US consumers' debts are an "accident waiting to happen", a leading economist has warned.
The Davos forum usually plays to a packed house
Morgan Stanley chief economist Stephen Roach told a meeting at the Davos World Economic Forum that the US was headed for a property bubble.
The cause, he said, was people's use of their houses as "massive ATM machines".
The US needed a sharp rise in interest rates to curb the rampant spending - but the Federal Reserve was "in denial" about it, he warned.
Mr Roach is famous in the investment community for taking a more cautious - some would say bleak - view of the world economy than many of his peers.
His case at the panel discussion on the future of the global economy was that "self-indulgent" US shoppers had kept world factories in business recently.
But the appetite for spending had been fed by dirt-cheap credit - in the shape of interest rates of just 1% for much of the past three years.
At the same time, the surge of imports had been balanced by foreign countries buying US dollars, keeping their currencies cheap and the US government's massive budget deficit afloat.
That, in turn, kept interest rates low.
"This is an utterly insane way to run the world economy," Mr Roach said.
"You know that, we know that, but the Federal Reserve is in denial about it."
At the same panel, Fred Bergsten, of Washington DC's Institute for International Economics, said the expanding budget could trigger chaos in the currency markets if it continued to drag the US dollar lower.
"We face an enormous risk of a major dollar crisis" unless the government takes the need to close the deficit seriously, he said.
"The world would undoubtedly fall into a much slower growth pattern."