Gross Says Fear ‘Mindless’ U.S. Deficit Spending

PIMCO's Bill Gross is parroting what I've been ranting about for years.  PIMCO funds have over $1 trillion under management.  When the world's biggest bond fund manager says to stay away from US Treasury bonds, one may want to heed his advice.

http://www.bloomberg.com/news/2011-01-05/pimco-s-gross-says-investors-should-fear-mindless-u-s-deficit-spending.html

“The problem is that politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion dollar annual deficit,” Gross wrote in a note on Pimco’s website today. “As long as the stock market pulsates upward and job growth continues, there is an abiding conviction that all is well and that ‘old normal’ norms have returned. Not likely. There will be pain aplenty.”

 “All investors should fear the consequences of mindless U.S. deficit spending.” wrote Gross, a founder and co-chief investment officer at Pimco. Like a female mantis who eats the head of her mate while reproducing, policy makers are “munching on the theoretical heads of future generations, while paying no mind to the wretches that will eventually be called upon to pay the bills,” he wrote.

Bond investors will suffer once general prices start to rise, Gross wrote. He declined to be interviewed today. 

“The American answer to a bulging waistline is always ‘mañana’” Gross wrote. “Eventually, as reflationary policies take hold, long-term bondholders lose their heads (and a portion of their principal as well), as yields rise to reflect higher future inflation.”