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There was concern that the Fed's accommodative monetary policies of the 1920s had led to asset speculation that precipitated the 1929 crash and ensuing Depression.
And with fewer good bets to back in the real economy, investors awash with cash discovered the joys of asset speculation.
The real lesson here is that extended periods of low interest rates (including periods of negative real interest rates) encourage leverage and asset speculation, and this time it was housing.
The most recent evidence of asset speculation in Chinas commodity markets has been for garlic, which has seen unprecedented gains as speculators have entered the market, Morgan Stanley said.
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As more people buy the asset, the speculation and frenzy increase.
Out will go the economy dangerously skewed towards asset-price speculation.
Rumors of a possible takeout began swirling in mid-October, but serious skepticism about the value of CenterPoint's assets dampened speculation.
Unlike the U.S., which keeps interest rates at zero to fuel debt-fueled asset-price speculation, at least China has a plan to both generate savings amongst her citizenry (with a savings rate of return greater than zero) and, at the same time, show some respect for the cost of capital.
The afflicted countries saw housing speculation, asset bubbles and cheap loans followed by a credit crunch and the seizing up of the financial system.
Contrary to Mr. Gross' speculation, asset flipping and securities trading probably accounted for little of the acceleration in withheld income and employment taxes.
When combined with negative real interest rates and diminishing marginal returns in industry pushing more and more money into asset investment and speculation, inflation will remain a persistent threat.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com