Citadel CEO Ken Griffin warns on 'irresponsible' US debt

MONEY & BUSINESS: Citadel CEO Ken Griffin warns on ‘irresponsible’ US debt

Hedge fund billionaire Ken Griffin blasted the US government over its mounting debt pile, signaling that future generations will face dire consequences if America goes deeper into the hole.

“The surging US public debt is a growing concern that cannot be overlooked,” Griffin, founder and CEO of Citadel, penned in his 2023 year-end investor letter released Monday. “We must stop borrowing at the expense of future generations.”

Historically, increases in the national debt — which is currently hovering at $34.58 trillion — are driven by high unemployment rates, plus the decreased tax revenues and increased government spending on stimulus programs that come with it.

The current unemployment rate of 3.75%, however, is between 3% and 5% — largely considered a reasonable range — and doesn’t justify the government spending that has been taking place, according to Griffin.

“It is irresponsible for the US government to incur a deficit of 6.4% when unemployment is hovering around 3.75%,” Griffin wrote.

Citadel founder and CEO Ken Griffin said “the surging US public debt is a growing concern that cannot be overlooked” in a year-end letter sent to investors and released Monday. REUTERS

Unemployment peaked during COVID at a staggering 14.8% in April 2020 before declining to 6.2% in February 2021 and 3.9% in February 2024, the Bureau of Labor Statistics reported earlier this month.

“The Western world urgently needs a significant increase in productivity growth as the burden of rising government debt and entitlement spending strains almost every major economy,” Griffin said.

Representatives for Citadel did not immediately respond to The Post’s request for comment.

Earlier this year, JPMorgan boss Jamie Dimon sounded the alarm that the US debt needs to be tackled before it results in a crisis.

“It is a cliff, we see the cliff,” Dimon told Fox in January. “It’s about 10 years out, we’re going 60 miles an hour [toward it].”

The debt soared past $33 trillion for the first time ever last year under Joe Biden’s administration, to $34.58 trillion — more than 100% above the debt-to-GDP ratio. Christopher Sadowski

The US debt soared past $33 trillion for the first time ever last year under Joe Biden’s administration even as the president spun poor financial figures as good news for his Bidenomics agenda.

Today, the debt-to-GDP ratio is above 100% — 123% to be exact, per the International Monetary Fund — and is projected to reach 130% by 2035.

Dimon added that the debt-to-GDP ratio has not reached the “hockey stick” surge yet, “but when it starts, markets around the world — by the way, because foreigners own $7 trillion of US government debt — there will be a rebellion, and that is the worst possible way to do it.”

Dimon also noted just how different the economy was some four decades ago, when inflation sat around 12%, the prime rate around 21.5% and unemployment somewhere around 10%.

The US debt at the time stood at $907 billion and was around 35% of gross domestic product.

By the end of 2022, the national debt grew to about 97% of gross domestic product. Under current law, that figure is expected to skyrocket to 181% at the end of 2053 — a debt burden that will far exceed any previous level.

Treasury Department data shows the red ink doubled over the past year, from about $1 trillion to $2 trillion. MICHAEL REYNOLDS/POOL/EPA-EFE/Shutterstock

Treasury Department data showed that the federal government spent 23% of its budget on Social Security in fiscal year 2023.

Health care swallowed up 15% of federal spending while national defense, Medicare and income security each took up 13% of Uncle Sam’s expenditures.

Even before the Treasury Department’s fiscal year 2023 data was released, Fitch Ratings downgraded the US government’s credit rating one notch, from the highest rating, AAA, to AA+.

Fitch cited rising debt at the federal, state and local levels and a “steady deterioration in standards of governance” over the past two decades.

To make matters worse, the Congressional Budget Office has also indicated that the national debt will nearly double in size over the next three decades.

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