Jim Grant: "The Federal Reserve Is The Vampire Squid Of Vampire Squids"

Tyler Durden's picture

Munch's "The Scream" may be all the rage today, but to Jim Grant, in his latest interview on Bloomberg TV, the record price paid for the painting is not so much a manifestation of modern art as one of modern currency: "This is the flight into things from paper" . Thus begins the latest polemic by the Grant's Interest Rate Observer author whose topic is as so often happens, the Federal Reserve (for his latest definitive expostulation on why the Fed should be disbanded and why a gold standard should return, delivered from the heart of Liberty 33 itself, read here). The world in which we invest is a world of immense wall to wall manipulations by our friends in Washington. And people get off on Goldman Sachs because it has done this and this, it is pulling wires... The Federal Reserve is the giant squid of squids, it is the vampire squid of vampire squids."

He continues: "They - the vampire squids - have manipulated virtually every single price and valuation in the capital markets. People ought to recognize when they invest that one of the unspoken risks is the risk that this hall of mirrors, this Barnum and Bailey world that the Fed has created for us is going to vanish one day because they will not be able to hold it any more... It's not as if there is nothing to do in investing, but one must always keep in mind that the valuations that we see, that the prices that we watch flicker across the tape are prices that are fundamentally manipulated by these well-intended, dangerous people in Washington called the Federal Reserve". And to think that 3 short years ago Grant would have been branded a loony, tin-foil hat wearing gold bug, while now it has become trendy for hedge fund managers to bash the Fed with impunity. It is all downhill from here.

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Jerry Maguire's picture

Soon the'll have to start raising rates like they're doing in Canada:



lineskis's picture

"It is all downhill from here." - Except for Gold and Silver! :)

knukles's picture

Goldman and others of it's ilk are but a fronts, shills for the RedShield and kin, owners of the central banks, the bankers of the bankers. 
The shills shall be offered as sacrificial lambs to the peasantry whilst the true powers remain silent, in the shadows, to continue as they have for generations, silently, carefully, ever amassing more power and treasure.
Undoubtedly, the entire NWO's seen and heard, the Bildergergs, CFR, etc., are well removed from the throne, to be dealt with under unpleasant circumstances.

Thomas's picture

"well-intended dangerous people" Well intended? Are you sure, Jim?

rosiescenario's picture

.....more accurately, they think of themselves as being well intended......

flacon's picture

Gold and Silver will crash. In fact they must crash. When ZERO dollars buys you one ounce of gold then you will know that Voltaire was in fact correct. 




How many Zimbabwe dollars buys one ounce gold coin?


Infinity and/or Zero to Hedge it. 


There is a fine line between Zero and Infinity... you need to understand that.


As Mike Maloney says, stop measuring your gold in dollars and start valuing it according to things you can buy with it...

Gold must not be measured in Dollars, it must be measured in REAL STUFF. As soon as dollars disconnect from REAL STUFF then you will start to see the disconnect between dollar price of gold. 

Marty Rothbard's picture

More accurately, they try to present themselves, as well intended.

Cabreado's picture

Required politeness of a polite-by-nature man, when speaking to the world, thru a corrupt medium, of a monster-like creature who has control.

Good for you, Mr. Grant, and thank you.

Yes_Questions's picture



Absolutely Correct.

economics9698's picture

The gold standard helps the average consumer by keeping inflation at zero and prices declining. 

If there is $200 in the economy and company A builds a better mouse trap, lowering its price from $15 to $10 and increasing sales from 2 units to 4 units the total revenue for the company increased from $30 to $40. 

This is extremely important to understand and why the elite capital owners DO NOT want a gold standard.

When company A has good times not there is $10 less in the money supply and other companies, call them B and C, MUST lower prices to maintain market share or lose market share.

Understand what that means.  This was referred to as “messy competition” in the 19th century.  Industrialist hated having to constantly lowering prices and finding ways to save money whenever a competitor improved their productivity.

Competitor C must lower prices from $2 to $1.9 losing revenue (on sales of 20 units) from $40 to $38.

Competitor B must lower prices from $5 to $4.5 on sales of 10 units lowering total revenue from $50 to $40.

Is the picture becoming clear why capital elites do not like the gold standard?

Savings was $80 before the better mouse trap was invented but now there is a increased demand for money as consumers scramble to buy the better mouse trap.  Savings drop from $80 to $77 and more money is spent.

Under a gold standard with fewer savings available demand for loadable funds would drive up interest rates, attracting more savings, and so forth, the cycle repeating.

The key to the gold standard is it forces manufacturers to constantly strive to be competitive or they will price themselves out of the market by other, maybe unrelated industries.  Think of the implications in today’s world and the significance this would have on oil markets.

The gold standard removes the power of central governments, forced balanced budgets and trade, in the long run.

The main appeal is that in the 1880s to 1890s prices DECLINED 25% and wages ROSE 3% for the masses.  Compare that to today’s wealth concentration going to the top 20% and the bottom 30% stagnated for decades.

Simply put fiat allows governments to live unrestrained and wealth to be transferred from the bottom 80% to the top 20%.  This is the real reason central governments and elites want a central bank.  They simply hope the masses are too stupid to catch on to the con game.

