Bill Gross said: " if we continue down the current road and don't address our "fiscal gap."
IF is the key word here. No one dispute that US government bond will be less attractive (not bankrupt) if the US doesn't fix its fiscal problem in some undefined number of years in the future. Let us look at what Bill Gross is ACTUALLY doing with his clients' money.
Go to here: http://investments.pimco.com/products/pages/346.aspx and click on Portfolio Statistics.
You will see that 20% of their investments are in US Treasury securities, 3% US agencies securities and another 49% in mortgages. The mortgages are almost entirely in Fannie Mae and Freddie Mac securities which are ALSO guaranteed by the US Government. In contrast, investments in other developed governments' bonds are less than 10%. Gold doesn't even show up. In total, his fund has 70% plus in US government guaranteed securities and no one is forcing his investment choices.
In other words, he overhwhelmingly trusts the US Government to pay back his clients' investments.
In simple terms, we're on a boat headinng toward a shoal IF we don't turn away. IF we hit the shaol, the boat may leak. You are claiming that the boat is already leaking and ready to sink. It may be fun to pretend to be Cassandra, but only real data will anchor you to the real world instead of a fantasy world that makes you feel superior. Please don't just read hermetic Austrian theories, look at what real people are doing with real money.
