Bridgewater Associates founder and former CEO Ray Dalio stated in a podcast last month that it will be too late for parties to work together on an effective measure to solve the $37.8 trillion (£28.1 trillion) US debt problem before 2027 due to the current political cycle and the upcoming midterms in 2026.
On what could really be done to address the challenge, Dalio said some highly unpopular measures would have to be taken, including spending cuts and tax hikes.
‘Any sort of bipartisan effort that comes after will both take time and be unlikely to be effective, because those commissions generally don’t work very well in practice,’ Dalio said. ‘The way I see it, any serious effort to solve the debt crisis will likely come too late.’
The 76-year-old billionaire investor, who has a net worth of over $15 billion (£11.1 billion), also forecast that US President Donald Trump‘s ‘big, beautiful bill’ will continue to increase the national debt, contributing trillions of dollars to the outstandings over the next decade.
Earlier this week, Dalio said in an interview with Bloomberg TV that the US is headed towards a civil war, citing ‘irreconcilable differences’ that are provoking conflict simultaneously across multiple arenas.
It means that the US is already engaged in ‘a civil war of some sort,’ he said.
‘We’re in wars,’ he added. ‘There is a financial, money war. There’s a technology war, there’s geopolitical wars, and there are more military wars. And so we have a civil war of some sort which is developing in the US and elsewhere, where there are irreconcilable differences.’
War is disruption. As is civil unrest.
‘If you take the most analogous period…I would say we’re in a period that’s quite like 1937‑38. You have a debt issue. You have the internal conflicts of wealth and how things should be run. Disorder existed — formed. Democracies stop being democracies. So we’re in a period that’s very much analogous. That’s plenty to worry about,’ the veteran investor explained.
Dalio also stated in an interview with the Financial Times that Trump demonstrated a ‘strong autocratic leadership that sprang out of the desire to take control of the financial and economic situation.’
‘I am just describing the cause and effect relationships that are driving what is happening,’ he had stated. ‘And by the way, during such times, most people are silent because they are afraid of retaliation if they criticise.’
Furthermore, Dalio said a rise in wealth and value gaps translates to more populism of the right and the left and creates differences between them that cannot be addressed democratically. This way, democracies weaken, paving the way for more autocratic leadership as more people want the government to rapidly secure control of the system to make ‘things’ work for them. However, the US economy is in no position to offer a quick solution, given its massive debt problem.
For regular investors, Dalio had also urged them to start allocating a part of their portfolios towards gold to hedge against market volatility and economic uncertainty.
Originally published on IBTimes UK
