Jim Grant-Fed Would Be Shut Down If It Were Audited

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On Wed, Jun 10, 2009 at 8:48 PM, Scott Fullwiler wrote:

(email exchange)

>   On Wed, Jun 10, 2009 at 8:48 PM, Scott Fullwiler wrote:
>   Thanks, Ian.
>   Warren . . . Ian was one of my students at your presentation last week . . . some people are
>   learning how this works, at least. I feel like a proud papa!

Yes, congrats!

I’m nominating this for both the stupidest article of the year and the stupidest article of all time in the category of ‘statements by economic experts:’

And it was only a few weeks ago Bernanke explained the Fed/government makes payments by simply changing numbers in bank accounts and that their spending is not operationally constrained in any way by revenues.

Fed Would Be Shut Down If It Were Audited, ‘Expert’ Says

June 10th (CNBC)—The Federal Reserve’s balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant’s Interest Rate Observer, told CNBC.

With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview.

“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.”