eyes in the supermarket. I don't care what they're saying. Look at this, look at the price of what was the eggs. It was the retirement. One of the interesting features about the present day and the Fed's concern relaxing around buy is the price of gold which is kind of knocking on the door of $4,000 an ounce. And so it was $35 until 19. It was $20.67 from basically Alexander Hamilton. There's some ups and Downs until 1933 and there was $35 in notes again with some wiggles until 1971. There was some cut loose being cut off in the gold standard. What remained in the gold standard and it was free to float. We didn't take float. But now it's just kind of gone bonkers and people who own are just as worried as our friend David inside of stocks. Is it why okay, what's driving it and is it priced? Is it is only to disappoint its many somewhat bruised and calloused followers by collapsing as it did in 2011? 2011 the price got to 1900 and something dollars an ounce. And what followed next three or four or five years was the return to my $1200 bounce and the collapse in gold mining shares upwards of 90% in some of them, 95%. So everything's kind of out of whack. The credit spreads are out of whack gold seems even for the gold people who love it seems that and love it is unfortunately the word for many of us. It's a seductive asset. It's not just any old asset. It's not broom handles. She fall in love with it or not. Maybe it was like bitcoin or something. Fall in love with it or not.
- [75:37]
William Greene
And you've had a long love affair with this. I mean you bought it in January 1980, I think your first Krugerrand for what, 850?
- [75:46]
Jim Grant
I don't mean to brag but I happen to have invented it.
- [75:52]
William Greene
Nice job. So you're a few thousand years old. Good job.
- [75:58]
Jim Grant
Well, I don't know, it looks to see 23 or something. I wear that, should we say not pinpoint timed purchase as a badge of honor or at least of constructive humiliation. I don't need to remind myself that others who might mistakenly in their ignorance fasten the the guru title on mainland gold price. So Pierre Lesan at the conference showed this very well. The gold moves in cycles and it can go sideways or down for 15 years and then there is, he puts it down to an over issuance the public debt and the questions about the public perhaps and then it just takes off like a stuck pig. It startles everyone as it is to us now, I think even its fans. It's a curious kind of bull market. Public participation is still rather muted. There are signs of it growing, but there isn't the frenzy we saw in Bitcoin in 2023 and 24 for example, or, or common stocks today.
- [77:17]
William Greene
But you've been, you've been pushing gold for many years, right in this sort of very contrarian way. And now that it's hit roughly crass.
- [77:26]
Jim Grant
Sorry, I'm going to commission this touting.
- [77:28]
William Greene
Hawking, advocating peddling now, now that it's, it's hit 3, 900 an ounce this week and it's up What a good 40% this, this year. It must be very uncomfortable for you as a, someone who is always a skeptic now, now you're looking at and thinking we have a speculative bubble in gold or is the run up justified given the backdrop of all kinds.
- [77:53]
Jim Grant
I was, I happened to be in the presence of one of the great speculators of our age in springtime. And I said this is, I could closing in on 3,000. I've lost track of one. But it was, it just hurdled, cleared some high hurdle. And I said you think goal is a bubble? He said of course it's a bubble. Is it a I, is it justified by what we on Wall street are pleased to call the fundamentals. And this is where you construct these, these great, you know, metal either transit. You build this narrative for yourself about what's causing it. I remember very well in 2011 that the S and P had just downgraded gold, sorry had downgraded the treasury from AAA to double A plus. And by the way live to rule that for the next 10 or 15 years because the authorities went after them big time for having done, letting have the temerity to do that. And the price of gold had been in the mid 1500 for a while. And I thought so myself that, well, now the world is catching onto the joke. And the world will demand of this country a reform in the finances which will entail some role for gold in the monetary system and gold will find its place at a higher price. I'm not sure we actually use the phrase permanent high plateau, but that's what a gold standard is. It's literally a permanent plateau. It's not necessarily high or low, but $20.67 for 135 years is a high plateau. It's a plateau. $35 for decades was a plateau. So that was some of the thinking among the thought leaders of the gold world. It turns out that there was not any such thing as a worldwide permanent condemnation of our messy fisc. Nor was there any intention on the part of the authorities of bringing gold back into the world. America's monetary system. America has read out gold from its monetary affairs starting in 1976 under Treasury Secretary Bill Simons. Absolutely. Revenue. We turn our back on it. No more gold. Period. And the IMF or in the treasury. Gold is a. It might as well be scrap metal that is housed under guard, to be sure. And there in Fort Knox and elsewhere, but no more gold. So that's, that's so you can build these air castles of narrative. You kind of. You have to be careful. I mean my current air castle. So if I were to have the good one would consist of administration that seems valid, unlikely will prove to be successful in taking over the central bank and imposing its interesting theories of money market interest rates on the dollar and on the world that loses the dollar. It's one plank of this New York castle. And another would be the proclivity of the 1230 to borrow much more than it takes in and the Congress to allow that. And for the fiscal dilemmas you talked about but never acted upon it. So that would be enough to convince me that the upside is still in front of us. But mine, you can't be sure. And if you have too much of this stuff, my Jim Guan have a restless night's sleep. But. But you want. You don't want to. As David tempted. You don't want to miss all the upside, you know, so it's. That's what makes this line of work so interesting. There's no firm ass and there's no, there's no certitude. There can't be. And people expect they have it. You know, one thing about or two things about it. You know, they're not very old. I know they have not really had the invaluable educational experience of having their face ripped off during a bear market. There's two things you know about one of the two. Let's take a quick break and hear from today's sponsors.
