(The Washington Newsday) - Carl Icahn, a billionaire investor, has issued a warning to the United States’ economy: there is too much money in the system, and the markets will finally come to a conclusion.
Icahn warned that the economy could be heading for a “crisis” and that it could “hit the wall” in the long run in an interview with CNBC on Monday. The biggest issue he sees is an overextended money supply as a result of the Federal Reserve’s trillion-dollar stimulus package and asset purchases in response to the COVID-19 outbreak.
“The way we’re going, the way we’re producing money, the way we’re moving into inflation,” Icahn said, “I genuinely think there will be a problem.”
Since the epidemic shut down the economy in March 2020, Congress has passed multiple multibillion-dollar stimulus programs to safeguard workers and keep businesses afloat. President Joe Biden has been pushing for the passage of two major infrastructure and social spending initiatives, each of which will cost more than $1 trillion. These bills have been stalled in Congress due to internal bickering in Biden’s Democratic Party.
On the monetary policy front, the Federal Reserve announced a monthly asset purchase program of $120 billion to inject liquidity into the markets and help the economy recover. Icahn’s comments may align with Fed officials’ arguments that the time has come to begin reducing the asset-buying program beginning in November.
Both the Federal Reserve and the White House have expressed concern about inflation, but both believe it will be passed on once supply chain bottlenecks are alleviated. However, major inflation indicators have revealed price increases not seen since at least 1991, raising concerns that this judgment may be incorrect.
Icahn was cautious to point out that his statement was not meant to be regarded as a market forecast, but he did warn that some of the costs incurred during the epidemic may come back to hurt the economy later.
