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Jim Grant: We Are Now All Labrats Of Bernanke And The Fourth Branch Of Government

Tyler Durden's picture


You put Jim Grant on TV and someone mentions the Fed and the result every single time is the equivalent of waving a red curtain in front of a rabid bull. This time was no different, as the Interest Rate Observer once again let Bernanke, with whom he clarified is no longer on speaking terms, have it. The ensuing central-planner bashing was in line with expectations, and just as we presented yesterday in "The Experiment Economy", so too does Grant believe that the Fed is "learning by doing" and follows up by clarifying that this is an experiment, "and we are lab rats in the financial markets." He then proceeds to lament that the credit markets, clueless NYT econopundits notwithstanding, have now lost all informational value as every rate instrument is purely in the manipulated domain of the Fed. "We are all living in a land of speculation and manipulation" is Grant's summary of the current predicament of anyone who wishes to trade these "markets" and it may as well be the best synopsis of the New (ab)normal. And aside from an odd detour into Government Motors, Grant once again hones in on the only true antidote to central planner idiocy, gold: "the best thing about gold is that it's got no P/E multiple. Gold is a speculation on an anticipated macroeconomic outcome, the systematic debasement of currencies by central banks. Why wouldn't they do QE4? What intellectual argument do they have against doing it again, and again, and again." Well...none.

And while Jim Grant blasting the Chairman is not exactly news, what may be news, is that the man who barely managed to prevent America's collapse in an inflationary mess in the early 80s, Paul Volcker, told Reuters something rather fascinating. Responding to the question whether the Fed has taken on too much power and has too much centralized and unchecked control, the former Fed chairman said "Is too much being centered in the Federal Reserve now, should there be a different arrangement? I'm not ready to take it away from the Federal Reserve entirely, but it deserves a look, it deserves a review of how we have organized the regulatory system." So, did the man who has made prop trading at various banks nearly impossible, and who, oh, ran the Fed, just say that it is time to reevaluate the Fed's role in the world? Why yes. Which explains why nobody in the media is talking about this.


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Thu, 09/20/2012 - 18:36 | 2816451 kliguy38
kliguy38's picture

Put your foot down Jim.....and if you want to be taken seriously get that butterfly off your collar.......

Thu, 09/20/2012 - 18:44 | 2816457 ACP
ACP's picture

The second blurb explains why Paul Volcker was a one-termer. Too much truth gets you the boot.

If Volcker became Chairman today, he'd tank the markets & real estate back down the reality right quick, which would set the stage for the most vigorous recovery in decades.

Thu, 09/20/2012 - 18:51 | 2816471 Rainman
Rainman's picture

I greened ya, but I doubt he'd survive the riots. 

Thu, 09/20/2012 - 18:58 | 2816488 XitSam
XitSam's picture

I'm waiting for the Bernanke riots. Keeping the tar warm.

Thu, 09/20/2012 - 21:24 | 2816673 old naughty
old naughty's picture

We have been lab-rats for a long time.

This is just another attempt to identify the Lab-yrinth Owner.

Don't you like the merry-go-around?

Fri, 09/21/2012 - 02:55 | 2817058 Skateboarder
Skateboarder's picture

Bitchass Ben's gonna run this fucking show to the ground. It's not when, but rather how you compose yourself when all fails. Bring it on, motherfuckers...

Fri, 09/21/2012 - 00:06 | 2816948 fockewulf190
fockewulf190's picture

Lab rats? More like feeder mice...and the snake is never satisfied and always famished

Thu, 09/20/2012 - 18:52 | 2816474 The Shootist
The Shootist's picture

Romney will fix it if the 47% vote that way.

Thu, 09/20/2012 - 19:41 | 2816549 The Shootist
The Shootist's picture


Thu, 09/20/2012 - 20:26 | 2816612 Manthong
Manthong's picture

You had me worried about your sanity for a moment there..

Thu, 09/20/2012 - 19:27 | 2816526 Hohum
Hohum's picture


I am not the down arrow, but I think it's a little different than the early  1980s.  The net energy to run society isn't as good (please, someone show me an analysis to the contrary, if it's out there) and the country is much more indebted, saturated with debt.

But dreams are wonderful to have, aren't they?