- [82:20]
Kubera Sponsor
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- [85:41]
Jim Grant
All right, back to the show.
- [85:43]
William Greene
I always remember Bill Miller many, many years ago saying to me there is no certainty. It's all probabilities. And it's very unsettling. And so I mean just in terms of, well, in terms of just being a prudent investor to position ourselves. And this is before we turn to your book, which I want to talk about next, to position ourselves sort of prudently given the backdrop. You don't much like bonds, you said basically in 2021 we entered a 40 year. Yeah, well after a 40 year bull market we've entered a long period of bear market.
- [86:20]
Jim Grant
I own, I own some bonds personally, my wife and I do because no one's getting any younger and I dearly love gold. But you'll notice that that is deficient for one thing only. It pays no interest, which is also one of its great virtues. It's being, it's, it's money. It's not, you know, it's simple. It's 6 money which the world regards to that one. So bonds. So I own some kind of. Not the ones you think of as. It's a fund that invest in special situations that yield rather more than the ones that trade in public markets. And it's risky but I think risk is well managed. So that's part of our lives for the time. I intend to work my whole life. I don't have any intention of retiring, but prudence would dictate that there's some reasonably assured income outside of Social Security. So that's that. So that's my, that's my codicil to. In my anti bond stance.
- [87:23]
William Greene
I own some of them and I saw yesterday at the conference and talked to briefly the great Paul Isaac who we talked about last time you were on the podcast who you'd invested with many years. So I'm assuming you still have some exposure to the stock market through people like Paul.
- [87:39]
Jim Grant
Oh yes I, I do, I do. And he's coming into his own all these stocks that stood still are heaped lower and lower and of course in the past five or ten years the bonus seems to be a well is a by way of preface is a it's a necessity deep value with nested they looked for special situations that who feels are protected both the downside and that they're protected downside and this would have to do with quality of the of the balance sheet of the earnings stream of course of the price that affords protections and beaten down and ignored sufficient by Wall Street. There's some protection that's very obscure. It's not going to be a part of of kind of portfolios that will be liquidated. It will pay a price during the liquidation because it's traded somewhere. And this has to do with companies so banks in for example in Europe. It has to do with medical device companies in this country that are kind of on the cul that have been have been neglected because they once failed at something. He's I'm not sure special situations is a better description of some of his investing style than value but he looks for opportunities that will not necessarily be borne aloft by a great rush into Mag7 and they have been left behind. So he was suffered by comparison with that. But these things are wow, it's starting to work.
- [89:16]
William Greene
Yeah.
- [89:18]
Jim Grant
Unless what is happening now is every last dog is finding is its doctor from the pound. It's like every like pandemic dogs, even the most improbable beasts get let out of the pound.
- [89:38]
William Greene
So let's hope that he's not listening to this and thinking you're describing him as a three legged pandemic hound is finally having his day. But I think the point is that it's not like you're going to cash and crawling up in fetal position in the corner. It's about taking intelligent risk whether it's with gold and commodities or bonds or diversifying beyond the US market and beyond the so this isn't you advising everyone to panic and cash out. It's just saying be more conscious of the risks that you're mindlessly taking or take them thoughtfully.
