Ray Dalio on $38 Trillion National Debt
- billionaire Ray dalio, founder of Bridgewater Associates, warned that the United States' growing national debt will likely lead to dollar devaluation, burdening future generations.
- Dalio, a student of economic history, pointed to a pattern of how nations handle excessive debt - currently at $38 trillion in the U.S.
- "It's always done when countries essentially go broke," Dalio said.
billionaire Ray dalio, founder of Bridgewater Associates, warned that the United States’ growing national debt will likely lead to dollar devaluation, burdening future generations. He predicted his grandchildren and great-grandchildren will pay off the debt in devalued dollars, during a recent interview on the David Rubenstein Show.
Dalio, a student of economic history, pointed to a pattern of how nations handle excessive debt – currently at $38 trillion in the U.S. He argues that spending cuts and outright defaults are rare. Instead, governments typically devalue their currency and print more money.
“It’s always done when countries essentially go broke,” Dalio said. “They print money, devalue the currency, and create an artificially low interest rate, so that the person who’s holding the bonds is receiving an artificially low interest rate.”
This strategy, he explained, diminishes the returns for those holding government bonds, as those returns don’t keep pace with actual inflation. Dalio drew a comparison to 1971,when President Richard Nixon ended the dollar’s link to gold.
“The world used to have gold as money,” Dalio said. “That was the way.” He noted people historically calculated prices based on gold’s value, and reiterated his advice to hold between 10% and 15% of a portfolio in gold. he believes gold’s current rise in value reflects its enduring appeal throughout history.
“There’s a saying that gold is the only asset that you can have that’s not somebody else’s liability,” Dalio said.