Yes_Questions's picture



and an Absolutely Correct to you too.



Harlequin001's picture

Well Economics, what you say is true, or half way there anyway.

I have said this many times, if I bring back my capital and invest it in these same business you speak of I am a credit to my country, providing jobs and income and greater assets to the betterment of the country AND MYSELF. This last bit is very important because if it's missing I'm not going to do it. If I now make two workers redundant I am out-voted, and democracy allows these workers to now vote themselves all my capital, profits and income through welfare paid for by taxes. The reason why we don't have a gold standard is because poor people want my capital and politicians are willing to give it to them. When they do, and we have a subsequent recession welfare cannot be cut without riots, so the government then borrows to pay consistent welfare thereby not only relieving me of my capital, profits and income but leaving me also with debts to be paid through currency debasement or more and higher taxes.

There is a good reason why we do not have a gold standard, and yours is not it. It is called democracy, or put to put it other way, mob rule. What you say is fundamentally sound economics but it is not the reason we have no gold standard. Society will collapse and I will bring my capital back one day, but not until governments realise that giving my money to someone else to do nothing does not create wealth, or long lasting benefits.

Until then it stays in gold offshore... Sad, but there you go.

economics9698's picture

In the 19th century the people in the Democratic Party understood the relationship and voted for “hard money.”  William Jennings Bryant broke with the party in 1896 and the rest is history.

Big government, and the inflation, ALWAYS favors the capital owners and government.  Look at the stagnant per capital disposable income and corporate profits at all time highs. 

Look at the wealth transfer acceleration since 1971 when Nixon removed the Fed from the Bretton Woods agreement.  You have it backwards my friend.

Inflation always favors the capital owners and government.  Government spending on social welfare programs is just a excuse to create that inflation.

Max Fischer's picture



Inflation always favors the capital owners ......



Here's your comment, translated:  Devaluation of capital always favors those with capital.



MeelionDollerBogus's picture

Inflation clearly favors those holding / producing high-quality assets, rare and/or needed for life - clean water, energy, food, land for food, medicine. And of course precious metals as they pertain both to industry use and to monetary use in the face of a currency crisis (which we have now)

InjuredThales's picture

Wow, this moron (Max) doesn't understand that there is a difference between money and capital. 

Why am I not surprised?

Harlequin001's picture

Ok let's have a look at this. 'Big government, and the inflation, ALWAYS favors the capital owners"... That depend on how you hold your capital. If it is in cash and loaned out then inflation favours the debtor, since it reduces the amount that is repaid in real terms, which is not good for capital holders. Capital holders generally don't need mortgages to buy houses so in this case I'd say not, it benefits the borrowers who are the poor in most cases. If capital holders hold it in gold or other assets not already inflated by credit then you are correct, IF you can get it before the general economy.

"and government.  Look at the stagnant per capital disposable income...' This is a consequence of previous credit, or its now reducing availability which doesn't allow employers to pay higher wages when sales are stagnant or in this case, reducing. "and corporate profits at all time highs." - Again the consequence of credit, not inflation (and can we say some very dubious accounting practices?) 

If 'Government spending on social welfare programs is just a excuse to create that inflation." then why does the welfare come before the inflation, and by that I mean in some cases, fifty years before it?

I should say that your first post says it well, if I as capital holder and shareholder invest in an efficient company then I don't need inflation to make more money, just a more efficient business.

I agree that inflation favours the govt but only in the short to medium term, which, for as long as it's longer than the political life expectancy of a politician, will persist. But then that's how they pay for welfare isn't it?

brettd's picture

Since they control the education "system" it's easy to keep people "...too stupid to catch on to the con game."

Max Fischer's picture



The main appeal is that in the 1880s to 1890s prices DECLINED 25% and wages ROSE 3% for the masses.....

Much to your embarrassment, you have this totally wrong.  Of course, you're just another hypocritical libertarian, so it's not surprising.* 

Wage differentials between the owners and laborers widened dramatically during the "Gilded Age." In fact, this period of time (from the end of the Civil War to the creation of the Federal Reserve/1913) marks one of the WORST periods for wage dispersion in American history.  There are many reasons for this including the rapid evolution of manufacturing during this time, enabling corporations to substitute skilled labor for cheaper, unskilled labor. This, coupled with an influx of immigrants during this period kept a tight lid on wage appreciation for the laborers (the 99%), while the owners and the titans of industry (the 1%) became richer and richer.  Furthermore, I'm sure the depression of 1893 and the myriad of bank panics during this time had an enormous affect on the 25% price deflation you speak of. 

The topic of wage inequality during the second half of the 19th century is rich with data and research, and for you to suggest that this was an era of prosperity for the masses because, for some cherry picked interval of time, wages rose a stupid 3% means one thing and one thing only:  YOU HAVE NO FUCKING CLUE WHAT YOU'RE TALKING ABOUT.

The gold standard had NOTHING to do with whatever 3% appreciation in wages you've referenced.  NOTHING.  The overwhelming majority of laborers lived in pure poverty during the last quarter of the 19th century. 


