Famous Bond Investor, Bill Gross shines Light on GovBond Excess

October 7, 2016 in News by Slad

 

Source: WHTT | By 

Speaking of money, in  Double Down, Bill Gross has turned negative on the value of US Treasury bonds because there are just too many.  Gross is respected for building the giant PIMCO bond fund. He says with authority, the Central Banks (US FED, BOJ, IMF, World Bank, and ECB) are no better than International gamblers manipulating world Gov-Bond markets with unlimited computer generated money.  We Hold These Truths add our observation that the few governments that refuse to join the printing binge seem to become increasingly mentioned as war targets, Russia and its BRICS teammates being the current propaganda target, recently taking the place of Iran. Would you believe, Russian savers can earn near double-digit return on bank accounts!  American, Europeans, and Japanese savers earn nil.  –Editor CEC

DOUBLING DOWN BY BILL GROSS“(C)central bankers around the globe…. are quite simply, employing a Martingale System in the conduct of monetary policy with policy rates now in negative territory for both the ECB and the BOJ – which in turn have led to over $15 trillion of negative yielding developed economy sovereign bonds. How else would one characterize the “whatever it takes” statement by Mario Draghi in 2014? How else would one interpret BOJ’s Kuroda when just last week he upped the ante in Japan by capping 10 year JGB’s at 0% until inflation exceeds 2% per year? How else would a rational observer describe Carney and Yellen other than “Martingale gamblers with a wallet or a purse?” Our financial markets have become a Vegas/Macau/Monte Carlo casino, wagering that an unlimited supply of credit generated by central banks can successfully reflate global economies and reinvigorate nominal GDP growth to lower but acceptable norms in today’s highly levered world.”

Gross continues: “….at PIMCO, Janus, or any other financial institution. Central bankers have fostered a casino like atmosphere where savers/investors are presented with a Hobson’s Choice, or perhaps a more damaging Sophie’s Choice of participating (or not) in markets previously beyond prior imagination. Investors/savers are now scrapping’ like mongrel dogs for tidbits of return at the zero bound. This cannot end well….At some point investors – leery and indeed weary of receiving negative or near zero returns on their money, may at the margin desert the standard financial complex, for higher returning or better yet, less risky alternatives. Bitcoin and privately agreed upon block chain technologies amongst a small set of global banks, are just a few examples of attempts to stabilize the value of their current assets in future purchasing power terms. Gold would be another example – historic relic that it is. In any case, the current system is beginning to be challenged.” Mr Gross’ full story-his subscription is free

Supporting story from Financial Times:  “Central banks are embarking on the largest quarterly purchase of assets since quantitative easing was introduced following the financial crisis, as policymakers double down on monetary policy despite growing concern it has reached its limits.

In the final three months of the year, the UK, Japan and Europe are expected to mint a combined $506bn to purchase assets — the largest quarterly sum created since the early days of the US Federal Reserve’s QE programme in 2009.

Figures from JPMorgan Asset Management show that rolling quarterly asset purchases have intensified after the UK’s vote for Brexit as the Bank of England joins the European Central Bank and Bank of Japan in cutting interest rates and creating money to buy assets — mostly government bonds — in a bid to expand credit and spur investment.”

We Hold These Truths’ series connects our money to our wars, A link that needs to be kept in mind, for the central bankers are the funding Warmakers of the world.- cec