FROM: Lisa Sorani, Manager of HR Employee Services LS -
FROM: Lisa Sorani, Manager of HR Employee Services LS -
FROM: Lisa Sorani, Manager of HR Employee Services LS -
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Expert Views: Inflation Hawks<br />
• Bill Gross – Founder and co-CIO <strong>of</strong> PIMCO<br />
• Policy makers are robbing investors through the combination <strong>of</strong> ultra-low interest rates and inflation<br />
• Policy makers are attempting to reduce debt loads by monetizing the debt<br />
• Put his money where is mouth is – sold Treasuries from the PIMCO Total Return Fund he manages<br />
• Reasoning<br />
• Federal Reserve is printing money at an unprecedented pace<br />
• Record government deficits will lead to some form <strong>of</strong> default<br />
• Countries who control their own monetary policy default through currency devaluation and inflating away debt –<br />
Not reneging on debt<br />
• Policymakers overestimated the extent to which high unemployment will keep inflation from<br />
accelerating – U.K. has 8% unemployment and 5% increasing inflation<br />
• Businesses thus far have absorbed input price increases<br />
• When will businesses start passing on increased costs?<br />
• PPI (measure <strong>of</strong> business inflation) increased by 4.8% in 2011<br />
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