Thursday, 4 September 2014

Bill Gross of PIMCO joins the monetary loons.

He’s fallen for the myth, pushed amongst others by Paul Grignon, namely that in order to pay interest on loans, people have to borrow an ever increasing amount of money. See his second sentence.
I dealt with that bit of nonsense in section 3.4 of this paper.
Yawn yawn.
(h/t to Mike Norman)

1 comment:

  1. I fear that your answer(s) are incomplete.

    The only logic that I can see behind the Gross comment would speculate that the pension funds managed by Gross expect to grow by an amount defined by the interest rate each year. He seems to think that this money is withdrawn from the system, having come to rest in his pension fund. Thus he needs the money supply to grow (increasing debt grows the money supply) each year for the process to continue.

    I think these are fair questions to ask: Do pension funds lend their assets for productive economic increase? Do pension funds lend their assets to government for the purposes of government?


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