The world’s central bankers are running out of time to get their economies growing and using policies that will ultimately punish investors if they fail to “reflate” their economies, according to Janus bond fund manager Bill Gross.

In his latest economic outlook, Gross writes that if central bank policies fail to boost nominal economic growth, financial markets will suffer and “capital gains and expectations for future gains” will become “giant pandas” – rare and less able to reproduce.

“Developed and emerging markets are flying at stall speed and they’ve got to bump up nominal GDP growth rates or else,” writes Gross. More specifically, nominal GDP needs to rise to levels that allow central banks to “normalize short-term interest rates,” or markets will be headed south instead of loss, writes Gross.

Gross writes that nominal growth in the U.S. needs to rise to 4% to 5% by 2017, up from 3% currently. And he offers these targets for other global economies: 1% to 2% for Europe (currently 0.3%); 1% to 2% for Japan (currently -0.3%); and 5% to 6% in China (reported as 6.9% for 2015).

Gross doesn’t say exactly what central banks need to do to reach these targets but lambastes the current negative rate policy of many central banks, as he has many times before, arguing that negative rates haven’t increased. He argues instead that negative rates—which account for 30% to 40% of government bond markets in developed economies including 75% of Japanese government bonds – “break down capitalistic business models related to banking, insurance, pension funds and ultimately small savers.”

Negative rates may seem like a logical way to force investors to buy longer-maturity debt  or take more risk, but they’re not working, says Gross.

“Investors cannot make money when money yields nothing,” writes Gross. “All financial assets are ultimately priced based upon the short-term interest rate.” It follows logically then, writes Gross, that if an investor loses money owning a German government bond because it pays a negative interest rate, that same investor or another will earn less than historical returns in his or her stock portfolio and may even lose money. “Yields have been at 0% or negative for years now across most developed markets, and to assume that high-yield bond and equity risk premiums as well as P/E ratios have not adjusted to this Star Trek interest rate world is to believe in – well to believe in Zeno’s paradox,” writes Gross, referring to the writings of a Greek philosopher. The Zeno paradox is essentially an illusion and in this case one where investors believe they will be able to make money.

Maybe so, but the evidence is mixed. The German DAX stock market index has fallen almost 17% since German government rates turned negative in April 2015, but Bloomberg’s German sovereign bond index is actually higher, up 0.74%. In Japan, the Nikkei 225 is down 4% since Japanese rates turned negative in late January, but Japanese government bonds are up moderately, gaining 1.33% in the past month. And in the U.S., where interest rates remain very low but not negative, the iShares 7- to 10-year Treasury ETF (TLH) is up 5.3% year to date while the S&P 500 is just 0.77% higher.

Negative rates may be hurting stock markets but not necessarily government bond markets.

In the U.S. the Federal Reserve has ended its policy of cutting rates and raised rates in December, but it has not made any changes since then. Earlier this week, Fed Chair Janet Yellen told the Economic Club of New York that the U.S. central bank intended to pursue high rates as the economy improves but will “proceed cautiously in adjusting policy,” suggesting perhaps one or two additional hikes this year.

The Janus Unconstrained Bond Fund that Gross manages, meanwhile, is up almost 2% year to date, beating 89% of his peers, according to Morningstar.

— Check out Bill Gross: Global Economy ‘Devolving’; Finance ‘Burning Out’ on ThinkAdvisor.