Janus Capital fund manager Bill Gross—most recently in the news for leaving PIMCO, the bond fund giant he co-founded—today published commentary on the global economy and financial markets in his typically quirky style.
Before turning to some important points on inflation, Gross spends a couple paragraphs waxing Yoda-like about humanity… and how he’s made of sand:
Then, against all odds, he steers these elaborate metaphors into a commentary on U.S. fiscal and monetary policy—and it turns out he has some important points to make.
Here are the four of them, roughly translated:
- Young people should (and do) fear inflation because it means their retirement portfolios will be cut in half or more.
- But these days, deflation is just as dangerous a threat as inflation, because the economy has become dependent on inflation to shrink our debt.
- The problem is that the monetary policy approach that would ordinarily prevent deflation—printing more money—is not helping to create true growth. “Prices go up, but not the right prices. Alibaba’s stock goes from $68 on opening day to $92 in the first minute, but wages simply sit there for years on end,” Gross writes.
- The solution Gross suggests for making the “right prices” go up is government fiscal stimulus — a surprising policy suggestion from a bond fund manager. But he also points out that government spending is a tough sell, thanks to fears about the very debt that makes us dependent on inflation.
These are some wise insights, despite the strange introduction. Actually, there’s evidence that Gross may be in on the joke when it comes to purple prose, or at least that he’s actively cultivating his reputation as an eccentric genius. In any case, today’s commentary wasn’t necessarily Gross’s strangest. He has in the past mused about his dead cat, Cracker Jacks, crows, and, as in the following passage, sneezing:
The latter commentary, titled “Achoo!”, goes on for another two paragraphs about sneezing before turning to neutral policy rates.