Bitcoin is an example of a new innovation that will see the current financial infrastructure governed by central banks challenged, as the current negative/zero interest rates threaten capitalism itself, says billionaire Bill Gross, the financial manager who runs the Janus Global Unconstrained Bond Fund.
In his latest investment outlook letter released today, billionaire bond manager Bill Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund has notably picked bitcoin as attractive storage of wealth for investors, while delivering a damning verdict on the manner in which the central banking system is administered.
The financial manager foresees investors growing “leery and indeed weary” of the standard financial sphere that offers near-zero returns on their money. This would see them desert the existing system to turn toward “higher returning or better yet, less risky alternatives,” like bitcoin.
Cryptocurrency observers will take notice of a prominent Wall Street financial manager recommending bitcoin as a “less risky” alternative in comparison to traditional investments that are governed by a system of fiat cash.
Indeed, he stated:
Bitcoin and privately agreed upon block chain technologies amongst a small set of global banks, are just a few examples of attempts to stabilize the value of their current assets in future purchasing power terms.
Including gold among the three cited examples, he further added:
In any case, the current system is beginning to be challenged.
That Central Bank ‘Casino’
Gross summed up Central bankers and the financial industry as casino gamblers, who double down on bets despite losing while wagering on an unlimited supply of cash generated by central banks. The strategy, says Gross, sees central bankers claim that they are promoting economic growth and restore stability, while the (bloated) asset market will eventually see wealth trickle down to the masses.
“An absurd example of this would be to triple your bet if you’ve lost 3 times in a row, and if you lose that, to quadruple your bet and so on,” wrote Gross.
However, a string of losses will eventually see reality catch up, because the bets will reach “billions of dollars”, he added.
Another excerpt from his newly published letter read:
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.
The outlook letter concludes in stating:
Central bankers have fostered a casino like atmosphere where savers/investors are presented with 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.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:51 PM