The End of the "Free Money Era": Expect Higher Interest Rates for the Long Haul

Jim Grant, the renowned Fed watcher who accurately predicted the 2007 housing bubble, warns that the U.S. economy is facing a potential disaster due to the end of the "free money era" and the accumulation of debt. Grant believes that the consequences of a decade of low interest rates will play out in the credit markets, with many corporations struggling to refinance their debt as interest rates rise and the economy slows. He points to the rise of "zombie companies" as an example of the challenges lenders may face. Grant predicts an era of higher interest rates that could last a generation, leading to low economic growth, high inflation, and potential corporate defaults. However, there is a counterargument that technological progress could bring deflation, although Grant is skeptical that the current rate of progress is fast enough to significantly reduce prices.