Thursday, March 8, 2012

Jim Grant see central bankers 'printing money like mad'

The irreplaceable Jim Grant was on CNBC today and deriding the madness of central bankers as only he can. In just a few years we will look back on the actions of the BOE, ECB, Fed with shock and wonder how we could all have been so blind and foolish... You can't print your way to prosperity and you can't fix the problem of having too much debt by issuing even more debt.

We should call this what it is, it is market manipulation, that's what we call it in the private sector. what the fed is doing is manhandling the structure of interest rates to the end of achieving of what it takes to be desirable macro outcomes.

... There's inflation certainly in spots. obviously commodity inflation. but there's also inflation, I think, in market assets that are stimulated, to use that favorite word of the authorities, stimulated by ultra-low interest rates. for example, in the distressed debt markets, you'll find companies that have not made a profit in five years, issuing debt, as if this company were somehow soundly and demonstrably solvent. by pressing down interest rates, by repressing interest rates, the fed is in effect dulling the risk sensors of the entire marketplace.

... The world over we're seeing unprecedented things. we're seeing interest rates that are lower than ever, and central banks that have never been more recklessly pro creative, to use Warren Buffett's words, about assets. They're printing money like mad and people can't seem to get enough long-term bonds, because the central banks are manipulating expectations about the future of interest rates. I think it's all very dangerous.

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