Gross Says Treasury Investors Face Similar Fate as Boiling Frog
By Susanne Walker
Pacific Investment Management Co.’sBill Gross said investors in U.S. Treasuries are being lulled into a false sense of security by positive returns this year because yields aren’t high enough relative to inflation. Gross, who oversees the world’s biggest bond fund, said bond investors face a similar fate as a frog that remains in a pot of water while the temperature is gradually increased until the amphibian is cooked. Inflation erodes the value of the fixed payments of bonds over time.
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Comment: The longer it take for price inflation to show up, the more drastic it will show up finally. We may well move quickly like never before from a state of relatively low price inflation into hyperinflation.
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