Veteran fund manager reveals America's fatal flaw, which could lead to a crash next year
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America's 'addiction to government debt' is its fatal flaw - and could lead to a stock market crash, an expert has warned. Ruchir Sharma, who is an author and fund manager, said attempts to rein in the debt - now at a record $36 billion - will eventually weaken economic growth.
![[Ruchir Sharma, who is an author and fund manager, said attempts to rein in US debt will eventually weaken economic growth]](https://i.dailymail.co.uk/1s/2024/12/23/19/93433395-14221955-Ruchir_Sharma_who_is_an_author_and_fund_manager_said_attempts_to-a-18_1734983452149.jpg)
Sharma, who is chairman of Rockefeller International and worked at Morgan Stanley for 25 years, made the comments in a column for the Financial Times. He had previously said that the US financial market has grown into 'the mother of all bubbles', which is due to pop soon.
![[Growth and profits are getting an 'artificial lift' from the 'heaviest deficit spending ever recorded at this stage of an economic cycle,' said Sharma]](https://i.dailymail.co.uk/1s/2024/12/24/01/93433249-14221955-Growth_and_profits_are_getting_an_artificial_lift_from_the_heavi-a-1_1735004212500.jpg)
The stock market has soared to record highs in the last several weeks, bolstered, in part, by Donald Trump's victory in the presidential election. Despite hitting a more rocky patch last week, many on Wall Street predict US stocks will continue to outperform the rest of the world in 2025.
'But US earnings growth would not look so exceptional if not for the supernormal profits of its big tech firms, and massive government spending,' Sharma said. Growth and profits are getting an 'artificial lift' from the 'heaviest deficit spending ever recorded at this stage of an economic cycle,' he added.
Sharma said that the US financial market has grown into 'the mother of all bubbles', which is due to pop soon. US federal debt has soared past $36 trillion - a record high. Interest expenses for the debt are now $1 trillion a year, and are among the biggest budget items - even exceeding defense spending.
