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BILL GROSS: 'We Are Witnessing The Death Of Abundance'
TBI ^ | 2-1-2012 | Joe Weisenthal

Posted on 02/01/2012 6:12:40 AM PST by blam

BILL GROSS: 'We Are Witnessing The Death Of Abundance'

Joe Weisenthal
Febuary 1, 2012

In his latest monthly letter, PIMCO's Bill Gross has a long philosophical-sounding discussion about credit, delevering, and the difficult task facing Bernanke.

The money line is this paragraph at the end:

Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time.

Read The Full Letter Here >

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: billgross; credit; debt; economics; obamanomics; pimco; thecomingdarkness
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The end of abundance is what? Depression?

I expect Bernanke to print money until the cows come home. (Hyperinflation eventually)

1 posted on 02/01/2012 6:12:46 AM PST by blam
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To: blam

This is foolish. Human civilization is poised to enter the greatest era of abundance ever.


2 posted on 02/01/2012 6:17:01 AM PST by tentmaker (vote for John Galt)
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To: blam

That is what will make us all poor.

Communism will only be possible when they destroy the middle class.


3 posted on 02/01/2012 6:17:03 AM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: blam

For a while now (since at least 2008), the primary objective of Fed policy has been to keep the deficit “managable”. It is doing this by keeping interest rates near zero as to minimize interest payments on the deficit. There are a lot of consequences to this, including the hoarding of $$ by corporations and banks. In addition, it is a huge (stealth) tax on savers.

If the 10Y treasury every goes above 5%, its game over.


4 posted on 02/01/2012 6:18:30 AM PST by rbg81
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To: tentmaker

The cost to produce most manufactured goods is going down. But the cost of raw materials and food is going up. Fact is, the Human race is increasingly able to produce everything it needs with fewer and fewer people. The big question is: who will pay to keep all those redundant people happy?


5 posted on 02/01/2012 6:21:09 AM PST by rbg81
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To: tentmaker

Yeah, abundance of stupidity.


6 posted on 02/01/2012 6:22:34 AM PST by Loud Mime (When conceit and anger are part of your religion, it's a political movement, not a religion.)
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To: blam

Eventually?? Have you noticed that that Our Dollar has been DEVALUED by some 3500 Percent over the last 40 years. It Only took 1 Paper Federal Reserve Note to Purchase 1 Dollar in Legal Tender in 1971 when Nixon Officially closed the Gold Window after the UK called in their loans. Today it takes 35 paper federal reserve notes to purchase 1 dollar in Legal Tender. Seems to me that HyperInflation has been in full swing for quite a long time, I think what you really mean is an OUTRIGHT THEFT and DESTRUCTION of All Americans Assets on a Grand Scale.


7 posted on 02/01/2012 6:23:24 AM PST by eyeamok
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To: eyeamok
Inflation Is Part Of The Plan
8 posted on 02/01/2012 6:26:10 AM PST by blam
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To: blam
I expect Bernanke to print money until the cows come home. (Hyperinflation eventually)

The Fedzilla money bomb is like a nuclear bomb; you need a good develivery system to go with it. There is no good delivery system to get massive amounts of money "downstream".

9 posted on 02/01/2012 6:26:55 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: rbg81
The cost to produce most manufactured goods is going down. But the cost of raw materials and food is going up. Fact is, the Human race is increasingly able to produce everything it needs with fewer and fewer people. The big question is: who will pay to keep all those redundant people happy?

That is a key question and it makes me really sad.

If a person is redundant and provides no economic benefit to society, what it to be done? One option is to kill them. The Left stands ready to exercise that option -- Death Panels are one manifestation of the idea. Another option is to put more people on welfare -- send 'em a check. The Left is also happy to exercise this option.

On the side of freedom ... what do we propose to do with redundant people who provide no economic benefit to society?

I swear, our side has no answer to that at all. I hate the answers that the Left would offer, but I don't see any alternatives except "Uhhhhhhh, the free market will think of something". I love the free market -- but "hope" is not a plan nor a policy.

10 posted on 02/01/2012 6:29:11 AM PST by ClearCase_guy (When the night falls, it falls on me, and when the day breaks I'm in pieces.)
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To: tentmaker
This is foolish. Human civilization is poised to enter the greatest era of abundance ever.

I agree. I think we are seeing the(hopefully temporary) suppression of wealth creation, and therefore, abundance.

By you know who.

11 posted on 02/01/2012 6:30:06 AM PST by wayoverontheright
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To: eyeamok
The Fed's Inflation Target; QE3, QE4, QE5, Etc. Are In The Queue
12 posted on 02/01/2012 6:30:13 AM PST by blam
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To: blam

Inflation has been the ONLY PLAN SINCE AUGUST 15 1971, was my point. Nothing has changed with the exception of the MoneyChangers doubling down on TYRANNY.


