Billionaire hedge fund manager Paul Tudor Jones believes the U.S. is headed for high inflation due to its growing debt.
In an interview with CNBC on October 22, 2024, Jones said, “I think all roads lead to inflation,” citing rising government debt as a major factor. He explained that the only way the U.S. can manage this debt is by growing the economy through inflation.
Jones, the founder of Tudor Investment Corporation, advised investing in assets like gold, Bitcoin, commodities, and Nasdaq tech stocks, and avoiding fixed-income investments like bonds.
In his words, “I’m longing gold, I’m longing Bitcoin,” he said, warning that bonds, especially long-term government ones, won’t perform well in an inflationary situation.
The hedge fund manager also pointed out that the U.S. national debt has increased from 40% of GDP to nearly 100% over the past 25 years.
Jones cautioned that unless the U.S. addresses its spending, it faces financial trouble. “We’re going to be broke really quick unless we get serious about dealing with our spending issues,” Jones warned.
However, Jones’ outlook on inflation aligns with other financial figures, including Federal Reserve Chair Jerome Powell, who has acknowledged that the current debt trajectory is “untenable.”
Additionally, Stanley Druckenmiller, an investor, also recently disclosed that he is betting against U.S. government bonds. Jones suggested that the Federal Reserve might have to keep interest rates low, even below inflation, to boost economic growth.
Regarding the upcoming election next month, Jones said the debt issue will persist regardless of whether Kamala Harris or Donald Trump wins. Both candidates have proposed more spending and tax cuts, which he believes will worsen the deficit.
Moreover, the Congressional Budget Office expects the deficit to reach $1.9 trillion in 2024 and rise to $2.8 trillion by 2034.
Additionally, Jones mentioned that rising geopolitical tensions are pushing investors toward assets like gold and Bitcoin, a trend reflected in what is being called the “debasement trade.” according to a recent report from JPMorgan.
