Bill Gross: Our financial system is sputtering

In his latest note, ’Bond King’ Bill Gross has warned that “our credit-based financial system is sputtering, and risk assets are reflecting that reality even if most players (including central banks) have little clue as to how the game is played.” Using an interesting analogy based on a game of Monopoly, Gross explains how a lack of credit growth and slowing velocity of money are creating stresses in the credit markets and economy. “Credit is the oil that lubes the system, the straw that stirs the drink, and when the private system (not the central bank) fails to generate sufficient credit growth, then real economic growth stalls and even goes in reverse. A highly levered economic system is dependent on credit creation for its stability and longevity, and now it is growing sub-optimally." Read Gross' note to investors here: (VIEW LINK)