Gross Predicts Repression Due to Fed

Bill Gross, famed manager at PIMCO, has been increasingly vocal about the dangers he sees in more Fed monetary stimulus. Many analysts believe the Fed will continue to turn the printing press on and buy treasuries. In the last two rounds of stimulus, the Fed bought over $2.3 Trillion in treasuries, making them the largest holder of U.S. Debt. Gross believes this policy will create a “repression,” by killing any opportunities for greater credit lending, and hence economic growth in developing economies. According to statements made in the last PIMCO monthly statement, Gross believes:

While recent actions by policy makers provide assurances that short and intermediate U.S. bond yields may not change for years, any potential for price appreciation is limited. Financial repression depends on negative real yields and until inflation moves higher for a period of at least several years, central banks will hibernate at the zero bound.”