WASHINGTON, D.C. March 18 (DPI) – Economist and bond guru James Grant went on CNBC today to remind viewers that central banks – not simply the Federal Reserve but the European Central Bank and the Bank of Japan – are engaging in price controls as they drive down interest rates, and price controls never end well, he says.

“I would re-institute the price mechanism in our capital markets,” Grant told CNBC this morning, and allow short-term interest rates to float freely.  At this stage of the nearly 6-year financial experiment, Grant admits, that’s a risky move and the Fed should proceed carefully in the weeks and months ahead.

On the day that the latest Federal Reserve  policy statement was released – and Wall Street hanging on the Fed’s use of the word “patient” – Grant and other conservative economists reminded the investing public that the Fed can change how things look but “not how they are.”

And how are things? The Fed is exhausting its ability to influence economic growth – and job growth – with its zero-interest-rate policies, now in place for several years.

http://finance.yahoo.com/news/jim-grant-heres-why-fed-120146777.html