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President wants everyone but himself to pay more
Topic - William H. Gross
The threat of the first downgrade of U.S. government debt - for decades considered the safest investment in the world - came as a jolt to some in Washington last week, but financial markets foreshadowed the move for months.
Last week, economist and bond expert William H. Gross, warned that when the Federal Reserve ends its second round of "quantitative easing," any recovery momentum in the economy may reverse. Quantitative easing is the term used to describe the Fed's policies of buying huge amounts of Treasury bonds in hopes of creating a demand for these instruments, keeping interest rates - including mortgage rates - down.
Mr. Gross said he doesn't expect the U.S. to default outright on its obligations and stop making payments on the debt.
Rather, he warned of a kind of "backdoor" default process already under way, whereby the U.S. Federal Reserve and Treasury spur inflation through devaluation of the dollar to enable the government to "inflate" its way out of the debt.