Bond king Bill Gross is not sanguine about the global economy. He says that even if the U.S. Fed does finally make a long-awaited rate cut by the end of the month that it is probably “too little too late”, as the global economy is likely stuck in neutral due to ultra-low interest rates in virtually all developed economies.

Gross’s most recent comments come from an investment outlook report he wrote Wednesday, September 2nd for Denver-based Janus Capital Group.

The Fed Interest Rates Bill Gross

Fed stuck between a rock and a hard place

The former PIMCO bond king says that by waiting to increase interest rates the U.S. Fed has put itself on the horns of dilemma. He says the central bank should have already acted to try and get the U.S. economy back on a “normal” footing and paying investors at least some returns on their investments.

Gross explains the nature of the dilemma in his comments Wednesday: “The ‘too late’ refers to the fact that they may have missed their window of opportunity in early 2015, and the ‘too little’ speaks to my concept of a new neutral policy rate which should be closer to 2 percent nominal, but now cannot be approached without spooking markets.”

Gross says both stock markets and bond markets are screwed by zero interest rates and no-growth

Bill Gross has argued for several years that the Fed and other global central banks maintaining ultra-low interest rates for seven years after the financial crisis is a major mistake and that the world economy will be stuck in the slow lane for some years because of this error in judgement.

He notes: “Global fiscal (and monetary) policy is not now constructive nor growth enhancing, nor is it likely to be. If that be the case, then equity market capital gains and future returns are likely to be limited if not downward sloping. High quality global bond markets offer little reward relative to durational risk. Private equity and hedge related returns cannot long prosper if global growth remains anemic.”

The “old normal” that led to past prosperity is gone

Gross goes so far as to say that the Federal Reserve and other global central banks have already blown it, and that the “old normal” of higher interest rate cycles promoting global economic growth is gone. “That is the near global conundrum we are faced with as near zero percent interest rates limit capital gains in the future, and if raised too high, will lead to redzone losses. Not much else to say here. Finance based capitalism with its zero bound interest rates has now produced global imbalances that impair productive growth and with it the chances for “old normal” prosperity.”

Gross says buy short-term blue-chip corporate bonds or just hold cash

Gross’s advice to investors right now? Buy short-term corporate bonds or just squirrel away your cash. He says: “Cash or better yet “near cash” such as 1-2 year corporate bonds are my best idea of appropriate risks/reward investments. The reward is not much, but as Will Rogers once said during the Great Depression – “I’m not so much concerned about the return on my money as the return of my money.”