- Ken Griffin founded the hedge fund that manages more than $60 billion in assets
- He predicted that higher interest rates would become the norm during deglobalization
- Annual inflation fell to 3.7 percent in September – still above the Fed’s target
According to billionaire investor Ken Griffin, headline inflation could continue for decades.
Griffin, founder and managing director of Citadel, a Miami-based hedge fund firm that manages more than $60 billion in assets, said rising prices could become entrenched as global unrest ushers in an era of deglobalization.
Speaking at the Bloomberg New Economy Forum in Singapore, the investor pointed to the wars between Russia, Ukraine and Israel and Hamas, and how the pandemic disrupted supply chains, to demonstrate how “the peace dividend is clearly at the end of the road.”
“That’s certainly a trend toward higher base inflation,” he said. “It could take decades.”
US inflation soared last year, reaching a four-decade high of 9.1 percent in June 2022.
According to billionaire investor Ken Griffin, headline inflation could continue for decades
In an effort to curb rising prices, the Fed embarked on an aggressive rate hike campaign, raising the benchmark rate 11 times between March 2022 and July this year.
Annual inflation fell to 3.7 percent in September, but is still above the Fed’s 2 percent target.
Griffin predicted that higher interest rates would become the norm, with Fed officials forced to keep borrowing costs high to maintain this target.
He said: ‘There are several reasons why you want low levels of background inflation: it helps grease the wheels of commerce.
“That number that the Fed has committed to is 2 percent. They’re going to fight pretty hard to keep that as a target, and for a whole host of good reasons.”
The billionaire said higher interest rates will also raise concerns about the U.S. government’s ability to pay back its $33 trillion deficit, which would become more expensive in the event of a Federal Reserve tightening.
Griffin said the government had not expected higher rates when it embarked on a “spending spree” that resulted in the record debt.
He added that US budget spending needs to be put in order as the country “is spending like a drunken sailor at government level.”
Inflation soared last year, reaching a four-decade high of 9.1 percent in June 2022
The US national debt has exceeded $33 trillion for the first time
“We will see higher real interest rates, and probably higher nominal interest rates as well, and that will have real consequences for the cost of financing our huge budget deficit,” he added.
The federal debt stood at $33.04 trillion in September, an increase of $1.58 trillion since the debt ceiling was lifted in early June.
The debt consists of $26 trillion in debt held by the public and $7 trillion in debt held in government bonds such as U.S. government pension funds and the Social Security Trust Fund.
“The United States has reached a new milestone that no one can be proud of: our gross national debt just surpassed $33 trillion,” Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, wrote in a news conference. Edition at the time.
Since 2001, the government has run a deficit of about $1 trillion every year. This includes spending on social safety net programs, interest on debt, and military financing.
Recently, the national debt has increased due to the Covid-19 pandemic. The latest findings from the Congressional Budget Office suggest that the national debt will almost double in size over the next thirty years.