Ray Dalio Predicts U.S. Debt Crisis Within Three Years
- Ray Dalio highlights a $2 trillion gap between U.S. spending ($7.5 trillion) and revenue ($5.5 trillion).
- The 10-year Treasury yield closed at a high of 5.31% on October 5, with Japan’s yield reaching its highest since August 1996.
- Dalio suggests reducing the deficit from about 6% to 3% of GDP through spending cuts, increased taxes, and lower interest rates.
- Japan, the largest foreign holder of Treasuries, reduced its holdings from $1.24 trillion in February to $1.10 trillion in July.
- Dalio recommends allocating 10% to 15% of a portfolio in gold and only a small fraction in bitcoin.
Ray Dalio warns that U.S debt service payments are constraining spending, potentially leading to a debt crisis within three years if current trends continue. The rising Treasury yields indicate increased borrowing costs that could exacerbate the situation.
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