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Donald Trump will come to like the market's big, fat ugly bubble, Jim Grant says

Despite President-elect Donald Trump's tough talk on the Federal Reserve, he will not likely make radical changes to the central bank once he takes office, noted Fed watcher Jim Grant told CNBC on Monday.

Throughout the campaign, Trump criticized the Fed and blamed its low interest rate policy for creating a "big, fat, ugly bubble" in the stock market.

"I suspect that he is going to come to like that bubble and to adopt it on his own," said Grant, founder and editor of Grant's Interest Rate Observer.

That means he may disappoint those who thought he would refashion the Fed in the image of Adam Smith, who many consider the father of modern economics, Grant told "Closing Bell."

"Trump is a kind of an empty vessel into which people are pouring their hopes and their fears and their dreads and their great aspirations," said Grant, who voted for Trump.

However, he thinks in the end Trump is going to appoint a Fed chair who will advance his programs.

"His program is protectionism. His program is infrastructure. His program is nationalism. His program is import substation. He'll need capital for that."

Grant, who has been a longtime critic of the Fed's monetary policy, thinks the central bank would be better if its business model were "radically overturned."

As for who he thinks would be a good Fed chair, Grant said he likes Judy Shelton. A member of Trump's economic advisory council, she has been critical of the U.S. monetary system.

"She is thoughtful. ... She has a way of looking ahead. She is a student of monetary policy and she is a gold person," Grant said. Fed Chair Janet Yellen's term ends in February 2018.