Bridgewater Associates founder Ray Dalio said the United States could run into a debt crisis within the next three years as rising interest costs consume a larger share of the federal budget. Speaking to Bloomberg, Dalio laid out the scale of the pressure: the US government takes in about $5.5 trillion a year, spends roughly $7.5 trillion, and is running a fiscal deficit close to $2 trillion. He added that annual federal interest expense is about $1 trillion, while total debt service and refinancing needs reach around $11 trillion when maturing obligations that must be rolled over are included. Dalio also pointed to higher Treasury yields as an added burden on government financing. The 10-year US Treasury yield closed at 5.31% on Oct. 5, while the 30-year yield reached 5.66%. To address the imbalance, he said the deficit should be reduced from about 6% of GDP to 3% through lower spending, higher tax revenue, and lower interest rates. On asset allocation, Dalio previously said 10% to 15% of a portfolio could be allocated to gold, with Bitcoin taking only a smaller share.
Bridgewater Associates founder Ray Dalio said in an interview with Bloomberg that the United States could face a debt crisis within the next three years as interest payments take up a growing share of the federal budget.
Dalio said the US government collects about $5.5 trillion in annual revenue and spends about $7.5 trillion, leaving a fiscal deficit close to $2 trillion. He added that annual federal interest expense is around $1 trillion. Once maturing debt that must be refinanced is included, total annual debt service and refinancing needs come to about $11 trillion.
He also pointed to rising Treasury yields as another source of pressure. The 10-year US Treasury yield closed at 5.31% on Oct. 5, while the 30-year yield reached 5.66%.
Dalio said the fiscal deficit as a share of GDP should be cut from about 6% to 3% by reducing spending, increasing tax revenue, and lowering interest rates.
On portfolio allocation, Dalio previously said 10% to 15% of a portfolio should be allocated to gold, while Bitcoin should account for only a smaller portion.
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