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Lord Rothschild: “This Is The Greatest Experiment In Monetary Policy In The History Of The World”

August 16, 2016

Lord Rothschild: “This Is The Greatest Experiment In Monetary Policy In The History Of The World”

Two months ago, the bond manager of what was once the world’s biggest bond fund had a dire prediction about how “all of this” will end (spoiler: not well).
Janus Capital @JanusCapital

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

10:05 AM – 9 Jun 2016

Now, it is the turn of another financial icon, if from a vastly different legacy –  and pedigree – that of Rothschild Investment Trust Chairman himself, Lord Jacob Rothschild, who appears to be the latest entrant to the bearish billionaire club.

We were surprised to find his summary of recent events downright gloomy, and certainly non-conforming with a stock “market”, manipulated by central banks as it may be, trading at all time highs. Here are the key excerpts:

The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world.

…click on the above link to read the rest of the article…

Bill Gross Interview: ZIRP Causes Too Much Debt, Too Many Zombies, Not Much Trickle-Down, Busted Pensions

March 3, 2015

Bill Gross Interview: ZIRP Causes Too Much Debt, Too Many Zombies, Not Much Trickle-Down, Busted Pensions

In an Bloomberg Television interview Bill Gross of Janus Capital spoke with Bloomberg Television’s Trish Regan about the outlook for Federal Reserve policy, the U.S. economy and his objectives at Janus Capital.

Key Quotes

  • “Not even thin gruel is being offered to our modern-day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate.”
  • “The interest rate can’t be raised substantially even over the next two to three years.”
  • “The US has escaped the liquidity trap that euroland and Japan are in. But, not necessarily for all time.”
  • “[Low interest rates] keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent. It destroys business models. It’s destroying the pension industry and in the insurance industry.”
  • “ultimately, [low interest rates] destroy the capitalistic model at the margin. Instead of investing in the real economy, [corporations] can now simply borrow at close to 0 percent and buy their own stocks, which yield 2 or 3 percent on a dividend basis and provide a return of 6 or 7 percent on an earnings to price ratio basis.”

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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