Longtime activist investor Carl Icahn said on Monday that US markets could face major long-term challenges in the face of excessive money supply and rising inflation.
âIn the long run, we’re definitely going to hit the wall,â Icahn said Monday on CNBC’s âFast Money Halftime Reportâ. âI really think there will be a crisis in the way we go, the way we print money, the way we go into inflation. If you look around you see inflation. all around you and I don’t know how you would handle this in the long run. “
The Federal Reserve and Congress have released billions of dollars in stimulus packages to save the economy from the Covid-19 pandemic. The central bank‘s balance sheet has swelled by more than $ 3 trillion as part of its indefinite quantitative easing program, while the government has allocated more than $ 5,000 billion in stimulus measures to help them. Americans get through the health crisis.
Icahn was adamant not to make a market timing call, but he believes that one day, in the long run, the markets will pay the price for these policies.
Thanks to these unprecedented stimulus packages, the S&P 500 quickly wiped out the losses induced by the pandemic and rebounded to a new high. The benchmark equities index rose more than 19% in 2021, standing just 1.4% below its all-time high reached in early September.
The massive money supply has partly contributed to the mounting price pressures in the economy. Inflation hit a new 30-year high in August amidst supply chain disruptions and extraordinarily strong demand.
The basic personal consumption expenditure price index, which excludes food and energy costs and is the Fed’s preferred measure of inflation, rose 0.3% for the month and 3 , 6% compared to last year.
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