Ray Dalio warns of US debt crisis

Ray Dalio, a billionaire, has declared the start of a debt crisis in the United States.

There is an excessive amount of debt being issued by the US, but not enough purchasers.

The US Treasury will be releasing $1.6 trillion worth of Treasury bills into the market in the near future.

It appears that the American economy is headed for a difficult period.

Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the United States, has warned that the US is at the start of a debt crisis that typically lasts around seven years, according to Bloomberg. He noted that inflation in the US is still high, along with higher real interest rates.

He stated that the US is currently in the early stages of a classic late grand cycle debt crisis, where there is an imbalance between the amount of debt being issued and the number of buyers.

The US debt ceiling was recently increased, and the Treasury Department has declared its intention to issue $1.6 trillion in Treasury bills in 2021 to replenish its reserves. JPMorgan has stated that these new bonds will be available on the market before the end of September.

The founder of Bridgewater stated that, due to the sheer amount of public debt, there are no buyers for it. To be purchased, the debt must have a high enough interest rate.

Dalio predicted that Fed interest rates will remain relatively low, but warned that the economic situation in the US could become worse, leading to increased political unrest.

Last October, Ray Dalio stepped down as chief investment officer of Bridgewater Associates, the largest hedge fund in the US. Despite this, he still holds a significant ownership stake and is a member of the board of directors. The Bloomberg Billionaires Index estimates his net worth to be $16.5 billion.