Perma-bear and AdvisorOne contributor A. Gary Shilling, president of A. Gary Shilling & Co. and author of "The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation," is taking aim at Fed policy in a piece written Thursday for Bloomberg, noting that Federal Reserve Chairman Ben Bernanke and Co.'s low rates are luring yield seekers onto "thin ice."
"Some investors are pursuing the safety of federally insured deposits," Shilling (left) begins. "Others are dissatisfied with low nominal and negative real returns and are moving further out on the risk spectrum in their zeal for yield, regardless of whether they understand the additional risk they are incurring."
Just as Alan Greenspan downplayed the possibility of a housing bubble prior to the collapse in 2008, Bernanke acknowledged that the central bank's "nontraditional policies," namely quantitative easing, "could induce an imprudent reach for yield by some investors and thereby threaten financial stability." But he downplayed the threat, saying, "We have seen little evidence thus far of unsafe buildup of risk or leverage."
Shilling doesn't buy it, noting that he sees "lots of potentially unsafe buildups."
