Gross said the central bank has a responsibility now to provide liquidity.
"We're in an asset deflation of near-historic proportions. That calls for the use of the government's balance sheet and not for the Federal Reserve to raise interest rates," he said. "To the extent that the central banks now must prevent that deflation, interest rates don't go up, they go down."
Watch the Gross interview in video at left.
However, Gross said the Fed cannot lower its key rate, but rather he called on central banks across the world to examine their monetary policy.
"In the US, 2 percent is pretty much the floor. I think the Fed made that clear," he said. "They're going to provide liquidity in different forms and fashions."
As for investments at this point in the market, Gross advised against junk bonds and toward government-backed securities.
"We want to stay under the umbrella to the extent that we have an umbrella that shelters large banks and to the extent that we have an umbrella that shelters the agencies, Fannie and Freddie, that's where you want to be," he said. "Why mess with junk bonds? Let's stick to high quality and stay under that umbrella. Let's stay dry."