Yesterday, hedge fund manager Paul Tudor Jones joined CNBC’s Squawk Box to share insights on the latest market trends.
The fiscal debt of the United States was top-of-mind. The danger of leaving this problem unaddressed is something that investor Stanley Druckenmiller and the hosts of the All-In Podcast have been raising as well.
Here was Paul Tudor Jones’s warning:
In the United States we will have the grinding reality that with 122% debt-to-GDP and interest costs going up, we get a vicious cycle. Higher interest rates cause higher funding costs, cause higher debt issuance, cause further bond liquidations, which lead to higher rates and puts us in an untenable fiscal position.
Our interest bill will shortly exceed our defense spending in just a couple of years. In probably 4-5 years we’ll have the highest interest bill, as a % of GDP, that we’ve ever had. Probably 20% of your taxes will go toward paying interest on the debt unless we do something. That has to be part of the dialogue, the main part of the dialogue for next year’s Presidential election.