Thu, 09/20/2012 - 19:55 | 2816558 ACP
ACP's picture

I think you're absolutely right about the fact that it's completely different from the 80s, but like every situation, whoever takes the initiative first, reaps the largest rewards.

The thing I haven't heard from any financial reporters or economists is that during the Greenspan housing bubble (and to a slightly lesser extent the tech bubble), people had access to phantom money in the form of their home/ATM. If say, during 2003-2007, one person spent $20k in disposable income, as well as another $20k in disposable income from their home equity, that ONE PERSON created a "phantom consumer." All the businesses flourished with these newfound "phantom consumers" and rocketed to new heights in business. Now that the housing bubble has burst, these home owner/consumers, as well as the additional "phantom consumer" are now gone......basically the equivalent of 2 jobs lost for each homeowner out of work. Edit: I personally know several people who created more than 2 "phantom consumers." This is just an example...I'd like to see the results of real number crunching on this.

After the bubble burst, many businesses, such as Linens n Things got trashed as a result, because "real" as well as "phantom" consumers were lost, and lost forever. BBBY had a larger base and was able to survive the consolidation.

Europe has had high unemployment for a long time, and now it's America's turn. It ain't going away, but can be mitigated if someone actually sees this and takes the initiative.


Thu, 09/20/2012 - 22:52 | 2816835 Poor Grogman
Poor Grogman's picture

Australian economist Steve keen looks at this very effect when he analyses the change of credit entering the system, which correlates closely with employment.

Visualizing it as additional phantom consumers is interesting

Thu, 09/20/2012 - 23:00 | 2816847 ACP
ACP's picture

I actually came up with this theory back in 2007, as a way to quantify the effects of the overbloated housing market on the US economy, to justify my investment decisions during the latter part of the year. Even though I only looked at it on a macro basis, it worked out well.

Thu, 09/20/2012 - 23:09 | 2816864 Poor Grogman
Poor Grogman's picture

Yep it is a useful insight, for any economic participant.

Understanding this also leads one to understand why the PTB will never end QE unless they can somehow miraculously restart the leveraging cycle.

Grant is right we are all lab rats in this giant debt ponzi experiment, unfortunately for us lab rats, our welfare is secondary to the continuation of the experiment.

Prepare accordingly....

Fri, 09/21/2012 - 01:22 | 2817017 prains
prains's picture

that is why WAR is the backdoor when the ponzi is about to crater

Fri, 09/21/2012 - 10:39 | 2817811 MachoMan
MachoMan's picture

Definitely a solid way of viewing it.  Makes a lot of sense.  I'll add that it's worse than just the consumer and his phantom derivative being extinguished.  For a very, very long time, at least nominally, people had a significant portion of their note payments made for them through appreciation of housing or, alternatively, lived rent free...  this has been going on for decades.  (factor in a ~4.2% yearly increase in home prices since the late 60s and measure it versus paying ~6.5% of the initial balance of your FIXED 30 year note every year).  It gets trickier when factoring for inflation, maintenance, etc. (but these typically aren't ever considered in the purchase decision....).

So now, not only is the ATM machine removed, but people are actually forced to pay for their houses (that are losing value) through wages instead of appreciation of housing...  double whammy.  Further, as the shadow inventory clears, it's going to destroy the smidgen of remaining zombie consumers because they'll actually have to start paying rent.  does.not.look.good

Thu, 09/20/2012 - 19:36 | 2816542 Landotfree
Landotfree's picture

"Too much truth gets you the boot."

The Fed's job is very simple, hold off the collapse as long as possible, try and convince the sheeple that the system is sustainable long-term thereby the system can reach max potential before collapsing.  

All I see is 7 billion unfunded liabilities running from the Truth and for good reason.

Thu, 09/20/2012 - 21:51 | 2816716 Cabreado
Cabreado's picture

"If Volcker became Chairman today, he'd tank the markets & real estate back down the reality right quick, which would set the stage for the most vigorous recovery in decades."

I understand your point, but,

- there should be no Chairman, as there should be no organization to Chair

- doing anything now "right quick" is not an option

- there is no "vigorous recovery" coming, regardless

The Softest Landing Possible is the appropriate goal, and while Volcker might be a decent man for the job, I suspect he wouldn't be interested.

