The Fed is not the Monopoly bank

In the opionion of Bill Gross, manager of the Janus Global Unconstrained Bond Fund of Janus Capital Group, who has not played by children at the famous board game might have difficulty in managing the US finances. In fact in his latest Investment Outlook titled "Just a Game", he wanted to provoke the American financial world with a curious comparison: "If only the Fed governors and US presidents had played more Monopoly and taking less account of the historical models, probably the US economy and its future prospects would be best. "

Known as the King of  bond, Gross said that, in a context in which the rates on government securities for a total value of $ 10 trillion are near zero or even negative, the contribution of the currency rate to GDP growth is coming at the terminus. Not only that this contribution could also fuel a negative growth.

"Our financial system based on credit is running low, and risky assets reflect this reality, even if most of the players (including central banks) has figured out just how to play this game."

In his latest Investment Outlook, Gross compares the global financial system to the Monopoly game and attacks Fed officials for having trusted too much of historical models, such as those of the Taylor rule and the curve Phillips. In his view the Fed officials "they worship false idols."

The American financier, to better explain his theory, he wanted then use an irreverent comparison with the famous Monopoly game: "In this game, the capitalists will travel around the world, buying property, paying rents and each time a player passes by Via, collecting $ 200 ". Now, "this cash of $ 200 (which in the economic scheme of things is the new 'credit') is responsible for the health of our economy, which is based on finance. No new credit, economic growth is moving in reverse, and the failures of individual players become more and more likely. "

Therefore, the misunderstanding is to consider the FED as the Bank of Monopoli, a role that was for the official private system: without the intervention of the latter, credit growth is a vain hope.