Jamie Dimon believes U.S. debt is the ‘most predictable crisis’ in history

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Jamie Dimon believes U.S. debt is the ‘most predictable crisis’ in history—and experts say it could cost Americans their homes, spending power and national security
By Eleanor Pringle
February 11, 2024

Alarm bells are beginning to ring with increasing frequency and volume.

Jamie Dimon says Washington is facing a global market “rebellion” because of the tab it is racking up, while Bank of America CEO Brian Moynihan believes it’s time to stop admiring the problem and instead do something about it.

Elsewhere The Black Swan author Nassim Taleb says the economy is in a “death spiral”, while Fed chairman Jerome Powell says it’s past time to have an “adult conversation” about fiscal responsibility.

And despite the issue being the “most predictable crisis we’ve ever had” according to former Speaker of the House Paul Ryan—a summary Dimon agrees with—it’s an item that isn’t yet top of the political agenda.

It’s also worth noting this isn’t the job of one party or the other to fix—this debt has been accumulated courtesy of spending by both Republicans and Democrats.

The list of presidents who added the most debt by percentage begins with FDR (Dem.), followed by Woodrow Wilson (Dem.) and Ronald Reagan (Rep.).

Whoever’s shoulders it falls on to address, it’s clear the public now wants action.

Last year Pew Research found that ‘reducing government debt’ was a key concern for 57% of the 5,152 people surveyed—up from 45% just a year prior.

But do individuals—who currently have a sum of more than $100,000 dangling over their heads when debt is divided by capita—need to be so concerned about the issue?

How will it impact their purse strings, their living costs, and their savings plans?

How big is the threat?

It depends on who you ask.
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That’s a primary concern for Joao Gomes, senior vice dean of research and Professor of finance at the University of Pennsylvania’s Wharton School.

“The most important thing about debt to me that people to keep in mind is you need somebody to buy it,” Gomes told Fortune. “We used to be able to count on China, Japanese investors, the Fed to [buy the debt.] All those players are slowly going away and are actually now selling.”

America’s ability to pay its debts is a concern for the nations around the world that own a $7.6 trillion chunk of the funds.

The nations most exposed are Japan, which owned $1.1 trillion as of November 2023, China ($782 billion), the U.K. ($716 billion), Luxembourg ($371 billion), and Canada ($321 billion).

“If at some moment these folks that have so far been happy to buy government debt from major economies decide that ‘You know what, I’m not too sure if this is a good investment anymore, I’m going to ask for a higher interest rate to be persuaded to hold this’ then we could have a real accident on our hands,” Gomes said.

He added: “The moment the government in any country realizes that it cannot sell $1.7 trillion in [annual] debt anymore, you will have to impose major cuts on some programs. That opens a Pandora’s box of social unrest that I don’t think anybody wants to think about.”

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