Jeffrey Gundlach gives his insights on what would happen if interest rates stay high, remain where they are, or go even higher in his latest interview.
“What happens when all this debt comes due and we are running a 6.5% budget deficit of GDP and the economy, to my eyes, appears to be weakening?” he asked.
Jeffrey Gundlach notes a lot of early indicators have flipped towards a recession.
“The last one to go all the way is the unemployment rate. Also, we have an actual unemployment rate, which on a state level is rising. Hours worked are going down. First, they cut hours, then the jobs. That is how it works in a business cycle,” he said.


“What happens when all this debt comes due and we are running a 6.5% budget deficit of GDP and the economy, to my eyes, appears to be weakening?”
JEFFREY GUNDLACH
What if the economic cycle tanks; Jeffrey Gundlach gives his insights
“If we go into recession, the deficit goes up four per cent during a recession.
In the last recession, the deficit went up 9% of GDP,” he said.
“The deficit is going to be higher in a recession. Let’s say from 8 or 12%, then fifty per cent of tax receipts would have to go to interest rate payments,” he added.
Jeffrey Gundlach gives his insights on a big debt problem looming
“All that debt is going to make inflation go higher, so let’s say we go to 80s inflation of 9%, then 100% of tax receipts, in the current tax system, would go on interest payments on the debt,”he said.
“That is not possible. So we are in this scheme where giving out money seems to be the answer to everything,” he said.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “ – Mark Twain.

“we are in this scheme where giving out money seems to be the answer to everything”
JEFFREY GUNDLACH
Jeffrey Gundlach questions default levels in the next recession, where interest rates don’t allow refinancing. “Maybe defaults will be higher and rates lower,” he said.
“Chief Business Officers CBOs are assuming interest rates will be 3%. Well, they are at 4 and 5% already. They thought the budget deficit would be 3 or 4%. It is 6.5% now. I think there will be a recession when we get to 2025,” he said.
“We have 212 trillion dollars of unfunded liabilities and total assets in US 190 trillion dollars. We are what you call bankrupt” – Jeffrey Gundlach
“We have 212 trillion dollars of unfunded liabilities and total assets in US 190 trillion dollars. We are what you call bankrupt,” he said.
“If we were a hedge fund, we would be praying every night not to get a margin call because our liabilities exceed our assets,” he added.
Jeffrey Gundlach gives his insight on inflation
He thinks 2 and 2.5% inflation is possible if the Middle East war doesn’t send oil prices spiking.
He thinks the next recession will result in the Fed radically loosening. “All they can do is print money and give it to people,” he said.
Jeffrey Gundlach gives his insight on a reset
He believes yields could go higher.
“We might need to rethink the Fed, a system people can believe in, how we manage debt, and the tax system all needs restructuring, which is a lot of heavy lifting,” he said.