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Will the Fed have to create massive monetary liquidity to divert a finical crisis?

*Bloomberg, by Jody Shenn, September 4, 2008

U.S. Must Buy Assets to Prevent `Financial Tsunami,’ Gross Says

“The U.S. government needs to start buying assets to stem a bourgeoning ‘financial tsunami,’ according to Bill Gross, manager of the world’s biggest bond fund.

A process of ‘delevering,’ where banks are shrinking and cutting off lending, is sapping demand for loans, bonds, stocks and commodities, driving down prices of assets of even ‘impeccable quality,’ Gross said. The decline may continue until the government steps in as a buyer, he said.

‘Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami,’ Gross of Newport Beach, California-based Pacific Investment Management Co. said in commentary posted on the firm’s Web site today. ‘If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury.'”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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