Ray Dalio raises the alarm on US debt: possible “scioccanti” developments

Ray Dalio, founder of Bridgewater Associates, has renewed his concerns regarding the growing US debt crisis, warning that the issue could lead to “shocking” developments with global repercussions. During his speech at CONVERGE LIVE in Singapore, Dalio emphasized the seriousness of the situation and the need to address a severe imbalance between the demand and supply of debt.

US Debt Crisis: An Imminent and Primary Concern According to Ray Dalio

According to Ray Dalio, the U.S. government finds itself in the necessity of selling an amount of debt that the market might not be willing to absorb.

“We have a very serious problem of demand and supply of debt. The United States must sell an amount of debt that the world will not want to buy. This situation is imminent and represents a matter of primary importance,”

stated to CNBC.

Dalio highlighted that the federal deficit should be reduced from the current level of 7.2% of GDP to about 3%, an adjustment that, according to him, will lead to drastic decisions. “We will see shocking developments in terms of how this issue will be managed,” he warned.

Possible consequences: debt restructuring and international pressures

To the question of whether the debt crisis could lead to a period of austerity, Dalio hypothesized several scenarios, including a possible debt restructuring, pressure on other countries to buy U.S. bonds, and even the interruption of payments to certain creditors.

He also connected the current situation to the historical cycles of the global economy, referencing past events that have led to economic and political upheavals. 

“Just as we are witnessing political and geopolitical changes that seem unthinkable to many, history teaches us that these events repeat cyclically. We will see surprising developments, just like those we have already observed in the past”,

he stated.

Trade tensions and the risk of conflicts between nations

The debate also touched on the topic of commercial tensions between the major world economies, with Dalio drawing a parallel with 1930s Germany, a period marked by debt devaluation, increased customs duties, and the strengthening of the internal market.

“Being nationalists, protectionists, and militarists is the way these historical cycles work,” said Dalio, emphasizing that the introduction of tariffs could intensify economic conflicts between the United States, Canada, Mexico, and China. He clarified that he was not necessarily referring to a military conflict, but to heightened economic and trade competition between the nations.

Dalio has warned that tariffs could trigger unpredictable international tensions, impacting global supply chains, financial markets, and diplomatic relations. “The most critical aspect will be the management of these economic clashes and the ability of economies to adapt to a new world financial order,” he stated.

A warning not to underestimate

The words of Ray Dalio represent an important warning for governments, investors, and economic analysts. The US debt crisis could not only influence the bond market but also generate ripple effects on the global economy. With an already unstable geopolitical landscape and an increasingly interconnected world economy, managing the debt crisis will be crucial for the future of global financial stability.

To address the situation, the United States might be forced to revise their economic strategy, opting for drastic fiscal measures, new monetary policies, and possibly strategic alliances with other economic powers to mitigate the risk of a global financial crisis.

Although Dalio declares himself a neutral observer, his warning underscores the need to closely monitor economic and financial developments to prevent the situation from degenerating into a even deeper crisis.

Conclusion

With over 36.2 trillion dollars of national debt, the United States faces a historic challenge. The combination of high indebtedness, trade tensions, and possible austerity measures could redefine the entire global economic landscape in the coming years.

Investors and analysts should pay particular attention to macroeconomic indicators, the policies of the Federal Reserve, and the moves of the U.S. government to prevent unforeseen crisis scenarios. Dalio’s warning, therefore, is not just a forecast, but an invitation to be prepared for an era of profound economic transformations.