Jim Grant, founder of Grant’s Interest Rate Observer, author of numerous books on finance including most recently the 2008 title “Mr. Market Misculates,” and ardent free-marketeer, appearing on CNBC yesterday translated Janet Yellen’s Federal Reserve policy into one simple but troubling sentence:
“What we mean to do is continue to nationalize the yield curve…and we would like to enlist the stock market in a program of wealth creation for the security holders of America.”
In other words, expect the Federal Reserve to continue to manipulate monetary policy and thus interest rates in order to make financial markets levitate.
Responding to a question regarding his impressions of Janet Yellen’s recent remarks, Grant also noted that Yellen “neglected to tell us that the Fed is continuing in…[its] unprecedented exercise in price control.”
According to ZeroHedge, during the interview Grant also referred to gold as “nature’s Bitcoin,” as holding gold is “the reciprocal of faith in Central Banks.”
Title: Mr. Market Miscalculates: The Bubble Years and Beyond
Grant, who has been a mainstay of Wall Street since beginning his career as a columnist at Barron’s in 1975 is famous for his erudition as a (regularly bearish) market observer, staunch defense of the gold standard and often sardonic diatribes against the Federal Reserve specifically and central planning more broadly.
Readers may recall a speech he delivered to the Federal Reserve Bank of New York in 2012 in which Grant said this:
“And what would I do if, following the inauguration of Ron Paul, I were sitting in the chairman’s office? I would do what I could to begin the normalization of interest rates. I would invite the Wall Street Journal’s Jon Hilsenrath to lunch to let him know that the Fed is now well over its deflation phobia and has put aside its Atlas complex. “It’s capitalism for us, Jon,” I would say. Next I would call President Dudley. “Bill,” I would say, pleasantly, “we’re not exactly leading from the front in the regulatory drive to reduce the ratio of assets to equity at the big American financial institutions. Do you have to be leveraged 89:1?” Finally, I would redirect the efforts of the brainiacs at the Federal Reserve Board research division. “Ladies and gentlemen,” I would say, “enough with ‘Bayesian Analysis of Stochastic Volatility Models with Levy Jumps: Application to Risk Analysis.’ How much better it would please me if you wrote to the subject, ‘Command and Control No More: A Gold Standard for the 21st Century.’” Finally, my pièce de résistance, I would commission, staff and ceremonially open the Fed’s first Office of Unintended Consequences.”
Check out a clip from the CNBC interview below, and for further Grant reading be sure to pick up a sampling of his writings from the 1990s through the beginning of the 2008 financial crisis in “Mr. Market Miscalculates.”