Bill Gross: "Treasuries Have Little Value Given Our $75 Trillion National Debt; We Are Out-Greeking The Greeks"
- Medicare, Medicaid and Social Security now account for 44% of total federal spending and are steadily rising.
- Previous Congresses (and Administrations) have relied on the assumption that we can grow our way out of this onerous debt burden.
- Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates.
That adorable skunk, Pepé Le Pew, is one of my wife Sue’s favorite cartoon characters. There’s something affable, even romantic about him as he seeks to woo his female companions with a French accent and promises of a skunk bungalow and bedrooms full of little Pepés in future years. It’s easy to love a skunk – but only on the silver screen, and if in real life – at a considerable distance. I think of Congress that way. Every two or six years, they dress up in full makeup, pretending to be the change, vowing to correct what hasn’t been corrected, promising discipline as opposed to profligate overspending and undertaxation, and striving to balance the budget when all others have failed. Oooh Pepé – Mon Chéri! But don’t believe them – hold your nose instead! Oh, I kid the Congress. Perhaps they don’t have black and white stripes with bushy tails. Perhaps there’s just a stink bomb that the Congressional sergeant-at-arms sets off every time they convene and the gavel falls to signify the beginning of the “people’s business.” Perhaps. But, in all cases, citizens of America – hold your noses. You ain’t smelled nothin’ yet.
I speak, of course, to the budget deficit and Washington’s inability to recognize the intractable: 75% of the budget is non-discretionary and entitlement based. Without attacking entitlements – Medicare, Medicaid and Social Security – we are smelling $1 trillion deficits as far as the nose can sniff. Once dominated by defense spending, these three categories now account for 44% of total Federal spending and are steadily rising. As Chart 1 points out, after defense and interest payments on the national debt are excluded, remaining discretionary expenses for education, infrastructure, agriculture and housing constitute at most 25% of the 2011 fiscal year federal spending budget of $4 trillion. You could eliminate it all and still wind up with a deficit of nearly $700 billion! So come on you stinkers; enough of the Pepé Le Pew romance and promises. Entitlement spending is where the money is and you need to reform it.
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March 11 (Bloomberg) -- Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., discusses the outlook for the U.S.'s AAA credit rating. Gross, speaking from Newport Beach, California, with Margaret Brennan on Bloomberg Television's "InBusiness," also talks about the 8.9-magnitude earthquake that struck Japan and the Federal Reserve's quantitative easing.
Summary from Bloomberg:
Gross Echoes Buffett Saying Treasuries Have ‘Little Value’ on Debt, Dollar
Apr 7, 2011 at 12:06 PM
Reader Comments (11)
Its a mad mad world.
No one cringes any more when Social Security is described as a crippling expenditure of the "federal spending". We are all supposed to forget that it is an INSURANCE. "Social Security is a social insurance program that is funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA)".
The fact that the money is long ago stolen by the politicians and their puppet masters does not quite change the fact. The secondary fact is that if the actual money would be there, it would be growing as we speak, while the IOU's in its' place add to the debt burden, bitter irony of it all!
While working on contract teaching at an university, i personally shelled out over 14% every month into this "insurance". Now i am supposed to start drooling and in slurred speech repeating after Bill Grosses that the Social Security is spending other people's money? The history is written every day, and it is all one big lie.
until we physically remove the people complicit in these fraudulent schemes, nothing will change.
Bill Gross the same person who went on CNBC and admitted he made 1 billion dollars in a day on insider trading from the federal reserve.
Obama just released a copy of his long form birth certificate. I guess we can thank Donald Trump for getting Obama to release it. This should really piss off the left. What’s the next step?
It looks like it is a photograph of the document but then they have blackened out some of the more relevant details.
It will take some time for those in the know to vet this release for authenticity. My guess is that there is something fishy about it and I doubt that they can obtain the information that is blackened out.
I wonder if this will lead to the release of Col Lakin from prison. I say no because that would mean that Obama is going to be removed from office.
Poor people, working people, and the destitute aren't running the economy into the ground, greedy global corporatists who can hide their income offshore are. A dollar invested in human infrastructure-- health, education, housing-- is a dollar that's kept from the piranhas who own our politicians. American capitalists can't wait to sell every US asset overseas. The stock exchanges are all gone or going that way. I think it was Daddy Bush who kept (at the last possible moment) an Arab firm from scooping up most of the US ocean freight handling facilities. And the capitalists got all in a twist about that. We're facing some hard-going for awhile, but maybe, if people can just figure out who the enemy is (hint, it's not Obama), then maybe the US can get back to what it's good at-- creating goods people the world over want to buy, and opportunities for all of its citizens to excel and thrive.