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Ray Dalio warns of a severe debt crisis in the USA and names a concrete time horizon for the first time.
The Bridgewater founder sees a risk that the high debt will lead to massive disruptions within five years at the latest.
Dalio recommends that investors underweight government bonds and instead invest in gold and, to a lesser extent, Bitcoin.
Ray Dalio is sounding the alarm: The founder of Bridgewater Associates warns of a global debt crisis – and for the first time, he has given a specific timeframe on social media. His personal assessment: “that it will happen in three years,” provided current trends continue.
The 77-year-old is reacting to the announcement by US Treasury Secretary Scott Bessent , who plans to buy back more than four billion dollars’ worth of US Treasury bonds. Dalio, who successfully predicted the 2008 financial crisis, is using the measure as an opportunity to highlight the precarious debt situation of the US.
US national debt now exceeds $40 trillion. In July alone, the budget deficit reached $432 billion. Dalio pointed out that the US is currently spending around 40 percent more than it takes in – a gap that must be financed through new debt.
Bond yields at multi-year high
The yield on 30-year US Treasury bonds has now climbed to over five percent. This means that the long-term financing costs of the American government have reached a level that investors considered virtually impossible for years.
Dalio speaks of a “debt-induced heart attack.” In his social media post, he wrote: “If the problem is not addressed now, the debt will rise to a level that cannot be managed without severe disruption.” The risks could now accelerate.
Most economies face similar debt and deficit problems. This applies to Great Britain, China, Japan – and the Eurozone. “I expect a comparable adjustment process in most economies, characterized by high debt and currency devaluation,” said Dalio.
Gold and Bitcoin as a hedge
The hedge fund founder draws concrete conclusions for investors. He recommends underweighting traditional debt securities. Instead, investors should allocate a portion of their assets to gold – he suggests a guideline of ten to fifteen percent of a portfolio.
His recommendation for Bitcoin is noteworthy. Dalio had long been skeptical of cryptocurrencies, but in recent years he gradually changed his stance. Now he advocates a smaller position in Bitcoin – in addition to gold as a classic hedge against currency devaluation.
Gold has been rising steadily since the beginning of August, and Bitcoin experienced a massive surge last week. Both assets have already reacted to these developments and even anticipated Bessent’s plans.
Finance minister reassures – Dalio remains skeptical
Bessent paints a less dramatic picture than Dalio. The Treasury Secretary said in interviews that his team is working on plans to cut government spending by several hundred billion dollars. At the same time, he expressed his expectation that the deficit may have already peaked under President Donald Trump.
Dalio, however, believes the scope for savings is limited. A large portion of government spending goes toward social programs, defense, and interest payments —items mandated by law or politically difficult to cut. In his view, the deficit must be reduced to around three percent of economic output. This requires a combination of lower spending, higher government revenue, and lower interest rates—ideally in roughly equal proportions to prevent the fragile system from becoming unstable.
He issued his warning to investors early on. At the World Economic Forum in Davos, he warned: “Anyone still investing according to the old textbook in 2026 will find that they are playing a game whose rules have long since changed.”