BofA CEO: National debt is something to be concerned about

The International Monetary Fund warned in its latest economic outlook that when it comes the US national debt, "Something will have to give."

Bank of America CEO Brian Moynihan (BAC) tells Yahoo Finance Executive Editor Brian Sozzi that though the US did need to spend a lot to keep the economy churning during the pandemic, in better times "you have to have more discipline." "The financial strength of the US is one of the beacons of the world," Moynihan says, "but you got to take care of that. One of the parts of taking care of that is making sure the government's budget stays in line with the economy." He adds that it's not something that alarms need to be raised about yet, but a it is something that needs to be managed over time.

Click here to watch the full interview with Bank of America CEO Brian Moynihan.

This post was written by Stephanie Mikulich.

Video transcript

BRIAN SOZZI: When I last saw you in the World Economic Forum or since then, rates, 10-year treasuries, those rates have risen as various as we've gotten some hotter inflation reports. And then I look at what the IMF said this week, warning about a potential next decade of high levels of debt. Our debt in this country is over $34 trillion. You think the market is finally, after decades, starting to get worried about our country's debt position? And how do we solve this?

- Well, at the end of the day, the living within your means and spending within your means is a refrain that our grandmothers all taught us. And so we all have to take that into account. And there are times when the government needs to spend more money than it brings in order to do things that are needed. That's what happened in the pandemic.

The economy fell by 30% in a single quarter. People were hurting. They had to go in and basically think of that as a big pothole in the economy. They had to put a spackled over and basically make it smooth. And that's what they did. So there's times when it has to happen.

And then in better times, you have to have more discipline. So many of us have spoken for many years, the government about you've got to keep the debt dynamics in line. You've got to get your budget so that you can afford this in a low-inflation, low-growth arena, where you can inflate your way out of the debt like some countries have done in the past.

And so you really have to let the debt run at the right levels. And it's fine now, but it's something we have to be concerned about. And that's why you saw the downgrades and the putting on watch of the US credit and the downgrade of several years ago. It's something we have to be taken care of, because the financial strength of the US is one of the beacons of the world.

The US dollar, the strength of the US dollar, the strength-- the financial strength of the US, the resilience of the US economy. We're going to grow faster than almost any other economy by twice. Our economy is now one 3/4 times what it was prior to the financial crisis, where others are still lagging 1.1 times. So our economy has grown much faster than Europe's economy. The capitalism goes on America. The private sector, the resiliency, and all those things.

But you've got to take care of that. And one of the parts of taking care of that is making sure the government's budget stays in line with the economy. And we got out of line and closed up a lot of the cushion we had. And they kind of tell you they've got to bring it back in line. It doesn't mean you have to stop cold, it just means you have to start really watching the budget.

And it's not something to raise the alarm of and say we got to stop everything tomorrow. It's something you have to manage over the next decade, because a little bit done every year adds up to a lot at the end of the decade.