The leader of America’s largest bank believes the battle over fighting inflation may not over.
“Governments have the biggest deficits ever, and they have the biggest debt ever,”
JPMorgan Chase
chief executive Jamie Dimon said on Wednesday at the New York Times DealBook Summit.
The executive then cited a number of reasons why deficits may continue to rise in the future, noting the investments required to expand the green economy and Europe’s need to pay for its energy needs. Dimon also said the restructuring of global trade relations and the remilitarization of countries around the world would be inflationary.
“There are a lot of things out there which are both dangerous and inflationary,” he said. Be prepared: Dimon warned that interest “rates may go up—both the short rate and the 10-year rate—and be prepared that might lead to a recession.”
When asked about his views on the current strength of the economy, the bank executive warned it may not be sustainable, especially when considering the role that robust consumer spending plays.
“Yeah, corporate profits are up because people are spending a lot of money. Where do they get the money? The government gave it to them,” he said. “Well, of course profits are up. When they stop spending money, corporate profits will go down.”
The U.S. has had “drugs injected directly into our system called fiscal stimulation, the largest we’ve ever had in peacetime, and [quantitative easing], the largest monetary stimulation,” he said. “They are drugs running through the system and they create this kind of sugar high.”
He added: “I’m quite cautious about the economy. And I think that the QE, [quantitative tightening], and all the geopolitical stuff, they can bite.”
Write to Tae Kim at [email protected]
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