Grid cells, in entorhinal cortex (EC) and related structures, signal animal location relative to hexagonal tilings of 2D space. A number of modeling papers have addressed the question of how grid firing behaviors emerge using (for example) ideas borrowed from dynamical systems (attractors) or from coupled oscillator theory. Here we use a different approach: instead of asking how grid behavior emerges, we take as a given the experimentally observed intracellular potentials of superficial medial EC neurons during grid firing. Employing a detailed neural circuit model modified from a lateral EC model, we then ask how the circuit responds when group of medial EC principal neurons exhibit such potentials, simultaneously with a simulated theta frequency input from the septal nuclei. The model predicts the emergence of robust theta-modulated gamma/beta oscillations, suggestive of oscillations observed in an in vitro medial EC experimental model (Cunningham, M.O., Pervouchine, D.D., Racca, C., Kopell, N.J., Davies, C.H., Jones, R.S.G., Traub, R.D., and Whittington, M.A. (2006). Neuronal metabolism governs cortical network response state. Proc. Natl. Acad. Sci. U S A 103: 5597-5601). Such oscillations result because feedback interneurons tightly synchronize with each other - despite the varying phases of the grid cells - and generate a robust inhibition-based rhythm. The lack of spatial specificity of the model interneurons is consistent with the lack of spatial periodicity in parvalbumin interneurons observed by Buetfering, C., Allen, K., and Monyer, H. (2014). Parvalbumin interneurons provide grid cell-driven recurrent inhibition in the medial entorhinal cortex. Nat. Neurosci. 17: 710-718. If in vivo EC gamma rhythms arise during exploration as our model predicts, there could be implications for interpreting disrupted spatial behavior and gamma oscillations in animal models of Alzheimer's disease and schizophrenia. Noting that experimental intracellular grid cell potentials closely resemble cortical Up states and Down states, during which fast oscillations also occur during Up states, we propose that the co-occurrence of slow principal cell depolarizations and fast network oscillations is a general property of the telencephalon, in both waking and sleep states.