Jim Grant: We Could Be Heading Toward a Generational Bear Market in Bonds

By SCHIFFGOLD 

One of the singularities of the present time is the American position in international finance. You know, this country emits the reserve currency, which means that we consume much more than we produce. We finance the difference with dollar bills that only we can lawfully print at a most reasonable price of like nothing. And we remit the dollars to our creditors, mainly in Asia, say, and those dollars don’t leave the country because they come back in the shape of Treasuries and mortgages purchased for the portfolio interests of our accreditors. So that is kind of a new thing in the long historical sweep. It’s not so new in terms of years, but in terms of phenomena, the reserve currency country being a chronic big debtor, that’s kind of a different thing. Reserve currency country living on the kindness of strangers, so to speak.