The real bond kings and queens sit on the Federal Reserve throne

Cash has been trash for years but soon it may be the only haven for investors

Bill Gross 

Current Fed chair Jay Powell, top row, centre, with, clockwise from left, former chairs Janet Yellen, Ben Bernanke, G William Miller, Paul Volcker and Alan Greenspan © FT montage; Bloomberg; Corbis, AFP, Hulton Archive, Getty

Let me be honest. 

The only bond kings and queens over the past half-century since credit was unleashed from its gold standard in the early 1970s have been the US Federal Reserve chairs.

Sure, there were lauded economists Henry Kaufman and Albert Wojnilower during the frantic end days of double-digit inflation in the early 1980s but they were consiglieres egging on clients to avoid long bonds and then somewhat belatedly issuing an all-clear.

There never has been an investor that could move bond markets with a large enough wallet to make a difference. 

The Fed chair with the ammunition of the global currency has been sitting on the monetary throne for the past 50 years.

And now it is Jay Powell — well meaning I’m sure, but bombarded with unique pandemic-related circumstances that make me wonder whether he has changed his conservative clothes and unleashed the potential for chaotic future economic and market outcomes.

Granted, he is conjoined now more than ever with the Treasury and forced to accommodate peacetime deficits of unimaginable size. 

That these fiscal and monetary monarchs have logical intentions is not in doubt — a return to a pre-coronavirus economy of 3 per cent real growth and 2 per cent inflation is their goal. 

Still, how does Powell (and Washington) get there, and for how long do they keep their “pedal to the metal”?

I suspect that $5tn spending programmes and the Fed’s current package of near zero per cent short-term rates and $120bn of monthly bond buying will move growth, inflation and financial markets far beyond reasonable targets that ultimately will jeopardise post-Covid-19 normals.

Even enthusiasts of the Fed’s policy must wonder whether hundreds of cryptocurrencies or a boom in special purpose acquisition vehicles are the result of continuing financial innovation or the product of cheap and plentiful credit demanded by deficit spending and an accommodating Fed chair.

Powell will not even acknowledge asking the question about asking the question until Covid is more under control and employment returns to historical norms. 

Yet unemployment may never return to 4 per cent, given the radical changes in working from home and Zoom-like technological shifts.

What is Powell’s new Nairu? 

The Fed’s historical model for the “non-accelerating inflation rate of unemployment” cannot be a reliable guide for future policy rate changes. 

And how long can the Treasury continue to require near-costless Fed financing for $2tn, $3tn and $4tn deficits without sinking the dollar? 

In a historical gold-standard world, Fort Knox would have been emptied long ago, implying the bankruptcy of the world’s reserve currency.

Many observers wonder how Treasuries and other global sovereigns can trade at yields that are so low, and in some cases negative.

Five-year US Treasuries currently yield just 0.80 per cent, not much in a world where inflation expectations over the same period are above 2.5 per cent. 

That is reflected in the negative real yields, which have the effects of inflation stripped out. 

Five-year US inflation protected bonds now trade at a yield close to minus 2 per cent.

Part of the explanation lies with the less attractive yield on local sovereign debt for foreign institutions (minus 0.5 per cent in Germany, for instance).

Even US investors, however, believe that a 10-year Treasury yielding 1.65 per cent can earn a total return of 2.40 per cent or more by capturing the rising price of the bond as it approaches its maturity date. 

And then there’s the Fed buying more than $1tn Treasuries a year. 

No wonder the 10-year Treasury rests illegitimately at 1.65 per cent.

Such speculations, however, are dependent upon the stability of the dollar and the consistency of Powell’s vow to keep short rates unchanged for the foreseeable future. 

At some point in the next few months, hopes for this will probably be disappointed as inflationary pressures pose increasing price risks to Treasuries and stocks too.

The Fed cannot for long continue to maintain current policy rates and expand its own balance sheet and therefore private bank reserves at a $120bn monthly pace.

Ten-year Treasuries morphed into the “risk” asset category several years ago. 

Stocks with valuations supported by low yields have entered the same category now, no matter the growth potential for 2021 and 2022. 

Cash has been trash for years but soon it may be the only haven for investors sated beyond reasonable expectations of perpetually low yields and supportive bond kings and queens.

The writer is a philanthropist and co-founder of Pimco. He was also fund manager at Janus Henderson Investors from 2014 until his retirement in 2019 


By Egon von Greyerz

“The scholar does not consider gold and jade to be precious treasures, but loyalty and good faith.” 

– Confucius

This article will discuss gold’s growing importance as the principal protector of wealth and also that the coming price evolution of gold will be dazzling as it reaches heights that no one can imagine.

