From The Janus Capital Group March 2016 Investment Outlook by Bill Gross:
Capitalistic initiative married to an ever-expanding supply of available credit has facilitated economic prosperity much like the sun has been the supply centre for energy-food and life’s sustenance. But our global, credit-based economic system appears to be in the process of devolving from a production-oriented model to one that recycles finance for the benefit of financiers.
Making money on money seems to be the system’s flickering objective. Our global financed-based economy is becoming increasingly dormant, not because people don’t want to work or technology isn’t producing better things, but because finance itself is burning out like our future sun … the global economy has been powered by credit — its expansion in the US alone since the early 1970s has been 58-fold — we now have $58-trillion of official credit outstanding, whereas in 1970 we had only $1-trillion.
But now, this expansion appears to be reaching an ending of sorts, at least in its current form. Private sector savers are growing leery of debt piled upon debt and government regulators have begun to build fences against further rampant creation. In addition, the return offered on savings-investment whether on deposit at a bank, in Treasuries-Bunds, or at low equity risk premiums, is inadequate relative to historical as well as mathematically defined durational risk. The negative interest rates dominating 40% of the Euroland bond market and now migrating to Japan, are an enigma to investors. Why would someone lend money to a borrower with the certainty of getting less money back at a future date? Our finance-based economic system … is running out of fuel.
Street Dogs
From The Janus Capital Group March 2016 Investment Outlook by Bill Gross:
Capitalistic initiative married to an ever-expanding supply of available credit has facilitated economic prosperity much like the sun has been the supply centre for energy-food and life’s sustenance. But our global, credit-based economic system appears to be in the process of devolving from a production-oriented model to one that recycles finance for the benefit of financiers.
Making money on money seems to be the system’s flickering objective. Our global financed-based economy is becoming increasingly dormant, not because people don’t want to work or technology isn’t producing better things, but because finance itself is burning out like our future sun … the global economy has been powered by credit — its expansion in the US alone since the early 1970s has been 58-fold — we now have $58-trillion of official credit outstanding, whereas in 1970 we had only $1-trillion.
But now, this expansion appears to be reaching an ending of sorts, at least in its current form. Private sector savers are growing leery of debt piled upon debt and government regulators have begun to build fences against further rampant creation. In addition, the return offered on savings-investment whether on deposit at a bank, in Treasuries-Bunds, or at low equity risk premiums, is inadequate relative to historical as well as mathematically defined durational risk. The negative interest rates dominating 40% of the Euroland bond market and now migrating to Japan, are an enigma to investors. Why would someone lend money to a borrower with the certainty of getting less money back at a future date? Our finance-based economic system … is running out of fuel.
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