Tuesday, December 17, 2013

Jim Grant: Fed-Inflated Stocks a 'Hall of Mirrors'

"The stock market is now a tool of Fed policy," said Jim Granr of Grant's Interest Rate Observer, on CNBC's "Squawk Box".

"What the Fed is doing is an exercise in price control. This is 'stocks.gov' [and] 'bonds.gov,'" Grant said. "The clear and present risk of the stock market is we're living ... in a hall of mirrors" because the Fed's accommodative policy is distorting the calculations by which the market has been traditionally valued.

Making that case, Grant explained that "clearer than the proposition that the stock market is too rich is the proposition that the stock market is being led, rather than leading itself, through the discovery of earnings and how to discount them."

"The Fed can change how things look. It can't change what way things are," he said.

Grant also smacked down CNBC's Fed apologist Steve Liesman, when Liesman attempted to disrupt Grant.

"I got up this morning to talk, not listen," he said.

"You say, 'There's no inflation?' How about Wall Street? Stocks and bonds and art and Ferraris and farmland, assets are up," Grant continued.


  1. Inflation hawks should be required to wear the church lady costume from Saturday Night Live whenever they appear on CNBC. Someone who sold their gold last year and invested in the S&P 500 has 78% more money than someone who held onto their gold. Does not really matter why the market crushed gold this past 12 months. Fact is it did and the inflation hawks who scared people out of the market and into gold gave lousy advice.

    1. Why would someone betting on inflation advise anyone to get out of equities? - one might be wise to hedge against a drop in the buying power of the currency, but certainly not to be out of equities

      In other news, interesting how my weekly Trader Joes grocery bill has gone from ~$55/week to ~$70/week in the span of 18-24 months ... i literally buy the same things/brands each week

  2. Wow. A whole 12 months. Whoop-dee-damn-doo.