Roll the dice! Bond guru Bill Gross says global markets have been transformed into monolithic casino fostered by the easy-money policies unfurled by the world’s central bankers.

In his most recent monthly screed, published Tuesday, Gross says the Bank of Japan’s recent decision to hold its 10-year government bond
TMBMKJP-10Y, -1.85% at a yield of zero and European Central Bank President Mario Draghi’s ongoing effort to do “whatever it takes” to lift stubbornly low eurozone inflation have “fostered a casino like atmosphere.”

“Our financial markets have become a Vegas/Macau/Monte Carlo casino, wagering that an unlimited supply of credit generated by central banks can successfully reflate global economies and reinvigorate nominal GDP growth to lower but acceptable norms in today’s highly levered world,” Gross wrote in his October note.

If those utterances from the manager of Janus Capital Group’s unconstrained bond fund sound familiar, they ought to. Gross has been railing against central-bank intervention for months and warning about the impact the emergence of trillions of dollars in negative-yielding debt ($15 trillion by his count) will have on savers, pension funds and big banks.

Deutsche Bank CEO John Cryan, who is embroiled in his own fight to restore confidence at Germany’s largest lender, also has attributed some of the problems associated with his bank, namely meager profits, to a protracted period of ultralow-interest rates. Of course, low rates are just part of the nettlesome issues buffeting Deutsche Bank’s shares DBK, -1.79% DB, -0.75% J.P. Morgan Chase & Co. JPM, -0.55% CEO Jamie Dimon also has decried the growth of negative yields.

Gross continues:



In the U.S., the Federal Reserve, and most recently Fed member Jeffrey Lacker, has stated a desire to normalize interest-rate policy in the U.S., but has been reluctant to do so, as evidenced by the fact that it has paused on its rate-hike plan since lifting benchmark rates once back in December.

This environment has been supportive for equity markets, with the S&P 500 index SPX, -0.29% the Dow Jones Industrial Average DJIA, -0.14% and the Nasdaq Composite Index COMP, -0.26% all showing firm year-to-date returns, but sinking Tuesday.

Drawing his gambling analogy out, Gross references the so-called Martingale system. That is a strategy in which a gambler doubles his or her wager after every loss in an attempt to win a profit equal to the original stake. Proponents of the system, which tends to be used in games of chance where the odds are equivalent to about a coin toss, like roulette, swear by it.

But the strategy ignores what’s referred to as a gambler’s fallacy, or Monte Carlo fallacy. That is the fact that despite a series of outcomes (for example, five consecutive hits on red or black) in games of chance, each game resets to the same 50-50 probability. (That is unless you are in the world of Tom Stoppard’s “Rosencrantz and Guildenstern Are Dead.”)

Perhaps the gambler’s fallacy is what Gross is saying is being ignored by central bankers.

He puts it this way:



Of course, not everyone agrees with the high-profile bond investor. He’s often viewed as someone who tends to make comments that benefit his own investment strategies. But even if that is the perception, he’s certainly not the only market participant making dire pronouncements about the jeopardies of the current state of monetary policy.

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