But first let us observe Confucius’ words at the beginning of the article. 

There are many real values that are much more precious than wealth or gold. 

Loyalty and good faith are clearly two of them. 

Also as I have many times stated, some of the best things in life are free, like family, close friends, nature, music, books and many more….

But with the risks and problems that are now facing the world, it is also our responsibility to protect our family and assist our friends in whatever way we can.


There are two principal risks that need our attention:

- Systemic Risk and Currency Risk

These two risks are totally interrelated.

The systemic risk arises as a result of a 100+ year period (since the Fed was created in 1913) of deficit spending and debt explosion.

And since Nixon closed the gold window in 1971, things have got a lot worse. 

Debts and deficits have gone exponential and the fake GDP expansion could only be achieved with the creation of fake money fabricated by central and commercial banks.

All this money was created out of thin air.

No one needed to work one hour for it and nobody needed to produce any goods or services against it. 

And today not even a printing press is needed. All that is required is pushing a button on a computer and trillions of dollars, euros etc just appear out of nothing.


This is the biggest Hocus-Pocus scheme ever produced in history.

To further deceive the people, the so called experts have come up with the name MMT (Modern Monetary Theory).

When you need to deceive the people, you invent expressions which sound very fancy and creative like MMT or QE (Quantitative Easing). 

Both these two expressions mean forging money but that would clearly be too obvious. 

Much better to hide behind fancy words or a theory which no one understands, not even the inventors.

Is it possible that credit growth could be healthy for the economy?

Yes at certain times but not if you constantly need $3-5 of credit to create $1 of GDP.

And certainly not if you grow debt 31X and tax revenue only 6X which has been the case since Reagan became President in 1981.

And most definitively not if the Federal debt can only be financed at zero or negative interest rates. 

In the long term Investments must always equal Savings. 

But that fundamental law of nature and economics has been set aside by the MMT Wizards.

Remember that the Piper will always get his pay.

But the risk that the cost will be the survival of the whole financial system. 

MMT or money printing lasts until the world wakes up to the fact that there was no substance and no value in the money that inflated all the bubble assets of stocks, bonds property etc.


So if the money was created out of mainly Nitrogen and Oxygen or thin air, the value of the assets created must clearly be mainly air too.

The only thing that needs to trigger the coming collapse is the evaporation of confidence. 

And once confidence goes so will the system with it.

But governments and central banks will clearly not give up without a final stand. 

This will involve money printing into the hundreds of trillions and eventually quadrillions as the global derivatives bubble implodes. 

Remember that when counterparty fails, the gross derivatives of $1.5 to $2 quadrillion will remain gross. 

Hyperinflation will obviously be the consequence as the currency collapses.


No one can of course with certainty say that this scenario is guaranteed to take place. 

But what we can say is that the risk is greater than any time in history.

Because never before have so many countries been indebted to such a great extent with absolutely ZERO ability to repay the debt or to finance it at proper market rates.

Manufacturing of fake money and manipulation of interest rates break all rules of nature and creates a state of massive disequilibrium that cannot be sustained.

It is all really very simple. 

Extreme moves always return to the mean in normal times. 

But we haven’t had normal times in the last half century so the extreme swing of the pendulum to one side will result in a similar counter reaction.


Thus after the massive creation of more fake money with zero economic benefit, all assets including paper money will implode with devastating effects on the world financial and economic situation. 

And that is how the world goes from a depressionary hyperinflation to deflationary implosion and depression.

So this is in my view a very likely scenario in the next 3-10 years and probably sooner rather than later.

Remember that we are talking about probabilities and definitely not certainties. 

I can clearly be wrong but more likely in the timing than in the eventual outcome.

Thus in my view the systemic risk is greater than any time in history. 

What actually will happen only historians can tell us with certainty. 

Because hindsight is the most exact of all sciences!


As regards the currency risk, this is the obvious consequence of the systemic risk. 

And although many will reject the systemic risk, few can deny the currency risk.

Since 1971 all currencies have lost 97- 99% of their value in real terms. 

And since 2000, they have lost around 80%.

Thus it is absolutely guaranteed that all currencies will lose the remaining 1-3%. 

The only question is how long it will take. 

Again, I would be surprised if it takes as much as 10 years. 

Between 3 and 5 years seems more likely.

So there we have it. 

Not a rosy scenario but the consequences of creating a world based on debt, fake money and deceit leading to a total lack of morality and real values.

But remember that countries and empires have gone through major forest fires before and life on earth has continued and advanced. 

So even though the coming setback that we are all facing is likely to be greater than the world has ever encountered before, but it will create the foundation for future healthy growth.


Wealth preservation is what it says, protecting current wealth and also generational wealth. 

