The US economy is rapidly heading into a credit bubble that will burst. At least, that’s what some market veterans believe.
The hedge fund manager Mark Spitznagel, whose firm helps to protect investors from unforeseen Black Swan events, predicts that the bust will send the stock market into its worst crash since 1929. Billionaire hedge fund manager Ray Dalio has also said that we are heading into a debt crisis.
But how bad can things be, and when could this happen? It’s hard to say for certain. But Wharton Professor Kent Smetters, a faculty director for the Penn Wharton Budget Model, which provides budgetary projections and economic analysis of US legislation, says we could hit the point of no return in 20 years.
Federal spending ballooned after the global financial crisis and then accelerated during the pandemic, outpacing tax revenue and creating a deficit. The government has been borrowing the difference.
To put things into…
