Bill Gross: "Ultimately Creditors And Investors Are At The Behest Of A Central Bank And Policymakers That Will Rob Them Of Their Money" → Washingtons Blog
Bill Gross: "Ultimately Creditors And Investors Are At The Behest Of A Central Bank And Policymakers That Will Rob Them Of Their Money" - Washingtons Blog

Wednesday, January 19, 2011

Bill Gross: "Ultimately Creditors And Investors Are At The Behest Of A Central Bank And Policymakers That Will Rob Them Of Their Money"

Bill Gross had a great sound bite at Forbes' annual investing roundtable:

I don't know if the U.S. has reached a desperate point, but it is employing instruments and vehicles and policies that smack of desperation. We are not looking at a default here, but at years of accelerating inflation, which basically robs investors and labor of their real wages and earnings. We are looking at a currency that almost certainly will depreciate relative to other, stronger currencies in developing countries that have lower levels of debt and higher growth potential. And, on the short end of the yield curve, we are looking at creditors receiving negative real interest rates for a long, long time. That, in effect, is a default. Ultimately creditors and investors are at the behest of a central bank and policymakers that will rob them of their money.

Gross' statement came right after the following zinger from Marc Faber:
Janet Yellen, vice chair of the Federal Reserve, said about a year ago that if it were possible to push interest rates into negative territory, she would vote for that. This is a very important statement because it implies that the Fed will keep real interest rates negative as far as the eye can see. Negative real rates amount to expropriation and destroy one function of money: to be a store of value and a unit of account. If you measure the stock market not in dollars but gold, it is down 80% since 1999. I no longer regard the U.S. dollar as a valid unit of account. People shouldn't value their wealth in dollars because one day, in dollars, everyone will be a billionaire.
Of course, Gross and Faber are forecasting high inflation. If deflation or "MixedFlation" prevail instead, things might look very different.


  1. One Fig Newton is a fig that falls at 39.37 inches a second.

    The same with debt ratio to GDP and we are beyond the threshold of recovery. That interest rate spiral on debt can only end in default, it’s a death trap and the Banksters have us by the short hairs as planned. Unless we bring the Banksters to Justice, we are doomed.

    How many American cities and States will be in default in 2011? When will the U.S.A be in default and be in receivership to the IMF and the BIS--2011 or 2012?

    The question is not “if” we will default, but when? It is only a matter of time before we fall under the N.W.O receivership and governance. That is the N.W.O agenda and plan that has been executed and delivered by our leaders.

  2. Windchater, If the present “debt to GDP ratio” is “beyond the threshold of recovery” how come this ratio was well over double its present level (in both the US and UK) immediately after WWII, yet “recovery” was no big problem? Same applied in the UK just after the Napoleonic wars 200 years ago. Same applies in Japan today.

    I’m strongly against big national debts, but a debt to GDP of up to about 200% is not an insuperable problem.

  3. You know, I don't fear inflation as much as unemployment. As long as I have a job, I have income - which is a means of obtaining goods and services. If I have no job - I have nothing, since I have no pile of investments to live off. Inflation is only feared by the wealthy, who live off accumulated wealth (i.e. passive income). Screw the wealthy. Let them earn active income and suffer the drudgery and tedium of having to drag their ass to a job they hate every day!

  4. Musgrave, thanks for the mediocre thought, it only proves that people will believe what they want to believe regardless of the facts. After all, we are on a Chamber of Commerce mission that has a beginning and an end, maintain the course for the N.W.O.

    Apply that Keynesian thought that debt is good and as long as the Banksters will loan you more money, you can borrow more money to pay the interest on the original debt. That thought doesn’t work on a household level and certainly will not work on a city, State or National level. We call it going bankrupt and losing our home and serving the rest of your life to pay off the debt. Fact, American cities and States are going bankrupt in 2011 and 2012.

    Just because the Bankster is willing to loan you more money, it is not wise to go deeper in debt.

    Being solvent and independent is strength. Being subservient to Banksters by debt is foolish and weak and they will own and control you and your children.

    At the Bush/Obama White House the Chinese Communist flag flies right next to the American flag and it is not by coincidence. The U.S Chamber of Commerce may propagandize that fact and that it is a good thing, but it is not.

  5. I took a course taught by Janet Yellen at UC Berkeley in 1988. She seemd like a nice little old lady then. In the international economics couse she taught, Yellen took the position that countries should exit industries in which they could no longer compete. I was one of the few in class who challenged that viewpoint, and used the US auto industry as an example of an industry that could be turned around. I was one of few students who received a B+ in the class; most everyone else received an A.

    It is interesting to see that the US government has attempted to turn around the US auto industry, as had been proposed by moi, and that Yellen finds herself working with the administration responsible for the bailout.

    I wouldn't necessarily say that I was vindicated, since the successful turnaround of the US auto industry remains in doubt. But in an earlier econ class, I objected to having to agree that full employment and low inflation were incompatible. Of course this was proven to be compatible under the Clinton administration in the USA.

    So economics taught at one of the best schools in the USA, UC Berkeley, is fraught with nonsense. And yet folks that believe in bogus theories are working at the Fed and in positions of importance in the adminsitration.


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