Jim Grant

The Perilous Misperception That Central Bankers Have Mitigated Market Risk

Never have markets carried so much risk. And never have markets been as vulnerable to an abrupt change in perceptions with regard to central banker competence, effectiveness and capabilities. At the minimum, global markets will function poorly, but risk is now high for a disorderly – Party Crashing - "run" on financial markets, as faith in central banking begins to wane.

Jim Grant Explains How To Hedge Against The Coming Money Paradrop

"This is a monetary moment... we are looking at the beginning of the world’s reappraisal of the words and deeds of central bankers like Janet Yellen and Mario Draghi. You see monetary disorder manifested in super low interest rates, in the mispricing of credit broadly and you see it in the escalation of radical monetary nastrums that are floating out of the various central banks and established temples of thought: Negative real rates, negative nominal rates and the idea of helicopter money. So you need some hedge against things not going according to the script and that makes gold and gold mining equities terrifically interesting now."

Weekend Reading: Just A Correction, Or Something Else

"You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in wonderland, and I show you how deep the rabbit hole goes." - Morpheus, The Matrix

Jim Grant Warns "The Fed Turned The Stock Market Into A 'Hall Of Mirrors'"

The question we appear to be getting answered this week is, as Grant's Interest Rate Observer's Jim Grant so poetically explains, "how much of this paper moon market is real, and how much is governmental whipped cream?" In this brief but, as usual, perfectly to the point interview with Reason.com's Matt Welch, Grant asks (and answers), "are prices meant to be imposed from on high, or discovered by individuals acting spontaneously in markets?" noting that, while many readers here may know the answer, "they’re regrettably in the minority." The always entertaining Grant then goes on to discuss the underlying causes of the recent market turbulence, why we don’t really "have interest rates anymore."

Fed Lunacy Is To Blame For The Coming Crash

From our perspective, the fundamental reason for economic stagnation and growing income disparity is straightforward: Our current set of economic policies supports and encourages a low level equilibrium by encouraging debt-financed consumption and discouraging saving and productive investment. We permit an insular group of professors and bankers to fling trillions of dollars about like Frisbees in the simplistic, misguided, and repeatedly destructive attempt to buy prosperity by maximally distorting the financial markets.

Jim Grant: Financial Prices Should Be Discovered, Not Administered

"The modern financial animal is wont to assume that he or she lives in an age of science. The truth is we live in an age of pseudoscience. Far from dealing in science, central bankers, and, to a degree, investment bankers and security analysts, employ magical thinking... For an individual to fix Libor is a crime. For a central bank to suppress European bond yields is an act of financial statesmanship..."

Jim Grant Explains "Our" 3 Biggest Financial Mistakes

Speaking at Russell Napier’s Library of Mistakes in Edinburgh earlier this month, Jim Grant of Grant’s Interest Rate Observer was asked what financial mistakes we’re making today that future generations will regard as the most ridiculous. If you’re familiar with Grant’s writing the short answer won’t surprise you...

Jim Grant Warns: Cost Of "The Unmasking Of The [Fed-Driven] Mis-Allocation Of Capital" Is Dire

"The Fed is 'ever-interested' in doing something later," Jim Grant notes, explaining why he believes the timetable for rate hikes will be pushed back further as fear of allowing a free market in the "most critical" of prices - that of interest rates - would lead to the "unmasking of the misallocations of capital that will have come about through the levitation of asset prices." Grant further unleashes his verbal attack of truthiness when he points out that the central bank's persistent easy money policies is on display currently in the form of stifling American enterprise and sending millions of people from the workforce "more or less permanently."

Former Fed Governor Admits Market Controlling The Fed Is A "Very Dangerous Development"

The constant changes to Fed policy targets and enslavement to the ticker must change, according to former Fed Governor Kevin Warsh. "The markets think they have Yellen's number," that she will never allow markets to go down, Warsh warns "that is a very dangerous development." What worries Warsh the most, however, is "The Fed's policies changing based on what happens on the ticker... The Fed should be thinking 3 to 4 years ahead." Investors "think good times can last forever," he notes ominously, "we tried negative real rates in the mid 70s and the early 2000s and both ended badly." Someone is not getting invited back on CNBC...

Inside The Federal Reserve: "Money For Nothing" - The Full Movie

Nearly 100 years after its creation, the power of the U.S. Federal Reserve has never been greater. Markets and governments around the world hold their breath in anticipation of the Fed Chair's every word. Yet the average person knows very little about the most powerful - and least understood - financial institution on earth. "Money For Nothing" is the first film to take viewers inside the Fed and reveal the impact of Fed policies - past, present, and future - on our lives. Join current and former Fed officials as they debate the critics, and each other, about the decisions that helped lead the global financial system to the brink of collapse in 2008. And why we might be headed there again...