Billionaire Peter Thiel warns of an imminent U.S. recession. The tech billionaire identified excessive government spending through “crazy” budget deficits as the reason for the looming recession. Thiel said the U.S. government should implement new reforms to prevent economic collapse.
Billionaire Peter Thiel spoke at the All-In Summit 2024, an exclusive three-day event held in Los Angeles that started on September 8th. Thiel spoke alongside fellow billionaire Chamath Palihapitiya and warned that the U.S. economy was on the verge of a recession.
Thiel continued to share his insights on the global economy, the future of technology, and the political landscape.
Peter Thiel warns of impending recession
According to Thiel, the U.S. economy is propped up by heavy government intervention, preventing it from already being in a recession. Theil criticized the approach taken by the U.S. government when managing its budget, emphasizing the reckless nature of its spending.
The tech billionaire divulged that the projection for the deficit in the fiscal year 2024 was already at an alarming $1.5 to $1.6 trillion in May 2023. He added that by the time fiscal year 2024 began in October, the deficit rose by an additional $400 billion. Adding the extra $400 billion pushed the spending deficit closer to the $2 billion mark.
Thiel also noted that the timing of the spending was problematic. He described the U.S. government’s spending as being “crazy” as it happened at the top of the economic cycle. Theil said that the top of the cycle is a period in which deficits should be reduced, not expanded. He then argued that the government’s use of the “crazy” spending format was delaying a recession that would have already taken hold.
Thiel said that deficits should be allowed to grow during recessions to help stimulate the economy instead of being utilized when the economy was operating at full capacity. Thiel noted that failure to properly utilize the deficits as is currently done by the U.S. government would result in long-term instability.
Thiel urges reforms to prevent economic collapse
Peter Thiel mentioned that he believes that significant economic reforms will be compulsory to steer the economy back into the green. The outspoken tech billionaire stated that the government should identify and implement means of reducing the deficit in a meaningful way without relying on tax hikes or causing GDP contraction.
In his address, Thiel stated that the use of technological innovation may be a viable alternative to promoting sustained economic growth.
“There’s some way where we have too much debt not enough sustainable growth. You know again, I always think it comes back to tech innovation. There probably are other ways to grow an economy without tech or intensive progress, but I think we don’t have those.”
–Peter Thiel– Co-founder of PayPal, Palantir Technologies, and Founders Fund
According to Thiel, traditional tax cuts and embracing globalization aren’t effective ways to address the current situation. He cited the 1980s Reagan-Thatcher era and the 1990s Clinton-Blair era as periods that benefited from one-time moves that aren’t applicable today.
Thiel advocated for the government to deploy reforms driven by technological innovation as they are the most ideal path to long-term economic growth.
