Bond guru Bill Gross is famous for his wacky but insightful market analyses, and this one is exemplary -- in both regards.
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:
I am a philosophical nomad disguised in Western clothing, a wondering drifter, masquerading in a suit near a California beach. Sand forms the foundation of my being and its porosity is at once my greatest strength and deepest wound. I have become after 70 years, a man who believes that no belief is sacred. I have ideals and moral standards, but I believe them specific to me. Had I inherited your body and ego, “I” could just as clearly have assumed “yours.” If so, I wonder, if values are relative, then what are mortals to make of them, and what would a judging God make of us? If a collective humanity is to be rooted in sandy loam, spreading its ideological seeds through howling winds only to root in mutant form at different places and different times, can we judge an individual life?
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:
There’s nothing like a good sneeze; maybe a hot shower or an ice cream sandwich, but no – nothing else even comes close. A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500. It feels sooooo good that people used to sneeze on purpose. They’d use snuff and stick it up their nose; the tobacco high and the resultant nasal explosion being the fashion of the times. Healthier than some of the stuff people stick up their nose these days I suppose, but then that’s a generational thing. My generation is closer to the snuff than that other stuff.
The latter commentary, titled “Achoo!”, goes on for another two paragraphs about sneezing before turning to neutral policy rates.