European families who have survived financially for centuries have always had major portions of their assets in land and in physical gold.

Gold is a 100%-proof bet on the continued failure of governments’ monetary policies.

Or in other words, holding physical gold is like putting your money on black on a roulette table with only black numbers. 

You know that you will win every time as history proves with 100% certainty that governments will continue to destroy the currency and thus the economy.

So regardless if investors are in agreement with the systemic collapse that I have outlined above, no one can deny the currency collapse since that has happened without fail throughout history.

Governments are incapable of stopping deficits or money printing. 

The US for example has increased its debt every year since 1930 with four year’s exception. 

America is a bankrupt country but has managed to hang on to its reserve currency status until now. 

But this comes at an enormous cost. Since Nixon “temporarily” took away the gold backing of the dollar in 1971, the dollar has lost 98% in real terms.

With the current state of the US economy and with Biden having already committed $6 trillion in his first 100 days, the dollar is guaranteed to implode.

The principal objective of a government is to be reelected and the only way to achieve that is to buy the people’s votes. 

Thousands of years of history proves that.


In times of political and geopolitical upheaval gold also serves as a protector and life saver.

Gold is also your best protection against a rigged and totally corrupt financial system.

To take a few examples, just look at the Romans in 180 to 280 AD when the Denarius lost 100% of its silver content or the people in Uganda during Amin’s rule or in Yugoslavia during the hyperinflation of the early 1990s or in Venezuela today, to mention just a few examples in history. 

The list will fill a whole book.

Within the next 5 – 10 years investors are likely to lose in excess of 90% of their wealth.

This projection has nothing to do with sensationalism or Cassandra fortune telling

The likelihood of having nothing left in real terms is substantial just from currency risk.


So now is the time to get out of the financial system for a major part of your assets and invest in physical gold and silver.

The average investor hasn’t got a clue of the REAL return on investment. 

REAL in this case means measured in stable money. 

And the only stable money in history, WITHOUT EXCEPTION, is of course gold.

No one must believe that measuring your wealth in the US dollars for example has got anything to do with the REAL performance.

Wealth preservation is now paramount and that involves not having the majority of your assets in paper wealth within a shaky financial system.


Many are asking about the Basel III requirements in relation to gold. 

Alasdair Macleod has written some excellent articles on this subject on the King World News site.

According to Basel III, the bullion banks (in rest of Europe from June 30 and December 31 for UK) can only count physical gold owned by them as a Tier 1 asset. 

In theory that would force them to either acquire major amounts of physical at a high cost or sell their paper gold. 

Since we are talking about substantial amounts of paper gold, this would lead to panic in the gold market.

But it is clear that the market is not expecting panic since this news is already known by market participants and investors. 

Also, it is not in central banks’ interest to cause panic.

The former Governor of the Bank of England, Eddie George, described such a moment back in 1999:

“We looked into the abyss if the gold price rose further. 

A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. 

Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. 

It was very difficult to get the gold price under control but we have now succeeded. 

The US Fed was very active in getting the gold price down. 

So was the U.K.”

Since the central banks control and own the BIS (Bank of International Settlement) which is behind Basel III, they are not going to allow the gold market to get out of hand, IF THEY CAN STOP IT.

So in my view there will initially be some fudging of the rules and a transition period to prevent such panic.

Even if it doesn’t happen today, I do believe that the central banks will lose control of the gold market in the not too distant future.


Gold began this bull market in 2000. 

But it is really a bear market in currencies and in paper assets which we are facing.

As the chart below shows, gold went up for 12 years in a row 2000 to 2012. 

After a 3 year correction, this bull market is now resuming.

I expect gold to do as least as well in coming years as the 2000 to 2012 run which was a compound annual growth rate of over 20% for 12 years.

Also the short term picture for gold looks very favourable. 

On March 31st when gold was $1,707, I said that the gold bottom was in. 

The price is up almost $200 since then but that is just the beginning. 

A strong and sustained move is starting very soon.

There is no better asset than gold to protect against the systemic and currency risk which the world is facing. 

But it is not just a matter of wealth preservation as I expect gold to also generate substantial wealth enhancement in coming years.

The End of the C.D.C. Eviction Moratorium Means Trouble

By Peter Hepburn

Credit...John Moore/Getty Images

A federal judge last month struck down the eviction moratorium put in place by the Centers for Disease Control and Prevention. 

Though the judge stayed her decision pending appeal, the ruling is a harbinger of the inevitable: the end of the federal eviction moratorium, which is set to expire on June 30. 

With millions of tenants behind on rent and emergency rental assistance only now beginning to be disbursed, few states are ready for this eventuality.