- [90:18]
Jim Grant
Even though I mean it's well and good to anticipate your peace of mind come the liquidation. But it's like everyone's got a plan until it gets hit Mike Tyson line. I never underestimate how sweaty your palms are going to be. These liquidations can seem unending. They typically don't.
- [90:45]
William Greene
I I think also. Sorry to interrupt you, Jim. It's, it's also about at this, you know, you hear you I was listening to Grant's current Yield podcast and you were talking about how we're in the age of decadent finance and so part of it is about being wary of having stuff sold to you that's kind of marginal and speculative at a time when we should be being more prudent. And there was a lovely line you said we, we at Grants take a rather moralistic view sometimes instead of credit being man's confidence in man in this day and age of decadent finance, it now demands man's confidence in the sagacity of his lawyer. What you were saying is, you know, you can't just be trusting at a point like this where all of the most rapacious cunning people come out to try to sell you stuff that is.
- [91:32]
Jim Grant
Not and all of course rapaciously cunning people have done very well by their rapacity and by their guile. You know, it's a. The markets, when allowed to function properly, go down as well as up. And the down portion serves any number of functions, one of which is to skim the bad actors off the stage just to flick them away. But what happens when the Fed was ever good intention, I'm sure and lends its force, its arm and strength to prolonging cycles and forestalling bear markets and to pumping up the GDP so that we never have to endure this, this kind of experience again. So bad, bad conduct goes uncorrected on chastise. Mr. Martin is the best, is the best disciplinarian. Never mind all these only lessons that you could read down reflect on Warren Buffet. He is a great coiner of phrases. Charlie Munger but nothing succeeds like having your head handed to you as a learning tool and disbarment in the case of the bar or delicensing in the case of financial advisors just to get some of these people out where they ought to be, which is like, I don't know, work for the Fed. I don't know whether they're going to go after this get them, get them out of the markets where they have lingered too long or they're going to get too many people in trouble. So that's my moral argument.
- [93:15]
William Greene
Let's turn to your, your lovely book Friends until the end, which is a Double biography of these two magnificent 18th century orators, Edmund Burke and Charles James Fox. And it's set against the backdrop of three great events, I guess so. Britain's loss of the American colonies, the rapacious exploitation of India by the East India Company, the great dominant monopoly of its time, and also the French Revolution. And it would be great if we could chat for half an hour about the book and the lessons therein. Early in the book. At the end of the preface, in writing about Burke and Fox, you say, I love them for what they said and the way they said it, for what they believed and for what they did. Can you give us a sense of why you so greatly admire these two figures who are in many ways giants, but also have been widely forgotten by many people? Although Burke obviously is an important figure in. In the world of conservatism, still, for.
- [94:13]
Jim Grant
Me at least, great oratory is like music. I read it as I listen to took a third moment of Brahms's third Symphony, which I happen to love. So may I read you a little something?
- [94:30]
William Greene
I would love that, yeah.
- [94:33]
Jim Grant
This is Burke's panegyric to his friend Fox. And the preface to this is that to bring the British East India Company to heal, to. To curtail the most abusive practices of its agents in India, Edinburgh and Charles Fox together drafted a bill to revise the governance of this monopoly, the biggest company in the world. And Fox, who was the front man for this in the House of Commons of Great Britain, bore a lot of abuse because if the bill went through, he would command a great deal of power in nominating functionaries to serve on the new governance commissions. He had all this tower awaiting him, if only the bill would get through. So this is worksy. So they question his motives. But he has put to hazard his ease, his security, his interest, his power, even as strongly popular, no benefit of a pupil, no gun has never seen him. This is the mode that all heroes have tried before him. He has traduced and abused for his supposed motives. He will remember that obstacle is a necessary ingredient in the composition of all true glory. He will remember that it was not only in the Roman customs, but it is in the nature and constitution of things that calumny and abuse are essential parts of triumph. Now is that not a wonderful read? So that speaks to the first point I tried to make. There was what they said and how they said it. Book is well seasoned with quotations from both Burke and Fox. They're both magnificent speakers and they both came into their prime after stenographers were at least semi legally allowed the House of Commons to take folks notes. They couldn't get all of it. It's like catching a bird on a wing. They were writing Scribbler on a shorthand of creation. But witnesses to foxes and Brooks. Eloquence contender was much better than what you'd read in the page. Oh my goodness, that's pretty good on the page. So that was what they said and how they said it.
