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Jim Grant: "Central Banks Have Over-Egged The Financial Pudding"

Tyler Durden's picture


The anchoring bias in the world's major sovereign bond markets (most notably those that have printing presses) is tremendous. As Jim Grant notes during this interview with Lauren Lyster, the blind indifference to the possibility of rising interest rates now is extremely similar to the indignance to the possibility of interest rates falling during the 1970s and 80s. In a broad and insightful few minutes Grant sheds a critical light on the similarities between then and now and fears that our unshakable confidence in the ability of the PhDs running our world monetary policy is false and that the market will eventually win out. The fear that is dominant among central bankers is indeed that of deflation and there is little to no fear of inflationary concerns and notes that there is a less than small probability that the world falls out of love with the US government's financial position. The truly humbling lesson of cycles past, he notes, is that they don't issue a press release (or ring a bell) at the turning point. "Things can remain seemingly excessive, until you turn your back and the reversion to some sort of mean begins." Grant believes we are approaching that, if not having already begun, that path back to reasonableness in interest rates. Grant continues with a discussion of potential income-generating ideas, his views on Bernanke's miscalculcations and most recent regime shift, the concerning idiocy of Japan (who seemingly can "neither procreate, nor re-inflate"), MMT 'price controls', and the path to total central planning.


The interview with Grant starts around 3:00 in with a discussion of the market's psychological similarities to the 1970s and 80s... around 9:00 Grant explains some ideas on generating income via leveraged loan funds around 11:45 Grant considers Bernanke's regime shift (with a critical insight that "The Thing You Want To Measure Somehow Disappears When You Try To Measure It" - to wit inflation's anchor during the 2000s when house prices were going sky-high... around 17:00 Grant discusses the craziness of world central bankers and especially Japan with their new leader (about to be elected) - quote of the day "The Japanese, seemingly, can neither procreate or reinflate" 20:00, Grant reflects on the endgame and Bernanke's proverbial helicopter drop and how Japan is the leading indicator 21:10, Grant addresses the MMT crowd... and extends on at around 23:00 to discuss the path to broad-based central-planning - which has all too much in common with what we used to call 'Red China'



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Sat, 12/15/2012 - 16:42 | 3067005 Lets_Eat_Ben
Lets_Eat_Ben's picture

Of all the bow tie wearing, pencil-necked economists, Jim Grant is my favorite.

Sat, 12/15/2012 - 16:52 | 3067018 MillionDollarBoner_
MillionDollarBoner_'s picture

Yeah...Jim way outgeeks all the geeks I know !:O)

Sat, 12/15/2012 - 17:05 | 3067041 knukles
knukles's picture

That chick don't have a pencil neck bowtie...


Huh, I wasn't listenin'...

Sat, 12/15/2012 - 17:09 | 3067058 Jack Sheet
Jack Sheet's picture

She was expecting a pencil dick instead....,

Sat, 12/15/2012 - 18:01 | 3067178 economics9698
economics9698's picture

Here is a blog I just finished showing the relationship between spending, taxes, and deficits.  It ties into this nicely and the graphs are split up into 1947-71 and 71-2012 so you can see a before and after of the Bretton Woods system.

Couple of good charts in it Tyler needs to use.



Sun, 12/16/2012 - 00:41 | 3067984 TwoShortPlanks
TwoShortPlanks's picture

Every time I see her I feel like giving the ferret a run.

Sun, 12/16/2012 - 11:15 | 3068480 c-rev with a twist
c-rev with a twist's picture

Ha ha I was thinking the same thing.  Who cares about Jim Grant.  More Lauren!

Sat, 12/15/2012 - 19:41 | 3067399 A Nanny Moose
A Nanny Moose's picture

She has a great yield curve.

Sat, 12/15/2012 - 21:42 | 3067660 Urban Roman
Urban Roman's picture

Had to watch just to see the LLLL

Sun, 12/16/2012 - 06:54 | 3068304 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

pert and perky for sure but she needs a nice long strip of duct tape for her piehole

Sun, 12/16/2012 - 11:57 | 3068549 Argos
Argos's picture

Extremely annoying voice.  She should invest in some voice lessons.

Sat, 12/15/2012 - 20:01 | 3067440 Cash2Riches
Cash2Riches's picture

Central banks are leading us over the edge.


Five Gold & Silver Mistakes.

Sat, 12/15/2012 - 21:44 | 3067664 ball-and-chain
ball-and-chain's picture

Ron Paul loves Jim Grant.

