In what can only be described as perfect timing, just a few short hours after we recalled Bill Gross' March 2011 [8]note in which the former head of Pimco asked "Who will buy Treasuries when the Fed doesn't", moments ago the current/former (depending on one's ideoloigical persuasion) bond kind has just tweeted another warning, this time asking, again rhetorically, what happens when the music ends.
Gross: (1 of 2) QEs worldwide supporting financial assets: ECB + BOJ each $1 trillion +
— Janus Capital (@JanusCapital) June 10, 2015 [9]
Gross: (2 of 2) U.S. Corp buybacks $1 trillion + as well; China too. What happens when it stops?
— Janus Capital (@JanusCapital) June 10, 2015 [10]
We all know what happens: as Chuck Prince so accurately pointed out nearly a decade ago, as long as the music is playing, one has to ignore reality, and dance.
And when the music gets quiet enough, and the Fed has no other choice, it will do what it has done every single time when the dance was in danger of ending: do even more QE.
Rinse. Repeat. Until one day the USD is no longer the reserve.
