Jaime Dimon Shares Concerns Over Potential U.S. Debt Default

On May 11, JPMorgan Chase President and CEO Jamie Dimon warned that U.S. markets will be gripped by panic, as the U.S. approaches a possible default on it sovereign debt and that such an event would ripple through the entire financial world. Specifically, he said, “The closer you get to it, you will have panic in the form of stock market volatility and upheaval in Treasurys.” In a televised interview with Bloomberg, Dimon joined a growing list of business figures and administration officials insisting that an actual default would be “potentially catastrophic” for the country. He went on to say that he expects the worst-case scenario to be avoided, because he believes lawmakers will be forced to stop playing politics and instead respond to very legitimate and growing financial concerns which will impact “contracts, collateral, clearing houses, and affect clients definitely around the world.”

Treasury Secretary Janet Yellen has said the idea that our country could default on its bonds should be “unthinkable” and would lead to economic disaster. Dimon echoed her dire warning stating that, “If it gets to that panic point, people have to react, we’ve seen that before…[But] it’s a really bad idea, because panic becomes something that is not good. It could affect other markets around the world.” Dimon has been meeting regularly with members of JP Morgan’s “War Room” advisory board, which has been preparing for the risk of an American default and whose meetings are getting more frequent as a possible default approaches. His early pass at politicians was to, “Please negotiate a deal.” Due to their failure to move, Dimon has since excoriated politicians from both political parties for failing to compromise, thereby avoiding a potentially ruinous outcome.

Having won last week’s government-brokered auction for First Republic Bank, Dimon announced in an interview that he speaks daily with regional bank executives about concerns arising from the Silicon Valley Bank collapse, back in March. He explained that regional banks are “quite strong” and will have good financial results, but managers are still worried because of the bank runs that have already taken down three firms. In conclusion, he said, “I think we have to assume there’ll be a little bit more [fallout].” The lack of political response to a debt ceiling increase is only adding to regional bank concerns. Outside of a dip in September/October of last year, the stock market has vacillated within a very limited, yet consistent range. Precious metals which took a similar dip in the September timeframe, have rebounded far more dramatically and appear to have broken out of the doldrums that have held them back.

In spite of the fact that inflation has dropped significantly from a four-decade high last June and ticked down in April, it continues to hover in a range well above the Federal Reserve’s 2% target rate. When combined with the latest interest rate hike, increasing pressure on the dollar sees no short term relief and seems to be paving the way for even greater gains by precious metals. With retirement plans taking a beating, along with stocks and the dollar, many investors are now taking the opportunity to open or increase positions within precious metal IRAs. American Bullion was a pioneer in the industry and remains an industry leader, as can be verified by its recent selection to the number one position in Forbes Advisor’s May 1 publication of, “Best Gold IRA’s of 2023.” Call the seasoned professionals at American Bullion at (800) GOLD-IRA (465-3472) in order to protect your portfolio, retirement, and legacy.

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