But it's not about a "Chairman" of anything, it's about the most powerful governing body in the history of the world -- and It has demonstrated it has no interest either.

Fri, 09/21/2012 - 07:36 | 2817210 Chuck Walla
Chuck Walla's picture

If Volcker became Chairman today, he'd tank the markets & real estate back down the reality right quick, which would set the stage for the most vigorous recovery in decades.

Sadly, there are no votes in that kind of common sense.


Thu, 09/20/2012 - 18:37 | 2816452 tenpanhandle
tenpanhandle's picture

You dirty rat.  You killed my portfolio.

Thu, 09/20/2012 - 19:03 | 2816498 Daily Bail
Daily Bail's picture

Hilarious Video: Apple Store Robbed, Getaway BMW Trapped Inside

Just like how they trap buyers of their products with a closed system.

Thu, 09/20/2012 - 18:46 | 2816461 akak
akak's picture

We may all be lab rats, but I don't know what anyone expects the Fed is "learning" by throwing all of us rats into a vat of molten steel --- I think the outcome is pretty much obvious from the start.

Thu, 09/20/2012 - 21:47 | 2816702 Melin
Melin's picture

It's the testing that makes science fun.

Thu, 09/20/2012 - 22:02 | 2816748 Anusocracy
Anusocracy's picture

Th Fed isn't learning anything, it only seems like it is.

It is just set upon systematically trying every incorrect solution until it is left with the correct one.

By then, it will be too late.

Thu, 09/20/2012 - 18:48 | 2816466 Rasna
Rasna's picture


C'mon Man...


Thu, 09/20/2012 - 18:50 | 2816468 Votewithabullet
Votewithabullet's picture

Interest Rate Observer...Your services are no longer needed.

Thu, 09/20/2012 - 18:52 | 2816477 Bolweevil
Bolweevil's picture

mmmm, eau d' bernank

Thu, 09/20/2012 - 18:57 | 2816487 Cursive
Cursive's picture

He's right, but that's really sad.  Wouldn't it be great if we had a President or a presidential nominee that would say, "Mr. BernanQE, tear down your banking cartel!"  But, that ain't gonna happen.

Thu, 09/20/2012 - 18:59 | 2816490 helping_friendl...
helping_friendly_book's picture

Fucking hawking GM? 


Trust no one!

Thu, 09/20/2012 - 22:49 | 2816831 Drag Racer
Drag Racer's picture

air time comes with a price, churn out our ad or you go home...

Thu, 09/20/2012 - 19:00 | 2816491 Slightly Insane
Slightly Insane's picture

This would make a great "Twilight Zone" episode.  I can hear the music now, with the spinning orb, and swirly bullseye, if it were not true.

Thu, 09/20/2012 - 19:14 | 2816514 XitSam
XitSam's picture

There is a filthy dimension, beyond that which is known to economists. It is a dimension as vast as Fed economic models and as timeless as high frequency trading. It is the middle ground between Krugman and Keynes, between finance and fiat, and it lies between the pit of man's EBT card and the summit of his stack. This is the dimension of rainbow unicorns. It is an area which we call the Inflation Zone.

Thu, 09/20/2012 - 19:31 | 2816535 fuu
fuu's picture


Thu, 09/20/2012 - 20:49 | 2816638 Westcoastliberal
Westcoastliberal's picture

And you're soaking in it!

Fri, 09/21/2012 - 11:41 | 2818092 OneTinSoldier66
OneTinSoldier66's picture

At the end of it that old commercial, the phrase "As good as Gold" is used.

Thu, 09/20/2012 - 19:05 | 2816499 buzzsaw99
buzzsaw99's picture

Volker is a mealy mouthed wimp these days. the fed is a criminal organization controlled by the ny bankers for the front run, pump and dump, and every other dirty deal. they are crooked as a dog's hind leg and should all be rotting in prison. why just today jpm was accused of pulling the old enron scam on california again. die bitchez. end. the. fed.

Thu, 09/20/2012 - 20:30 | 2816617 Tourist2008
Tourist2008's picture

This is the first time I have heard Volker speak and actually I found him intelligent and refined. If public administration was full of leaders of his calibre, I am sure things would be a lot better than they currently are.

