The U.S. entitlement crisis and ballooning national debts are no longer concerns that are far off on the horizon, says Peter G. Peterson, co-founder of the Blackstone private equity group.

Some 78 million Baby Boomers will be retiring in the coming years and further drain the economy, Peterson told the Financial Times.

"The long-term problems that I have been writing about since 1980-81 are now much shorter," Peterson says. "For example in 2016, the social security will be in cash deficit."

The U.S. is facing a dollar crisis in the coming five years, which could translate into declining dollar values as well as rising inflation with sluggish growth.

That scenario, Peterson says, could force the U.S. to cater even more to the Chinese to keep the Asian giant buying U.S. Treasuries, a move that could affect U.S. foreign policy.

"For example, what if they presented to us an alternative of some sort of acceptance of a Taiwan policy?"

The U.S. federal deficit has swelled to $1 trillion for the first time thanks to money spent on kick-starting the economy out of the recession, as well financing the wars in Iraq and Afghanistan.

The gap is fueling fears about interest-rate hikes and inflation, and already pressuring the value of the American dollar. There's also concern about trying to reverse the deficit either through cutting government spending or raising taxes in the midst of a tough recession.

"These are mind-boggling numbers," says Sung Won Sohn, an economist at the Smith School of Business at California State University, reports the Associated Press.

"Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."