“U.S. needs to make things, not paper,” says Gross

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Bill Gross, co-founder and co-CIO of PIMCO, is to my mind one of the shrewdest money men around. His monthly Investment Outlook newsletter therefore always makes for thought-provoking reading.

The following are a few excerpts from the December report:

“The global economy is suffering from a lack of aggregate demand. With insufficient demand, nations compete furiously for their share of the diminishing growth pie.

“In the U.S. and Euroland, many policies only temporarily bolster consumption while failing to address the fundamental problem of developed economies: Job growth is moving inexorably to developing economies because they are more competitive.

“Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and other developing economies, both in asset and in currency space. The United States in short, needs to make things not paper, but that is not likely unless we see a policy revolution in Washington DC. In the meantime, our unemployed will continue to fill out forms and stand in line.”

Click here for the full article.

Gross also shared this message in the following CNBC interview:

Sources: Bill Gross, PIMCO – Investment Outlook, December 2010 and CNBC, December 3, 2010.

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