JPMorgan boss Jamie Dimon says the US is addicted to debt, and it's created a dangerous sugar high in the economy
- America's debt problem has caused a dangerous sugar high for the economy, Jamie Dimon said.
- The JPMorgan chief pointed to the enormous surge of new debt taken on during the pandemic.
The US is practically addicted to debt – and that's put the economy in a dangerous position, according to JPMorgan CEO Jamie Dimon.
The Wall Street banking chief pointed to the enormous amount of debt the US has taken out since the pandemic, including around a trillion distributed in stimulus checks and the $4 trillion doled out by the Federal Reserve to buy government bonds. Those actions injected a huge amount of cash into US markets, leading firms to rake in more profits while stocks soared higher in 2021.
"That money is like heroin," Dimon said at the Global Investment Summit in London, per the Telegraph.
After the debt-fueled stimulus came inflation, which prompted the Fed to apply the brakes on ultra-loose monetary policy. That's threatening to put markets in a state of withdrawal, Dimon suggested, with stocks struggling in 2022 and markets seeing big bouts of rate-fueled volatility throughout 2023.
Inflation in the US is also likely remain elevated, he added, partly due to high levels of government spending. The US's total debt pile hit a record $33 trillion for the first time this year, and it's edging closer to $34 trillion as lawmakers spar over the federal budget.
"We're on this sugar high and I'm not saying this ends in a depression [but] I think there's more inflationary forces out there," Dimon warned. "There's a higher chance that rates go higher, inflation doesn't go away, and all these things cause more problems of some sort."
Economists have warned of a potential crisis emerging from the US's debt problem over the coming decades. If the US doesn't change course, it could potentially default on its debt in 20 years, the Penn Wharton Budget Model predicted, which could end up having catastrophic consequences on the US economy.
The rest of the global economy is also staring at a "cocktail" of risks, Dimon added. Previously, he said the world was facing "most dangerous time the world has seen in decades," citing wars, growing debt levels, and restrictive monetary policy from central banks.