According to the Covid-19 Housing Policy Scorecard — which is run by the Eviction Lab at Princeton where I work — only two states, Minnesota and Washington, afford renters strong pandemic-related protections, defined as freezing the eviction process in most or all cases. 

Thirty-nine states have few, if any, protections. No state that voted for Donald Trump in 2020 is still offering meaningful protections to renters.

The C.D.C. moratorium, which has now been in place for nine months, limits landlords’ ability to evict tenants who fall under certain income thresholds or are unable to pay rent because of a medical or economic hardship. 

Tenants must attest — and often prove under cross-examination in court — that they have made good-faith efforts to get rental assistance and have nowhere to go if evicted.

In anticipation of the end of federal renter protections, progressive housing activists persuaded lawmakers to make a robust investment in emergency rental assistance. 

Congress appropriated $25 billion in the Consolidated Appropriations Act in December and an additional $21.55 billion in the American Rescue Plan in March. 

These funds are intended to help renters catch up on back rent and to support landlords struggling to make mortgage and utility payments because of missed rent.

This aid, however, won’t be equally available everywhere. 

Congress allocated assistance on the basis of state population, without taking into account differences in the number of renter households, variation in the cost of rent, or the extent of pandemic-related hardship.

The legislation also mandated a minimum payment to smaller states. 

The result is that far more assistance will be available to renters in smaller, rural states than in larger, urban states — those that, in many cases, were hardest hit by the pandemic. 

The American Rescue Plan included discretionary funds for “high-needs grantees,” but they do not come close to providing equal resources to renters.

If you were to divide the maximum aid allocated to the states by the number of occupied rental units, each renter household in New York would get $766, compared to $5,167 in Wyoming. 

Based on median rent data from the American Community Survey, that would cover roughly half a month’s rent in New York, but six months in Wyoming.

Some funds were also allocated directly to large cities and counties, but at a lower rate. 

For example, New York City directly received only $645 million in rental assistance — just a quarter of the $2.6 billion allocated to New York despite the city’s being home to nearly two-thirds of the state’s renting households. 

Decisions about the distribution of state funds will vary across the country in ways that could shortchange renters in dense urban centers.

Ideally, better-funded states will use this aid to ensure that all rental debt is paid down and to institute eviction diversion, right to counsel, and housing counseling programs. 

If they don’t pursue such strategies, or if excess funds remain, the American Rescue Plan allows for the reallocation of unused aid. 

Money that Alaska isn’t able to use could, in theory, be sent to California. 

But that reallocation won’t happen until October at the earliest, well after many renters have been evicted.

When the C.D.C. moratorium ends, renters in large Republican-leaning states are likely to be hit the hardest. 

Renters in New York, California and Nevada get much less in emergency aid, but still have meaningful state-level protection. 

Places like Montana and South Dakota have few renter protections, but they have ample assistance available. 

By contrast, in places like Florida, Indiana, Ohio and Texas, renters will be receiving little in rental assistance and have few protections available.

Cities have interpreted the C.D.C. eviction moratorium in a wide variety of ways. 

Notably, the moratorium still allows landlords to file eviction cases for reasons other than failure to pay rent. 

The records of these cases — even those that do not eventually lead to an eviction — trail tenants, tarnish their credit, and limit their ability to find housing later. 

Across sites monitored by the Eviction Tracking System, more than 255,300 eviction cases have been filed since the C.D.C. moratorium went into effect — 54 percent less than normal over the same period in a typical year, but still troubling.

When the moratorium ends, renters’ rights will revert to the strict prepandemic status quo. Last spring, states put in place a range of moratoriums and renter protections. 

In mid-May 2020, nearly a quarter of renters lived in a state with a strong moratorium. But state governments largely abandoned these policies by the end of last summer.

So in the short term, maintaining the C.D.C. moratorium is affording critical time for rental assistance to reach tenants and landlords. 

While the initial $25 billion in assistance was provided to states and cities in late January, it has taken time for officials arrange how to distribute funds.

Overly burdensome application procedures delayed this process, but the Biden administration recently announced changes that should significantly improve the pace of distribution. 

Assistance is now available in most places and aid is being distributed more quickly, though not without problems.

What’s most encouraging is that policymakers are now more seriously exploring longer-term options to support renters. 

The pandemic has inspired attempts to expand the right to legal counsel in eviction cases, to establish eviction diversion programs, to seal records in eviction cases and to increase the cost for landlords of filing eviction cases. 

These efforts signal a potentially larger shift in renter protections and a rethinking of how eviction should — and should not — be used.

Peter Hepburn (@ps_hepburn), an assistant professor of sociology at Rutgers University-Newark, runs the Eviction Tracking System at the Eviction Lab.