It may surprise you to know that if you want to wield influence in political circles you have to be measured in your approach and your language. He seems to be the master of that while having a backbone .....

.... anyway, perhaps a buzzsaw is a better approach :)

Thu, 09/20/2012 - 21:29 | 2816681 blunderdog
blunderdog's picture

His humility sure was refreshing.  "I dunno...I wasn't dere!"

Thu, 09/20/2012 - 19:08 | 2816505 WhiteNight123129
WhiteNight123129's picture

Paul Volcker kick started a leveraging cycle, the kings of the days, the guys making money out of excess circulation (commodities) hated it. Bernanke is kick starting a deleveraging cycle, the king of the days the guys making money out excess leverage from circulation (bonds and equities) hate it, what else is new?

Thu, 09/20/2012 - 20:51 | 2816642 Snidley Whipsnae
Snidley Whipsnae's picture

I was not a 'king of the day' but definitely benefitted from long bonds paying greater than 13% for the past 30 years. One doesn't have to be a tycoon, nor a genius, to buy some 30 years and sit on them.

Volker made possible for all of us little guys to catch a break on an investment... and, if Benny boy wants to avoid total destruction of the dollar he will at some point jack interest rates above inflation (the real inflation rate not the fantasy rate). Is it going to be painful? Damn right... but it would have been much less painful if the Fed had not intervened to prevent the casinos on Wall St from bankruptcy.

I am sick of living in this damn petri dish while idiot 'economists' perform experiments on me/us...

How can these manipulations be labled experiments when the results are known before the experiment begins?

Hell is coming to breakfast. Kudos to Jim Grant and TD for the posting.


Thu, 09/20/2012 - 21:55 | 2816724 grid-b-gone
grid-b-gone's picture

Wall St saw that decent money you were making as a saver. They saw the home equity, the silent "second earner" of home equity mentioned in a comment above.

They began by seeing good worker pay and benefits in the 1980s and tapped that with LBOs, outsourcing, independent contracting, and offshoring. 

They used the "fourth branch" of government to cut you, the middleman CD saver out of the free market, giving 0% money directly to banks. All that CD money that Grandma and Grandpa used to funnel to the grandkids for college got transformed into student loans.

They are tapping health insurance premiums by drawing millions more into the web via federal mandate.

Now hedge funds are buying the real estate tied to mortgage-backed securities at deep discounts in quiet transactions, rather than publicly auctioning the assets to the highest bidder. Taxpayers cover the realized losses that the suspension of mark-to-market prevented for the past four years.

After garnering rock-bottom prices they will spawn a generation of renters and probably move to curtail Fannie and Freddie mortgage guarantees to allow for faster rent increases. 

They can still buy up municipal buildings to rent back to citizens. Public highways can still be bought and turned into toll roads.

What do the masses spend money on? That is where the next opportunity is. It only takes a few rule changes to swing the game in their favor. They have congress in check and the fourth branch was created for just this purpose.

Fri, 09/21/2012 - 00:57 | 2817001 calgal
calgal's picture

And that's why the Fed plan is to spend 40 bil on MBS per month, slice and dice into derivatives and blow the whole derivate bomb sky high
Mortgage meltdoen pas duex
Meet Uncle Fed your new landlord

Thu, 09/20/2012 - 19:10 | 2816507 JohnKozac
JohnKozac's picture
The Creatures from Jekyll Island are giving everyone a -1 tonight. They must be restless.
Thu, 09/20/2012 - 19:10 | 2816508 fonzannoon
fonzannoon's picture

These guys are all pussing out lately. Even Grant here, when questioned, recommends and equity (GM!) as a way to hedge against money printing to infinity. It seems as the noise gets louder even guys like him start making pretend they can't hear taps playing in the backround. Only Schiff and maybe Rogers are still running around with their hair on fire.

Thu, 09/20/2012 - 21:29 | 2816672 TWSceptic
TWSceptic's picture

I think Grant either got a nice check from GM or is talking his book. I don't fully trust him tbh. BTW did you see that clip where Rogers recommends CNBC? They must pay good.

Thu, 09/20/2012 - 21:51 | 2816715 Melin
Melin's picture

You don't think gubbamint billions will flow into gubbamint motors?  

