IT’S LIKELY EITHER THAT OR WATCH INFLATION COME ROARING BACK STRONGER THAN BEFORE: The Fed watcher who called the 2007 housing bubble expects interest rates to stay high for ‘much, much, much longer.’ It’s payback for the unsustainable ‘free money era.’

In order to help the economy recover after the GFC, the Fed held interest rates near zero and instituted a policy called quantitative easing (QE)—where it bought government bonds and mortgage-backed securities in hopes of spurring lending and investment. Together, these policies created what is now known colloquially as the ”free money” era, pumping trillions of dollars into the economy in the form of low-interest-rate debt.

Grant has long argued the Fed’s post-GFC policies helped blow up an “everything bubble” in stocks, real estate, and, well, everything. And even after equities’ rough year in 2022, real estate’s two-year slowdown, and a regional banking crisis this March, he still fears that that bubble has only partially deflated.

While the banking and commercial real estate sectors have been hit hard by rising interest rates, Grant’s biggest fear involves credit markets.

Washington having to re-fi ZIRP-era debt at much higher rates is juicing federal spending that was crazy to begin with.