Bill Gross: Fed Has Followed Old Models

The video discusses the mispricing of financial and intangible assets due to outdated economic models like the Taylor rule and Phillips curve. It highlights the negative impact of low interest rates on financial business models such as insurance companies, pension funds, and banks. The discussion extends to the Bank of England's interest rate strategies and the market's expectations. The video concludes with a critique of central banks' inability to recognize the adverse effects of prolonged low interest rates on the economy.

Which economic models are mentioned as outdated in the discussion?

• Supply-side and Demand-side models

• Taylor rule and Phillips curve models

• Keynesian and Monetarist models

• Classical and Neoclassical models

What is one consequence of low interest rates on financial business models?

• Wider spreads for insurance companies

• Higher investment returns for pension funds

• Increased profitability for banks

• Destruction of business models at the perimeter

Why might the Federal Reserve's lack of recognition of low interest rates be problematic?

• It could result in imbalances in the real economy

• It might increase unemployment rates

• It could lead to higher inflation

• It might cause a stock market crash

What is the market's expectation regarding the Bank of England's interest rate decision?

• They expect a cut in interest rates

• They expect interest rates to remain unchanged

• They expect a new monetary policy framework

• They expect an increase in interest rates

What is a potential risk of extremely low interest rates according to the discussion?

• The economy might worsen instead of improving

• Increased foreign investment

• Stability in currency markets

• Improved economic growth