Bill Gross, the mercurial boss of PIMCO, the earth’s largest bond manager, occasionally brings clarity to the table. He did so again with his comments on Bloomberg that spending government money to stimulate consumption spending in the face of demographic declines is utterly a waste.
He also remarked that capitalism depends on economic growth, and economic growth depends on population growth, and none of the developed economies have growing populations, and that’s why we are in trouble. It really is as simple as that. It is why this demand-destroying deflationary trip around the economic block is far different from all the rest. Growth can’t save us, like it did in the 1930’s and -40’s, unless we get more babies out of the wombs of women in the developed world.
The article from Bloomberg is worth a read, as well as the interview is worth a listen. Gross sees things more objectively, and from a longer-term perspective, than the shrill analysts on television that mostly play to the day-trader crowd. Like Gross, bonds are in it for the long haul.