Jim Grant Discusses The Fed's 'Backward Shooting Gun', And Black Walnut Tree Treasury Replacements

Tyler Durden's picture




 

Yesterday, when discussing the forthcoming implications of the Libor scandal, we said that in the barrage of coming lawsuits, "the entity that will be sued by proxy is the Federal Reserve, whose Federal Funds rate is really the setter for the baseline Libor rate." This claim came at an opportune time, just hours before one of the Fed's most vocal critics (and gold standard advocates), Jim Grant, appeared on TV to discuss precisely the same thing. Best summarizing his position is a cartoon that appeared in a recent issue of Grant's Interest Rate Observer in the context of Lieborgate, and who is really at fault here.

What follow next are some of the traditionally brilliant bullet point that we have come to associate with Grant.

On the Fed's arsenal:

The Fed is not out of bullets; the trouble is its gun shoot backwards. These massive interventions in the marketplace distort the price we call interest rates.

On Liebor and the Fed:

The banks fixed Libor. The Fed fixes rates. The banks do this surreptitiously and opportunistically. the Fed does it for a living.

On whom anger should really be focused:

The idea that these guys talking about what they might finance their bank, that they are in charge of manipulating interest rates is absurd. The central banks do it all the time, they do it massively. The outrage ought to be directed at them...

On the Fed's centrally-planned "reality show":

Ever see the Truman Show where Jim Carrey's character finds out
he is living in a TV set: he finds out because he rows his boat into the painted canvas sky: that is life under the rule of central banks.

On the paradoxical perfect storm which everyone sees:

Everyone is talking about the "perfect storm": the fiscal cliff, and China, and Greece, and Europe, there is a constellation of bad news: the Wall Street Journal is the grimmest reading in years. How can this be a perfect storm if we can see it coming?

One observation which our European readers will likely not find too palatable:

The trouble with Europe is they work 5 hours a day, nothing to do with a shortage of Euros.

And finally, where people should get "yield":

You plant black walnut trees, and in 30 years they flower to $1000 each, you pay $5 for them, that's a zero coupon tree, that's where you get yield.

Full clip below:

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 07/12/2012 - 19:11 | 2611366 Rich Bagg
Rich Bagg's picture

Too bad Grant will be dead before those Walnut trees flower to $1,000.  This pompous blowhard never had any good recommendations.

 

 

Thu, 07/12/2012 - 19:14 | 2611376 fonzannoon
fonzannoon's picture

He was bullish on equities, it's interesting that he and Jom Rogers would probably agree with each other on everything except their investment strategy.

Thu, 07/12/2012 - 19:36 | 2611435 Pladizow
Pladizow's picture

So Buffet says the FED is out of bullets and interest rates cant go any lower from one side of his mouth and from the other side says dont buy gold - cognitive dissonance?

Thu, 07/12/2012 - 19:58 | 2611487 1000pips
1000pips's picture

good observation...now buffet is bearish==Time To Go LONG !!!  

Thu, 07/12/2012 - 20:04 | 2611502 Pinto Currency
Pinto Currency's picture

 

At 2:14 Maria says "ekcetera".

Please give us some insight on the markets Maria.

Thu, 07/12/2012 - 21:56 | 2611732 markmotive
Fri, 07/13/2012 - 05:02 | 2612091 Chain Gun Smoke
Chain Gun Smoke's picture

At 4:00 grant calls Maria, Morgan. Whateva talking head.

Thu, 07/12/2012 - 21:53 | 2611728 Pinto Currency
Pinto Currency's picture

Congressman Howard Buffett:

 

"I have a son who is a particularly avid reader of books about panics and similar phenomenon."

http://bastiat.mises.org/2012/05/letter-from-howard-buffet-to-rothbard/

 

During a panic, you can pick up other people's assets for pennies on the dollar.

