US debt must be addressed before it becomes a crisis, the head of JPMorgan warns.
Jamie Dimon, the chairman and CEO of JPMorgan Chase, has warned that the country’s unmanageable debt is accelerating the country’s descent towards a precipice and that action must be taken now to prevent a crisis.
At a panel discussion on Friday at the Bipartisan Policy Center, the CEO of the biggest bank in the country gave this warning after being asked what he thought happen to the economy if the federal government did not take action.
In his opening remarks, Dimon described the state of the economy in 1982, estimating that the debt amounted to approximately 35% of GDP, the unemployment rate was approximately 10%, the prime rate was approximately 21.5%, and inflation was roughly 12%. He stated that the debt-to-GDP ratio is already at 100% and that by 2035, it is expected to rise to 130%.
“And it’s a hockey stick,” Dimon remarked, illustrating the how a chart showing the rise in debt would look.
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He claimed that the United States has not seen the “hockey stick” expansion yet, “but when it starts, markets around the world – by the way, because foreigners own $7 trillion of U.S. government debt – there will be a rebellion, and that is the worst possible way to do it.”
Dimon stated, “It is a cliff, we can see the cliff.” “It’s about 10 years out, we’re going 60 miles an hour [toward it].”
Significant deficits and high interest rates render federal debt less viable.
On the panel, Dimon continued to concur with former House Speaker Paul Ryan, who referred to the mounting debt as “the most predictable crisis we’ve ever had.”
With analysts growing more concerned about the reckless rate at which Congress and the White House are spending, the forecast for the level of the federal debt is dire.
According to the Congressional Budget Office’s most recent projections, the size of the national debt will almost double over the next thirty years. The national debt increased to around 97% of GDP by the end of 2022. By the end of 2053, that percentage is predicted by current law to soar to 181%, a debt load that will far beyond any previous record.
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If such debt comes to pass, it might jeopardize America’s global economic standing.
Megan Henney from FOX Business contributed to this article.
