As a result, there could be losses for investors with portfolios heavy with low interest loans, Blankfein predicted.
"At some point growth will come back. I think its going to come back sooner than people think. Now what's going to happen when growth comes back, interest rates rise?" Blankfein said. "That will have an effect on portfolios and people will have losses."
(Read More: JP Morgan Chase CEO Jamie Dimon on the Fiscal Cliff.)
Blankfein said that Goldman is advising all its corporate clients to borrow "as much as they're going to need for as long as they think they could need it" because of the low interest rate environment.
Blankfein's words revealed a conflict at the heart of Goldman's business. It advises corporate clients to issue debt while warning investors that buying too much low-interest debt might be financially perilous.
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