The yawning federal budget deficit is ultimately going to eventually lead to higher inflation
The federal debt-to-gross domestic product ratio is on track to be as large as it was during World War II, Greenspan said during a talk at a National Association for Business Economics conference.
The former Fed chairman despaired the lack of political pressure to control entitlement spending and narrow the deficit.
“Despite the huge increase that we’ve seen in the debt, nothing is happening. ” he said.
Current Fed Chairman Jerome Powell and his colleagues have said that they see muted inflationary pressures in the economic horizon. That is a key reason the Fed has said it can be patient with further interest-rate adjustments.
Greenspan was fairly upbeat about the fourth-quarter GDP data, released earlier Thursday, which showed a 2.6% growth rate, above economic forecasts.
