Greenspan warns U.S. budget deficit will lead to higher inflation
The yawning federal budget deficit is ultimately going to eventually lead to higher inflation, former Federal Reserve Chairman Alan Greenspan said Thursday.
“Unless you believe in fairies, that is not an economy that can function without inflationary instability,” Greenspan said. “Despite the huge increase that we’ve seen in the debt, nothing is happening. People are behaving like it’s a terrible thing, but [say] ‘I want a little more,’” he said. Greenspan was fairly upbeat about the fourth-quarter GDP data, released earlier Thursday, which showed a 2.6% growth rate, above economic forecasts.In an interview with Bloomberg Television, Greenspan did not sound enthused with modern monetary theory, that a country with its own currency can spend as much as it likes until inflation accelerates.
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