Bridgewater Associates founder Ray Dalio has issued one of his starkest warnings yet about the US economy, likening the country's $37tn debt burden to an impending “economic heart attack” and urging a return to fiscal discipline akin to the 1990s, according to a report by Fortune.
In a series of interviews and social media posts, including a conversation with Fortune and remarks on Fox Business, the hedge fund titan warned that America’s chronic budget deficit – with the country currently spending 40% more than it collects – is triggering a dangerous spiral of debt service escalation and diminished fiscal flexibility.
“We’re reaching the point where the government may soon be issuing new debt just to pay the interest on existing debt,” Dalio said. “It’s like plaque in the arteries—squeezing away our economic vitality.”
While Dalio sees a potential crisis on the horizon – putting the odds of a financial “trauma” above 50% – he still believes there's time to act. He’s calling for a bipartisan return to the principles that underpinned the fiscal turnaround of the 1990s, when US deficits shrank to around 3% of GDP.
“If we adjust spending and revenue by just 4% while the economy is still strong, we can bring interest rates down and stabilise the system,” he wrote on X (formerly Twitter). “We’ve done it before – from 1991 to 1998 – and we can do it again.”
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