Rising US debt can no longer be ignored, top investor warns

Citadel founder Ken Griffin says current government borrowing levels threaten Americans' future prosperity. Photo: Mike Blake/Reuters

Rising US debt and “irresponsible” government borrowing threaten Americans' future prosperity, one of the world's largest investors has warned.

Ken Griffin, founder of US hedge fund Citadel, said that The country's ballooning debt pile is «a growing concern that cannot be ignored.»

Mr. Griffin wrote in Citadel's annual letter to investors: “We must stop borrowing at the expense of future generations. The Western world urgently needs a big boost in productivity growth as the burden of rising government debt and entitlement costs strains nearly every major economy.»

Global debt rose to a record high last year, according to the Institute of International Finance. $313 trillion (£248 trillion).

Debt rose as inflation and higher interest rates forced both companies and governments to borrow more. .

In the US, the national debt currently hovers around $34.5 trillion. It has risen sharply under successive administrations and is projected to grow to 102.3% of GDP by 2025 under President Biden's current budget plans.

Spending is rising as the White House funnels billions of dollars toward clean energy production, semiconductor manufacturing and other zero-emissions projects.

The rapid increase in spending follows a surge in borrowing during the pandemic to support people and businesses.

The scale of borrowing is increasingly worrying investors. Ratings agency Fitch last year stripped the US of its triple A rating due to rising debts.

Mr Griffin said: «As we warned last year, rising US government debt is a growing concern that cannot be ignored.» .

Billionaire Mr. Griffin's warning is particularly significant given his position overseeing it. one of the world's largest fund managers.

Citadel manages approximately $60 billion in assets and invests in the stock, bond and currency markets.

Philip Swagel, head of the Congressional Budget Office (CBO) , an independent agency that analyzes US government finances, recently warned that the «unprecedented» rise in US debt puts the country at risk of a Liz Truss-style market crash.

Citing CBO data, Mr. Griffin said U.S. government spending is on track to reach 3.1% of GDP. That would be a full percentage point higher than the average spending level from 1974 to today.

Despite a flurry of warnings about rising debt levels, neither President Biden nor his Republican opponent Mr. Trump No plans have been put forward. raise taxes or cut spending to cope with the deficit.

Mr. Griffin said: “It is irresponsible for the US government to have a deficit of 6.4 percent when unemployment hovers around 3.75 percent.”< /p>

Despite the debt gloom, Mr Griffin was more optimistic about the outlook for bond markets, saying the climate had become more «favourable» due to lower inflation.

Consumers are also likely to benefit from reducing inflation. And wages are rising, he said.

Griffin's net worth is approximately $37.7 billion, making him the 40th richest person on the planet.