 

 

 

Thu, 07/12/2012 - 22:24 | 2611762 smlbizman
smlbizman's picture

rich bagg.....can you imagine  how david hasslehoff felt when he watched himself the next morning after fucking that chee'burger on the floor and how embarrassed his daughters were as they watched.....your "top spotted" comment should make you feel all hassle-hoffy inside in the morning  at that point you either vowel to never ever post again on the hedge, the wise choice. or you come back a few more times to get the rest of your robert brusca treatment ,....and they way it looks you have your  up arrow and four "daughter" up arrows....

Fri, 07/13/2012 - 01:10 | 2611969 madridisburning
madridisburning's picture

smlbizman, are you on your period?

should a person only post a comment if it can receive the accolades of others? I thought his comment was HILARIOUS? And, yes, Grant is a very astute (i.e., worth reading), but never right blowhard. Sor of like...hmm, Paul Krugman.

Thu, 07/12/2012 - 21:03 | 2611636 q99x2
q99x2's picture

Buffet has health problems and is older. He can not help but sense vultures circling. The FED policies are probably adding to his uneasiness. Or...

Good info from Grant.

Fri, 07/13/2012 - 00:33 | 2611937 Freddie
Freddie's picture

Buffet better get ready to meet his maker......Lucifer.  Evil old fukkk.

Jim Grant is great.

Fri, 07/13/2012 - 01:45 | 2612012 fourchan
fourchan's picture

buffets timeline is racing twards zero.  this must afford clarity.

Fri, 07/13/2012 - 05:13 | 2612093 MillionDollarBoner_
MillionDollarBoner_'s picture

"cognitive dissonance?"

Is that Latin for douche-bag POS?

Thu, 07/12/2012 - 19:53 | 2611472 Silver Bug
Silver Bug's picture

Jim Grant has been spot on for years. It is wise to listen to what he has to say.

 

Prepare for the US Dollar Collapse

Fri, 07/13/2012 - 01:11 | 2611972 madridisburning
madridisburning's picture

did the world spin off it's axis and I missed it? Damn!

Thu, 07/12/2012 - 19:16 | 2611382 HungrySeagull
HungrySeagull's picture

Today's 1000 dollars will be approx 550 30 years from now.

Thu, 07/12/2012 - 19:28 | 2611400 Manthong
Manthong's picture

Try .5 new cents on eBay in a plastic bag of one million old dollars.

Thu, 07/12/2012 - 19:53 | 2611471 XitSam
XitSam's picture

Today's 1 oz of gold will be 1 oz of gold in 30 years.

Thu, 07/12/2012 - 20:30 | 2611577 HungrySeagull
HungrySeagull's picture

Speaking of .05 cents, I have begun to pull a box or two of nickels in rolls fresh from the CU each month.

They look at me funny, but have gotten used to it.

I think the nickels will be worth melt twice or more original value if the Govt should decide to dump the penny and nickel.

Thu, 07/12/2012 - 20:37 | 2611593 PiratePawpaw
PiratePawpaw's picture

"NEW YORK (MarketWatch) -- There is an old and apocryphal saying that "a good handgun is worth an ounce of gold" and it turns out to be true -- at least it has for the past 136 years.

Because it is basically unchanged after 136 years of continuous production and because there is a healthy, liquid market for it, a good example of this case can be made by tracing the price of "The Gun that Won the West," the Colt Single-action Army revolver. The venerable Peacemaker turns out to be a better gauge of inflation than gold is and a better investment. President Ronald Reagan even named a missile after it.

The correlation of gold and guns can be traced back at least to 1873 when Colt's Manufacturing Company of Hartford, Conn., introduced the most technologically advanced handgun of its time, a six-shot revolver that used metallic cartridges. The Army adopted it as its standard side arm, a position it held until 1892. The innovation of metallic cartridges made it easier to reload in a hurry. Reloading had always been an issue because it was slow, unwieldy and required some expertise. Now anybody could do it.

In 1873 the Colt SAA sold for $17.50. The complete kit with a holster and some ammunition could be covered by a $20 gold piece. The $20 Double Eagle of 1873 contained 0.9675 ounces of pure gold. Today an ounce of gold is about $1,090 and a new Colt SAA can be special ordered from Colt's custom shop for about $1,500.

