Submitted by Taps Coogan on the 4th of May 2018 to The Sounding Line.
Legendary market commentator, interest rate expert, and founder of Grant’s Interest Rate Observer, Jim Grant, recently spoke with CNBC about the Federal Reserve.
Jim Grant had the following to say about the Fed’s increasingly telegraphed interest rate policy:
“The trouble with the utterly predictable stair-step change in things like the Fed Funds rate or money supply is that it give the leverage players a chance to tee off on certainty. One of the great… contributions to economic history was a piece by Charles Goodhart who examined the period before the Fed’s founding, the 13 years from 1900 to 1913…, and found that the volatility of what today is the funds rate stood in the way of banks making a big bet on leverage. They couldn’t count on a steady cost of financing. Therefore, they couldn’t borrow short and lend long… What is wanted is constructive uncertainty.”
There is much more to the full interview so enjoy it above:
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