Bill Gross recently came out with his monthly investment outlook entitled “Credit Supernova”. Below is a summary of the outlook, and my explanation of the 3 primary investment ideas he gives in the piece.
So, what is a credit supernova?
Google gives the following definition for a supernova
A star that suddenly increases greatly in brightness because of a catastrophic explosion that ejects most of its mass.
Gross sums up why he is comparing our current debt situation to a supernova in the following paragraph and the chart below it:
Today, at $56 trillion and counting, it is a monster that requires perpetually increasing amounts of fuel, a supernova star that expands and expands, yet, in the process begins to consume itself. Each additional dollar of credit seems to create less and less heat. In the 1980s, it took four dollars of new credit to generate $1 of real GDP. Over the last decade, it has taken $10, and since 2006, $20 to produce the same result.
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