* Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit.
* In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near unfathomable $66 trillion of future liabilities at “net present cost.”
* Aside from outright default, there are numerous ways a government can reduce its future liabilities. They include balancing the budget, unexpected inflation, currency depreciation and financial repression.
And Gross's investment advice will sound familiar to readers of these pages:
Favor countries with cleaner “dirty shirts” and higher real interest rates: Canada, Mexico, Brazil and Germany come to mind. Shade equity and fixed income investments away from dollar based indexes towards those of developing nations with stronger growth prospects. Purchase commodity based real assets before reserve surplus nations do. And above all, don’t be lulled to sleep by Congressional law makers that promise a change in Washington. The last change I believed in was on Election Day 2008, and that turned out to be more fiction than reality.
Click on over and read the whole thing. And don't you ever buy a Treasury backed by the full faith and credit of the United States government.
The debt deal was a "whole lot of nothing". As I have said before, "got gold? Get more. Got bonds? Sell immediately".
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