- [97:03]
William Greene
There was an amazing line from Boswell in your book, the biographer of the great Dr. Johnson, where he said watching book, if I get this right, it was something like being in this orchard where he could just pluck these apples at will like so fast. And I think one of the amazing things about their oratory was both of them, they, they were so brilliant and so quick speaking and quick thinking that they could be quoting Virgil and Horace and you know, in, in they would be quoting in Latin from memory. And the same with people like, like William Pitt who became prime minister at 24, who you quote that they could. I, I mean, I think there's a bit in the book where Pitt suddenly quotes Scipio in Latin from memory about some old guy who's insulted him. I think that's part of what's so amazing about the, the rhetoric, the oratory that they use.
- [97:58]
Jim Grant
Ah, yes. At one point, I'm not sure how much this is documented, but supposedly Lord Norris, who was the Prime Minister during much of the time, was in the House of Commons as Horsburg and Burke was lazing into the government on board north and North. This happened to be sleeping during this, supposedly. And Burke then quoted something in Latin, but Norris heard and misquote something in Latin and he awakened, corrected him and then feigned return sleep.
- [98:41]
William Greene
I had an amazing, an amazing history teacher, a legendary history teacher at Eton, which is where Charles Fox went and Pitt, this guy called Michael Kidson, who now, if he was still alive, would be banned from teaching because he would say such incredibly inappropriate things. But he was wonderfully articulate and he would always say they were giants in those days. And you get that sense not only from the quality of the rhetoric, of the actual use of language and hyperbole and just, you know, all from memory and all off the, well, a lot of it off the cuff anyway. They wouldn't deign to look at their notes. And you know, Burke could speak for 11 hours.
- [99:24]
Jim Grant
It was very bad form to speak for a script.
- [99:27]
William Greene
Yeah. So amazing. But then also the I, and I think this is probably what you were about to get to. It's not just that. It's the. It's the moral courage that they demonstrated. And I think. I mean if you could talk a bit about that. Because that certainly comes through particularly with Burke like this sense of his humanity and his moral courage and his compassion. And there's a point where he says that he has one rule for himself which is to act as the representative of the people who had no power. Can you talk about that? Because I think that's the other thing where you feel not only that you're uplifted by reading the quality of their language but also the quality of Burke's morality and decency.
- [100:13]
Jim Grant
He was the most. He was a difficult person personally. So many. So many occasions, you know. But he was also most of the times incredibly generous and courageous in the causes he would take out. For example, two guys were caught making a mob. And of course it was crime, serious crime. And they're called before the Bayless and sentenced to time in the stocks. And put your head and your arms through this and would stand before all the worst people around and they would toss stuff at your head. Sometimes merely vegetables and other times rocks. And these two male lovers suffered rocks. One of them is killed in the stocks. One of them was named. I'm not sure he didn't die either. But Burke took up their cause in the House of Commons. And of course you can imagine a ridicule that came down his head for this. And all the knowing leers one member to another on the other side of the House of Commons. The government lears. And this man who must have had both curious motives for taking up the cause of these two reprobates. These two offenders against the laws of God in nature, but persistent. And he had a newspaper libel him and he sued the newspaper. He won a modest symbolic settlement which he gave away as a gift or something like that. That's one example.
- [102:00]
William Greene
There was a wonderful example too where I think you write about the. This poet Crabbe who's at the end of his tether and he comes as a total stranger to Burke. And Burke not only reads his poetry but helps him revise it, gets it published. I mean, totally transforms this guy's life.
- [102:19]
Jim Grant
This total stranger Krabs is literally hungry and destitute. Me on the embankment. This is where and showing and holds himself together enough to knock on the door of Edmund Burke. And Burke takes him in. As you say. I came to view Burke as a kind of a next door neighbor to a saint. Saint or Neil Saint. My friend and neighbor Amity Schlase, who read the book, said, you know, Burke is crazy and not crazy. That comes across as he aged and became, if not more florid, exactly, but more complex and more heavily decorated with Shakespeare and Milton and the Latin poets. The younger crowd, younger people came in and he became rather an old number. He had been working and he would be greeted by covers, Rosenspie, you know, greeted by coughs, organized coughing by the young folk. And he came to notice the dinner bell because when he rose, they left and went to the House of Commons. I guess cafeteria was not quite right, but they want to get themselves a dinner.
