Hedge fund billionaire Ken Griffin has slammed the US government for its mounting debt mountain, suggesting that future generations will face dire consequences if the US sinks deeper.
“The rapid rise in U.S. public debt is a growing concern that cannot be ignored,” Citadel founder and CEO Griffin wrote in his book. End of 2023 Investor Letter It was released on Monday. “We must stop borrowing money at the expense of future generations.”
Historically, the increase in the national debt (currently hovering at $34.58 trillion) has been caused by high unemployment, an associated decline in tax revenues, and increased government spending on economic stimulus. .
However, Griffin said the current unemployment rate of 3.75%, which is between 3% and 5%, is generally considered a reasonable range and does not justify the government spending that has been undertaken. .
“It would be irresponsible for the U.S. government to incur a 6.4% budget deficit when the unemployment rate is hovering around 3.75%,” he wrote in the mogul’s first letter to investors in years. ” he wrote.
Due to the impact of the new coronavirus infection, the unemployment rate peaked at a staggering 14.8% in April 2020, but fell to 6.2% in February 2021 and 3.9% in February 2024. The Bureau of Labor Statistics announced earlier this month.
“With rising government debt and entitlement spending burdens straining nearly every major economy, Western countries urgently need to accelerate strong productivity growth,” Griffin said.
Representatives for Citadel did not immediately respond to The Post’s request for comment.
Earlier this year, JPMorgan President Jamie Dimon warned that America’s debt needs to be addressed before it becomes a crisis.
“It’s a cliff, we’re looking at a cliff,” Dimon told Fox in January. “In about 10 years, we’ll be going 60 miles an hour.” [toward it]”
Last year, under President Joe Biden’s administration, the U.S. debt soared to more than $33 trillion for the first time in history, even as the president announced poor financial numbers as a boon for Bidennomics policies.
Currently, the debt-to-GDP ratio is over 100%, 123% to be exact according to the International Monetary Fund, and is projected to reach 130% by 2035.
Dimon added that the debt-to-GDP ratio hasn’t reached a “hockey stick” spike yet, “but when it starts, markets around the world — foreigners, by the way, have $7 trillion in the U.S. “Because we own government debt — we’re going to see a massive rally.” That’s the worst way to do it. ”
Dimon also noted how the economy has changed from about 40 years ago, when inflation was about 12%, the prime rate was about 21.5% and unemployment was about 10%.
At the time, U.S. debt was $907 billion, or about 35% of gross domestic product.
By the end of 2022, the national debt had increased to about 97% of gross domestic product. Under current law, this figure will take the debt burden far above previous levels, which is expected to jump to 181% by the end of 2053.
The federal government spent 23% of its budget on Social Security in fiscal year 2023, according to Treasury Department data.
Health care swallowed up 15% of federal spending, and defense, Medicare, and income security each accounted for 13% of Uncle Sam’s spending.
Even before the Treasury Department’s fiscal year 2023 data was released, Fitch Ratings downgraded the U.S. government’s credit rating by one notch from the highest rating of “AAA” to “AA+.”
Fitch cited rising debt at the federal, state, and local levels and a “steady decline in governance standards” over the past two decades.
To make matters worse, the Congressional Budget Office predicts that the national debt will nearly double over the next 30 years.