* Definition of hypocrisy: getting a paycheck from the government as a contractor, yet spending all day on the internet ranting against government socialism.

TWSceptic's picture

Allegedly well-intended ;)

Starving Artist's picture

I'd be very surprised if Carney raised rates this year.  He's jawboning to get households to stop borrowing - remember we don't have 30Y fixed up here - combined with putting the CMHC under the OSFI where they can crack down on subprime lending at arm's length from the politicos.  When the RE implosion really gets going in Toronto and Vancouver, there's no way he's going to be able to raise rates, it's already started and it's going to be a mess.  FIRE is about 20-21% of our GDP and the govt is already on the hook for $600bn in mortgage insurance.

CPL's picture

Nobody said that Canada wouldn't get it's ass handed to it.  If taking notes over the last four years, it's any country with a central bank.


Wait for the coming news on the OTPP being short in unfunded liabilities...The NBTPP is short 1.6 billion right now and they just started on the books.

jimmyjames's picture

Soon the'll have to start raising rates like they're doing in Canada:


Raising rates doesn't always translate into the long end of the curve reacting the way they want-

The long bonds stymied Greenspan and they very well could in Canada or anywhere else-


Sam Clemons's picture

Just like Japan has had to?  Once you reach the zero-bound, there is nowhere to go.  Can't go up or down.

jmcaule4's picture

Like Zero Hedge? King World News?

Want to know when to expect the next round of QE?

Is it a good time to be long stocks? What about gold miners?


rocker's picture

Even her name is sweet "Deirdre".   

Odin's picture

yeah....I`d definitely go long on her treasuries...

lolmao500's picture

And it should be nuked from orbit.

rocker's picture

The FED is: "The Banking Cartel"  owned and run by the "Ruler of the World" called  "Goldman Sachs".


cherry picker's picture

During the Holocaust, the Nazis extracted gold fillings.  Jewlery was taken.

If Gold is worth anything, they will take it so you will still have nothing if you can't keep it.  If you find some in the ground, you have the same problem.  If gold becomes a standard, only the few will have it leaving the poor slob out in left field, the same place he is now with fiat.

So what benefit is gold to the 99%, except for the fact their fillings may pay for their funeral or shorten their timeline?

lolmao500's picture

In the Soviet Union, if they only THOUGHT that you had gold, they tortured you till you gave it all... but if you didn't have any, you were screwed...

And if you gave it all too quick, you were screwed too because they thought you had more.

The way to get out of it was to give enough at the right time so they believed you gave it all up... then they released you...

gmrpeabody's picture

Russian life seems complicated, at best.

savagegoose's picture

i hear thats how it worls in  ivory coast too. ruthless assholes are the same every where.

dogbreath's picture

you mean you know someone they released, I thought none were released.

juslen's picture

Very few people own physical gold, hell, I probably own more gold than the average person who makes 20x my income. If gold becomes money, people who have valuable skills will work for gold just like they work for fiat dollars. Money is a medium of exchange, stockpiling gold because it's shiny doesn't do you much good, it has to be exchanged for other things of value. So anyone who has gold will simply offer you gold for whaterver valuable produce or service you can provide. Gold would be circulated as money just like silver dimes and quarters were pre 1965. Imagine that, people will actually have to EARN real money once again. Anyone who holds large amounts of gold has accumulated that gold precisely because they realize fiat currencies will be inflated to their "intrinsic" value which is 0. Get off your ass and buy physical gold and silver, trade your fiat for real money and quit bitching.

Quisat_Sadarak's picture

All very true Juslen, but what happens when TPTB re-instates executive order 6102 again:

If the fit-hits-the-shan, my guess it that they will come knocking on your door and demand that you hand the gold over, and hand you back fiat and then once they have all the gold, they can begin devaluing fiat again. We have been already seen this movie.

Perhaps the TSA will enforce this with their newly purchased 450MM 40-cal hollow point bullets they just purchased. ;-)

See here

Paul Atreides's picture

I have NEVER seen any records of anyone being convicted for breaking EO 6102. The turn in was mostly voluntary, if you or anyone finds any record please post the link as I am sure we would all like to read it.

Pegasus Muse's picture

Go ahead.  Reinstate it.  There's plenty of folks who'll say, "If you can take it, it's yours".



Don't tell Homeland Security but 40 cal. hollow point ain't gonna cut it.

AustriAnnie's picture

Even if they convict people, they have to catch you first.

They can't even stop black market trade in prisons under extreme surveillance and control.

The black market will never be eliminated.  Ever.  Period.

MeelionDollerBogus's picture

What happens is a new era of Al Capone and immigrants to Canada. The USA would financially collapse like Americstan the eastern-bloc soviet nation.

Seize Mars's picture

I don't think that there will be a door-to-door gold confiscation. It's too risky, when they could just seize various ETF holdings and mining company assets. Way easier and practically risk free.


Ar-Pharazôn's picture

too risky for who? for the police officer coming to you perhaps, but do you really think that the "elite" is really caring about the life of a slave police officer?

brettd's picture

When TSHTF, and BHO calls out the National Guard...

will Haley Barber and Rick Perry's guards comply?