The Fed's Three Heresies According To Jim Grant

Tyler Durden's picture

In three concisely-worded, precisely-defined, factually-correct minutes, Jim Grant not only deconstructs Janet Yellen's mumblings this morning but explains how each of the Fed's three beholden doctrines...

1. We believe in price control
2. We believe in market manipulation
3. We believe in the Phillips Curve

...have been discredited as heresies over time; and, as Grant so poetically notes, Yellen "did not touch on the moral quandary that low interest rates introduce into our country - grandmothers, grandfathers, savers are figuratively on their hand and knees and rooting around in bushes and between sofa seats for lose change on which to sustain themselves."


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johngaltfla's picture

There's one missing:

We believe in slavery.

cynicalskeptic's picture

When you voluntarily relinquish your freedom for a limited time, it's indentured servitude. At the higher levels there's a chance to escape if you save and don't overextend yourself.  You're selling your soul for a decent income but you're working 60 -80 hours a week until you're cut loose at 50 with no support. 

When you've given up your freedom permanently it's serfdom.  The modern equivalent is permanent and inescapable debt.  The way things are going. when gov can no longer support the masses and decent jobs have evaporated,  most people will willingly give up their freedom in exchange for food and shelter.

The Alarmist's picture

There's another one missing ...

"We believe we can control things to our desired ends without totally screwing up the world."

unwashedmass's picture

um, we need to wake up. 

it doesn't matter to the Fed that grandparents are starving. 


the bankers are happy and making millions......

that's what matters. 

Nothing else. 


cynicalskeptic's picture

With all that Arctic ice melting we won't even be able to put the old folks out on ice floes to meet their demise........

Redneck Hippy's picture

Even if the Fed cared that grandparents were starving, what do you thing they could do about it?  You want Janet Yellen to show up in a Meals-on-Wheels truck and feed your grandma?  Feed your own damn grandma!  Shame on you, letting your grandparents go hungry.  WTF is the matter with you?

0b1knob's picture

< Heresies?

< Lies?

fonzannoon's picture

Good interview. It is already well known amongst fixed income traders that the high yield market is going to blow sky high most likely by next year.

Redneck Hippy's picture

It was well known among fixed income traders that the long bond would be at 3.5% by now.  

Sturmbock's picture

For the FED low interest rates are not a moral quandary: no morals -- no quandary.

Rainman's picture

Like taxes, moral quandaries are for the ' little people ' .

Poor Grogman's picture

Starvation. It's what's for dinner..

What's not to like about that from the FEDs perspective.

Learn to grow your own food and communities .

The FED will one day be just a historical curiosity.

A Nanny Moose's picture

Indeed. Perhaps ethics as we know them, are a tool used by the immoral, to entrap and eslave those who strive for virtue?

JR's picture

The dollar doesn’t hold its exchange value and it takes more of those devalued dollars every day to purchase than what it took yesterday -- and its value is manipulated by crooks.

"No one would welcome a counterfeiter to town, yet this same authority is blindly given to our central bank without any serious oversight by the Congress.

"When the government can replicate the monetary unit at will without regard to cost, whether it's paper currency or a computer entry, it's morally identical to the counterfeiter who illegally prints currency.

"Botn ways it's fraud...

"If unchecked, the economic and political chaos that comes from currency destruction inevitably leads to tyranny -- a consequence of which the Founders were well aware....

"Real economic growth won't return until confidence in the entire system is restored... Only sound money can do that." -- former Rep. Ron Paul

lucyvp's picture

Congress doesn't care either, they love to be able to borrow a trillion dollars at 2.5% for ten years in order to buy votes and enrich themselves and friends.   Otherwise I agree with what you said.

Kreditanstalt's picture

"...grandmothers, grandfathers, savers are figuratively on their hand and knees and rooting around in bushes and between sofa seats for lose change on which to sustain themselves."

But NOT because of "low interest rates".

It's "inflation", otherwise called THE COUNTERFEITING OF MONEY & CREDIT.

GooseShtepping Moron's picture

Jim Grant's mind and Kelly Evans' legs make for one fine video.

A Nanny Moose's picture

I like his Lauren Lyster interview better.

oleander garch's picture

Do you reject the Federal Reserve?


And all its works?


And all its empty promises?

ebworthen's picture

That damn banner on the bottom kept me from getting a good look at that tart Kelly's legs and imagining them in lace stockings and garters.

Grant tells it like it is, again.  And yes, why is punishing savers while slathering Wall Street with taxpayer gravy never a part of the discussion?

cynicalskeptic's picture

When banks were creditors and owned the debt they created (instead of packaging it and selling it off to patsies) they were opposed to inflation.  They didn't want government overspending either because they held government bonds and didn't want to see the value of their holdings decline.  Banks backed a gold standard because it was stable and limited inflation.  The 'Crime of 1873' demonetizing silver occurred because the vast increases in the supply of silver were inflationary.  Farmers and other debtors pushed the Free Silver movement (Jenning's 'Cross of Gold') because they WANTED inflation.  They would pay off their mortgages and debts with inflated money while getting full current value for what they produced when they sold their crops.