Thu, 09/20/2012 - 21:52 | 2816717 Melin
Melin's picture


Thu, 09/20/2012 - 19:28 | 2816527 deki
deki's picture

Wtf? I have so much respect for Grant but this GM bullshit is just ridiculous.

Thu, 09/20/2012 - 20:55 | 2816650 Snidley Whipsnae
Snidley Whipsnae's picture

Jim is talking his book on GM... it was painfully obvious to me.

But, did you notice how more and more gold is slipping into the conversations on MSM without the usually attendent 'gold bugs', 'conspiracy nuts', 'gold is not money', etc, bs?

The worm is turning even on MSM.

Thu, 09/20/2012 - 22:57 | 2816843 Drag Racer
Drag Racer's picture

you will continue to see golden speak more and more. within 2-3 years china will reach parity with the us on gold holdings. not in total amount but in money supply equ.


then the new system will come in... that is if they can keep it afloat that long. I am doubting that...

Thu, 09/20/2012 - 19:40 | 2816540 bob_dabolina
bob_dabolina's picture

We aren't lab rats. This experiment has been tried before.

I completely understand why this method of printing money (QE) is being tried again. You have to understand that there is a societal fulcrum, on one side being supply (printed money), and on the opposing side demand (as I call it; demand for free shit)

A lot of the people who are against the Fed are the very same people who are reliant on the Fed and don't even realize it. Take for example a woman I met in a D.C grocery store, she was using food stamps to buy her groceries. I flippantly made a comment about the prices of food going up. She retorts: "That god damn Federal Reserve printing all this money is the reason for that, they are going to destroy the currency" I was at first taken aback that even those in poverty have an inkling of the insidious nature of inflation caused by printing money. It was an interesting interaction because this lady had no idea that the money she was using on her SNAP card came from the same institution she was vilifying. The Federal Reserve is monetizing our nation's debt, of which the Federal government can then conveniently upload to her snap card. Said otherwise, if the Fed wasn't printing money she wouldn't have had a basket full of groceries.

Another group of people who benefit from Ben's profligate printing are contractors with government contracts. Also, government workers in general. The median income of a public servant is now higher than a private sector counterpart (aka, the people who are paying their bloated salaries) I've heard people from all of the above aforementioned groups bitch about the Fed fuckering up our currency and causing inflation. When the government spends more than it takes in, and hardly anyone wants to buy our bonds, where do you think the check is coming from? The Fed.

How is it that a country with record underemployment, poverty levels at all time high levels, and overall reliance on welfare at all time highs do we have such a fat society? I've driven through some poor neighborhoods and I am shocked at the amount of fat people I see in these areas. I see more fat people in neighborhoods subject to abject poverty than I do in wealthier can it be that you are poor AND fat at the same time?

At this point I am of the persuasion that there really is no turning back. We have an arrogant culture, an entitled culture, and a culture lacking respect for itself. If you take the time to actively look around you at how people look, and how they interact with each other, you will become aware of exactly what I'm talking about (if you're not already)

It's a total philosophical question but is the Fed the symptom of a gluttonous society or the disease that causes it?

Thu, 09/20/2012 - 19:53 | 2816562 khakuda
khakuda's picture

So true. I think our country is now too far removed from the hard working, thrifty immigrant culture that propelled it to the top. Debtors used to go to prison, now they are wronged victims. People didn't live beyond their means to the same degree. Credit has been marketed by the financial service industry and government as the smart way to live. That allowed more people to bid up the prices of college, healthcare, housing, etc to the point where things are not affordable without borrowing. Particularly the case after the jobs moved to China At first it $5 toasters were great. Not so great when you lose your job at the toaster factory. As it started to unwind and the free market was correcting the excesses, the Feds jumped in to keep the BS game going. It can't ever stop printing now.

Thu, 09/20/2012 - 19:58 | 2816568 fuu
fuu's picture

How fat were poor people in 1911?

Thu, 09/20/2012 - 21:03 | 2816655 Hi Ho Silver
Thu, 09/20/2012 - 21:31 | 2816662 fuu
fuu's picture

I was just coming to post that.

The charts really suck though.

Thu, 09/20/2012 - 22:24 | 2816779 howenlink
howenlink's picture


Thu, 09/20/2012 - 22:42 | 2816808 blunderdog
blunderdog's picture

Rich people used to be the fat ones.