13 posted on 02/01/2012 6:31:07 AM PST by eyeamok
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To: blam

“...the borning of austerity...”????
***
Does he mean “birth”?

In any event, I guess we all define abundance differently. A warm place to live, food, freedom to worship and speak (and don’t forget “free” health care). At least here in America it is pretty hard to make the argument that abundance is waning— SUPER abundance, maybe.


14 posted on 02/01/2012 6:32:38 AM PST by NCLaw441
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To: ClearCase_guy
"I swear, our side has no answer to that at all. I hate the answers that the Left would offer, but I don't see any alternatives except "Uhhhhhhh, the free market will think of something". I love the free market -- but "hope" is not a plan nor a policy."

Yup.

Midnight basketball didn't work out so well, eh?

15 posted on 02/01/2012 6:32:38 AM PST by blam
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To: blam
The end of abundance is what? Depression?

The end of abundance is Temptation. Temptation to steal, tax or take away anyone's abundance.

16 posted on 02/01/2012 6:35:08 AM PST by Zuben Elgenubi
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To: tentmaker
Human civilization is poised to enter the greatest era of abundance ever.

ONLY IF the politicians get out of the way and stop buying votes with our money. The parasites / takers are at nearly 50% and don't produce anything. The greens, AGW kooks, and EPA all want us to return to the stone age and will do prevent any development at all anywhere. These are abetted by a communist in the White House.

Credit crunch aside, these problems add up to limited supply of many things. But the apparatchiks and nomenklatura will, of course, have all they need and want.

17 posted on 02/01/2012 6:35:08 AM PST by ProtectOurFreedom
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To: blam

Yes; depression. For at least another 6 years.


18 posted on 02/01/2012 6:35:17 AM PST by TheWriterTX (All in now for Newt Gingrich)
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To: ClearCase_guy
On the side of freedom ... what do we propose to do with redundant people who provide no economic benefit to society?

Before all of this Nixonian Free Trade insanity, the lower IQ types worked manufacturing. Now they are a permanent drain on the nation. Look at them as overhead, a cost of doing business on the gloBULList open border, free trade welfare state.

19 posted on 02/01/2012 6:35:19 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: rbg81

Absolutely.


20 posted on 02/01/2012 6:36:33 AM PST by TheWriterTX (All in now for Newt Gingrich)
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To: GeronL

I still say that here in the States (United no more), the black market or underground economy will thrive. That’s what kept the USSR going all those years.


21 posted on 02/01/2012 6:37:09 AM PST by griswold3 (Character is Destiny)
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To: blam

Wow, look at that guy...

he’s giving Alan Colmes a huge run for his money in the

“most sepulchral visage” contest.


22 posted on 02/01/2012 6:37:26 AM PST by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: ClearCase_guy

Pay the people to exist.


23 posted on 02/01/2012 6:39:45 AM PST by The_Media_never_lie
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To: rbg81

keeping interest rates near zero as to minimize interest payments on the deficit

Neither the debt nor the deficit are getting any smaller.


24 posted on 02/01/2012 6:42:00 AM PST by wita
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To: The_Media_never_lie; ClearCase_guy
Pay the people to exist.

There is definity a growing segment of society that are just like farm animals on the Federal plantation. The only work they do is breed and vote every 2 years, in return they are fed and watered. Like cows.

25 posted on 02/01/2012 6:44:23 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: MrB
"Wow, look at that guy...
he’s giving Alan Colmes a huge run for his money in the
“most sepulchral visage” contest."

sepulchral [sɪˈpʌlkrəl] adj
1. suggestive of a tomb; gloomy
2. of or relating to a sepulchre
sepulchrally adv

26 posted on 02/01/2012 6:44:53 AM PST by blam
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To: ClearCase_guy

One option is to kill them. The Left stands ready to exercise that option...


I disagree with the premise that the Left wants to kill people....at least not physically. What they want to do is make them dependent on Government. That way they can be more easily manipulated and help them increase their power base. Maybe the only ones they’d want to kill are old, white guys who are no longer paying into the system.

In the past, “redundant” people were sent off to colonize the Hinterlands (Siberia, America, etc). Back then, the colonists were more/less self sufficient. Now, the Hinterlands have all but disappeared. Mexico sends us their people in hopes we will put them on the dole and (eventually) they will be able to re-annex the Southwest.

Ultimately, I think the salvation of the Human race is in colonizing outer space. Unfortunately, I think we are going in the opposite direct. The Left would luv to keep us all here on Earth under their thumb. Outer space is too good an escape route.


