Is the U.S. Nearing a Debt Crisis? Dalio's Creative Warning: "Like a Ship Sailing Toward Rocks!"

Billionaire investor and founder of Bridgewater Associates, Ray Dalio, has long warned that the U.S. is heading toward a debt crisis, using various analogies to sound the alarm.

He notes that while politicians recognize the danger, they remain "debating how to pivot" because they fear angering voters with tax hikes or welfare cuts. Summarizing his frustration, he states: "That's politics."

In fact, Dalio has been warning about debt risks since at least 2018, when he published Principles for Navigating Big Debt Crises.

In the book, he argues that excessive borrowing inflates bubbles, which then contract when debts become unsustainable. Citing the 2008 financial crisis and past collapses, he describes debt cycles as predictable "diseases."

At the 2022 Greenwich Economic Forum, Dalio called debt, political division, and foreign conflicts a "perfect storm" for America.

Earlier this year, he likened debt to a looming "fiscal heart attack," explaining that in the financial system, "debt builds up like arterial plaque," potentially triggering economic collapse via government/central bank insolvency.

Dalio highlights that U.S. government revenues are projected at $5 trillion this year against $7 trillion in spending—a $2 trillion deficit plus $1 trillion in interest payments.

In his new book How Nations Fail, he writes: "Debt problems metastasize quickly, like invasive cancer."

He warns U.S. debt is nearing "the point of no return," entering a "death spiral" that could destabilize the world’s largest economy.

Higher deficits force more bond sales to fund spending and interest, but shrinking demand requires ever-higher yields—a vicious cycle where "rising rates worsen credit risk, reducing debt demand, pushing rates higher," Dalio explains.

Beyond Dalio, many economists caution that ballooning interest payments may soon force tax hikes or social service cuts to service debt.