Famous Bond Investor, Bill Gross shines Light on GovBond Excess

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 saver can earns 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

 

       

1 comment so far

Paul Hoskins
October 8th, 2016

One must confess their ignorance of the modern ,”evolved” finances and eventually their discernment of money. Economics is not inspiring. Yet, a nation (not really) or raw materials Bodenschatz in the US is so generous it is obvious to a simple mind to question, “why should anyone not have gainful employment or how should anyone be hungry?”

Not to awake the plethora of all possible answers it is enough here to agree, many have no work or destined position and yes many, mostly from neglect hunger and old people are eating pet food. Governments answer to every problem is MONEY.

Whether it be teenage suicide or pregnancy, drug addiction , or unemployment or anything else. Any fool , which I am, can judge rightly, such things can not go on.

Gross compares government speculating as gambling. And gambling in the established kosher dens of iniquity which he has named. Sometimes the gambler may win but in the end he loses as lose he must. Sheldon Adelson is not SOlomon from winners but losers.

Amongst underlings and vassals of gambling like prostitution ( all is unlawful), drug smuggling, white slavery, pornography ad infinitum, one finds the neologism of “money laundering”, another enrichment to our vocabulary .

My grandmother treasured a penny not because of cupidity or parsimony but because it was a symbol of culture , labour and self respect. She had more respect for it then the mighty congressmen have for a trillion dollars which in her day was not yet known. It was not only its intrinsic value but it could be traded for food stuffs it may purchase, or postage stamp or even sales tax without whose significance of value one could not purchase a diamond ring.

Today they give pennies, albeit debased, away and many who see them lying on the street will not bend down to pick them up.

Money is also a symbol of our moral code; if not divine , then a guard for it. Devaluation of money is bonded to our own devaluation to “consumer”. Can you imagine the King Jesus calling anyone a “consumer”?

Yes, we have been divested of our moral garments for we can not afford them. The old worn , cotton shirt soiled with blood and sweat and the long dress of the maligned Hausfrau have been disavowed , one the symbol of self sufficiency and protection , the other of chastity and faithfulness.

Since Federal Reserve which was to preempt and preclude all those unforeseeable,recalcitrant crises which divested many of savings and enriched astronomically a few there has been nothing but war. Since I live , 67 years only war and USA has never won. The short hiatus from foreign wars there is only internal social strife and civil war. It is true , peace has no profit for the investor in ruin.

One might think , someone on the high unholy mountain should be ashamed ; but they instead boast of pride. They should be afraid of the consequences of devaluation of life. But no, they are optimistic. The blind are leading the blind and all will fall into the abyss. And there will be nothing left to save us; except my grandmother’s penny.