27 posted on 02/01/2012 6:44:57 AM PST by rbg81
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To: rbg81

Bingo.


28 posted on 02/01/2012 6:45:21 AM PST by Jack of all Trades (Hold your face to the light, even though for the moment you do not see.)
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To: ClearCase_guy

Beg to differ. “Our side” believes it is up to an individual to decide if they are going to be productive or not!


29 posted on 02/01/2012 6:45:25 AM PST by wastoute (Government cannot redistribute wealth. Government can only redistribute poverty.)
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To: MrB
"Wow, look at that guy...
he’s giving Alan Colmes a huge run for his money in the
“most sepulchral visage” contest."

sepulchral [sɪˈpʌlkrəl] adj
1. suggestive of a tomb; gloomy
2. of or relating to a sepulchre
sepulchrally adv

30 posted on 02/01/2012 6:45:38 AM PST by blam
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To: blam

Does this mean that Mr. Gross will purchase cheaper ties?

Will he move PIMCO from Newport Beach, CA to Spivey’s Corner, NC?

Remember, Gang, Mr. Gross is lucky if he is correct half the time.

Keep your chins up and keep working.

Besides, God is good.


31 posted on 02/01/2012 6:45:40 AM PST by RexBeach
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To: wita

Neither the debt nor the deficit are getting any smaller.


Agree. But the only reason the current large deficits ($1T+) are even managable in the short term is because interest rates are near zero. If the Government starts spending over 50% of its revenue on debt service, then you will see the SHTF.


32 posted on 02/01/2012 6:47:24 AM PST by rbg81
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To: ProtectOurFreedom

ONLY IF the politicians get out of the way and stop buying votes with our money. The parasites / takers are at nearly 50% and don’t produce anything. The greens, AGW kooks, and EPA all want us to return to the stone age and will do prevent any development at all anywhere. These are abetted by a communist in the White House.

...and if the stone age is reinvented, blame will be measured by the bullets expended. Just who will get the blame for what we will have become from what shoulda been.


33 posted on 02/01/2012 6:47:36 AM PST by wita
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To: The_Media_never_lie

“Pay people..”

That’s what we do now and we don’t like it.
IF we truly want to come back, as it were, we have got to create wealth here and that means manufacturing, mining,drilling, farming,,,the messy industries we are too good for now.

That means having the political will to delete the EPA, to make the business of the US business and to stop pandering to every whiner with a leftist grievance over grocery bags.

This is NOT a call to dumping raw sewerage in rivers or belching smoke into the air without a care. But we do have to recognize that sometimes there are messes created...for the greater good.[hey...it works for them...]


34 posted on 02/01/2012 6:52:10 AM PST by Adder (Say NO to the O in 2 oh 12)
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To: wastoute
Let me put this very starkly.

Real economic freedom means that people who make bad choices, or who may have disabilities, or may have bad luck, might possibly end up starving in an alley. Women and children too. Not their fault, sure – but if you own responsibility for your own situation, and if things don’t go your way (for any reason) then you are on your own.

Now, churches and benevolent societies have done great things in the past, and could do great things in the future. But if all the economic parasites in this country of 300 million people had to suddenly depend on either themselves or on the kindness of strangers, then there would be a lot of suffering.

I see two choices:

1) Put a gun to some folks’ heads, forcibly extract their money, and redistribute that wealth.
2) Allow children to starve in the street.

I’m open to other alternatives. But outside of science fiction novels, I really don’t see anyone giving serious thought to other solutions.

35 posted on 02/01/2012 6:52:59 AM PST by ClearCase_guy (When the night falls, it falls on me, and when the day breaks I'm in pieces.)
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To: blam

The problem with old age is a flawed perspective of the world. Bill Gross thinks the world is as old and stupid as he has become. Aging gracefully is a challenge.


36 posted on 02/01/2012 6:53:41 AM PST by Broker (Many are invited....)
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To: Adder

I keep it simpler than that.

My phrase to my liberal pofs acquaintances is “how can you consume if you don’t produce?”


37 posted on 02/01/2012 6:53:50 AM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: rbg81

If the Government starts spending over 50% of its revenue on debt service, then you will see the SHTF.

I agree, and the only thing keeping interest rates so low, is that NGO the FED, and of course the Congress and President are forced to go along, because they know the consequences.


38 posted on 02/01/2012 6:54:14 AM PST by wita
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To: rbg81
Worth repeating:

If the 10Y treasury ever goes above 5%, it's game over

39 posted on 02/01/2012 6:56:25 AM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: ClearCase_guy

Define redundant.


40 posted on 02/01/2012 6:56:39 AM PST by ecomcon
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To: MrB

Looks just like Peter Fonda, to me.


