"No Way Out" of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall

Yahoo/Finance ^ | 3/9/11 | Stacy Curtin

[EBH]

If the country cannot come to grips and cut back on entitlement programs, U.S. debt will continue to grow and governments around the world will loose faith in the U.S. dollar. Foreign goods would become more expensive, says Gross, while our standard of living would drop.

Under the second option, if entitlement programs are cut, many Americans would naturally have to learn to live on less and take a hit to their standard of living.

“There is really no way out of this trap and this conundrum at this point,” says Gross. From an investment perspective his advice is to stay clear of “bonds in dollar denominated terms” and to be “wary of higher interest rates going forward.”

[Gondring]

How dare you expound such conservative ideas here! Actually focus on the US first? Be responsible in our spending?

[EBH]

The only solution is default, new regime and new currency. That's it.

I've been saying that for a while now. The Weimar did something very similar to attempt to get out of their war debts. I realize Wiki isn't the best source for some things, but reading through their Inflation in the Weimar Republic gives a good idea of where we're actually headed and what the outcome will be.

Under Keynes he thought they didn't do enough to secure loans or raise taxes, interesting there again is no discussion of cutting spending. At one point in their journey the only thing they could do was print more money. Strikes by workers etc. Blaming bankers, Jews, competence of liberal institutions; it all sounds so very familiar.

[EBH]

PS. Foreign countries blockaded resources etc. to exact payment from the Weimar...what will China do?

If we do not start to produce and innovate there is more at risk than just civil war. IMHO

[RipSawyer]

The standard of living for the average American has been dropping for some time already by my calculations.

[RipSawyer]

I have long maintained that most government employees should not be counted as employed. The EPA is a prime example, there may be something they do that is positive but the vast majority of their actions are counterproductive, we would be better off if we disbanded the agency and paid the employees the same amount to stay home and play air guitar. We would be FAR better off if we fired them all and put those who could not find another job on an old fashioned poor farm where they could work the fields to grow corn and beans with hand tools and live in old fashioned barracks such as I enjoyed at boot camp back in ‘62. They would be so eager to get away they would find something productive to do.

[headstamp 2]

Lotsa ignorant Democrats commenting at the link. The new mantra is eliminate defense spending.

[EBH]

The world is one the very brink of full blown war in the Middle East...

and they want to cut military spending...

[Scott from the Left Coast]

employing people at the EPA and other overbearing regulatory agencies has served to eliminate other jobs in a quantity much larger than the quantity of jobs that they possess themselves.

Absolutely true...and is also true of our over-bearing judiciary and ridiculous plethora of lawyers using it for their own personal benefit.

You simply cannot engage in large-scale projects in America any more - energy, natural resources or infrastructure. The bureaucracy and the legal system have become effective barriers, making the cost and time involved so great that nothing, absolutely nothing, can pencil out. We can't do anything of significant size or scope in this country any longer.