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

While 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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