Greenspan warns U.S. budget deficit will utlimately lead to higher inflation

The yawning federal budget deficit is ultimately going to eventually lead to higher inflation, former Federal Reserve Chairman Alan Greenspan said Thursday.

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.

“Unless you believe in fairies, that is not an economy that can function without inflationary instability,” Greenspan said.

The former Fed chairman despaired the lack of political pressure to control entitlement spending and narrow the deficit.

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