| NEW YORK
NEW YORK Oct 4 Global central bank policy
makers have turned world financial markets into a casino, thanks
to their unprecedented monetary policies, warned bond investor
Bill Gross of Janus Capital Group on Tuesday.
"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 said in his latest
Investment Outlook titled "Doubling Down."
Gross, who oversees the $1.5 billion Janus Global
Unconstrained Bond Fund, recommended Bitcoin and gold for
investors who are looking for places to preserve capital.
"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," Gross said.
Gross has been lambasting ultra-loose central bank policies
for hindering global economies by keeping so-called "zombie"
corporations alive and inhibiting "creative destruction."
For several years, Gross and others have warned that zero
and negative interest rates not only fail to provide an easing
cushion should recession occur, but they destroy capitalism's
"A commonsensical observation made by yours truly and
increasing numbers of economists, Fed members, and corporate
CEOs (Jamie Dimon amongst them) would be that low/negative
yields erode and in some cases destroy historical business
models which foster savings/investment and ultimately economic
growth," Gross said.
He added: "Our argument is that NIMs (net interest margins)
for banks, and the solvency of insurance companies and pension
funds with long dated and underfunded liabilities, have been
negatively affected and that ultimately, the continuation of
current monetary policies will lead to capital destruction as
opposed to capital creation."
All told, Gross said central bankers have fostered a
casino-like atmosphere that present "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 scrappin' like mongrel dogs for tidbits
of return at the zero bound. This cannot end well."
(Reporting By Jennifer Ablan; Editing by Chizu Nomiyama)