Best Outcome for US is 'Nominal Growth': Legg Mason Portfolio Manager

The best outcome for the United States is "some nominal growth or some acceleration in nominal growth," Wayne Lin, portfolio manger and investment strategy analyst for Legg Mason Global Asset Allocation, told CNBC Wednesday.

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Lin oversees all of Legg Mason's asset allocation portfolio's with over $5.2 billion in assets.

"That's not to say that the [Federal Reserve] is gonna ignore its mandate of price stability. It's not. But the Fed feels far more comfortable being able to control the price level versus having to deal with deflation, as we all saw in 2008," Lin said.

"If I was Ben Bernanke [chairman of the Federal Reserve] I would be thinking about, 'Listen I'd be more than happy to have inflationdrift up a little bit as long as I feel like I can control the expectations.' That helps a little bit with the nominal debt that the U.S. has, and more importantly it helps the nominal growth generate nominal revenues that can help service the debt," he explained.

"That's how you get out of this," added Li.

Nominal growth is a gross domestic product figure that has not been adjusted for inflation.

"The bad scenario is if we aren't able to get growth. Then what ends up happening is a viscous cycle where the revenues generated by tax revenues and by economic activity actually starts to shrink, the debt becomes insurmountable," he went on to say.

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