- [103:46]
William Greene
One of my favorite things from him is that there's a. I mean, you were talking about his willingness to take unpopular positions. And there's a beautiful thing similarly, where he, he was often accused of being Catholic because he was a great defender of the Catholics. And there's something where he responds and, and the Catholics are obviously tremendously persecuted at the time. And he's. And it says. And if Burke went on, on account of such sentiments. People call me a Roman Catholic. It will give me not the smallest degree of disturbance. They do me too much honor who aggregate me as a member to any one of those respectable societies which compose the body of Christianity. Wherever they choose to place me, I am sure to be found in extraordinary good company. It's beautiful, right?
- [104:30]
Jim Grant
It brings tears to my eyes. It does. I, I that was Birkin's best and his best was, you know, fantastic. Anyway, what they believed, so what do they believe? So they were. These guys were. Birkenfeld were in the Opposition. Whole careers, basically, you know, each one had a short time in government, in the Ministry and which meant they, they drew no money from the House of Commons or unpaid. So they, they scrambled around for money. So they. Some kind of. Sometimes it's rather gamey speculations and Caribbean land deals, of course, unsuccessful. So as Members of Parliament, as Members of the Opposition, what do they believe? They believe that the King was overstepping his balance and that he had gone too far. The King was going too far. He was rather a tyrant. And they did what they could to stymie the King, but the King wound up stymying them. So the two of them believed. In the following episodes of their careers together, they believed the following. So that the American Revolution. They were both allied with George Washington and his feeble ragtag army and the ideals of abolition against the heavy hand of Lord Martha and King George iii. Now Edmund Burke welcomed the affection of the American people, but would squash them if they had presumed to achieve power over England. He was not a friend of a risen and powerful American state, but he believed that colonists would invite into dispus over taxation. And like Fox, as was his kind of unchained want, he would. He wore George Washington's collars around London, they said carousings and gambling at Brooks's Club, buff and blue and would, you know, some people mistook his enthusiasm for cause with treachery. So that was America. They both were, were quite stalwart efforts. And Mark would say after George Washington's round of the Battle of Long island, let us stand by our friends and their adversity as well as in their prosperity, never abandoning people who stand for the principles of the glorious revolution of 1688 in this country, but always support them in those ideals. So that was one episode. The second one had to do with overbearing, corrupt and a quite cruel regime at times quite cruel regime of the East India Company in India. And this shows Burke and his dogmatic and semi crazy side involved the trial of Warren Hastings, who was a leader of the East India Company. And I'm not sure whether Warren Hastings was quite as guilty as everything is very funny. But the trial lasted for eight years and by the end of it only Edmund Burke was interested in pursuing the case against my friend. Abbott H calls this lawfare. So that shows a dogmatism and how he could seemingly be unselfaware.
- [107:55]
William Greene
It's worth dwelling for a moment on the East India Company because as you write in the book, it's. It was as well hated and well envied as any modern day technology giant. And so this was the world's largest business. And so Hastings, who you mentioned was the Governor General who got impeached. Can you talk a little bit about the misdeeds and the wars and the cruelties and the scandals and the plundering of money from India that this, I mean it's kind of amazing because we talk about business now and the nefarious things that we've been saying Wall street has done. There's a level, there's a level of brutality and corruption to what they were doing that's quite astounding.
- [108:37]
Jim Grant
Well, all you have to know about. See behind you, William, the portraits of Charlie Moffer and I guess Warren Buffett. Yeah. And Charlie Muffer is fond of saying, show me the incentive, I'll show you the outcome. So the eastern diacopy would sam to to India as employees of the firm lads of 16, 17, 18, 20, scarcely shaving and they would be very ill paid. They would be ill paid. And they were to make their way in the company by setting up shop for themselves and by conducting their own business as a sideline. But actually the side hustle became their focus and their main focus they job. And so instead of enriching your employer, they enrich themselves. And that's one thing to know about incentives. The other was that the East India Company was itself a sovereign. It had its own arm and it had its own merchant fleet and its own navy. And what would a profit seeking company do with its own military power in search of profits? It would wage wars. Right.
- [109:52]
William Greene
Well, maybe the equivalent is Musk having starlink and maybe he's the person with the power that they had.
- [110:02]
Jim Grant
Yeah, well, maybe that's coming. But knowing those two things, you can imagine what liberties the agents of the East India Company, the servants of the East India Company took on their own behalf, as opposed to that interest of our stockholders and indeed the interest of the sovereign that gave them the monopoly. So they ravaged the country. And I know you probably have a favorite episode of their misgovernance, but it was pretty steady and pretty heavy handed.
