Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on April 2, 2011
Worlds largest money manager: United States will default on its debt
Bill Gross has said the US will default on its bonds because it is the only way the country can cope with its massive debt pile.
The PIMCO chief investment officer says the US has a total debt burden of $75 trillion if entitlements such as those for medical care and social security are included. In his latest Investment Outlook, Gross writes that unless large cuts are made to entitlements, the only way the government can afford this amount of debt is to default.
“The only way out of the dilemma… is to default in one (or a combination) of four ways: 1) outright via contractual abrogation – surely unthinkable, 2) surreptitiously via accelerating and unexpectedly higher inflation – likely but not significant in its impact, 3) deceptively via a declining dollar – currently taking place right in front of our noses, and 4) stealthily via policy rates and Treasury yields far below historical levels – paying savers less on their money and hoping they won’t complain,” he said.
Gross, who runs a $252.2bn bond fund has completely sold out of his US treasury holdings in favour of cash because he believes they have little value in the context of the $75 trillion debt burden. It is the first time since early 2008 Gross has cut all exposure to US government-related debt.
“Unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies – inflation, currency devaluation and low to negative real interest rates,” he said.
2 Comments on "Worlds largest money manager: United States will default on its debt"
Simon in BC on Sat, 2nd Apr 2011 9:49 am
That’s only $250,000 for every man, woman and child. Or about $1,000,000 per average family.
Oh wait – that is rather a lot. 🙂
CJ on Mon, 4th Apr 2011 12:29 am
GE paid zero taxes in 2010. Why?
There is a greed problem here. Corporate tax cuts, slashed taxes on the wealthiest of our citizens, obscene profits hoarded by bailed-out banks, increased concentration of wealth at the top 1% of U.S. population.
Blame entitlements? Increase $ ceiling on incomes over $106,000 to contribute to Social Security. End all entitlements to high net wealth individuals.
And, let’s not forget – the US. Military is the largest user of oil in our nation, and their bloated budgets benefitting Halliburton, BlackWater and other contracted Military Industrial Complex could have their budgets halved overnight.
Why is the military entitled to Endless Wars to profit the big corporate profit bottom line?
Why should me and my children pay for mistakes made by banks who risked my hardwon 401(k) dollars, got bailed out and now we have “taxation without representation” for the next generation?
We going to “Go Egypt” in the U.S. pretty soon.