When it comes to investors, bankers, and politicians, incentives matter. Not many writers know that better than Jim Grant, a veteran commentator who has worked in financial news for over 50 years, formerly at Barron’s but for himself since 1983, as the author of the weekly newsletter Grant’s Interest Rate Observer. The bespectacled and bow-tied Grant’s columns and many books have criticized money-printing by the Federal Reserve and stressed the flawed assumptions by a character he calls “Mr. Market.” A well-timed collection was 2008’s Mr. Market Miscalculates: The Bubble Years and Beyond, which the Financial Times approvingly reviewed at the time, with John Authers celebrating the many “uncanny examples of prescience” as well as Grant’s “crackling sense of humour.” This weekend, Grant argued that the Federal Reserve has ignored incentives for nearly a decade, and the economy is paying the price for yet another miscalculation.
“The Fed is problem No. 1 in American finance,” he told MarketWatch on Sunday, arguing the central bank has damaged markets and the economy for decades in ways that were “unintended but not entirely unforeseeable.”