As a collector's item the Colt fares even better. A recent check of Collectorsfirearms.com found scores of listings at a wide variety of prices from $1,699 at the bottom to $175,000 asked for a Colt "Pinch Frame" called "the Holy Grail of single action collecting." This gun carries the serial number 58. So your $20 gold piece spent on this gun in 1873 would have returned 874900%.

Gold Double Eagle $20 coins from that year can be found on line for $1500 to $5000 depending on condition about the same price as Colt SAA's of similar age and condition.

Gold's price is fixed

Gold was in the midst of one of its many upheavals when the Peacemaker arrived. In 1873, Congress put the United States on the gold standard with the Fourth Coinage Act, which de-monetized silver and made gold the only metal by which to fix currency. President Grant signed it into law in February of that year. Gold was set at $20.67 an ounce where it stayed until 1934 when President Franklin Roosevelt devalued the dollar to 1/35 of an ounce of gold. During this period gold lagged behind the handgun."

I like and have both....The difference is that throwing gold coins at an intruder isnt much of a deterrant.

Thu, 07/12/2012 - 21:18 | 2611661 pd45
pd45's picture

The ICBM was called Peacekeeper, it was SAC's motto.

Thu, 07/12/2012 - 21:39 | 2611705 HardAssets
HardAssets's picture

B-36 Peacemaker was an early strategic bomber (developed during WW2 - deployed late 40s - 1950s). Could deliver hydrogen bombs. Some models actually used prop and jet engines. (Was into aircraft as a kid).

Thu, 07/12/2012 - 21:40 | 2611709 HungrySeagull
HungrySeagull's picture

Nice aircraft. However the Reds did not get hot and bothered until we came up with the Hustler.

Thu, 07/12/2012 - 21:46 | 2611719 HardAssets
HardAssets's picture

The B-58 Hustler - - that was one of my favorite aircraft as a kid. It just looked 'mean'.

(Of course, as a boy I didnt think all that much about the fact that these things were designed to kill a lot of people with nukes - - both, the guilty and the innocent.)

Thu, 07/12/2012 - 22:54 | 2611804 Manthong
Manthong's picture

I thought the B-58 was nifty looking too, but even as a kid, I thought that between 8 and 14 fixed forward firing .50 cals and strafing duty in an A-26 was way more cool.

Fri, 07/13/2012 - 02:47 | 2612046 HungrySeagull
HungrySeagull's picture

If Memory Serves, the A-26 was flown until they simply fell apart.

The Hustler scared the Reds in trying to match or improve defenses.

Fri, 07/13/2012 - 00:16 | 2611916 dbomb12
dbomb12's picture

An interesting analysis from Marco Polo during the reign of Kublai Khan and and the first FIAT currency

“Population and trade had greatly increased, but the emissions of paper notes were suffered to largely outrun both…All the beneficial effects of a currency that is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth. These effects were not slow to develop themselves…The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion.”

Read more: Fiat Currency http://dailyreckoning.com/fiat-currency/#ixzz20TNCchUx
Fri, 07/13/2012 - 08:09 | 2612064 Al Gorerhythm
Al Gorerhythm's picture

Today's 1 oz of gold will be 1 oz of gold in 30 years.

I wonder what it will be measuring in that era. Right now it's showing that the purchasing power of the dollar has fallen to 1/1572 of an ounce of gold. Don't think I can cut mine that small. The $US sucks.

Thu, 07/12/2012 - 21:04 | 2611639 malek
malek's picture

Under optimistic assumptions, it will be 125 dollars (worth halves every 10 years)

Thu, 07/12/2012 - 21:59 | 2611737 Shazam342
Shazam342's picture

Gawd, that's optimistic!

Thu, 07/12/2012 - 19:25 | 2611402 One eyed man
One eyed man's picture

This pompous blowhard never had any good recommendations.

Grant is a long term gold-bug. People (like me) who bought gold based on his recommendations are very happy now.