Today banks are partnered with the government so they both profit from endless and escalating debt.  They don't care about inflation because they've offloaded the risk and stand to profit from any run up in commodity prices.  Banks own tankers full of oil, warehouses full of aluminum, copper and steel - and silos full of wheat and corn.  It's a giant Ponzi scheme and as long as they can keep selling more debt they make more and more money.  Problem is it WILL collapse - there's no escape.

ebworthen's picture

Yup, all while lowering the value of an individual's labor and paying them nothing for saving.

OC Sure's picture




That is what they believe because they understand the authority of tyranny.


Repeat after me, Mr. Grant, "We live in tyranny, we live in tyranny, we live in tyranny." time you are on the air please say it verbatum so the whole world can hear it.


ronron's picture

this hits home. i raised two boys and put them through university with no debt. worked hard as a carpenter for 40 years. produced a lot. fuck these financial cock suckers. bought gold at 800 with my savings. all of it. fuck these useless cunts. still working.

The Alarmist's picture

And after all that, you probably have the more useful and marketable skill.  Give those boys some hammers and put that education to use.

ronron's picture

ha taught them both in tools. they know. they became software engineers and fucked off to byron bay.

km4's picture

Look at what this jackass 

Thursday: More Yellen, Unemployment Claims


what a dumbass

Spirit of T.R.'s picture

Grant missed something rather important:  falling prices actually lead to economic evolution by enabling larger portions of the population to have access to goods and services which then creates secondary and subsequent markets.  Two examples:  Henry Ford's Model T and the personal computer.  As more and more people could afford these goods new industries came to be (auto parts, auto service, gas stations, paved road construction, motels, vacation destinations, desktop publishing, personal accounting software, video games, printers, etc.) - not because of beaurocrats and bankers, but because of economic evolution.

beaker's picture

Both those events happened in a time of robust economic expansion.  We're contracting now.  Consumers of these  lower-priced goods have no disposable income. Note the news/earnings on Walmart, Dollar Stores, etc.  Thus, I do not believe Grant missed that point.

Policraticus's picture

Falling prices?  What falling prices?  Are we talking about what we need or what we want?  Bitchezzzzzzzz and I mean Bitchezzzzzz.

Reaper's picture

The heresy is that the Fed and its chair should be trusted as either intelligent or honest because they're appointed by the President with consent of the Senate. The greatest delusion of mankind is to trust in government and its intent.

JR's picture

…grandmothers, grandfathers, savers are figuratively on their hand and knees and rooting around in bushes and between sofa seats for loose change on which to sustain themselves."

The moral equation here is the contrast between the obscenely wealthy insiders connected to a private entity that prints its own wealth out of thin air and the people who have tried in every way to avoid high risk and survive frugally on what a life of labor legitimately has produced.

It is time for us all to recognize that Federal Reserve Notes are not a stable medium of exchange; but rather an ingenious device invented to steal the value of all things salable, including the people's stored labor, and to transfer it to the accounts of those individuals who own the right to print fiat money out of nothing.

While interest rates being paid are near zero for savers and depositors as March inflation ran at 9.2% (Shadowstats), a continuing  disaster for the savers and retirees and first time home buyers,  U.S. banks net income reached a record $154.7 billion for 2013, according to the Federal Deposit Insurance Corp. in its Quarterly Banking Profile.

It is the duty of the U.S. Congress to see that the nation’s money or exchange-medium holds its stability as a measure of value – the price of things being the expression of the dollar’s exchange-value.

Americans must have a new national medium of exchange whose property value is stable.  This value cannot be left in the hands of Fed profiteers. If Congress does not abolish the Fed, the people must abolish this Congress and find a means of regulating the nation’s money in relation to the rate of production of the nation’s material goods and things salable – since the value of all things must be expressed in terms of money.

The U.S. Congress created the Fed; it is its duty to abolish it.

Bear's picture

My income from interest before 2007 was $15,000 / mo ... now, not so much ... the FED is leeching Americans and what gets me is how few people even get it

Remington IV's picture

Grant + Marc Faber + Peter Schiff = 3 Blind Mice

Notsobadwlad's picture

In the end, EVERYTHING comes down to the choices we make; moral or immoral, self serving or serving others.... etc. We can always change our future choices, but not the past. Those who are ashamed of their past choices rewrite history so that others do not know the depth of their betrayal.

lucyvp's picture

I can't feed my grandma, because I have a crappy job, and can barely feed, clothe, house and take my kids the doctor.  15 years ago things were not looking like this.   Prices of essentials have climbed, wages are stagnant or declining.

AdvancingTime's picture

We may soon be forced to face our economic Armageddon. The forces that have driven stock markets ever-higher and upward may be beginning to wane. Many markets became distorted years ago when QE and super low interest rates hit the economy in an effort to lessen many of the missteps of recent years.

The policy of QE it now appears has been more helpful in holding up the underlying value of assets and derivatives than helping to repair a wounded economy. Unfortunately the economy has not fared as well as these asset prices and in many ways these policies have harmed Main Street and stripped savers of the interest they deserve. More on this subject in the article below.