As US 'debt bomb' spirals towards $35 trillion, hedge fund boss warns politicians are spending 'at the expense of future generations'

Hedge fund billionaire Ken Griffin has warned that the 'surging' US national debt is a 'growing concern that cannot be overlooked.'

Griffin, who founded and runs Miami-based hedge fund firm Citadel - which had a key role in the Gamestop share frenzy - sounded the alarm in a year-end letter to investors released this week.

'We must stop borrowing at the expense of future generations,' he wrote. 

The national debt is currently above $34.6 trillion and growing, after crossing over the $34 trillion mark at the beginning of this year. 

It comes after fellow hedge fund manager Paul Tudor Jones warned earlier this year that a 'debt bomb' is on the verge of exploding in the US - and grim projections showed interest payments on the debt will eclipse defense spending in 2024.

Griffin, who founded and runs Miami-based hedge fund firm Citadel, sounded the alarm over the public debt in a year-end letter to investors released this week

Griffin pointed to these projections from the nonpartisan Congressional Budget Office (CBO) which show the national debt rising to historic levels due to higher spending on interest to service the debt. 

Interest payments are now the fastest growing part of the federal budget. 

The CBO predicts they will be the second largest government expenditure by the end of the year, second only to Social Security. 

'As we have cautioned over the past year, the surging US public debt is a growing concern that cannot be overlooked,' Griffin wrote. 

'For example, the Congressional Budget Office estimates that net interest spending will reach 3.1 percent of GDP in 2023, which is a full percentage point higher than the average from 1974-2023.'

The hedge fund manager, who has a net worth of $37.6 billion according to Bloomberg, questioned why annual budget deficits are forecast to grow despite a strong labor market. 

'It is irresponsible for the US government to incur a deficit of 6.4 percent when unemployment is hovering around 3.75 percent,' he continued.

'We must stop borrowing at the expense of future generations. The Western world urgently needs a significant increase in productivity growth as the burden of rising government debt and entitlement spending strains almost every major economy.'

The national debt is currently above $34.6 trillion and growing, after crossing over the $34 trillion mark at the beginning of this year

Interest payments on the US national debt are set to eclipse defense spending in 2024, projections from the nonpartisan Congressional Budget Office (CBO) show

The year-end letter marked the first time Griffin had written to Citadel investors since 2018. 

He also shared his predictions for the year ahead, saying that economic growth will be modest in upcoming quarters as the Federal Reserve fights to combat inflation. 

But he added consumers should benefit from an increase in real income due to declining inflation and rising wages. 

For years, the US was able to borrow cheaply as interest rates remained at historic lows during the Covid-19 pandemic. 

But as the Federal Reserve has continued to hike rates, borrowing costs have ballooned for Americans - and for the government. 

The CBO predicts interest payments on national debt will be the second largest government expenditure by the end of the year, second only to Social Security

The central bank raised interest rates 11 times in a year and a half, bringing the benchmark rate to a 23-year high of between 5.25 and 5.5 percent. 

While the Fed has indicated that it may lower interest rates this year, there is speculation as to when this could start. 

Griffin's comments come after legendary hedge fund manager Paul Tudor Jones warned in February that 'unsustainable' government borrowing has led to a 'debt bomb' in the US.

The investor, who has a net worth of $8.1 billion, said that the economy appears strong - but under the surface it is actually on 'steroids' that are masking major problems.