The rate has remained there since late 2008, a move meant to provide support to the economy during the Great Recession but kept there long since the accompanying financial crisis is ended.

“My advice to them is this: get off zero and get off quick“, Gross urged the central bankers.

Gross called the Fed ‘illogical’ prior to the announcement after discussions centred on the central bank potentially raising rates just to allow them the policy room to cut them in the future.

The Fed chose to keep interest rates unchanged at its September policy meeting last week, but a continued focus on what many see as declining liquidity in the bond market shows how critical the Fed deems the issue for financial-market stability.

“Zero destroys existing business models such as life insurance company balance sheets and pension funds, which in turn are expected to use the proceeds to pay benefits for an aging boomer society”, Gross said.

Fed officials have been closely watching global bond markets for signs that trading conditions are becoming more brittle, a development that could hamper the central bank’s smooth transition to higher interest rates when the time comes.

In Wednesday’s missive, Gross argues that interest rates at the zero bound “destroy the savings function of capitalism, which is a necessary and in fact synchronous component of investment”. “Instead they have plowed trillions into the financial economy as they buy back their own stock with a seemingly safe tax-advantaged arbitrage”. That’s already beginning to happen in the developed world, where Detroit, Puerto Rico, and, he predicts, soon Chicago, struggle to meet their liabilities.

In order to pay out benefits, insurance companies need yields of 7% or 8% a year from their stocks and bond portfolios.

‘Do they simply chalk it up to bad management and inept governance and then return to their Phillips Curves for policy guidance?

‘Mainstream America with their 401Ks are in a similar pickle.

According to Gross, the Fed should accept that zero percent interest rates are destructive in nature over the intermediate and longer term.

His prescription to the Fed and the other central banks?

Gross said raising the federal funds rate to 2 per cent will harm corporate America “a little” and that stock and bond prices will “most certainly” go down. With bond yields compressed by low rates, the businesses must rely on stocks to produce annual returns of 10%, a hard benchmark to achieve consistently.

But citing Volcker’s actions in 1979 as precedent, he argues that “the time has come for a new thesis that restores the savings function to developed economies that permit liability based business models to survive – if only on a shoestring – and that ultimately leads to rejuvenated private investment, which is the essence of a healthy economy”.