- Renowned investor Paul Tudor Jones expresses concern about the large budget deficit in the US, calling it a potential “debt bomb” lurking beneath the surface.
- Federal Reserve Chairman Jerome Powell joins in on highlighting the growing deficit issue, urging lawmakers to ensure a sustainable fiscal path for the government.
- US Treasury Secretary Janet Yellen downplays worries about rising national debt, citing the management of net debt payments relative to GDP as a measure of stability.
Additional Coverage:
Renowned investor Paul Tudor Jones has expressed concern about the large budget deficit in the United States, stating that it poses long-term risks. Despite the appearance of a strong economy, Jones believes that there is a potential “debt bomb” lurking beneath the surface. He attributes the strength of the economy to excessive government spending and borrowing, referring to it as being “on steroids.”
In an interview with CNBC, Jones acknowledges the undeniable strength of the economy but highlights the 6% to 7% budget deficit and the rapid consumption that accompanies it. He is not alone in drawing attention to the growing deficit issue. Federal Reserve Chairman Jerome Powell, in a rare political statement during an interview with CBS’s 60 Minutes, expressed concern about the national debt, which he states is growing faster than the economy. Powell called on lawmakers to ensure a sustainable fiscal path for the federal government.
U.S. Treasury Secretary Janet Yellen, on the other hand, has downplayed worries about the rising national debt. She believes that as long as the government manages its net debt payments relative to GDP, there is no immediate cause for concern. The Office of Management and Budget projects these payments to rise from 2.5% last year to 2.9% next year, which is still below the levels seen in the early 1990s.
Jones acknowledges that the strong economy may temporarily mask the effects of the government’s deficit spending. However, he warns that the question is not if, but when these effects will manifest in the markets. Whether it happens this year, next year, or several years from now, Jones firmly believes that the current path of unsustainable spending cannot be sustained in the long run.