Tags: jim | Grant | us | economy | Inflation | Dangerous

Jim Grant: Even a Little Inflation Is Dangerous

Friday, 22 Apr 2011 10:05 AM

Grant's Interest Rate Observer editor Jim Grant sharply disagrees with Federal Reserve Chairman Ben Bernanke: Creeping inflation is unacceptable, and so-called stable prices aren't the same thing as the low prices many Americans spend their weekends pursuing at Wal-Mart and Costco.

"To give us 'stable prices,' the Fed has to create more credit to compensate for 'the Wal-Mart effect' in retail," Grant tells Wealthtrack. "It's creating dollars to lift the price level to what it would otherwise be."

Grant also believes the only way out of U.S. debt is to return to the gold standard.

"To me, the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n,'" Grant tells King World News.

bernanke200.jpg
Ben Bernanke (Getty photo)
"And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller ‘n’, the bigger the price.”

“One divided by a receding number is the definition of a bull market."

Grant notes that the gold market “is necessarily a speculative piece of business … not to be confused with the kind of investment that Ben Graham wrote about,” but he remains bullish on it.

Bloomberg reports that Bernanke may keep reinvesting maturing debt into Treasurys to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.

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Grant's Interest Rate Observer editor Jim Grant sharply disagrees with Federal Reserve Chairman Ben Bernanke: Creeping inflation is unacceptable, and so-called stable prices aren't the same thing as the low prices many Americans spend their weekends pursuing at Wal-Mart and...
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2011-05-22
Friday, 22 Apr 2011 10:05 AM
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