Gross: Central Banks are Robbing Bond Holders and Fuelling Inflation
In this segment on Bloomberg with Tom Keene just after the jobs report was released yesterday morning, Bill Gross continues hammering away at the central banks’ easy money monetary policies, the main point of his last newsletter. His contention is that government has four ways to rob bondholders of return:
- Outright default, something he says unlikely in the U.S.
- Currency depreciation: Gross contends this is a problem for the U.S. currency
- Unanticipated inflation: Gross believes the core vs. headline inflation numbers highlight this issue
- Negative real interest rates: His newsletter was very much about this point.
Gross recommends investing outside of areas with negative real interest rates and low policy rates like in the euro zone, Britain and the United States.
Gross also believes that the Fed is on hold for at least twelve months due to a still weak jobs market and a fragile economy. In his view, all three main central banks are promoting asset price appreciation with their easy money policies – and that this is helping fuel a rise in commodity prices, leading to inflation around the world. He voiced his concerns on this on CNBC. Video below.