Today in the show I talk to Bennett Johnson of aretebiz.com about surviving not only hurricane Katrina, but hurricane Rita as well. We also went over his impressions of the European healthcare system and how we could be facing this same healthcare system in the future. Although, after seeing many health insurance marketplaces take shape, who knows? and finally we went over the basics of economics and the current state of the government and why their spending is irresponsible.
At the end of the show I read an email that Bennett recently sent me about U.S. Treasury bonds and how they could affect our future.
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Here is the email Bennett sent me about treasury bonds…
Dale,
I thought that you would find this interesting.
The last time we talked, you and I talked about my former career on Wall Street as a Banker and Investment adviser.
Bill Gross of PIMCO is the GOD of the bond investing marketing. He is by far the most respected brain when it comes to investing in bonds. His funds are the most sought after by bond investors. I used to read his updates every week and made investment decisions for many of my clients based on his advice.
He has now directed ALL of his funds to dump US Treasuries. There is only one reason one would take that action. They expect things to go badly. By badly, I mean decrease in value. Bonds are different from stocks.
Remember that when you buy a bond, you are basically loaning someone money. In this case, when you buy a US Treasury Bond, you loans the US Government your money. The bond states how much you loaned them, for how long you loaned it to them, and how much you will get back when the bond matures or the time ends. A bond defaults when the US Treasury does not pay you back your money on time. The default drives the value of the bond downward until it is worth nothing.
If Bill Gross is advising people to dump US Treasury bonds, I cannot imagine any other reason except that he expects a default. That would be the first time in history that I know of.
Check out the story at the link below.
Bennett
http://www.nationalreview.com/exchequer/261796/biggest-bond-fund-dumps-us-debt
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