- [110:35]
William Greene
Well, Clive was amazing. Clive of India. And I used to, when I was living in Belgravia in London, I would pass this gorgeous house that would say, you know, Clive of India lived here. And you'd think, oh, this must have been some noble guy. And it's like, then you read your book, know, and you, you realize, no, they were just pillaging left, right and center. And then would. Having plundered jewels and stuff, they would come home with just millions and millions of dollars and, and, and buy themselves, you know, respectability, not respectability.
- [111:03]
Jim Grant
They would buy themselves seats of parliament.
- [111:06]
William Greene
Yeah, yeah.
- [111:07]
Jim Grant
Power, I think. So social respectability was. I'm not sure anyone had enough of that. But Climb of India was, was, was the, was the avatar of the maternal mogul.
- [111:20]
William Greene
Yeah.
- [111:21]
Jim Grant
Who they turned their mopias, I guess, into jewelry, gold.
- [111:32]
William Greene
My favorite bit that you write. Well, actually this is Burke that you quote on the East India Company talks about these young men, boys almost government without society and without sympathy with the natives. They have no more social habits with the people than if they still resided in England, nor indeed any species of intercourse but that which is necessary to making a sudden fortune. With a view to a remote settlement, animated with all the avarice of age and all the impetuosity of youth. They roll in one after another, wave after wave. And there is nothing before the natives but an endless hopeless prospect of New flights of birds of prey and passage with appetite continually renewing for a food that is continually wasting. And just that image of these. These new flights of birds of prey coming in to. To rip off these poor natives plundering their wealth. It's just an amazing piece of writing and rhetoric.
- [112:35]
Jim Grant
You see where I wrote the book.
- [112:37]
William Greene
Yeah. So I think the book, I mean, in some ways it. It almost tells me as much about you as it tells me about Burke and Fox. Because it seems like it's just infused with your love of language and writing and scholarship.
- [112:53]
Jim Grant
Is that so? Then comes the trial and Hastings at Warren Hastings, who the Governor General of India, as you noted, impeached, was tried off and on, mostly off, I guess, but still over the course of eight years. And this is a picture of the House of Lords. And he finally gets off. And it's most remarkable display. Okay, but there's more of that side of Burke wound, their death scene. And we're coming up to that now with the French Revolution. And this is where these two friends parted company. It was quite irreparable to Fox. The French Revolution was. That's the greatest thing that ever happened in the history of the world. Tossing off and throwing off the chains of the tyranny of the French Crown and of the miserable system of aristocracy and the suppression of the minds of the people. He thought it was marvelous. Okay, that was Fox. And Burke saw this. He saw chaos. He saw the destruction of civil society. He saw that structure of things that the order of society by social rank, very important to him. Family of privilege, all this stuff, which to him was the fabric of functional and prospering. All this would be destroyed. The church would be destroyed, religion would itself be trampled underfoot. And much of that indeed did come to pass with the Terror. And Fox was rather chagrined by the terror you could imagine in Wall street terms. He said, I'm really bullish on this. And then. And then most terrible things that happen in the country, it goes broken. And everyone's revealed to be not only an offender against the laws of the country, of the rules of the sec, but also criminals of most horrible sort. So that's the kind of the Wall street analog to the call that he made after the fall of Bastille. But still Fox clung to his view that this was a glorious moment in the history of man. And of course, he had many compeers in this. All the romantic generation coming up cheer them on. And he cheered them on. And okay, so that's that. But park was equally Unmovable in his view about not only the net evil of this, but also the gross evil. He didn't see much that would come out of it except. Except the end of France. So what about the friendship? Well, it came to a tearful end in the House of Commons and it was a debate over something having nothing to do with France. And Burke went on about the French Revolution. Fox said, you know, you can't. This is not germane. You can't. And Fox bolted back to Burke some of his thoughts in the American Revolution. And Fox in Burke went incandescent over the incivility of having his own words quoted back to him. That to him was a heinous crime against the unwritten rules of the House and more especially against the rules of unwritten rules of friendship. And he said, our friendship is at an end. And Fox, downbreaking the tears, said, no, it's not. So that was that. And time passed. And Burke's son tragically precedes him and predeceases him. And Burke falls ill and falls broke. Both of them are broke both their whole lives, you know, Fox lives from bankruptcy, bankruptcy. And Burke is broken again. And that does nothing to lift his spirits. And as Burke lay dying, Fox reaches out to his wife Mary, and may I come and see my friend? And she consults with her husband and she writes back to Fox, young Dad, maybe that's not word for word, certainly in the spirit of his reply, very stiff reply, that Mr. Burke must adhere to the views that the public knows so well and that if he were to severe from them, it would be a great hurt to the community and to couldn't do it. So 3D eyes Burke does and Fox he lives a long time afterwards, many years in declining health himself and declining health well earned by the way. So where Boreas had lived. And somebody comes around to ask Fox if he would not like to contribute to a fund in collection to raise a monument to the great Edinburgh town. Fox's mouth. No, I. I can't pretend to a spirit of forgiveness such that I could do this without making a wackipper tonight. I can't see that was that. And so the book closes with Fox having finally succeeded in putting over a log outlawing the slave trade in Britain. That was what he wanted most of all. And this is a statue of Fox in Westminster Abbey depicting a free slave or something free slave lying on his lap. And in gratitude. And he called them. And so I said that the Fox is. That's an enduring monument in marble and that Burke's Collected items are a marvel of another kind.
