Audio Only (poor quality) Jim Grant on Bloomberg January 26, 2011

excerpt: "Let's go back to the 1913 anticipation of this great institution (the Fed). The founders were sitting around a table; how would they..they did not say if the Fed were to be in the business of monetizing vast amounts of public and private debt and they did not anticipate that foreign central banks would be absorbing trillions of dollars worth of greenbacks through the agency of our privilege as a reserve issuing currency country. Do we have a picture of that outrageous ...somewhere in the Bloomberg archives is a picture that ends in 3.4...this is the leverage of the New York Federal Reserve Bank... ahh this is the graph that ends in the number $3.4 trillion and that is the sum of treasuries and agencies held in ... in central foreign banks. That mouthful means that the US is consuming much more than it produces it pays its bills in dollars and these dollars wind up on the balance sheets of foreign central banks, remember that AIG got into trouble because it never settled its accounts in those exotic derivatives, it never had to pay cash and receive cash for its mark to market positions, similar with the US we run deficits, we have for 25 consecutive years we never settle up. Settling up was part and parcel of central banking, we have abandoned that, the Fed today should come out and say, now that you mention it Jim, we do owe the world an apology."