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George Soros, the renowned hedge-fund manager, issued a warning in the 1980s about the risks of unsustainable U.S. public finances—a caution that has resurfaced amid today's market boom, stirring concerns among investors and economists alike.
What Happened: In his 1986 investment classic “The Alchemy of Finance,” Soros cautioned about the fundamental deterioration in the U.S.’s financial position. This warning materialized in October of the following year when the U.S. equity market experienced its swiftest crash in history, according to Economist Felix Martin‘s commentary on Reuters Breakingviews.
"The stock market boom has diverted our attention from the fundamental deterioration in the financial position of the United States," Soros wrote.
As the S&P 500 Index traded at 25 times earnings on the eve of the recent presidential election, the Congressional Budget Office projected that the U.S. public debt would surpass the post-World War Two record in 2027. ...
