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Billionaire Plutocrat Jamie Dimon Wants to Ditch the Debt Ceiling

At a meeting with President Binden and other CEOs last week, JP Morgan Chase CEO Jamie Dimon predicted a global catastrophe if the debt ceiling is not raised.

Dimon was echoing the words—nearly verbatim—of Biden’s Treasury secretary Janet Yellen in using the most extreme language possible, with words such as “complete catastrophe.” Dimon also repeated Yellen’s lie that the US has never defaulted, claiming a default “would be unprecedented.” Dimon then went on to demand that the debt ceiling be abolished altogether so that the US government would no longer be encumbered by inconvenient impediments to endless amounts of federal debt and spending.

This sort of thing, of course, is precisely what we’ve come to expect from billionaires and other captains of the financial sector who have made a living out of turning inflationary monetary policy into big profits for themselves and their fellow corporate cronies.

[Read More: “The Plutocrats of Wall Street and Silicon Valley Are Scamming America” by Ryan McMaken]

Wall Street and the financial sector have become increasingly dependent on inflationary monetary policy to prop up their portfolios, and huge amounts of deficit spending have been key to this equation.

After all, as federal deficits (and the debt overall) have ballooned, the regime in Washington has relied more and more on deficit spending to keep paying the bills. Yet with more than $25 trillion in debt on the books, debt service would prove to be crippling to the regime were it not for the central bank’s monetization of debt.

[Read More: “How the Fed Is Enabling Congress’s Trillion-Dollar Deficits” by Ryan McMaken]

In other words, the federal government would have to pay double or triple the amount of interest it now pays—thus forcing big cuts to popular government programs—were it not for the fact that the central bank is buying up enormous amounts of government debt. Indeed, the Fed’s holdings of Treasury debt have multiplied many times over during the past decade, rising from “only” a half trillion dollars in 2008 to $4.6 trillion today, more than half of the Fed’s total portfolio in 2021.

These assets have been purchased using newly created money, which when spent on Treasurys enters the economy through the financial sector. That means fat fees and a huge advantages for the financial sector, as it is able to spend newly created cash on assets and goods before prices adjust to reflect the realities of an increasingly inflated currency.

Moreover, this need for low interest rates on federal debt drives an overall dovish monetary policy committed to ultralow interest rates. This, as shown by Karen Petrou in her book Engine of Inequality, has disproportionately benefited the financial sector and the ultrarich.

So we shouldn’t be surprised when representatives of the ultrawealthy Wall Street class like Dimon apparently don’t see much downside to having federal deficits continue to spiral upward. The deficit-spending game has been great for them. 

Nonetheless, their efforts at defending the status quo are remarkably ham-fisted at times. In his efforts to end the debt ceiling altogether, Dimon listed his three reasons why huge deficits must continue:

“Number one is really a morality point: We all teach our children that we are supposed to meet obligations and I don’t think the nation should be any different. Number two, we should never even get this close—there are huge economic costs already being borne … [and] it’s already affecting the stock market,” Dimon said, and “number three, we should get rid of this debt ceiling—we don’t need to have this kind of brinksmanship every couple of years.”

The first point, of course, is laughable coming from any representative of corporate America. Corporate leaders in America hardly eschew bankruptcy as a method of avoiding paying one’s debts—when it helps the bottom line. It’s standard practice, and one never witnesses much hand-wringing about whether or not we’re sending a good message to “the children” when a business declares bankruptcy. Dimon’s attempt to put a patina of moralism on paying debts should be regarded as cynical in the extreme. Moreover, by engaging in policies that lead to price inflation—whether in assets prices of goods prices—the regime is already embracing the schemes of a deadbeat. It’s paying off its debts in deliberately devalued dollars. 

The second point merely illustrates the tunnel vision with which Wall Street operates. Ever since the early days of the Greenspan Put in the late 1980s, central bankers and Wall Street have increasingly all agreed that asset-price inflation in the stock markets is somehow synonymous with American prosperity overall. Yet, as repeatedly shown by David Stockman in his book The Great Deformation, Wall Street and Main Street are absolutely not the same thing, we ought not treat them as such. Moreover, a disproportionate amount of these “huge economic costs” that would be borne in case of default would be largely felt by the regime itself and by the investor class. While default would finally rein in government runaway spending—while freeing up much of the budget for things other than debt service—holders of government debt would no doubt suffer. But, as Rothbard notes, these people took that risk willfully. The taxpayers, on the other hand, have no say in the matter and ought not be forced to endlessly pay the bills which the taxpayers have never consented to. 

And finally, there is Dimon’s condemnation of “brinksmanship.” Yet, what Dimon here calls “brinkmanship” is what opponents of monarchical tyranny once called “dissent” or “freedom.” After all, parliamentary government—so far as it was a check on executive power—was created in practice for purposes of brinkmanship. That is, the legislative’s body control over government spending was there precisely to hold the executive—usually a monarch—accountable by withholding tax revenues until the monarch agreed to concessions of various types. Usually, the executive would attempt to force some sort of crisis—often a war-related crisis—to frighten the legislators into caving to his or her demands. It’s a time-honored political tactic. Much of the time, however, only by refusing to blink during periods of “brinkmanship” do opponents of executive power succeed.  The fact that the current crop of legislators is largely motivated by goals of partisan advantage is immaterial. Thus has it always been. That’s not a reason to straighten the regime’s path to yet another round of ripping off the taxpayers.  

Consequently, Dimon’s position is essentially this: “abandon all checks and balances if it threatens Wall Street portfolios!” What Wall street wants is to know for sure that the regime will keep the money flowing. That leaves no room for meaningful opposition. 

Also an Ideological Problem

It is unlikely, however, that Dimon is motivated strictly by the prospects of a bigger payday. Supporting runaway spending is simply the dominant ideology today in financial-sector boardrooms and in business schools. While conservatives were shortsightedly obsessing over “electing the right people” or winning the next election, interventionists ideologues were taking over business schools and university faculty offices. They ensured that the next generation of business leaders and economists would embrace the ideas of endless spending, large-scale government intervention, and inflationist monetary policy. So, when the Jamie Dimons of the world push for abolishing the debt ceiling—or having the central bank monetize another trillion in government debt—its likely not just a cynical ploy. This is especially unsurprising for someone like Dimon who sat on the board of the New York Fed from 2008 to 2013. The thinking here is likely far more nuanced than a mere scramble for profits.  In other words, these people are probably true believers. This is, after all, what they learned from their economics professors.