
Is it a ticking time bomb? Ray Dalio says skyrocketing U.S. debt could cripple the economy and threaten markets and the dollar
Is debt like a plaque?
According to the report, the Bridgewater Associates founder Dalio compared the US debt to «plaque» accumulating in the financial system. He warned that the mounting debt «poses a problem for governments as interest payments eat up more and more of their budgets,» as quoted by Business Insider.
As per Treasury's data, the US government spent $6.75 trillion last fiscal year. While it only brought in $4.92 trillion in revenue, leaving a deficit of $1.8 trillion, reported Business Insider. Over the past two decades, the national debt has more than tripled to around $36.2 trillion, the report added.
Risks of inaction
According to Dalio, unless the US doesn't cut its fiscal deficit from 6% of GDP to 3% in the next four years or so, it will experience a surplus of government bonds, potentially driving interest rates up and sending Treasury markets out of control, reported Business Insider.
He also claimed that this «trauma in the backbone of the financial system affects all markets, and money as a storehold of wealth as we know it,» as quoted in the report.
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