In fact, he wanted to make him FED Chairman before gradually doing away with the institution.

I don't know much about the guy.

I assume he loves gold.

Everyone loves gold.


Sat, 12/15/2012 - 22:37 | 3067756 TWSceptic
TWSceptic's picture

You'd be lucky to look as good as he does at his age.

Sat, 12/15/2012 - 16:47 | 3067009 NoTTD
NoTTD's picture

As Hemingway noted, one goes bankrupt slowly, then suddenly.

Sat, 12/15/2012 - 17:01 | 3067039 Jason T
Jason T's picture

whenever I think of Hemingway now, I think of his charactor from Midnight in Paris.. 

Sat, 12/15/2012 - 21:29 | 3067627 NoTTD
NoTTD's picture

Actually, I think of Woody's short story, "A Twenties Memoir".

Sat, 12/15/2012 - 16:46 | 3067010 Motorhead
Motorhead's picture

Jim Grant is a chick magnet.  Often with Deirdre Bolton, and now the luscious Lauren Lyster.

I haven't seen Dick "Oy Vey" Bove' lately.  That's a good thing.


Sat, 12/15/2012 - 17:01 | 3067024 MillionDollarBoner_
MillionDollarBoner_'s picture

I hate to burst your bubble but Dierdre is not so much chick as turkey nowadays...

Edit: naw, don't down arrow me, dude! Dierdre is okay but that Caroline Hyde...Wooooh Woooh !:O)

And what about Erin? Bring back Erin!!!

Okay...time for bed...:O)

Sat, 12/15/2012 - 17:02 | 3067042 knukles
knukles's picture

Liz Clayman

Sat, 12/15/2012 - 17:06 | 3067050 Motorhead
Motorhead's picture

Most def!

Sun, 12/16/2012 - 13:53 | 3068826 Spitzer
Spitzer's picture

Im not into these big corn fed mid-western hoes.


Betty Lue or Susan Lee for me. Yes , I am a rice king.

Sat, 12/15/2012 - 17:13 | 3067068 Jack Sheet
Jack Sheet's picture

Maria Barfaroma

Sat, 12/15/2012 - 17:16 | 3067078 Motorhead
Motorhead's picture

I bet she loves tequila shooters.

Sat, 12/15/2012 - 17:02 | 3067034 MillionDollarBoner_
MillionDollarBoner_'s picture

Rumor has it she got that stomach virus from eating a bad hairy clam...

Sat, 12/15/2012 - 17:37 | 3067126 Jack Sheet
Jack Sheet's picture

good one - wonder what she dished out for dessert!

Sat, 12/15/2012 - 17:03 | 3067046 knukles
knukles's picture

Nothin ta see here, go back to work, peasants.


Yeah, anodder one uh dem coincidences.

Fuckin' things happenin' daily seems these days.
Talk about horseshit...

Sat, 12/15/2012 - 17:37 | 3067128 Jack Sheet
Jack Sheet's picture

Could it be that you are a trifle inebriated?

Sat, 12/15/2012 - 20:04 | 3067447 boogerbently
boogerbently's picture

I'm certain the incident left her with complete amnesia concerning all things BENGHAZI.

Sat, 12/15/2012 - 21:30 | 3067632 ZeroAvatar
ZeroAvatar's picture

Yeah, she's close to retirement, so she's gotta get her 'Disability' claim started.

Sat, 12/15/2012 - 21:30 | 3067634 NoTTD
NoTTD's picture

"Help! I've fallen and I can't testify about Benghazi!"

Sat, 12/15/2012 - 16:55 | 3067026 buzzsaw99
buzzsaw99's picture

Hey Grant, the squid has some interest rate products to sell you. ;)

Sat, 12/15/2012 - 18:27 | 3067235 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He is about to get an Eaten Vance fleece in the mail.

Sat, 12/15/2012 - 19:47 | 3067393 CrashisOptimistic
CrashisOptimistic's picture

It is amazing to me how consistent ZH posters and commenters both, embracing the concept that we left normal long behind and this all uncharted territory, somehow forget all that when talking about bonds.

Look, guys, the Bernake Put is on bonds, not stocks.  He Has Explicitly Said He Is Buying Bonds.  He is a guaranteed bid under them.  Why would the price fall?  He owns them all.  Who else can sell?  No one.  If no one can sell, and he's buying, how can the price fall?

