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"Austrian" Investment Themes, Uncategorized

Bill Gross a.k.a. The Bond King on Negative Interest Rates


negative ratesWhile Legendary fund manager Bill Gross a.k.a. The Bond King could be the subject of a modern day Shakespearian epic; a Decemeber 2014 Bloomberg story chronilicing his exit from PIMCO, managed to capture the relevant themes in about 998 fewer pages.


The Bond King has long penned a monthly Investment Outlook that is a treasure of market widom, out of the box observations and (sometimes maddening) political pontification.

Read: What is a Core – Satellite Investment Strategy

His latest muse, though not covering entirely new ground for Mr. Gross, is a masterful take on the life expectancy of forty-five year massive credit expansion cycle.


Rather than summarize the cliffs notes, I’ll just provide some of the sizzle and a link for the reader to pursue:

Sunshine, Lollipops and… Bill Gross Investment Outlook March 2016

“Our global, credit based economic system appears to be in the process of devolving from a production oriented model to one which recycles finance for the benefit of financiers. Making money on money seems to be the system’s flickering objective.”

“Why would someone lend money to a borrower with the certainty of getting less money back at a future date?”

“Noted economists such as Larry Summers; respected journalists sucha as the FT’s Gillian Tett, central bankers such as Mario Draghi – all seem suddently concdrned that 500 Euro or 10,000 Yen Notes are facilitating drug dealers and terrorists (which they are). But what’s an economist/central banker doing opining on law enforcement? It appears that the one remaining escape hatch for ordinary citizens is being closed. Money in a mattress will heretofoe be associated with drugs/terror. The Cashless society which appears over the horizon may come sooner than the demise of the penny!”

” A 30 year Treasury at 2.5% can wipe out your annual income in one day with a 10 basis point increase.”


Happy Reading!

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DISCLAIMER: Nothing in this article should be construed as a personal recommendation or advice. Nor should anything in this article be construed as an offer, or a solicitation of an offer, to sell or buy any investment security. Barnhart Investment Advisory Principal and clients may hold positions in securities mentioned above, and subject to change without notice. Consult your investment professional before investing.

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