Submitted by Taps Coogan on the 8th of April 2020 to The Sounding Line.

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Grant’s Interest Rate Observer founder and editor, Jim Grant, recently spoke with CNBC’s Rick Santelli to express a concern that many investors likely share: what is to stop the Fed from repeating, for every run-of-the-mill recession and slowdown, the sort of massive buyout of financial markets that they are currently executing?

 

Some excerpts from Jim Grant:

“…Whatever (the Fed’s limitless liquidity) may or may not do to help for the present moment, it raises questions about what follows this moment… What is so radical and, indeed, unprecedented about the events of the past three or four weeks is that the central bank has swooped in and, to exaggerate slightly but not so greatly, …instituted a leveraged buyout of the United States of America. It has intruded itself into every nook and cranny of finance and one can argue that this was entirely necessary for a government mandated cessation of commerce… but I think it sets a precedent that will be hard to repeal. Next time there is a garden variety recession, why would the Fed not do everything it has done now? What would stay its hand? …For the investor in fixed-income securities, the question is: Can a 0.75% 10-year yield peacefully co-exist with a limitless Fed intrusion and with money growth that is beginning to accelerate? M2 is up 12% year-over-year…”

There is more to the interview so enjoy it above.

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