It can't.  That's why rates this time last year were about 2%, and now they're 1.7%.  30 bps reduction in rates and if you held bonds you made big money.  There's no reason to think that doesn't continue 2013.  In fact, even more so.  He's buying more in 2013 than he did in 2012.  

Besides all of which, as regards crowded trades and contrarianism, has anyone seen any CNBC guest in weeks, or months, who was NOT saying SELL TREASURIES?

Sat, 12/15/2012 - 20:10 | 3067460 boogerbently
boogerbently's picture

Chicken littles that lost their A$$ since '09 have been in the "safety" of Treasuries, missing the entire climb up.

Interest rates CAN'T go lower. When they rise, these same "less than inflation" collecting morons will pay the penalty to leave that "safe" investment early, to chase the higher % "safety" of Treasuries. Completing the ONLY strategy possible to LOSE money between late '08 and now.

"Man is the only animal that can be skinned more than once."

Mark Twain

Sun, 12/16/2012 - 09:13 | 3068351 Widowmaker
Widowmaker's picture

I don't see your point.

Most of those you describe ain't coming back to the fraud factory ever again.

Market(s) are dead, and fiat "money" is right behind.

Sun, 12/16/2012 - 10:55 | 3068456 Landrew
Landrew's picture

Let's see there are about 10 trillion worth of bonds the FED doesn't own! That's how the price goes down. Or the Chinese or Japanese sell their bonds the price goes down. 

Sat, 12/15/2012 - 16:56 | 3067032 PGR88
PGR88's picture

"Banks have over-egged the financial pudding."

Everybody likes pudding!  What a pleasant way of saying we are all FUCKED!

Sat, 12/15/2012 - 19:45 | 3067407 A Nanny Moose
A Nanny Moose's picture

If ya don't eat your meat, you can't have any pudding.

Sat, 12/15/2012 - 17:22 | 3067091 falak pema
falak pema's picture

AS if they had a choice... If the shadow banking shadow is as big as Charles Hugh Smith says here :

Essays in Fragility: Shadow Banking, Housing Inventory and Liabilities | ZeroHedge

Keep printing to suck in that casino play until hell freezes over...

Sat, 12/15/2012 - 17:30 | 3067109 kito
kito's picture

So what is grants point? No currency crisis? no hyperinflation? The world will still have faith in u.s. financial instruments? No end to the dollar reserve reign?? I dont see much beef from him.................

Sat, 12/15/2012 - 17:41 | 3067133 fonzannoon
fonzannoon's picture

Grant was out pumping GM last I saw....

Sat, 12/15/2012 - 18:23 | 3067227 Yen Cross
Yen Cross's picture

 You guys getting back to normal Fonz? Been on the road/ 

Sat, 12/15/2012 - 19:11 | 3067328 kito
kito's picture

fonz I feel as if more and more of the alt-pundits that zh covers are starting to dilute their previously bold and dire may be subtle.....but thats what im picking up........

Sat, 12/15/2012 - 19:26 | 3067363 fonzannoon
fonzannoon's picture

I still listen to schiff. His last few video blogs and his radio show he is back to his old self. He had smoke coming off his head last week. He does have a precious metals aspect to his business.  Maybe that has something to do with it. I do believe that a lot of these guys have started watering down their message. Bill Gross is the worst offender. Santelli is right there with him. I personally think these guys realize all it takes is one firm to start selling bonds and this thing collapses. These firms also know that they would be committing mass suicide so they must all have made some pact not to. I still have no idea if we have 3 months, 3 years, or an orwellian nightmare of decades of this ahead.

I'm hangin in Yen. Glad Kito is back. He always had a different take than I did and I see merit in it. It's good to compare notes.

Sun, 12/16/2012 - 02:04 | 3068141 Non Passaran
Non Passaran's picture

Noticed that, too.
It seems it's becoming likely the world can continue in footsteps of Japan for at least a decade. In the meantime they're turning the world into a police state.

Sat, 12/15/2012 - 18:22 | 3067214 OneTinSoldier66
OneTinSoldier66's picture

He said he thought interest rates were going to start, beginning, to rise. I would say, that, he didn't exactly state what he thought that portends though.

Sat, 12/15/2012 - 19:22 | 3067355 Yen Cross
Yen Cross's picture

Kito/ ya playin the Santelli CNBS Merc Exchange(comment) to the umpteenth level? Get a grip man!

