Unless the U.S. government can figure out a constructive way to reduce the budget deficit, which has reached 8 percent of gross domestic product (GDP), the country risks higher interest rates, a lower dollar and stunted GDP growth for a long time, says Bill Gross, chief investment officer at Pimco.

Jumping over the fiscal cliff isn’t the solution, he maintains.

“Clearly, the ad hoc budgetary triggers set to take effect Dec. 31 are extreme and counterproductive on both the revenue and spending sides,” Gross writes in The Washington Post.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

“Draconian cuts to defense and dangerous increases to middle-class tax rates are destructive fantasies spun inside closed-door Washington chambers.”

Instead, the government should implement higher capital gains and ordinary income tax rates for the wealthy, Gross says. It should also pursue a reduction in Social Security, Medicare and Medicaid benefits.

“Should substantial and believable progress not be made over the next few months, rating services as well as global creditors may begin to desert our markets.”

Peter Schiff, CEO of Euro Pacific Capital, shares some of Gross’ concerns. He notes on Business Insider that the budget deficit and trade deficit together total 13 percent of GDP, more than twice the level prevailing at the time of the “Black Monday” stock market crash 25 years ago.

This time around, “Black Monday is more likely to occur in the currency and/or bond markets, with safe haven flows moving into gold, not Treasurys,” Schiff says.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation