Jamie Dimon Warns Of Bond Market Crisis Caused By US Debt Binge: 'You're Going To Panic'

A storm is building in the bond market, according to JPMorgan Chase CEO Jamie Dimon who sees the financial system vulnerable to a sudden fracture fueled by years of unchecked debt and monetary expansion.

“You’re going to see a crack in the bond market,” Dimon said, warning regulators and market participants of a looming dislocation.

“It’s going to happen, and you’re going to panic. I’m not going to panic.”

Speaking at the Reagan National Defense Forum in Simi Valley, Dimon said that the U.S. has borrowed and spent $10 trillion since 2020.

The Federal Reserve has added $8 trillion to its balance sheet via quantitative easing, Dimon highlighted, while global central banks added a similar amount.

"These are very large numbers," Dimon said.

Combined, that’s $16 trillion in monetary expansion across the world. Dimon said the long-term effects of this financial deluge remain uncertain, but he is confident instability is on the horizon.

According to the Congressional Budget Office, the U.S. ran a $1.8 trillion deficit in fiscal year 2024, and the federal debt rose to $35 trillion last year.

"When you give that kind of money to American citizens—fiscal or QE—it's like water filling every crack," Dimon said. "Some of you bought a Rolls-Royce."

Dimon believes that asset prices remain elevated, and that a reversal could cause financial stress and strain for people.

In his view, markets may need to suffer a shock to correct course. "Unfortunately, it may be that we need that to wake us up."

The Fed Is Right To Wait—For Now

Dimon expressed support for the Federal Reserve's current pause in rate cuts, saying “the Fed has a tough job” and “they were late raising rates”, but have since caught up.

“I have enormous respect for Jay Powell,” Dimon added.

He criticized the Fed's earlier messaging, which suggested rates wouldn't rise above 2%. "We were quite prepared for rates going to 5%," he said, highlighting JPMorgan's readiness despite what he called flawed stress tests.

Yet, economic uncertainty remains.

Looking forward, Dimon said inflation may rise again due to structural factors. "What I see is inflationary," he said, citing “huge fiscal deficits around the world”, widespread rearmament, green energy spending, and aging demographics.

He said that artificial intelligence might introduce deflationary forces, but "not next year."

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