- [119:30]
William Greene
One of the things, Jim, that was so striking to me is both Fox and Burke were incredibly admirable and gifted in so many ways, and yet they were both absurdly bad with money. And you talk. I mean, both of them lived in debt, both of them died broke. But I think Fox was kind of extraordinary. Can you talk a little bit about his gambling? Because the recklessness of it is quite staggering. And his father was absurdly rich, so it was quite impressive what he managed to achieve.
- [120:04]
Jim Grant
Well, he comes for an interesting line, financially speaking. His grandfather, Sir Stephen Fox, paymaster of the fortunes, which meant very briefly that you got to invest the money that was entrusted to you for the payment of the troops until that money was needed by the king to discharge those debts. So you could do anything with it, and you got to keep the profits, whether it's interest on investing government securities or profits from dealing with college stocks. So that was Sir Stephen Fox and Fake. His own father, who came to know as Lord Holland, got the same gig and he became fabulously rich. People couldn't believe what he did with that money. He fed the profits to his addicted gambler. But Fox would. Would play night and day at his club, Brooks's Club. He played dice, games of dice and cards. And he was a horse player, rather better at that than cards and dice. But he lost, quite literally, fortunes at gambling.
- [121:26]
William Greene
He lost 900 pounds on a single game of billiards. You write at a time when that was real money. But, I mean, I think you write that in 1776, he had £140,000 of gambling debts. I mean, that's. That's many millions in today's money, right?
- [121:43]
Jim Grant
Yes. And what did not speak well of his moral character didn't seem to bother. People would say, how can you sleep at night? All I want you to do is Fox. Well, the question is, how can my creditors sleep at night?
- [121:55]
William Greene
And it's so amazing. He would go out sort of drinking all night, sleeping with prostitutes, sleeping with his mistress, and then he would come into the House of Parliament and give an amazing speech. And I think there's a wonderful bit where Horace Walpole listens to a speech that he's just given after basically being out drinking and carousing all night. And he's like, this is just total genius what he could do.
- [122:16]
Jim Grant
Yeah, yeah. So that was. So he was. And, you know, people were astounded by it, but also they recognized that he was basically just a big sponge. He borrowed from his friends, borrowed from everybody. Whose father died despairing of the debts that he had accumulated and what it did to his estate, he still kept feeding on money. Burke was different entirely. He bought lovely estate, Regan's Field. And it was as so many lovely estates are, it was a money pit. He didn't make any more money in farming than most people do today. It took him. He was a student of scientific agriculture. But think of the productivity that he had or didn't have now. This place lost money. So he could by hitching some oxen ahead of horses and plowing better dams, he could plow one acre a day. Now today a mechanized farmer and not so very accommodating hilly New York farm can do 21 acres a day, mechanized plowing. So 20 fold appreciation in plowing. So Burke had two jobs at Parliamentary. A devil. He was a gentleman farmer, but actually more than a gentleman. He was a hands on farmer, a scientific one at that. Who with the right equipment, oxen, his Welsh horses could plow all of one acre a day. Upstate New York we can do 21 acres a day with machinery. So not much productivity growth there. And so the price never paid for itself. It was mortgaged. So he was perennially in debt to his friends and to his political mentor, Lord Rockingham, and with all the insecurity that entails. And so at length Burke became a member of Brooks's club as well as Fox was towards the end of his life. And one of the documents that my quite terrific research assistant and length intellectual partner James Roberson managed to fish out of archives was a letter from Brooks's club to Mrs. Edmund Burke about eight years after his death, dunning her for unpaid dues at Brookton's. Oh God. So that was the state of his exchequer and both of them lived. I think that Brooke never suffered in his lifetime the indignity of bankruptcy. More than once foxes were Fox's furniture was out in the sidewalk. You know, the debt collectors came and just took his stuff. And once he was, after a night approaches, after immense losses, you know, one of his friends came to him and concerned about what this might do to him. Would he take matters into his own hands with a pistol, alone, on the dead of night? No. So he came and there was Fox serenely reading something great Latin poet and his friend said, what are you doing? And Fox said, well, what do you think I ought to do? I've lost every shilling. There was a serenity in the face of rule that will amaze the readers of, I hope this book. I want to share one last Story about Fox's death and his. He fell in love with a cortisol. This is Marmostin. Not ever sure whether it was a Mr. Overstep, Marma said. But they had a genuine love affair. And at length, during one of the breaks in the Napoleonic wars, Fox takes his then wife, leaving her at length takes her to France. And they sit down with a Talleyrand, French diplomat. And Talleyrand too had married a corsair. And the two ladies sat next to each other on the banquette and they shared very interesting observations about people they had known. Marvelous.
