Thursday, January 3, 2013

PIMCO's Bill Gross on Fed balance sheet expansion: Money For Nothin' Writing Checks for Free

PIMCO’s Bill Gross on Fed balance sheet expansion:  Money For Nothin’ Writing Checks for Free


But there is no such thing as a free lunch, economically speaking.  There are consequences to these actions.  And the Fed is not likely to exit QE without someone paying the consequences.  The only questions are who, how, and when.


“…ultimately government financing schemes such as today’s QE’s or England’s early 1700s South Sea Bubble end badly.”


“The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.”


“Capital vs. labor; bonds/stocks vs. cash; lenders vs. borrowers; surplus vs. deficit nations; rich vs. the poor: these are the secular anomalies and mismatches perpetuated by unlimited check writing that now threaten future stability.“



John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury


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