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James Grant Comments on Fed Policy and Interest Rate Outlook

June 10, 2009
In my investment activities, I avoid making commitments based on macroeconomic forecasts alone. As Warren Buffett has said many times, macro factors do not influence his decisions when it comes to investing in a high quality business. At the same time, it seems obvious that an investor needs to at least be aware of the condition of the overall economy to understand the climate in which his or her portfolio businesses are operating. Also, for many investors, following economic developments is a fascinating endeavor even if it has no immediate bearing on investment results.

James Grant, publisher of Grant’s Interest Rate Observer, appeared on CNBC today and commented on Federal Reserve policy and his outlook for interest rates and inflation. I found the following quote to be particularly interesting. I highly recommend viewing the video below or, for those reading this via the RSS Feed, click on this link to view the video on CNBC’s site.


“If the Fed examiners were set upon the Fed’s own documents—unlabeled documents—to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.”


Ravi Nagarajan

www.rationalwalk.com



About the author:

Ravi Nagarajan
Ravi Nagarajan is a private investor and Editor of The Rational Walk website. Ravi focuses on applying value investing techniques to find securities trading well below intrinsic business value. Ravi has over 15 years of experience in the financial markets and started investing on a full time basis in 2009. From 1996 to 2009, Ravi held a number of technical and executive level positions in the commercial software industry. Ravi graduated Summa Cum Laude from Santa Clara University with a degree in finance. Visit his website The Rational Walk

Visit Ravi Nagarajan's Website


Rating: 4.4/5 (16 votes)

Comments

joeldee
Joeldee - 5 years ago
Those who watch this need to get active by writing, E-mailing or calling their Congress persons or Senators. The Fed honeymoon is over! The Administration needs to get their feet off their desk, stop the lip flapping, and get to work. We don't mean CEO salary caps as work, but a country in dire need of rebuilding needs serious leadership and not salesmanship.
Sivaram
Sivaram - 5 years ago
Well, the FedRes can print money whenever it wants so technically it is probably never undercapitalized per se.

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