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.