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06/09 01:37

Foreign debt will ruin the US economy – Ray Dalio

Foreign debt will ruin the US economy – Ray Dalio

Legendary investor Ray Dalio has issued a stark warning about the trajectory of the US government's finances, saying the country is headed for a series of severe economic shocks unless urgent action is taken to address the debt spiral.

In a summary of his new book, “ How Countries Go Broke: The Big Cycle ,” published June 3, Dalio painted a bleak picture, predicting that debt service costs could reach $55 trillion within a decade — many times more than the government’s annual revenue. Even in the short term, interest payments alone could reach $1 trillion a year, eating up a fifth of federal revenue and worsening the deficit.

Dalio argues that rising interest rates increase risk by making U.S. debt less attractive to investors, which could trigger a cycle of weaker demand and even higher borrowing costs. “ That’s how the financial stability of nations collapses ,” he warned.

The founder of Bridgewater Associates emphasized that such crashes have occurred throughout history, but current politicians remain complacent, convinced that the existing financial order is immune to collapse.

He called for a more conservative fiscal policy, warning that if action is not taken now, the country could find itself in trouble.

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