Bill Gross, the manager of the world’s largest mutual fund, told Reuters on Monday that he fears that the measures will result in a catastrophic decline in the value of the dollar:
“I think a 20 percent decline in the dollar is possible,” Gross said.
“When a central bank prints trillions of dollars of checks, which is not necessarily what (a second round of quantitative easing) will do in terms of the amount, but if it gets into that territory—that is a debasement of the dollar in terms of the supply of dollars on a global basis,” Gross told Reuters in an interview at his PIMCO headquarters.
“QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices,” Gross added.
The Fed seems unconcerned that the public impression it is creating is that it is clearly acting to debase the US dollar