- [126:45]
William Greene
Before I let you go, Jim, one last question. You spent so much of your time studying history and I wondered if it gives you a sense that life has improved, that we've. That we've survived these terrible periods in the past, you know, whether it's the French Revolution or civil wars and the like. And does it give you a sense that even in our strange and difficult moment now that. That we sort of muddle through after all, like, is there a. Does your study of history kind of give you optimism or pessimism about the future?
- [127:21]
Jim Grant
A little bit of both. Hence to the material side of life, it is onward and upward, nothing like it's ever been seen. And we would not be having this discussion except for advances in medicine. I wouldn't be interlocutory. You can't get somebody else. So, you know, the marvels with which we live are just astounding. This little thing I have in my pocket, which I forgot to put down airplane mode. It has the entire category of world knowledge. It does. And so people think I say, yeah, what about the. What about the next edition of the Apple, whatever it is, you know, get jaded about these things. You get jaded about. I find myself hear myself complaining about the pills I have to take to ward off the next round of disease and rank in gratitude. So in so many ways things never been better. And we should thank our lucky stars live when we do. In other respects we live. It's back to living in rags in the forest with respect to public oratory, going back to grunting and groaning. Where have they conducted business before? The profession of writing and the arts of literacy can compare what comes out of today's House of Commons as well as of course, Truth Social or the House of Representatives or the ultra dignified Senate. I mean, it's just want to lay your head down and not watch television, do something else. So it's mixed. So all of the intellectual energy of Burke and Fox's. Time for a certain class of people was in literary pursuits there's a great American financier called Albert Gallatin he was the treasury secretary he just he was a near successor to Alexander Hamilton I think there was one or two between the two of them but Hamilton was treasury secretary under under Jefferson and Madison and then he was a diplomat who helped to settle the War of 1812 when he came back was a banker length he retired and the gravestone talks about so he retired to Rochelle academic studies and literary pursuits Gallatin did and went down to the grain universally honored but the business about and literary pursuits I go over to the churchyard from time to time and read his gravestone at Gallatin said think about him and you can tell what happened by memory past 50 or so years I can't remember exactly the phrasing but it will it's marvelous and so if you're a lover of oratory language disappointed to not to have lived in some other time but otherwise just when you go nevermind the dramatic diseases of late life or commonplace not dramatic commonplace diseases of late life just go a trip to the dentist just thank your lucky stars but it's pretty great on balance pretty great I'm glad to be here.
- [130:41]
William Greene
On that note Jim, it's been such a delight and I'm I'm so happy to have got to spend this time with you. It's a one of the great pleasures of having a podcast is it gives me an excuse to to hang out with you and awfully kind and what.
- [130:54]
Jim Grant
A pleasure it is to be in your company. I feel I wrote my written my biographies mainly about people whose company I was I wanted to have to be in so I like your company too William.
- [131:07]
William Greene
Ah, thank you. That's lovely to hear and I and I loved coming to the conference yesterday so now I'm planning to become a regular. I'm looking forward to it. Thanks so much. Lovely chatting with you.
- [131:19]
Jim Grant
Okay William, Happy days.
- [131:21]
William Greene
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