Billionaire Ray Dalio has warned that the rapid growth of U.S. government debt and “irreconcilable differences” within the country are creating a troubling financial and political environment.
In an interview with Bloomberg TV that aired Friday, the founder of investment firm Bridgewater Associates said the national debt is rising too quickly, evoking the period preceding World War II.
“There’s a certain dynamic to debt,” Dalio said. “When debt and the cost of servicing it grow faster than income, it’s like plaque in the arteries that gradually blocks the flow and limits spending capacity.”
“One person’s debt is another person’s asset,” he added. “And if those assets don’t yield a real return, they start getting sold.” According to him, this is precisely what the U.S. government is now facing.
According to data from the U.S. Treasury Department, total government debt exceeded $37.8 trillion last week. More than $30 trillion of that is held by private investors—corporations, banks, and other entities outside the federal government—a figure now nearly equal to the country’s gross domestic product.
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According to projections by the Congressional Budget Office, by the end of fiscal year 2035, the United States’ total debt will exceed $52 trillion. The U.S. Government Accountability Office, an independent watchdog, has also noted that debt growth is outpacing economic expansion, calling the trend “unsustainable in the long term.”
The report further warns that rising debt will drive up borrowing costs, increase prices for goods and services, and slow wage growth—all of which will strain the personal finances of American households.
The report further warns that rising debt will drive up borrowing costs, increase prices for goods and services, and slow wage growth—all of which will strain the personal finances of American households.
“We are in a state of wars,” he said. “These are financial, technological, geopolitical, and military wars.”
“Moreover, within the United States and other countries, a kind of civil war is unfolding—driven by irreconcilable divisions,” he added. In the billionaire’s view, society could still “rise above it,” though the likelihood of such an outcome is slim.
“I think that’s too idealistic,” Dalio said. “I have to be a realist.”