Ray Dalio Warns of US Debt Crisis Looming
With the US debt burden showing no signs of abating, Dalio's warnings highlight the importance of finding a solution to the supply-demand problem, lest the country face a severe economic downturn, and the world economy suffers as a result, underscoring the need for a concerted effort to mitigate the crisis.
Billionaire investor Ray Dalio, founder of Bridgewater Associates, is sounding the alarm on the US debt burden, warning that the situation will worsen if the White House can't find buyers for its debt, citing a severe supply-demand problem that could lead to "shocking developments" if not managed.
Dalio believes the US will struggle to sell a significant amount of debt to international investors, emphasizing the importance of addressing the US deficit, which needs to decrease from 7.2% of GDP to 3%. He notes that the current trade policy uncertainty, including tariffs, could lead to a period of "fighting between countries", potentially causing significant economic consequences.
The billionaire investor draws parallels between the current situation and 1930s Germany, where debt was restructured and tariffs were increased to boost revenue, citing historical patterns of nationalism, protectionism, and militarism. Dalio suggests that the US may need to restructure its debt, apply pressure on other countries to buy the debt, or even cut off payments to some creditor countries to mitigate the crisis.
As the US debt problem continues to escalate, Dalio's warnings serve as a stark reminder of the need for urgent action to address the deficit and prevent a potential debt crisis, which could have far-reaching consequences for the global economy.