The Federal Reserve made no changes to its zero interest rate policy Wednesday, a move that didn't surprise Jim Grant, the founder and editor of Grant's Interest Rate Observer.
"Radical monetary policy is pretty much here to stay," he said in an interview with CNBC's "Closing Bell."
The long-time proponent of rate normalization said that while the Fed wants to enlarge aggregate demand, "inadvertently, through these zero percent rates and through more and more quantitative easing, they also enlarge aggregate supply."
"The Fed is in the business of making things worse as it seeks to make things better."
In its post-meeting statement Wednesday, the Federal Reserve removed any hints about when a rate hike may occur by taking out any calendar references. The central bank has kept its key fund rates near zero since late 2008.
With monetary easing taking place across the globe, zero percent interest rates mean more assets are needed to generate income, he said. That means German life insurance companies are starving and there have been a record low frequency of defaults in junk bonds, he noted. While on the face of things that is desirable, it is pushing back failure, Grant said.
"We must have failure in capitalism in order to allow things to come and develop."
Meanwhile, Grant thought Ben Bernanke's latest role at Pimco was indicative of what was wrong with the system.
The former Fed chair is now a senior advisor at Pimco, and is also consulting for the hedge fund Citadel.
"The proof that our Federal mandarins have way too much power over the lives in people in finance is they are asked to serve as very high level salesmen for a lot of money when they get out," Grant said.
—CNBC's Jeff Cox contributed to this report.