Now that rich people are thin, I guess that's proof how much tougher everything's gotten for them over the past few centuries.

Thu, 09/20/2012 - 22:58 | 2816845 Drag Racer
Drag Racer's picture

jow much HFCS was in our food in 1911?

Thu, 09/20/2012 - 20:18 | 2816600 blunderdog
blunderdog's picture

      It was an interesting interaction because this lady had no idea that the money she was using on her SNAP card came from the same institution she was vilifying.

How do you figure?  I mean--what makes you think she didn't know the money was "coming from" the Fed.  And clearly a smart guy like you realizes that ALL dollars come from the Fed, right?  Your capital gains last year "came from" the Fed.

Thu, 09/20/2012 - 21:06 | 2816660 miker
miker's picture

Hey, very insightful comments.  I think the Fed's policy of easy money, ongoing inflation hidden inflation over many years has produced a 'deflation' in the values of our people.  Easy money, easy jobs, entitlements, all have left us soft, stupid and resourceless. 

Thu, 09/20/2012 - 21:31 | 2816682 Anusocracy
Anusocracy's picture

Twenty first century Americans have adopted the worst attributes of the Morlocks and Eloi.

Thu, 09/20/2012 - 22:24 | 2816778 grid-b-gone
grid-b-gone's picture

Check out the documentary "King Corn". It does a good job of explaining why food is generally cheap for Americans, but has resulted in a lack of nutritional diversity.

This lack of a diverse diet leads to overeating as the body craves bulk to make up for a lack of quality. 

It is unfortunate the U.S. poor look so well-fed. That bloated, over-fed look is also the look of major medical problems in process.

Thu, 09/20/2012 - 19:45 | 2816551 khakuda
khakuda's picture

I love when big Democrat Bob Wolf sets Volcker up and asks what he thinks of the terrible criticism of the Fed out of Ryan and other Repubs and implies that the Fed should be above criticism and untouchable. Volcker replies that is unevitable that they do it, as implies that they should be called out for extreme policy so it can be debated. Wolf looked like a sheep after that one.

Thu, 09/20/2012 - 20:10 | 2816585 loveyajimbo
loveyajimbo's picture

The problem is that the banker/defense/oil crooks have bought off a large majority of the politicians... yet while these cancerous shit-bags know how to rig markets and steal billions... they know nothing about keeping the host (America) healthy enough to continue the bloodsucking.  the host is dying rapidly now and soon, with it's last gasp, will reach out and slaughter the traitorous 'roids that have destroyed her.

Thu, 09/20/2012 - 20:22 | 2816609 davidsmith
davidsmith's picture

The only thing which ZH can do to prevent itself from sounding like a broken record, is to stop looking at financial topics  or economic doctrines on their own merits, and begin examining them as tools in a larger political development.  After all, that's what the kleptocrats are doing.  For example, stop analyzing developments as if they are designed to make more money for kleptocrats, or to increase consumer spending, or whatever.  Examine them instead as corporatist/fascist POWER policy.  Because that's what's going on.  The "economy" is nothing more than a bunch of jargon now, and the terms  and the structures and the institutions will be progressively thrown off as America moves toward a fascist dictatorship.  Oooooo!  Sound like it could never happen here.  Well, it happened progressively in all sorts of places--Italy, Spain, Germany.  


The problem with American commentators is that they keep thinking their old terms mean something in a fascist dictatorship.  There is no "market" or "profits" or "losses" or "investments" in a fascist dictatorship.  It may take some time for the the dictatorship to get control over you so you stop fiddling with your "accounts" or "investments" or "income."  But it will.  And then not only with IT stop using these old terms--YOU will too.


ZH should try to get some politically informed sociological or demographic commentary on what is going on.  ZH keeps scratching its head and saying "Gee whiz!" when one traditional economic/financial notion is trashed by the U.S. Government.  Didn't it ever occur to ZH that the U.S. Government simply no longer THINKS in terms of markets, income, profit, investment and so on?


I think ZH is FAR behind the times in terms of what the kleptocrats are thinking.   If the "market" is dead, why keep talking about it?

