What are the key takeaways from this Grant's Current Yield Podcast episode?

Key insights include: **Defense Industrial Atrophy:** US shipyards service fewer than 200 vessels versus China's 7,000-plus capacity, with 40% of American submarine fleet currently out of service due to deferred maintenance and workforce shortages, creating strategic vulnerability requiring outsourcing to Japanese and Korean shipbuilders.; **Capital Investment Reversal:** Tangible investment share of GDP declined from 12.5% to 8.5% between 1985-2021 while intangibles rose, but this trend reverses as AI data centers, electrical grid expansion, and remilitarization demand massive physical infrastructure spending, pressuring interest rates upward despite Federal Reserve cuts.; **Fiscal Deficit Collision:** Running 6.4% peacetime deficit with defense spending likely increasing to 5% of GDP creates unsustainable trajectory where annual interest expense reaches $1.1 trillion at 3.3% average rates, while lowest yield curve rate sits at 4.1%, guaranteeing accelerating debt service costs.

What did Steve Bogdan discuss on Grant's Current Yield Podcast?

Jim Grant and Steve Bogdan analyze America's declining defense industrial capacity versus China's shipbuilding dominance, exploring implications for capital markets, interest rates, and the shift from intangible to tangible capital investment amid rising geopolitical tensions. Key topics include: **Defense Industrial Atrophy:** US shipyards service fewer than 200 vessels versus China's 7,000-plus capacity, with 40% of American submarine fleet currently out of service due to deferred maintenance and workforce shortages, creating strategic vulnerability requiring outsourcing to Japanese and Korean shipbuilders.; **Capital Investment Reversal:** Tangible investment share of GDP declined from 12.5% to 8.5% between 1985-2021 while intangibles rose, but this trend reverses as AI data centers, electrical grid expansion, and remilitarization demand massive physical infrastructure spending, pressuring interest rates upward despite Federal Reserve cuts..

How long is this episode of Grant's Current Yield Podcast?

This episode is 38 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Grant's Current Yield Podcast

BACK TO THE FUTURE

December 11, 2024

38 min episode · 2 min read

Steve Bogdan

Episode

38 min

Read time

2 min

Topics

Investing, Fundraising & VC, Artificial Intelligence

AI-Generated Summary

Published Jan 2, 2026

Key Takeaways

✓Defense Industrial Atrophy: US shipyards service fewer than 200 vessels versus China's 7,000-plus capacity, with 40% of American submarine fleet currently out of service due to deferred maintenance and workforce shortages, creating strategic vulnerability requiring outsourcing to Japanese and Korean shipbuilders.
✓Capital Investment Reversal: Tangible investment share of GDP declined from 12.5% to 8.5% between 1985-2021 while intangibles rose, but this trend reverses as AI data centers, electrical grid expansion, and remilitarization demand massive physical infrastructure spending, pressuring interest rates upward despite Federal Reserve cuts.
✓Fiscal Deficit Collision: Running 6.4% peacetime deficit with defense spending likely increasing to 5% of GDP creates unsustainable trajectory where annual interest expense reaches $1.1 trillion at 3.3% average rates, while lowest yield curve rate sits at 4.1%, guaranteeing accelerating debt service costs.
✓Munitions Production Gap: US used 80 Tomahawk missiles in single day against Houthis but only purchased 55 annually, illustrating critical stockpile depletion and production capacity constraints that require years of skilled labor development and capital investment to address, favoring prime defense contractors.

What It Covers

Jim Grant and Steve Bogdan analyze America's declining defense industrial capacity versus China's shipbuilding dominance, exploring implications for capital markets, interest rates, and the shift from intangible to tangible capital investment amid rising geopolitical tensions.

Key Questions Answered

•Defense Industrial Atrophy: US shipyards service fewer than 200 vessels versus China's 7,000-plus capacity, with 40% of American submarine fleet currently out of service due to deferred maintenance and workforce shortages, creating strategic vulnerability requiring outsourcing to Japanese and Korean shipbuilders.
•Capital Investment Reversal: Tangible investment share of GDP declined from 12.5% to 8.5% between 1985-2021 while intangibles rose, but this trend reverses as AI data centers, electrical grid expansion, and remilitarization demand massive physical infrastructure spending, pressuring interest rates upward despite Federal Reserve cuts.
•Fiscal Deficit Collision: Running 6.4% peacetime deficit with defense spending likely increasing to 5% of GDP creates unsustainable trajectory where annual interest expense reaches $1.1 trillion at 3.3% average rates, while lowest yield curve rate sits at 4.1%, guaranteeing accelerating debt service costs.
•Munitions Production Gap: US used 80 Tomahawk missiles in single day against Houthis but only purchased 55 annually, illustrating critical stockpile depletion and production capacity constraints that require years of skilled labor development and capital investment to address, favoring prime defense contractors.

Notable Moment

Crypto entrepreneur Justin Sun purchased banana duct-taped to wood for $6.2 million at Sotheby's then immediately ate it, prompting comparison to 1929 crash precursor when New York Central Railroad offered free nickels, both symbolizing dangerous financial excess.

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Episode Transcript

Welcome. This is current year old Grant's Industrial Observer of the Air. And the fellow with the head cold, modulated voice is me. That's Jim Grant. I'm with you, as always with the great deputy editor of Grant's Evan Lorenz. Evan, welcome. Good afternoon. Yeah. And Henry French, who does our engineering so well. Henry, howdy. And, we have a guest today, and his name is Steve Bogdan. And Steve knows a few things about investment strategy and, and geopolitical strategy and how the two, connect. And he can talk to us about some of the extraordinary facts that have come to light concerning, for example, I would call the naval competition between China and America, except that one side of that competition seems not to know there's a competition, so we'll get around to that presently. Evan, as you know, we take a rather platonic view of advertising on this program. We don't like to sit, have our own whistle. It's unseemly, and we're all also just rich enough anyway. Right? Yeah. We occasionally throw a great conference, and occasionally the future treasury secretary might come and speak at them. Right. And we also, as a sideline to the ones the conference we publish every two weeks, right? Let's not forget that. And we did so last night. So what reminds me of, of the present state of play in almost everything is a grass piece from two weeks ago. And the headline is, View from the Crazy Train. Evan, you suggested that it's a compilation of, valuations and transactions and and declarations. And every one is more implausible than the next. Right? It's it's it just I mean, I guess dozen or 15 of things you couldn't believe have happened. But, oh, yeah. They happened. They are happening. So can you regale our listening audience, Evan, with one or two of your favorites, the the, this idea that you generated so timely? I think one of my favorites is, you remember Peanut the Squirrel, the, the the squirrel who New York authorities euthanized because, for no real good reason. He's a libertarian martyr of a squirrel. Right? Libertarian martyr of a squirrel. Well, somebody created a cryptocurrency named Peanut the Squirrel Coin, and it had a market cap of around 1,700,000,000, which is bigger than a number of gold miners that we could name. People are really excited about private companies that are fast growing and on the right tech trend. There's a ETF called Destiny Tech one hundred. It invests in these. It's trading at a 800% premium to its net asset value. So not only are you buying these companies, which are often trading at very high multiples, you're buying them at an 800% premium to those lofty multiples. But but, there there's a catch here. I mean, there's there's there's an explanation, isn't there? Number go up? And I I think one that really captures the zeitgeist is, Trump Media and Technology Group, which is …

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