 Too much money without velocity= stagflation    So I'm upvoting you kito

Sat, 12/15/2012 - 17:37 | 3067127 davidsmith
davidsmith's picture

The problem with Grant's analysis is that we are much further along in fascist corporatism than he realizes.  Oooops!

Sat, 12/15/2012 - 17:44 | 3067144 RobotTrader
RobotTrader's picture

Why do so many bears look as if they had just emerged from a concentration camp?

Man, somebody needs to take that guy out to Fleming's for a good steak dinner!

And trade that 2002 Buick Park Avenue for a 2010 Lexus or something.

Sat, 12/15/2012 - 18:14 | 3067187 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am sure he is fine.  Silver and gold are still outperforming stocks and bonds over the last decade.

Sat, 12/15/2012 - 22:32 | 3067760 TWSceptic
TWSceptic's picture

He seems healthy to me and it's good to see an American who doesn't look like he'll get a heart attack at any moment.

Sat, 12/15/2012 - 18:29 | 3067160 Yen Cross
Yen Cross's picture

 Grant is a smart man. As he states, "There is a less than small probability that the world falls out of love with the US government's financial position".

  Who shops at a store where the owner is an A-Hole? No matter how good the product is,  U.S.Treasuries are good from far, but far from good..

   The U.S. is the Rodney Dangerfield of Planet Earth.

Right now/ We have a choom head with no foreign policy skills, dictating another choom head with no fiscal policy skills running, " Skoolhouse Rock  Amerika"...

Sat, 12/15/2012 - 18:12 | 3067185 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Lauren is such a babe.

One day I hope that someone like Lauren finds out Max Keiser stole my idea to "Crash JPM and Buy Silver" and leaks it and totally discredits that bozo.

And instead of going to youtube just watch the interview on RT here:

Sat, 12/15/2012 - 18:21 | 3067221 Yen Cross
Yen Cross's picture

 Thanks L/H, nice lead in... ;-)

Sat, 12/15/2012 - 23:08 | 3067820 Cosimo de Medici
Cosimo de Medici's picture

Damn, you are obsessed with being somebody.  Get over yourself.  You think if that woman knew "the truth", she'd get all weak in the knees around you?  Keiser might well be a bozo, but glass house residences and all that.  Just sayin'.

As for those who are enamored of this TV talking head Lyster, might I suggest getting a couple of articles off Bloomberg, then have your wife or girlfriend stick her head inside an old big box TV and read to you.  That should spice up the love life.

Finally, as for that piece of Putin Propaganda called RT, anybody wonder why its website cannot be accessed on Tor and that it leaves LSOs on your computer to keep tabs on visitors?  Anybody also know why the network just happened to overlook Putin's new draconian security law passage?  No doubt it was just an oversight in a busy news decade.

Tue, 12/25/2012 - 00:46 | 3094214 MeelionDollerBogus
MeelionDollerBogus's picture

really? Including when James Turk or James Rickards are interviewed? James Rickards has even co-hosted Capital Account. You think it's easy to get his time? He even consults for the Pentagon. Does your wife have that kind of pull?

Sat, 12/15/2012 - 18:35 | 3067247 ZFiNX
ZFiNX's picture

Neglecting the radioactive holocaust of Fukashima (Fuku?) the only really good return you can get out of Japan is probably living there. Sounds the perfect place - tons of easy capital and no inflation; who cares if no one is making profit? Large profits are just an indicator of how far technical progress is away (due to diminishing marginal returns on technology) from the maximum.

Sun, 12/16/2012 - 09:14 | 3068352 BigInJapan
BigInJapan's picture

Yeh, sure thing.

Wanna swap houses, then?

Sat, 12/15/2012 - 18:36 | 3067251 kevinearick
kevinearick's picture

we are testing keynes assumption, irrational markets or rational individuals, to set price. the money is competing to buy time, up the wall...

Sat, 12/15/2012 - 18:39 | 3067253 RobotTrader
RobotTrader's picture

I give Lauren Lyster a maximum of 6 more months on the air.

Eventually, some "Enterprising Speculator" running a giant hedge fund with "billions under management" will sweep her off her feet, offer her a monthly stipend of $25,000/mo. plus an AMG Mercedes, and put her up in a luxury apartment overlooking Park Avenue rent free.

Her days of working for a living will be gone forever.


