January 21, 2020
Guggenheim Says Central Bank-Driven ‘Ponzi Scheme’ Must Collapse
by Ross Larsen, Sonali Basak, Sridhar Natarajan
BloombergQuint.com
(Bloomberg) -- Scott Minerd has a message for his fellows at Davos who are applauding rallying markets: Things aren’t as good as they seem.
The Guggenheim Partners investment chief likened the inflation of asset prices caused by the loose money policies of central banks to a “ponzi scheme” that eventually must collapse.
“We will reach a tipping point when investors will awake to the rising tide of defaults and downgrades,” he wrote in a letter from the World Economic Forum meeting. “The timing is hard to predict, but this reminds me a lot of the lead-up to the 2001 and 2002 recession.”
Minerd cited rising defaults despite a rally in riskier assets, and reiterated a warning that BBB-rated bonds risk further downgrades. He said that type of debt is at a greater risk of deterioration than it was in 2007.
Anne Walsh, Guggenheim’s fixed-income chief, said in an interview that 15% of the U.S. economy is already in recession. She said the Federal Reserve’s efforts to pump liquidity into markets has created “zombie companies” that may see an outflow of capital as the utility of that money continues to diminish, she said.
The longer that this market runs, the harder the fall will be when it ends, she said.
http://www.bloombergquint.com/onweb/guggenheim-says-central-bank-driven-ponzi-scheme-must-collapse
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
| 
