Jamie Dimon, the CEO and chairman of JPMorgan Chase, said last week that he believes America is heading toward a steep cliff, as runaway debt in the U.S. continues to grow exponentially.
Dimon, who serves as the head of the largest bank in the nation, said that the country needs to figure out how to tackle the debt situation before it ends up in a major crisis.
He issued this warning while participating on a panel for the Bipartisan Policy Center last Friday. Dimon was asked to give his opinion on what would happen if the federal government doesn’t end up addressing the country’s debt.
He started to respond by harkening back to 1982, when inflation hovered at about 12%. At the same time, the prime rate was about 21.5%, unemployment stood at about 10% and total debt was roughly 35% of GDP, or gross domestic product.
Today, the debt-to-GDP ratio is more than 100%, with projections showing it will get to 130% over the next 11 years. Dimon said the country’s growing debt would look like “a hockey stick” on a chart.
While the U.S. hasn’t quite reached that surge yet, Dimon added:
“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.
“It is a cliff. We see the cliff. It’s about 10 years out. We’re going 60 miles an hour [toward it].”
Dimon further agreed with another person who sat on the panel, Paul Ryan, who once served as the Speaker of the House. Ryan said the country’s snowballing debt is “the most predictable crisis we’ve ever had.”
Most economists believe the federal debt outlook is bleak, to say the least. Many have sounded the alarm recently about just how much and how quickly the White House and Congress is spending money.
The Congressional Budget Office released findings recently that show the country’s debt would almost double over the next 30 years.
At the end of 2022, national debt levels rose to roughly 97% of GDP. According to current laws, the debt is projected to go as high as 181% of GDP by 2053.
If that does indeed happen, it’ll end up being much larger than it’s ever been in the history of the country.
Having such a high debt-to-GDP ratio could certainly result in a huge negative impacts for the U.S. economy as a whole. What’s worse, it’s an internal problem, meaning that America could easily lose its standing as one of the strongest economies in the world if it ends up happening.
While inflation has been tampering down as of late, and the Federal Reserve has halted more increases in the benchmark interest rate, some economists believe that it’s possible that the economy won’t experience the “soft landing” that federal government officials are hoping for.