41 posted on 02/01/2012 7:02:49 AM PST by sportutegrl
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To: ClearCase_guy
if all the economic parasites in this country of 300 million people had to suddenly depend on either themselves or on the kindness of strangers, then there would be a lot of suffering.

A lot of people who are currently economic parasites are being so out of an economically rational decision. "I won't be better off if I work and support myself." They very well COULD support themselves, but make the rational choice not to.

In other words, I don't think it would be as bad as you think. Those who are choosing dependence will experience some incentives (hunger) to support themselves, and those who are truly incapable of doing so can turn to the churches. The first group may also turn to the churches, but with limited resources, the churches would soon weed out the truly needy from the truly lazy.

42 posted on 02/01/2012 7:02:49 AM PST by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: tentmaker

By rights that should be true, there is amazing technology coming into use but there is the problem of human stupidity which is unlimited and seems to be multiplying at an exponential rate. Can man overcome his own stupidity?


43 posted on 02/01/2012 7:05:47 AM PST by RipSawyer
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To: ecomcon
Let me strike out the word "redundant".

I mean to point to people who can't make it on their own.
Some people have disabilities.
Some people are old and sick.
Some people have mental health issues.
Some people have low IQs and/or bad attitudes.

Sure, some folks could dig ditches rather than collect welfare checks, but a lot of folks can't perform any sort of beneficial economic function. I'm not saying it is their fault. I'm just pointing to reality.

Again, two choices: Government checks or abandonment.

Increased charity would help a lot but I am not so foolish as to think that increased charity is a 100% solution.

44 posted on 02/01/2012 7:07:16 AM PST by ClearCase_guy (When the night falls, it falls on me, and when the day breaks I'm in pieces.)
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To: ClearCase_guy

“our side has no answer to that at all.”

Yes we do: freedom. Everyone is free, with a supportive sociopoliticoeconomic system, to earn their survival. If they want to live they will find a way to contribute something and get by (see my tagline). Few indeed “provide no economic benefit to society”, if only an outlet for charity (the providing of which is indeed itself a human need).

The Left, however, insists on controlling others, passing judgement and rendering reward and punishment unto capital. They have made functional poverty illegal, leaving those who “provide no economic benefit to society” only abject dependency or termination.


45 posted on 02/01/2012 7:18:45 AM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: ClearCase_guy

I see.

I disagree with the idea that there are that many people that are truly incapable. I think the destruction of our culture (respect for elders, family cohesion, accountability to God) has wrought these changes by cutting people adrift.


46 posted on 02/01/2012 7:21:34 AM PST by ecomcon
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To: tentmaker
Human civilization is poised to enter the greatest era of abundance ever.

Maybe for China and other 3rd world countries moving up. Western countries are getting knocked down a peg. I suspect most Americans in the future will have to live like we did in the 1950's. We will live comfortably but won't have all the toys like we did from 1990-2005. In 50 years most countries will be equal economic wise.

47 posted on 02/01/2012 7:22:00 AM PST by trailhkr1
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To: blam
30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets

I think Mr. Gross's spell checker meant "parabolic". At least I hope it did.

48 posted on 02/01/2012 7:22:58 AM PST by NeoCaveman
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To: eyeamok

What are you talking about? It is mathematically impossible to devalue by 3500 percent, if something is devalued 100 percent it is worthless, no further devaluation is possible. As for 35 paper dollars to purchase a dollar of legal tender, I can make neither heads nor tails of it, the paper dollar IS legal tender as far as the government accepting it for tax payment even though it does seem to violate the constitution. If you refer to the price of silver it may be 35 times what it was back then, I have not checked on it but I think the price of gold is MORE than 35 times higher.

One thing is certain, I wish that I had the income and the freedom to live the way I could live in 1971.


49 posted on 02/01/2012 7:23:58 AM PST by RipSawyer
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To: ctdonath2
Well, I can't disagree with that, but let me make my point more explictly --

IF freedom is the answer (and I think it is) then we have to change our culture so that low standards of living for some (and I mean very low) are acceptable. And early deaths for some folks are acceptable.

Productive people? Go and live a wonderful middle class lifestyle. Government is getting out of the way. Be free and prosper!
Can't quite make it? Well, at least you're free. There's a church down the street that might help you, but just be clear: you are not entitled to what I have. I may give something, but you cannot take something of mine.

That's a culture shift, my friend. I think we need it. I think it would be good. But how do you plan to sell that to the people who want either Romney or Obama?

I say you can't get there from here. Which is why I think there will be a catastrophic meltdown in this country in my lifetime.

50 posted on 02/01/2012 7:26:05 AM PST by ClearCase_guy (When the night falls, it falls on me, and when the day breaks I'm in pieces.)
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