The United States, teetering on the brink of an economic precipice, faces a dire future as its national debt spirals out of control. Jamie Dimon, the CEO of JPMorgan Chase, America’s largest bank, has sounded an ominous alarm about the impending crisis that not only threatens the nation’s economic stability but also poses a grave risk to the global financial system.
Speaking at the Bipartisan Policy Center, Dimon painted a grim picture of the current state of U.S. finances. The national debt, which now stands at a colossal $34 trillion, has pushed the debt-to-GDP ratio to a perilous level above 100%. Dimon, with a tone of foreboding, warned that “It’s a hockey stick,” referring to the sharp upward trajectory of debt growth projected for the coming years. By 2035, this ratio is expected to reach a staggering 130%, and by 2053, it could soar to an unprecedented 181%.
Investing and Money’s (IAM) own experts have been tracking this trend for several years now. The expectation has been that a debt level of $35 trilling would be the tipping point. We are almost there.
The situation is a stark departure from the economic landscape of the 1980s. Dimon recalled, “Back then the deficit during a recession—you do spend money in a recession—was 4% or 5%; today it’s 6.5% in a boom time.” In 1982, despite high inflation, a soaring prime rate, and significant unemployment, the national debt constituted only 35% of GDP. The contrast between then and now underscores the alarming acceleration of America’s fiscal decline.
The looming crisis is not confined within U.S. borders; it casts a long, dark shadow over the entire world. Foreign nations, which own a substantial $7 trillion of U.S. government debt, stand on the precipice of a financial upheaval. Dimon grimly predicted that “when it starts, markets around the world…there will be a rebellion.” This rebellion signifies not just a loss of confidence in American financial stewardship but a potential unraveling of the global economic order.
Former House Speaker Paul Ryan, sharing the panel with Dimon, concurred with the severity of the situation, calling the burgeoning debt “the most predictable crisis we’ve ever had.” The Congressional Budget Office corroborates this bleak outlook, projecting that the national debt will nearly double in size over the next three decades.
The implications of this economic nightmare extend far beyond mere numbers and fiscal policy. The stability and security of nations around the globe are inextricably linked to America’s ability to manage its debt. Countries like Japan, China, the U.K., Luxembourg, and Canada, all major holders of U.S. debt, find themselves precariously perched on the edge of this financial chasm.
IAM experts are anticipating a multi-shock scenario – a heavy but tolerable shock will happen in the U.S. likely in the form of inflation. Then a secondary shock will pass through the rest of the world where the suffering will be quite pronounced. This will feedback into the U.S. and cause our society to suffer much worse consequences. These will be major changes in society, and violence will be a virtual certainty. People with means, i.e. money and property, will be under threat as inflation eats the value of money, and enforcement of ownership is challenged by both government and chaotic events.
Dimon, in a stark warning, emphasized the broader implications of this looming disaster: “This is about the security of the world.” The CEO, known for his astute financial insights, stressed the need for a stronger America—a call to fortify not just the nation’s economy, but its global influence and military might. The urgency of his message is clear: “We need a stronger military, we need a stronger America. We need it now.”
As Dimon and Ryan’s forewarnings echo through the halls of power, the question remains: will decisive action be taken to avert this catastrophic descent? The clock is ticking, and as Dimon chillingly noted, “It’s about 10 years out, we’re going 60 miles an hour [toward it].”
And the answer is no. No one in Washington has the will to do anything about the debt.
