Janus Capital Group Inc JNS 0.8%’s Bill Gross just released his Investment Outlook for August, and this edition focused on the fallout from the historically-low interest rate environment that has been in place ever since the Financial Crisis. According to Gross, while low interest rates started out as a solution to the world’s economic woes, they have since become part of the problem.

Historical Approach

The approach that most global central banks, including the U.S. Federal Reserve, has taken in the past to combat a slumping economy has been to lower yields, which serves to both stimulate asset prices and encourage investment spending in the real economy. However, Gross points out that, while this type of stimulus approach certainly results in higher P/E ratios and equity market prices, there has been little demonstrated “trickle-down” effect on real wages.

Economic Reality

In theory, allowing corporations to borrow at a nearly zero rate should…

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