Thu, 09/20/2012 - 20:36 | 2816626 Westcoastliberal
Westcoastliberal's picture

We're already using a lot of new jargon here in the "new normal".  The one that irks me the most is "Homeland".  Waaaay too similar to "Fatherland" for me.  TSA and SS rhyme too.

Thu, 09/20/2012 - 20:56 | 2816652 nmewn
nmewn's picture

TSA & SA...SA came first, on the timeline I think thats where we're at.

No Big Gulps, for de purity of de Fadderland!!!

Something you might find interestinK ;-)

Thu, 09/20/2012 - 20:31 | 2816616 Westcoastliberal
Westcoastliberal's picture

Boy are things fucked up, and we ain't seen nothing yet (unintended consequences).

Thu, 09/20/2012 - 20:43 | 2816633 Snakeeyes
Snakeeyes's picture

Grant is right and The Fed deserves to be BLASTED! The Fed, with QE3, just squeezed the juice out of the MBS market and is forcing investors (and borrowers) into RISKIER ASSETs. That is NOT the job of The Fed. Damn it!

Thu, 09/20/2012 - 20:54 | 2816647 WhiteNight123129
WhiteNight123129's picture

Jim Grant has no idea of what he is talking about. How do you create real estate bubble in Hong Kong, blaming monetary policy of the US , LTV is at 50% on housing in Hong-Kong, even at 100% cash down price would be high, Hong-Kong is a tax heaven like Monaco surrounded by France if you will. Blame the ECB for high price of real estate in Monaco yeah... that makes sense. Capital adequacy ratio in HK banking system us what 18%, where is the over extension of credit? Huh?


Fri, 09/21/2012 - 00:29 | 2816972 Clowns on Acid
Clowns on Acid's picture

Doh !....

Thu, 09/20/2012 - 21:04 | 2816659 robertocarlos
robertocarlos's picture

My stupid French brain parts thought we are all now LaBrats.

Thu, 09/20/2012 - 21:56 | 2816728 Tunga
Tunga's picture

Tunga is not sure if he is offended by that. 

Thu, 09/20/2012 - 21:18 | 2816669 blunderdog
blunderdog's picture

I guest that clears up how Grant gets on teevee alla time.

Thu, 09/20/2012 - 21:51 | 2816714 Westcoastliberal
Westcoastliberal's picture

I just received a postcard from the CA Dept of Justice/National Mortgage Settlement admin.  On the back the headline reads: "You can get a payment from the national mortgage settlement". Says I'll receive a "package" after 9/24.  I'm not holding my breath.  I file the OCC Foreclosure review thing too, waaay back in Dec 2011.  I think the deadline for filing was pushed back to 9/30 and since they're not even looking at the filings until after the deadline, I've heard nothing.  I received nothing in the mail on the OCC thing, just heard about it online.  Supposedly only 3% of those eligible have responded.

This would be a great way to put $ in the hands of Main St. if they would just make people aware.

Thu, 09/20/2012 - 21:54 | 2816722 Tunga
Tunga's picture

Tunga will friend you Jim Grant.


Fri, 09/21/2012 - 00:02 | 2816943 joebren
joebren's picture

The world's most dangerous man!

Fri, 09/21/2012 - 00:02 | 2816944 joebren
joebren's picture

The world's most dangerous man!

Fri, 09/21/2012 - 00:16 | 2816963 sbenard
sbenard's picture

I've been saying for months that Bernanke is a teenager with a chemistry set that won't stop fooling around until he blows up the house. I think he views us all as just his guinea pigs to experiment with. Grant is dead on!

Fri, 09/21/2012 - 01:47 | 2817030 Unbezahlbar
Unbezahlbar's picture

"Kocherlakota, one of 19 U.S. monetary policymakers and a known hawk, suggested the Fed should keep rates low until the jobless rate drops to 5.5 percent. Though that would likely take four or more years, given the nation's current 8.1 percent jobless rate...."

Fri, 09/21/2012 - 11:53 | 2818148 OneTinSoldier66
OneTinSoldier66's picture

There is only one reason for The Fed to exist. It is to manipulate the price of everything for favoritism(skimming the markets) for those that run it and pull it's strings.


All the Fed does is manipulate through the use of force and/or coercion, it doesn't do anything else.

Fri, 09/21/2012 - 12:08 | 2818236 steve from virginia
steve from virginia's picture


Hmmm ... who is the anachronism? Volcker or Antidiluvian Grant?


