One week from today the Federal Reserve is very likely going to announce the start of a new round of money printing known as Quantitative Easing 2.0. For those who are unfamiliar with the concept of quantitative easing, the process involves the Federal Reserve crediting itself money (“printing money”) and then using that money to buy up financial assets, including debt. The Fed’s goal with quantitative easing is to increase inflation/inflation expectations to overcome what it perceives to be a deflationary mindset in the mind of companies and consumers. The Fed is attempting to justify this new round of money printing by claiming that inflation is too low and that action is needed to improve the employment situation in the U.S.
The Wall Street Journal had an excellent article today describing the context that the Federal Reserve finds itself in as it prepares to embark on a new round of money printing and how there is doubt that a new round of money printing is the right move. Link
Even though the Wall Street Journal article was great, the article of the day is a commentary by Bill Gross, Managing Director at PIMCO. Gross is perhaps the most high-profiled bond investor in America and often appears as a special guest on financial news programs. Gross typically does not rock the boat when he is on television, so it was a complete shock today to discover that Gross wrote a commentary on PIMCO’s website that would probably get him banned from television if he dare repeat some of the items he wrote in his commentary live on television. Gross’s full commentary can be read here: Link
I actually had a complete article written about Gross’s commentary but I came to the conclusion moments before publishing the article that quoting from Gross’s commentary may not be the wisest thing to do.... However, the writers at ZeroHedge have decided to quote and highlight key points of Gross’s commentary so I’ll refer you to their website for an in-depth analysis of Gross’s comments. You can read their analysis of Gross’s comments at the following Link