Your "pompous blowhard" comment would fit Paul Krugman much better.

Thu, 07/12/2012 - 19:36 | 2611438 Beam Me Up Scotty
Beam Me Up Scotty's picture

More like pompous ass.

Thu, 07/12/2012 - 20:03 | 2611505 Daily Bail
Daily Bail's picture

Bailout Fiction Goes Hollywood: "After Losing Everything, Jim Confronts The Bank CEO With A Loaded Gun..."

 

Plot Suggestion: In the final scene when Jamie Dimon's character attempts to bribe 'Jim' for his life with $10 billion in cash that he keeps in his desk for emergencies, have Jim stuff that cash down Dimon's throat until he chokes to death on Federal Reserve Notes, while Jim screams:"How's that bailout taste, motherf*cker!  You need some mustard with that?" Then Jim should gather all the remaining Fed notes into a pile on Dimon's desk and set them ablaze.  Instead of watching them burn, Jim searches Dimon's lifeless corpse for the combination to his office safe, which he finds written on the back side of a bright red business card with #CtrlP on the front next to a picture of Bernanke and Krugman hugging it out, and the cell phone number for Brian Sack.  Jim moves across the room to the portrait of Dimon's dog, nicknamed 'Dumbshit American People' or DAP for short, hanging on the wall, rips it away, opens the safe and takes an envelope labeled 'QE3 - For Bernanke's Eye's Only' from among the contents.  Jim opens the envelope to reveal a picture of the Fed Chairman naked, hanging upside down from an Indonesian palm tree while baby giraffes lick his balls.

Finally Jim has what he needs to take down Bernanke, as he grabs a bar of gold bullion from Dimon's personal stash, puts it into his JPMorgan courtesy bag emblazoned with the grotesque image of Jamie's massive smile, visible just above the Chase logo, and heads out the door.  On his way out, he spies a loose folder marked 'Silver Manipulation' and decides to grab it.  Maybe it was going to be a good day after all, mused Jim, as he thought of ways to get Ben, Hank and Tim all into the same room. 

Thu, 07/12/2012 - 21:10 | 2611648 knukles
knukles's picture

Now that is funny.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Thu, 07/12/2012 - 22:55 | 2611805 100mgViagraAssist
100mgViagraAssist's picture

Rich Bagg, What is it about Mr. Grant that intimidates you?

1. His honesty?

2. His intellect?

3. His use of colorful metaphor?

4. His bow tie?

5. His 6 pack abs?

Go back to your box of vanilla wafers.

Fri, 07/13/2012 - 01:16 | 2611980 madridisburning
madridisburning's picture

His extreme political idealogy which shapes everything he thinks and does including how he puts his pants on? (Although he seems like the kind of guy who does not even undress to go into the shower.)

Thu, 07/12/2012 - 23:47 | 2611886 MrSteve
MrSteve's picture

Rich Bagg is totally reamed on this comment, and rightly so. You don't deserve to post on ZH with such obvious ignorance on display.

You are some kind of near-record junk magnet, a real hallmark of shame. Get lost and stay lost.

Thu, 07/12/2012 - 23:56 | 2611894 MrSteve
MrSteve's picture

see this url for all the info you need on growing walnuts, quite the piece of work!

Fri, 07/13/2012 - 01:15 | 2611977 madridisburning
madridisburning's picture

Ignore the negative comments. You have offended another's religion. HOW INDECENT! Great Grant Almighty! Someone around this joint needs to turn the record over.

Fri, 07/13/2012 - 01:47 | 2612015 Tapeworm
Tapeworm's picture

I subscribed to his letter for a while and cancelled because it was too bond oriented  and too expensive for me.

 His featured recoes did extremely well for the most part.

 I gave a copy to an aquaintance in which Mr. Grant mentioned Annaly. I got the guy out of Lucent and he took the proceeds to NLY. It saved his butt and his mother's butt too.

 Many of his mentions of the time that I subscribed turned out to be very large winners. You, Mr. Bagg are slagging Mr. Grant just because you want to tear down someone that is your intellectual superior.

