Carl Icahn says the market over the long run will certainly 'hit the wall' because of money printing

Longtime activist investor Carl Icahn said Monday that the U.S. markets could see major challenges over the long term in the face of excessive money supply and rising inflation.

“In the long run we are certainly going to hit the wall,” Icahn said Monday on CNBC’s “Fast Money Halftime Report.” “I really think there will be a crisis the way we are going, the way we are printing money, the way we are going into inflation. If you look around you, you see inflation all around you and I don’t know how you deal with that in the long term.”

The Federal Reserve and Congress have unleased trillions of dollars in stimulus to rescue the economy from the Covid-19 pandemic. The central bank’s balance sheet swelled by more than $3 trillion amid its open-ended quantitative easing program, while the government has allocated over $5 trillion in stimulus to support Americans through the health crisis.

Icahn was adamant about not making a market timing call, but he believes one day over the long term the markets will pay the price for these policies.

On the back of these unprecedented stimulus programs, the S&P 500 has rapidly wiped out the pandemic-induced losses and rebounded to a new high. The equity benchmark is up more than 19% in 2021, sitting just 1.4% below its all-time high reached early September.

The massive money supply has partly contributed to rising price pressures in the economy. Inflation ran at a fresh 30-year high in August amid supply chain disruptions and extraordinarily strong demand.

The core personal consumption expenditures price index, which excludes food and energy costs and is the Fed’s preferred measure of inflation, increased 0.3% for the month and was up 3.6% from a year ago.