The 70-year-old insists that sort of spending policy is an insult to Manchester United who have always put faith in youth development.
United have already spent £21 million this summer adding 23-year-old Shinji Kagawa from Borussia Dortmund and 18-year-old Nick Powell from Crewe Alexandra, but Sir Alex claims they cannot compete for 'top players' because of salaries and agents' fees along with the transfer fee itself.
He told The Daily Mirror: "What we are finding a problem is the climate for buying top players.
“It’s not just the transfer fees or the salaries, it’s also the agents’ fees. It’s getting ridiculous now.
“In the [Eden] Hazard deal, Chelsea paid the agent £6 million. And the situation last year with [Samir] Nasri was the same."
Sir Alex says that placing faith in young players is part of United's history and it is part of what separates them from the others.
He continued: "I can see Powell being a big surprise for us this season even though he is only 18. And that’s the difference between Manchester United and the rest – we can play 18-year-olds because it’s part of our history.
“It’s like a destiny for us. When a young player emerges, we play him – and that has never failed us.
“No other clubs can do that. City won’t do it. They definitely won’t play any youngsters who have come up through their system.
“Their buys are all 25, 26 or 27. Established players with good maturity and experience.
“City won’t be going away because they have a good age group.
“They don’t have any over-30s, but they don’t play any youngsters either and their fans don’t expect youth players to come through the way they do at United."
While admitting the current champions go into next season as favourites to retain their crown, the United boss still claims his side will be the one to beat.
“City will be the title favourites, no doubt about that, but I’m not worried at all", he added.
“The team everyone will worry about is Manchester United because our record of coming back is unbelievable.”