The dulcet tones of Jim Grant provided much food for thought on Tom Keene's Bloomberg Radio show this morning. While the interest rate observer did not change his tack on the extreme experimentation of world's central banks, he did have some new perspective on the incredible moral hazard (or unintended consequence) that is being created. One of his main criticisms is the incredible arrogance and conceit of a central banking system that believes it can see the future and thwart things before they come to pass, as he notes "I blame the central bankers for confusing the black art of central planning with the traditional art of central banking". He fully expects more easing by the Fed and its friends as he awaits their response to this latest stumble in the markets but what is most evident to him is that "The Fed owns the stock market" since they have financially repressed all investors into risky assets they now have been forced to have a moral responsibility to keep us safe in those assets - incredibly! The Fed is more likely than not to intervene with still more money-printing in any effort to keep this bubble afloat. What Jim focuses on is the morality in economics and the current immoral policies that have very bad consequences.
Jim's discussion of the Fed begins around 6:05 and he dives into financial repression at the 9:44 mark