Jim Grant Says Bernanke Is Imitating Former Soviet Union: "Needs To Get Out Of Central Planning Business, Return To The Gold Standard"

https://twitter.com/saraeisenFX/status/240809331308777472

Sara Eisen comments on the Grant interview.

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We haven't seen this interview posted anywhere else in the alternative or mainstream financial media.  As always with Grant, phenomenal stuff.

James Grant with Tom Keene - Bloomberg, Aug. 29

Grant kills it as only he can, assigning homework to Krugman.

"To defend and protect the gold dollar, that's all that the Fed's original agreement contained."

"Fast forward several decades and the Fed is now in the business of steering, guiding, directing manipulating the economy, financial markets, the yield curve, interest rates, essentially central planning, doing what so singularly failed in the old Eastern bloc..."

Comments

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[DailyBail]

On A Gold Standard And The Free Market For Goods, Services, And Money

http://www.zerohedge.com/news/guest-post-gold-standard-and-free-market-goods-services-and-money

[ernie]

How about a corn standard?
The USA has plenty of it and if you don't spend it you can eat it.

[S. Gompers]

I think I like Ernie.

[Cheyenne]

At least people can understand a corn standard. Jesus, try explaining this article to someone. Hell, try understanding it:

http://www.bloomberg.com/news/2012-09-10/big-banks-hide-risk-transforming-collateral-for-traders.html

The lead sentence alone should be a tipoff that people are about to get ripped off:

"JPMorgan Chase & Co. (JPM) and Bank of America Corp. are helping clients find an extra $2.6 trillion to back derivatives trades..."

Yeah, okay. Jamie Dimon woke up one morning and turned into Mr. Helper, just out there lending a hand to his firm's clients. At least when Jon Corzine and Russ Wassendorf "helped" their clients, they had the decency to just steal right out of their accounts. They didn't hide behind some 8-dimensional shell game, they looted pirate-style.

Not Jamie. He's like the land shark in the SNL skit, telling his victims that he's actually a dolphin. The incredible part is that people fall for it every time.

http://www.youtube.com/watch?v=bt4QiwR5ckk

If you think "transforming collateral" will end up helping customers, I've got a package of collateralized subprime loans on used cars to sell you. Oh, wait. Wall Street beat me to it.

[DailyBail]

Cheyenne

Here's a fun snip from the article:

U.S. regulators implementing the rules haven’t said how the collateral demands for derivatives trades will be met. Nor have they run their own analyses of risks that might be created by the banks’ bond-lending programs, people with knowledge of the matter said.

Banks could be squeezed if they have borrowed the Treasuries that they’re lending as collateral, and the original lender suddenly demanded them back, said Duffie, the Stanford finance professor.

“We just keep piling on lots of operational risk as we convert one form of collateral into another,” said Richie Prager, global head of trading at New York-based BlackRock, the world’s largest asset manager.

http://www.bloomberg.com/news/2012-09-10/big-banks-hide-risk-transforming-collateral-for-traders.html

[Pitchfork]

No idea how to meet collateral demands on derivatives...what could possible go wrong?

[Sagebrush]

("How about a corn standard?
The USA has plenty of it and if you don't spend it you can eat it.")

Great Idea!! And if you don't spend it, or eat it, You can make whisky out of it and have a hoedown.

I agree Gompers, I think I like Ernie Too!