J.P. Morgan Chase CEO Jamie Dimon blasted central banks for being “100% dead wrong” on government spending that he said would “be wasted.”
Dimon tore into the central banks at Saudi Arabia’s Future Investment Initiative conference, often called “Davos in the Desert,” citing the high level of government spending, which some experts, including Lawrence Summers, who served as secretary of the Treasury in the Clinton administration and as an economic adviser to former President Barack Obama, warned could cause inflation. The Federal Reserve kept interest rates stable at the highest levels in 22 years in September. (RELATED: ‘He Has No Real Credibility’: Steve Forbes Says Fed Chair Powell Will Be ‘Late’ To Fighting ‘Unnecessary Recession’)
“I look at the financial situation, the fiscal spending, which is more than it’s ever — I’m talking about the United States but it’s almost true around the world. It’s more than it’s ever been in peacetime, by a long shot, with the highest debt levels we ever had by government,” Dimon said during a roundtable discussion. “And there’s just kind of omnipotent feeling that central banks and governments can manage through all this stuff. I’m cautious. I don’t think it makes a piece of difference whether rates go up 25 basis points or more, like zero, none, nada. I think whether the whole curve goes up 100 basis points, you know, I would be prepared for it. I don’t know if it’s going to happen, but I look at what we’re seeing today more like the 70s: a lot of spending, a lot of it is going to be wasted.”
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Dimon also spoke up in defense of using Environmental, Social, and Governance (ESG) factors, but aimed criticism at governments for getting in the way of companies trying to address them. ESG, also known as “sustainable investing,” according to the Corporate Finance Institute, can factor in corporate policies on gun control, environmental issues, abortion or other issues in addition to or instead of strictly looking at a corporation’s profitability.
Federal Reserve Chairman Jerome Powell said that inflation would be transitory during an August 2021 speech at Jackson Hole, Wyoming, then admitted in September 2021 that inflation ended up lasting longer than he “expected.” He also claimed “nobody” thought that inflation would reach the levels it did in November.
“I’m in favor of this whole ESG effort,” Dimon said. “On the other hand, if you look at the way we’re going about it, it’s almost like governments want to whack ‘em all and force it, but no carbon taxes, no rational way to go about it that would be more important. In the United States, for example, you know, you can’t build pipelines to reduce coal emissions, you can’t build — you can’t build — get the permits to build solar and wind and things like that. So, we better get our act together. I’m hopeful, when I listen to all the R&D seen around the world, we will make the breakthroughs we need to beat climate, but it’s going to be later and longer than it should be because of our own basic incompetence.”
Dimon also said that central banks needed to develop humility.
“Since I’ve never seen anyone call it, I want to point out that central banks 18 months ago were 100% dead wrong. Okay? So maybe there should be humility about financial forecasting. I would be quite cautious about what might happen next year.”
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