Ray Dalio (Trades, Portfolio), the founder of Bridgewater Associates, has issued a stark warning about the "very serious" supply-demand issues facing U.S. debt. Speaking at an event in Singapore, Dalio highlighted the critical nature of the debt problem, emphasizing that it will compel the U.S. government to sell a large amount of debt. However, he noted that global markets are reluctant to purchase this debt.
Dalio stressed the urgency of the situation, suggesting that most people do not fully understand the mechanics of debt. He pointed out that the U.S. deficit needs to be reduced from a projected 7.2% of GDP to around 3% of GDP. He warned that this adjustment is crucial and will likely lead to some shocking measures.
His comments come at a time when markets are experiencing volatility due to tariff issues, which have heightened uncertainty on Wall Street. Investors are increasingly concerned about the potential impact of a brewing trade war on the global economy.
When asked if the U.S. debt issue could lead to a period of tightening, Dalio suggested that it might result in debt restructuring, pressure on other countries to purchase U.S. debt, or even halting payments to certain creditor nations. He compared the situation to historical political and geopolitical changes that seemed unimaginable at the time but have repeated throughout history. Dalio concluded that we should brace for developments that will be as surprising as past significant changes.
