He first talks about the Federal Reserve monetary policy and the bond market.
He explains that by distorting interest rates, the Federal reserve has suppressed price mechanisms and with little value in bonds (he calls the bond market a "desert of value"), many people flock to high yielding junk bonds.
- Highly accomodative = high manipulative
- Quantitative easing = money printing
Jim Grant also took a stab at Warrent Buffet's "Stocks outperform Gold" by showing a chart between 1996 and today with the prices of Gold, sugar and Coca-Cola stock. During that period Gold was the best performer, followed by sugar and then Coca-cola. He explains that valuation is important. Whereas Coca-cola had a PE ratio of 39 in 1996, it now has a much better 16 PE ratio. He also mentioned that while Gold is now the refuge of the fearful, back in 1996, Gold was considered to be the refuge of the idiots. :)
Finally he says he's bearish on the Chinese economy and worries about the consequence of a Chinese slump, since many people think the Chinese have found the formula to make it work...