Note to Tyler: when putting Volcker and Grant in the same article headline Volcker and not organ grinder monkey Grant.


Grant is waiting for the day when productive enterprise will emerge from behind the sun of credit creation and stand tall. He does not realise that the only kinds of productive enterprise that do not need credit are small-scale craftwork firms. Industrial firms are the children of credit, they cannot exist without it.


As old as he is in both body and spirit, Grant isn't old enough to remember when diversified workshop economies were the norm and industrial enterprises were the subject of fantasy: he would have to be 400 years old! As he obviously is not, Grant is either the typical, goofy TV attention grabber or a fool ... or both. 


As for Volcker, he has something to say, he's walked the walk. Can Grant, more Volcker.


Thank you, have a nice day!

Fri, 09/21/2012 - 13:50 | 2818280 cranky-old-geezer
cranky-old-geezer's picture



so too does Grant believe that the Fed is "learning by doing" and follows up by clarifying that this is an experiment,

Does Grant have ANY brains at all?

Anyone with half a brain can see it's no "experiment" at all, but a well-planned looting of the American people and economy. 

Since the so-called '08 "financial collapse" Wall Street has received trillions of dollars from the Fed in "bailouts" and the government another trillion or so each year to fund way bigger deficits than ever.  Government spending and deficits exploded after that so-called "financial crisis". 

Nobody saw it coming?  Nonsense.  It was planned. 

They SAY nobody saw it coming, ACTING dumb, to deflect people's rage over being LOOTED. 

Printing trillions of dollars for Wall street and the government has diluted the value of the US dollar 50% in those 4 years. 

Fed stole half your wealth and gave it to Wall Street and the government.  Now you work for half as much.  Your paycheck is the same but the dollars in it are worth half as much.  Ditto for the dollars in your bank account, in your pocket, under the mattress, anywhere you have dollars.

That's LOOTING, and it's PLANNED looting.

WHY do so many otherwise smart knowledgeable people like Grant utterly fail to see it, or refuse to see it, or refuse to say it?

And the LOOTING is still going on.  Open-ended QE3 now?  More trillions of dollars printed and given to Wall Street for worthless trash MBS and god knows what other worthless trash "securities", debasing the dollar even further, stealing more weath from everybody?

And STILL nobody calls it what it really is, massive end-game LOOTING of the people.

Yes, it IS the end game.  The END of the US dollar. We're looking at hyperinflation then currency collapse.  Weimar Germany all over again.  It's inevitable.

Fri, 09/21/2012 - 14:43 | 2818894 neutrinoman
neutrinoman's picture

Great interviews.

I think the TBTF banks really were not the problem before the crisis that people make them out to be. After all, the subprime dreck originated mostly in the shadow banking sector, enabled by private-label and Fannie and Freddie securitization.

However, the Fed's response to the crisis made the problem worse. Instead of handling the institutions-gone-bad through bankruptcy, the bad actors were mostly bought by healthy actors in shotgun sales "encouraged" by the Fed and Treasury. It was that that led to nearly bankrupt banks. (Citi was the exception, which bankrupted itself on its own.) These forced purchases-cum-bailouts were then the basis of the more concentrated banking system that emerged from the crisis. As a result of these interventions, much of the problem now was created; if handled differently and earlier, our current situation could have been avoided, and we might not be talking about TBTF.

In 2007, the brewing crisis was concentrated in a handful of large institutions (Fannie/Freddie, already bankrupt in 2005, but hidden thanks to Dodd and Frank; AIG; Citi, run into the ground by Clinton cronies Rubin and Weil; non-bank lenders like Countrywide, run by people with friends in Congress -- similar to the S&L crisis, but far larger and far more shameless). By the end of 2008, it was transformed into a "systemic" crisis, I suspect, in part, to hide the inconvenient facts about certain people and their political masters.

BTW, the Fed's repeated waves of liquidity injection and cheap interest rates, since the fall of 2007, are what has led to HFT, which uses and sometimes destroys liquidity, without really creating any (contrary to the industry propaganda).

All of these are examples of how the Fed's discretionary, non-rule-based, and unpredictable interventions have produced serious side effects and helped market insiders.

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