Grades really cover up failure to teach. A bad instructor can go through an entire quarter leaving absolutely nothing memorable in the minds of his class, curve out the scores on an irrelevant test, and leave the impression that some have learned and some have not. But if the grades are removed the class is forced to wonder each day what it's really learning. The questions, What's being taught? What's the goal? How do the lectures and assignments accomplish the goal? become ominious. The removal of grades exposes a huge and frightening vacuum.
Source left to the reader as an exercise.