 You might wabt to read his earliest book, "Money of the Mind", It is widely available in public libraries if you are too cheap to buy it.

Fri, 07/13/2012 - 03:34 | 2612065 BadKiTTy
BadKiTTy's picture

Unlike Rich Bag(less) who shares with us his wise and thoughtful words.....

K@

Fri, 07/13/2012 - 18:16 | 2614693 tlil5774
tlil5774's picture

Any European will disagree with the following statement simply because it's idiotic:

"The trouble with Europe is they work 5 hours a day, nothing to do with a shortage of Euros."

Jim Grant is a writer and not a trader, i.e. he's a sales-man. And it is appearently lost on him and his peers that in aggregate, Europe's fiscal statistics are better than those of the US, where the average worker works longer hours and takes 12 days of vacation per year, as opposed to 30 hours and approx. 5 weeks in Europe. Isn't it about time for Grant and his clever peers to understand that working more is not a viable solution IF "THERE IS NO DEMAND TO MEET THE PRODUCTION CREATED BY THOSE ADDITIONAL WORK HOURS!". Sure, European labour reform is needed, but working longer hours isn't going to solve the main problem, which is excessive debt and bloated benefits. Pure capitalism with bankruptcies will solve it however, but we all know we won't see pure capitalism (with bankruptcies and no govt intervention) any time soon.

Greetings from a European.

Tom

Fri, 07/13/2012 - 18:19 | 2614699 tlil5774
tlil5774's picture

Any European will disagree with the following statement simply because it's idiotic:

"The trouble with Europe is they work 5 hours a day, nothing to do with a shortage of Euros."

Jim Grant is a writer and not a trader, i.e. he's a sales-man. And it is appearently lost on him and his peers that in aggregate, Europe's fiscal statistics are better than those of the US, where the average worker works longer hours and takes 12 days of vacation per year, as opposed to 30 hours and approx. 5 weeks in Europe. Isn't it about time for Grant and his clever peers to understand that working more is not a viable solution IF "THERE IS NO DEMAND TO MEET THE PRODUCTION CREATED BY THOSE ADDITIONAL WORK HOURS!". Sure, European labour reform is needed, but working longer hours isn't going to solve the main problem, which is excessive debt and bloated benefits. Pure capitalism with bankruptcies will solve it however, but we all know we won't see pure capitalism (with bankruptcies and no govt intervention) any time soon.

Greetings from a European.

Tom

Thu, 07/12/2012 - 19:11 | 2611368 Temporalist
Temporalist's picture

Thank you Jim Grant for being honest!  And here is another truth teller:

British Ron Paul Nigel Farage is he the only politician that tells the truth (EU parliament speech )

http://www.youtube.com/watch?feature=player_embedded&v=DSg09DUxoJk

 

Thu, 07/12/2012 - 20:25 | 2611559 Yes_Questions
Yes_Questions's picture

 

 

Never a bad link regards Farage.

 

And here in the US we get the knuckle dragging dimwit wannabe conservative Tea Party and the utterly terminal, spineless democrats all holding out the Please Sir, may I have another campaign contribution bowl promising to return the favors with legislation benefiting per$onhood only a bankster could love.

 

at the very least, Farage could make a killing teaching the US CONgress rhetoric at some of those retreats they take at ALEX.

 

 

 

Thu, 07/12/2012 - 19:11 | 2611369 ACP
ACP's picture

So do they pay the settlement with printed money?

Thu, 07/12/2012 - 20:32 | 2611583 Yes_Questions
Yes_Questions's picture

 

 

That wouldn't really stack up to them paying now would it?

They need to miss something they used to have.

I want the deed to the planet desecurized in this and anything short will just not stack up.

Those fucking parasites.

Thu, 07/12/2012 - 19:16 | 2611378 HungrySeagull
HungrySeagull's picture

Planting Gunpowder to raise super crop failed too.

Do NOT follow this link or you will be banned from the site!