The US is in ‘uncharted economic territory’ due to ‘massive spending’ – Ken Griffin

Ken Griffin is founder and CEO of Citadel, one of the largest and most successful hedge funds. In an interview on the In Good Company podcast, he said the following (edited for clarity):

“If I look at the mosaic of the data points that we have on the US economy today, we’re in a very interesting, uncharted territory. Would you have ever imagined the United States would be at near full employment, with inflation running around three-and-change percent, and yet the government is on a massive spending binge?

We are at that point in the cycle where generally you should be trying to pay down your government debt. You should be trying to put your fiscal house in order. You should be trying to create the capacity to have flexibility when the rainy day inevitably comes.

And yet, right here right now, with the US economy pretty much growing at or beyond capacity, the government is still engaged in a massive, massive degree of fiscal stimulus. That’s creating hotter inflation than we would like to see in the economy, and it is leaving the United States in a more precarious long-term position, in having fewer degrees of freedom to deal with the next recession or, God forbid, depression.

I grew up in the era of fears about crowding out, that the scale of government deficits around the world would crowd out private sector access to capital. Of course, that fear still exists among those of us who think about a very long-term process. How do we make sure that we do not crowd out the private sector from profligate government spending?

But there’s another important point, which is the matter of equity. There’s an incredible focus around the world today on equity. Is income inequality, for example, too high? This is an incredible moment of borrowing from the future. We’re borrowing from our children, our grandchildren, and our great-grandchildren, right here, right now, to maintain a standard of living that is not in sync with either productivity or with the culture of work that is emerging across the developed economy.

It’s just not fair as a matter of equity across generations for us to be engaged in this level of spending in the form that we’re spending the money, right here right now, in my opinion.”

— Written by Seeking Alpha CEO David Jackson