BIll Gross: Beware The “Unknown Consequences Lurking In The Shadows”

Thursday, July 20, 2017
By Paul Martin

by Tyler Durden
Jul 20, 2017

Starting off with two macabre examples of extreme behavior – one man who can’t stop eating and another one who can’t start – in his latest monthly letter Bill Gross says that “monetary policy in the post-Lehman era” has become the modern equivalent of gluttony: “they can’t seem to stop buying bonds, although as compulsive eaters and drinkers frequently promise, sobriety is just around the corner.”

Pointing out a number we discussed just yesterday, Gross notes that “to date, since the start of global Quantitative Easing, over $15 trillion of sovereign debt and equities now overstuff central bank balance sheets in a desperate effort to keep global economies afloat.” What Gross is referring to, of course, is the chart we showed just yesterday in “The Most Dangerous Moment”: Why Every Bank Is Suddenly Talking About Q3 2018″

Going back to his, and our, favorite topic, namely mocking central banker stupidity, the Janus investor slams central bankers’ reliance on historical models such as the Taylor Rule and the Phillips curve, saying that “at the same time, over $5 trillion of investment grade bonds trade at negative interest rates in what can only be called an unsuccessful effort to renormalize real and nominal GDP growth rates.” and warns that “the adherence of Yellen, Bernanke, Draghi, and Kuroda, among others, to standard historical models such as the Taylor Rule and the Phillips curve has distorted capitalism as we once knew it, with unknown consequences lurking in the shadows of future years.”

The Rest…HERE

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