Bill Gross Calls QE A Ponzi Scheme So Large That Probably Should Be Renamed To Sammy Scheme In Honor Of Uncle Sam.

Bill Gross is very critical of quantitative easing effors from the Federal Reserve and eevn calls it a a "Ponzi Scheme":

"The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. It is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin. It is a Sammy scheme – you and I, and the politicians that we elect every two years – deserve all the blame.
While Gross isn't sure if QE 2 will work due to our liquidity trap predicament, he is sure who to blame for getting us into this mess. Gross targets the politics of the country at large."

And Bill Gross adds,

"Each party has shown it can add hundreds of billions of dollars to the national debt with little to show for it or move our military from one country to the next chasing phantoms instead of focusing on more serious problems back home. This isn’t a choice between chocolate and vanilla folks, it’s all rocky road: a few marshmallows to get you excited before the election, but with a lot of nuts to ruin the aftermath."

The impact of this politcal mess and QE 2 is extremely limited returns for investors in the bond market (and the stock market too). That's because the combination of inflation and negative interest rates is creating a uniquely bad environment for bondholders, according to Bill Gross.

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