B. Gross: Danger of recession if banks are aggressive in their policies

Highly leveraged world economies, including the US, are at risk of recession, if central banks around the globe are approaching too aggressively in terms of their interest rate policy, believes the "bond king" Bill Gross.
In his latest letter to clients, Gross who is managing $2.1 billion in the Janus Henderson Global Unconstrained Bond Fund, said that the Fed and other central banks around the world should not rely on historical interest rates in a world of "extraordinary monetary policy."
"The attachment of Yellen, Bernanke, Draghi and Kuroda, as well as the other central bankers to the standard economic models, have destroyed the capitalism we have known. There is a danger of the occurrence of unknown consequences in the coming years," Gross said in his letter.
Gross refers to Yellen's predecessor Ben Bernanke, ECB chief Mario Draghi and the Japanese central bank Haruhiko Kouroda to make a warning.
According to Gross, over the past 25 years, three US recessions have matched flat yield curves between quarterly and 10-year US bonds.
"In view of the current 80 basis point spread, which is still far from the spread of 0 points, economists and some Fed officials do not see the danger of recession," Gross said.
Monetary policy, however, following Lehman Brothers bankruptcy in 2008, was "unconventional" and failed to stop buying bonds, despite warnings that a collapse in bonds is "around the corner," said Gross.
"While governments and the US can afford the extra cost of this policy, leverage companies and US investors can not," said Gross.