Tags: Jim Grant | Economy | Federal Reserve | Janet Yellen

Jim Grant: Watch Out For a 'Thunderclap' in the Economy

By    |   Friday, 18 July 2014 07:30 AM

Grant’s Interest Rate Observer founder Jim Grant believes the Fed Reserve is "constitutionally behind the curve" and that a thunderclap of unexpected problems could strike the economy as a result.

Grant told Fox Business Network that the uncharted territory the Fed has been in with its vast monetary stimulus means no one can predict the eventual outcome.

“The Fed is in the business of reacting to things instead of acting on things,” he said.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

Grant noted Fed Chair conceded in a recent interview she did not see the 2008 housing crisis and credit market meltdown coming, and that her Fed chair predecessor Ben Bernanke has admitted taking unique steps to try to fix the Great Recession.

“So we are in the midst of this great improvisation. “I think the Fed is constitutionally behind the curve and no doubt will remain so,” said Grant, a frequent critic of Fed policy.

He said Wall Street does not care whether asset prices are high so long as they continue to go up.

“The wonder of finance is that you never know where the next surprise is coming from. What one can surmise is that after years in which money has been cheap and freer than free… there’s certainly going to be a problem – a thunderclap – we just don’t know where it’s going to come from.”

In her testimony before the Senate Banking Committee this week, the Associated Press reported Yellen said the economy is mending and the tight downturn in economic activity in the first quarter was likely the result of temporary factors.

"Although the economy continues to improve, the recovery is not yet complete," she said.

Even with a drop in the jobless rate to the lowest level since September 2008, Yellen said there was still weakness in the labor market and in wages.

Yellen also discounted a recent acceleration in the official inflation rate, noting that it still remained below the Fed's 2 percent target rate.

In her second day of Congressional testimony, Yellen pushed back at Republican lawmakers about legislation they are supporting to try to make the Fed more accountable and to make its policy decisions more open.

She said it would be a serious mistake for Congress to require the Fed to adopt a formal policy rule to guide its decisions on setting interest rates, a centerpiece of that legislation.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Grant’s Interest Rate Observer founder Jim Grant believes the Fed Reserve is "constitutionally behind the curve" and that a thunderclap of unexpected problems could strike the economy as a result.
Jim Grant, Economy, Federal Reserve, Janet Yellen
414
2014-30-18
Friday, 18 July 2014 07:30 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved