(Bloomberg) — Steven Mnuchin, the former U.S. Treasury secretary, warned about the risks of breaching the debt ceiling, overspending by the Biden administration and concerns that it could further fuel inflation.

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“I do worry that this will be ongoing inflation, and we could easily end up with 3.5% 10-year Treasuries, which again just increases the cost of the national debt and creates budget issues,” Mnuchin said Thursday at the Bloomberg Invest Global virtual conference.

Mnuchin didn’t specify when this could happen. Yields are currently about 1.55% having doubled since October, but he pointed to rising oil prices as evidence of inflationary pressures and said it was time for the Federal Reserve to normalize monetary policy.

“There should be a discussion around what is the appropriate level of national debt and national spending,” he told Bloomberg’s David Westin.

Debt Ceiling

Mnuchin didn’t join six former Treasury secretaries who appealed to Congress to raise the debt limit in a letter last month, but made clear he backs addressing the issue to avert a crisis.

“We cannot let the U.S. default on its debt,” Mnuchin said.

His remarks came as members of Congress continued working for a compromise that would allow at least for a temporary lifting of the limit of U.S. debt. Treasury Secretary Janet Yellen has said the government risks defaulting on its financial obligations by Oct. 18 if Congress doesn’t lift or suspend the ceiling.

Mnuchin said the trillions spent under the Trump administration was in response to the “medical emergency” of the Covid-19 pandemic. “We’re no longer in the same medical emergency that we were in,” he said.

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The positive news right now is that the U.S. economy is rebounding, according to Mnuchin, and he supports the bipartisan infrastructure bill. However, he warned that debt-to-GDP could become “dangerously” excessive if the spending bill envisioned by President Biden goes through.

‘Casino Chips’

Mnuchin, 58, a banker, private equity investor and movie producer before being tapped as Treasury secretary during the Trump administration, recently returned to investing. His Liberty Strategic Capital has raised about $2.5 billion for private equity investments, with most of the money coming from sovereign wealth funds in the Middle East, including Saudi Arabia’s Public Investment Fund, people with knowledge of the matter have said.

Liberty was founded this year with a focus on technology, financial services and fintech, as well as new forms of content, according to a statement in July announcing a $200 million investment in a cybersecurity business.

He also commented on the risks from stablecoins, saying they should be regulated, with the underlying funds put into banks with immediate liquidity.

“They shouldn’t be like casino chips,” Mnuchin said. “If you are going to issue a stablecoin, the actual money should go be held in a regulated bank, in a trust account and the people who hold the stablecoins should be able to exchange those for real dollars at any time.”

Read more: Stablecoin Tether Grows Into Crypto World’s $69 Billion Mystery

(Updates with additional comments throughout.)

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