Janus’s Bill Gross: ‘Helicopter money’ is coming in a year or so

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Manna from “heaven.” What could be better? Hurrah! Free money!

Consider that during Obama’s recent and brief economic legacy tour he was making the case that everything was great. Meanwhile Bill Gross, the legendary bond manager, is talking about dropping cash from the sky. This ain’t good. Gross knows that helicopter money is unwise yet he’s still somewhat advocating for it.

Yeah, things are peachy.

The world still hasn’t come to terms with 2008. The year hangs like a specter over the economy. It is not done with us. Markets weren’t allowed to clear during the Crash and as such we have massive global malinvestment weighing us down. This malinvestment is both old, from pre-2008, and even more dangerous, new, post-2008.

(From Reuters)

The next big monetary and fiscal policy move should include an airdrop of “money from helicopters” to stimulate the U.S. economy and avoid an extended recession, says Bill Gross, a portfolio manager at Janus Capital Group Inc (JNS.N)…

…”Drop the money from helicopters,” wrote Gross, manager of the $1.3 billion Janus Global Unconstrained Bond fund.

“There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die.”

On this last point Gross couldn’t be more right. However, the survival of politicians and central bankers shouldn’t be our concern. We need to get back to organic economics sometime in our lifetimes. But that is going to make many powerful people quite uncomfortable.

Sadly, getting back to reality will also cause hardship to everyday people too for a bit. It will be destabilizing. It will be politically challenging. (To say the least.) But we must heal the wound. We must shake the specter.

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