Dec 06

Jim Grant Sums It All Up In 2 Stunning Paragraphs (ZeroHedge, Dec 6, 2014):

What will futurity make of the [so-called] Ph.D. standard [that runs our world]?

Likely it will be even more baffled than we are. Imagine trying to explain the present-day arrangements to your 20-something grandchild a couple of decades hence – after the crash of, say, 2016, that wiped out the youngster’s inheritance and provoked a cenral bank response so heavy-handed as to shatter the confidence even of Wall Street in the Federal reserve’s methods…

I expect you’ll wind up saying something like this: Continue reading »

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Oct 12

America’s default on its debt is inevitable (Washington Post, by Jim Grant, Oct 11, 2013):

There is precedent for a government shutdown,” Lloyd Blankfein, the chief executive officer of Goldman Sachs, remarked last week. “There’s no precedent for default.”

How wrong he is.

The U.S. government defaulted after the Revolutionary War, and it defaulted at intervals thereafter. Moreover, on the authority of the chairman of the Federal Reserve Board, the government means to keep right on shirking, dodging or trimming, if not legally defaulting.

Default means to not pay as promised, and politics may interrupt the timely service of the government’s debts. The consequences of such a disruption could — as everyone knows by now — set Wall Street on its ear. But after the various branches of government resume talking and investors have collected themselves, the Treasury will have no trouble finding the necessary billions with which to pay its bills. The Federal Reserve can materialize the scrip on a computer screen.

Things were very different when America owed the kind of dollars that couldn’t just be whistled into existence. By 1790, the new republic was in arrears on $11,710,000 in foreign debt. These were obligations payable in gold and silver. Alexander Hamilton, the first secretary of the Treasury, duly paid them. In doing so, he cured a default. Continue reading »

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May 10

Jim Grant On Gold’s Recent Drop: “Confidence In Bernanke Is Utterly Misplaced” (ZeroHedge, May 9, 2013):

“Inflation is a state of affairs in which there is too much money,” Jim Grant notes in this Bloomberg TV interview, however, “It’s not too much money chasing too few goods,” he corrects the misnomer, “the thing this money chases is variable.” Whether it is Iowa farmland, housing, stocks, or bonds, central banks are stuffing us with it. Yes, equities are high, but Grant explains, “beneath the surface of things or not so far beneath the surface of things,” it is not at all good, adding that, “Central bank ‘original sin’,” is akin to Revolutionary France, and he shows no concerns over Gold’s recent dip, noting “a general fatigue animus towards gold,” that seems predicated on more confidence in central bankers; to Grant, “that confidence is utterly misplaced!”

On Inflation: Continue reading »

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