Bill Gross responds to the Fed decision

Veteran investors Bill Gross, thinks the Fed has lost sight of the consequences of their actions. “The closeness to the zero bound, it basically robs savers of their ability to earn money and threatens business models such as insurance companies and banks in terms of their margins. Certainly pension funds in terms of their ability to earn money.” In his view, this is a tried and failed policy with Japan having kept rates low for a long time with little benefit to show for it. “I would suggest that once the euphoria wears off, investors should be concerned about being at the zero bound for a long, long period of time. It’s not always a gravy train.” In his view, near-zero rates challenge the basis of our financial system; “Capitalism doesn’t work when there’s very little incentive to earn returns. It’s hard to make money when money doesn’t yield anything.” Hear the audio update: (VIEW LINK)


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