Read this for some suggestions as to what others did, but beware that animosity towards those that were able to capitalize on the situation ultimately led to a growing hatred of them that resulted in 6 million being exterminated during WWII........
Posted on 04/04/2011 3:04:21 PM PDT by blam
U.S. Will Default On Its Debt
Interest-Rates / US Debt
Apr 04, 2011 - 04:13 PM
By: DailyWealth
Dr. Steve Sjuggerud writes: "I am confident that this country will default on its debt," Bill Gross wrote this week.
Bill Gross is not some anti-American crackpot... quite the contrary.
He manages the world's biggest bond fund. As the founder and chief investment officer of PIMCO, he's responsible for over $1.2 trillion in assets – mostly in bonds.
And last month, in his main bond fund, he got rid of all of his U.S. government bonds.
"[I've] been selling Treasurys because they have little value within the context of a $75 trillion total debt burden," Bill said. "Unless entitlements [namely Social Security, Medicare, and Medicaid] are substantially reformed, I am confident that this country will default on its debt."
How would that happen?
"Not in conventional ways," he explained, "but by picking the pockets of savers."
He says the government will pick your pocket through "inflation, currency devaluation, and low to negative real interest rates."
These things are all happening right now...
The currency is already weak... The U.S. dollar index is right around the lowest levels it's ever been since we went off the gold standard in the early 1970s.
We already have low to negative real interest rates... The Fed is artificially holding short-term rates at zero. But officially, inflation is 2%. So your "real" rate of interest at the bank is a negative 2%.
You can hardly blame Bill for not wanting to own government bonds...
Right now, if you're willing to lock your money up for 10 years in a government bond, you'll collect 3.5% every year in interest. The benefit (a small 3.5% interest payment) isn't worth the risks that Bill writes about.
Remember, Bill isn't some wacko. He's the "Bond King" – and that nickname comes from decades of extraordinary performance in his bond funds.
If Bill is right, it's dangerous to be a "saver" in the traditional sense... Low-interest bank CDs will have their value eaten away by the government's stealth default on its debts. What to do instead is a story for another DailyWealth...
Right now, the asset class Bill's fund has the biggest exposure to is mortgage-backed bonds (like those held by longtime DailyWealth favorite Annaly). He's putting his chips on a "real" asset as opposed to an asset that's backed by the "faith and credit" of the U.S. government.
U.S. government bonds are no longer good enough for Bill Gross, the best bond manager in history. If they're not good enough for Bill, then they shouldn't be good enough for you or me either.
Stay out of U.S. Treasurys.
The way a country does this while technically still honoring its obligations is to allow steep inflation, i.e. print money like there is no tomorrow. That way it gets to pay its loans back with much cheaper money.
balogna.
as long as the US owns the printing press it cant default. you just print up a new batch of dollars and ship em to the rubes
I can hear Jay Leno now, “Spend all you want, we’ll make more.”
Beat me; Globama will print more money and tell the sheeple that the problem has been fixed.
” you just print up a new batch of dollars and ship em to the rubes “
Some of the ‘rubes’ won’t take kindly to having their holdings essentially ‘made worthless’ - especially the ones with large, efficient, well-equiped armies, and nuclear weapons, to back up their claims....
yeah, but thats a different issue than default, which will never happen
What to do instead is a story for another DailyWealth...I'm sorry but I'm getting a little sick of this sh*t.
All these articles basically on the theme of Duck in Word World running around in circles screaming "What are we gonna do? What are we gonna do?", and no freaking solutions.
Ok. I get it. Obama is flooding the sh*t out of our currency and bigtime inflation is coming.
I'm already storing food, water, ammunition, batteries and other necessities.
But is that all I can do? Aren't there some INVESTMENTS I can be making???
I want some practical advice or I'm going to stop reading these garbage chicken-little screeds.
The nation will default on its entitlement obligations before it defaults on its debt.
iShares Silver was up 2% today
Never say never ...
Our government is on the road to hell.
Sam, you're late.
Silver closed today at $38.69...I bought silver at $9.50 - $11.50 oz.
I bought Krugerrands at $382.00 - $402.00 each. Gold closed today at $1435.00 an oz.
I have a couple thousand dollars in nickels.
Please don't call me a Chicken Little. If you don't like these articles...don't click on them.
Read this for some suggestions as to what others did, but beware that animosity towards those that were able to capitalize on the situation ultimately led to a growing hatred of them that resulted in 6 million being exterminated during WWII........
As a general rule, invest in companies or people that MAKE STUFF. Not paper, not “services.”
Tangible, you-can-hold-it-in-your-hand stuff. Stuff made out of metal, wood, fibers, etc.
Here’s an example: We know that the third world wants a second meal in a day. Well, the only way to get there is to grow more food. So buy companies that service the ag sector when the price is right. Read up on Deere’s recent projections of sales, for example.
We know that there’s going to be a relative shortage of oil. OK, you could buy into major oil refiners, but they get hammered as the cost of crude keeps going up. So who is really reaping the profits now? Drillers and service companies. Again, making tangible stuff - black gold.
And then there’s raw materials. You don’t have to be a gold bug to like raw materials. There’s plenty of raw materials going up in price if you want to play commodity angles.
Buy securities in companies that make tangible stuff. Tangible stuff is back in fashion. Ask any farmer.
... and the hoards of the entitlement classes will riot in the streets, burning, killing and rampaging, yelling “Eat the rich!!” Will it be open season then?
Invest time with your neighbors. Know who is of a like mind with you. Who has some stocks of food, weapons and ammunition. Who will stand with you if the Zombies pour out of public housing when “on time delivery” fails and they start to get hungry.
I've got it easy. Every other person on the street is either active duty or retired military. For all the stickers on cars we could hold our own darn NRA convention.
interestingly Mountain Home and other MRE manufacturers of “preparedness” supplies are totally stocked out right now. you cant even buy mountain home freeze dried and other stuff the demand is so high.
same with ammo, which continues in short supply and back order.
what does that tell you?
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