Jamie Dimon, CEO of JPMorgan Chase, said that the United States is actually addicted to debt, putting the economy in a dangerous position.
He pointed out that since the outbreak of the epidemic, the United States has been burdened with huge debts, including about $1 trillion in stimulus checks and $4 trillion in government bonds purchased by the Federal Reserve. These measures injected a large amount of cash into the US market, leading to companies gaining more profits while the stock market surged in 2021.
"This money is like heroin," Damon said at the Global Investment Summit held in London
After the debt driven stimulus plan, the United States experienced severe inflation, which prompted the Federal Reserve to put the brakes on ultra loose monetary policy. Damon stated that this led to the US stock market facing difficulties in 2022 and experiencing significant fluctuations in 2023 due to interest rate hikes.
He also added that inflation in the United States may remain high, partly due to excessively high levels of government spending. This year, the total debt of the United States has reached a record high of $33 trillion for the first time, and as lawmakers debate the federal budget, it is approaching $34 trillion.
Damon warned, "We are currently in a high debt state, and I'm not saying it will end in a recession, but I believe there will be more inflationary forces emerging. The likelihood of interest rates rising is greater, and inflation will not disappear, all of which will lead to more problems."
At the same time, Wall Street economists warned that the debt problem of the United States in the coming decades could lead to a crisis. The budget model of the Wharton School of Business at the University of Pennsylvania predicts that if the United States does not change direction, it may default on its debt within 20 years, which could ultimately have catastrophic consequences for the US economy.
Damon added that other parts of the global economy also face a series of risks. Previously, he had stated that the world was facing the "most dangerous period in decades" due to wars, rising debt levels, and restrictive monetary policies by central banks.