Tons of pics here:

Sat, 12/15/2012 - 18:48 | 3067272 dark pools of soros
dark pools of soros's picture

actually I hope she just gets a job at Naked News for a week or two

Sat, 12/15/2012 - 21:23 | 3067610 Joe moneybags
Joe moneybags's picture

Maybe Lauren can afford her own stable of boy toys, and to hell with an old, cold, shriveled sugar daddy.

Sat, 12/15/2012 - 21:30 | 3067633 Joe moneybags
Joe moneybags's picture

Robot, before your computer dies, consider donating your hard drive to the Smithsonian, as a comprehensive  compendium of the adult entertainment found on the internet, circa 2000 through 2012.

Sat, 12/15/2012 - 21:53 | 3067336 scatterbrains
scatterbrains's picture

yall niggas crazzed.. think of it this way.  Bernank is tuning up his ole whoopty (economy) in the garage and unaware of the deadly carbon dioxide gas (debt)  building up around him. He's running wide open throttle (printing like no tomorrow) he's tweeking the fuel/air mix too lean (interest rates anchored to zero) and is about to melt the exhaust valves.  The Gold bet is that he will not let up in time and destroy the engine. (fiat system).  Should interest rates start to rise the risk of melting the valves disappears and gold gets crushed. So the question is what comes first ? Does he kill himself from the gas? Does he blow the engine?  Do rates rise (deflationary collapse)  or does he manage to get it all under control in time to avoid either of those outcomes? 

Sat, 12/15/2012 - 19:31 | 3067372 q99x2
q99x2's picture

The Red US. Thus Spake Thunderbird.

Sat, 12/15/2012 - 21:24 | 3067613 ZeroAvatar
ZeroAvatar's picture

Jim Grant: "Central Banks Have Over-Legged EGGED Over-Egged .......(damn that girl).

Sat, 12/15/2012 - 21:24 | 3067615 ZeroAvatar
ZeroAvatar's picture

"Honey, I blew up the Economy!"

Sat, 12/15/2012 - 21:56 | 3067694 Yen Cross
Yen Cross's picture

 Who cares about the "girl"?  It's all about iNTEL/  Learn Bitchez/ Deferment is for clowns/

Sun, 12/16/2012 - 03:26 | 3068012 cranky-old-geezer
cranky-old-geezer's picture



I don't wana rain on everybody's Grant-worship-fest here, but he's just like all the other (alleged) realists out there, won't come out and say what's really happening, won't come out and say they're looting the nation dry, stealing all the wealth they can, the silent easy way, printing and currency debasement.

They climb over each other telling us how present policies don't work and can't work, they've been saying it 4 damn years now, we're tired of hearing it, we know damn good and well present policies won't work and can't work, they're not telling us anything we don't already know, they're just getting TV exposure.

Fuck 'em all, Grant, Faber, Rogers, Bass, Schiff, Celente, all those gutless pussies.

Even ZeroHedge can't seem to grow enough balls to come out and say what's really happening.  What the fuck?  Is this fightclub or some damn socialite white glove tea time?

Seems Max Keiser is the only one coming right out saying they're robbing everybody blind, looting the damn nation dry.

... and me too of course.

I think I'll spend less time here.  Article after article day after day week after week month after month saying the same damn thing from different angles.  Gets boring eventually.

Sun, 12/16/2012 - 09:39 | 3068370 Papasmurf
Papasmurf's picture

Any place better to go Cranky?  You have any ideas other than to realized what's happening?  Please share.

Sun, 12/16/2012 - 11:06 | 3068469 Catullus
Catullus's picture

Yes.  Go to Max Keiser, who supports that Web of Debt, greenbacker crank who wants to do what Bernanke is doing except more of it.

Sun, 12/16/2012 - 10:12 | 3068402 mewenz
mewenz's picture

I like Grant but just don't get why he pretends the Treasury market is actually a "market", surely he knows better.  He talks about people deciding not to buy Treasuries what happens then?  Do yields go up or does the Fed, with unlimited ability to print, continue to "up the ante" and become a substitute buyer. As long as the USD is accepted as a reserve currency, and the alternative currencies continue in the race to debase, the Fed can just keep printing. 

Sun, 12/16/2012 - 11:53 | 3068545 theprofromdover
theprofromdover's picture

Lauren needs a good meal, she looks ill.

non-sexist comment, just an impartial observation.

Sun, 12/16/2012 - 13:51 | 3068821 No Euros please...
No Euros please we're British's picture

hey! Excuse me, could you make it plain that you're talking Economics PhDs here! Leave us rocket scientists out of this mess.

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