The head of the US central bank warns of the dangers of America’s rising debt.
In a letter to shareholders, JPMorgan Chase chairman and CEO Jamie Dimon said the US government must deal with its debt crisis before things collapse.
“The mounting public debt needs to be tackled – the right way would be to deal with it now before it becomes a problem; the wrong way would be to let it fester, which, in my view, is probably the end result.”
Dimon is sounding the alarm amid what he says is the world’s biggest deficit and debt.
“The needs of the world have increased, especially during times of economic prosperity around the world, and until recently, in peacetime – the global deficit has increased by 5%, while the world debt has increased significantly. The current situation of the Congressional Budget Office has the ratio of debt to GDP from 100% today to 2030%.”
Dimon says the debt relief that will happen someday will be more expensive than expected all non-profit lending.
“This is because credit policies have been gradually decreasing across the board; for example, aggressive and positive views on future operations (so-called extensions), weak contracts, high use of PIK (payments in kind; not paying interest but increasing), very aggressive ratings (especially large insurance companies).
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