Bridgewater Associates founder Ray Dalio said on Oct. 6 that the United States could face a debt crisis within three years as interest costs keep squeezing the federal budget. He cited annual government revenue of about $5.5 trillion against roughly $7.5 trillion in spending, leaving a fiscal gap close to $2 trillion. Dalio also pointed to about $32 trillion in federally held debt owned outside the government and annual interest costs of around $1 trillion. Treasury yields remained elevated, with the 10-year U.S. Treasury closing at 5.31% on Oct. 5 and the 30-year at 5.66%. He also noted that Japan held $1.10 trillion in U.S. Treasuries in July, down from $1.24 trillion in February, while Japan’s own 10-year government bond yield rose to 3.12% on Oct. 1, the highest level since August 1996. Dalio proposed a “3% three-part solution” built on spending cuts, higher tax revenue and lower interest rates to reduce the fiscal deficit from about 6% of GDP to 3%. On portfolio allocation, he said investors should hold 10% to 15% in gold and keep only a small portion in bitcoin. Bitcoin.com News was cited as the source.
Bridgewater Associates founder Ray Dalio said on Oct. 6 that the United States could face a debt crisis within three years, with interest payments putting pressure on the federal budget.
Dalio said the U.S. brings in about $5.5 trillion in annual revenue and spends about $7.5 trillion, leaving a fiscal shortfall close to $2 trillion. Federal debt held outside the government stands at about $32 trillion, and annual interest costs are around $1 trillion.
Treasury yields and Japan’s holdings
The 10-year U.S. Treasury yield closed at 5.31% on Oct. 5, while the 30-year yield stood at 5.66%.
Japan held $1.10 trillion in U.S. Treasuries in July, down from $1.24 trillion in February. Its 10-year government bond yield rose to 3.12% on Oct. 1, the highest level since August 1996.
Dalio’s “3% three-part solution”
Dalio proposed a “3% three-part solution” that would cut the fiscal deficit from about 6% of GDP to 3% through lower spending, higher tax revenue and lower interest rates.
For portfolio allocation, he recommended putting 10% to 15% into gold and keeping only a small share in bitcoin.
Bitcoin and gold performance
As of Oct. 6, bitcoin traded at about $85,630, roughly 32% below its all-time high of $126,080, and down about 3.5% for the year. Gold futures were down about 4.2% over the same period.
The report cited Bitcoin.com News.
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