Dalio warns: US debt crisis worsening, political inaction may lead to disaster.

Ray Dalio, founder of Bridgewater Associates, has issued a new warning about the US economy, stating that terrible consequences will ensue if the Trump administration does not reduce US debt. Speaking at the World Government Summit in Dubai on Thursday (February 13), Dalio told the media, "It's like if I were a doctor and talking to you about your condition, I would say to you, the situation is very, very serious. All of these are major issues." "What you need to do is bring the deficit from about 7.5% of GDP down to 3% of GDP, and you can do that. You can take certain actions to reduce the deficit, make it healthier, so the real issue is a political issue." Data released last week shows that as of February 5, 2025, the total US federal government debt stands at $36.22 trillion, of which $28.9 trillion is debt held in securities by the public. High debt means the government will spend more on interest payments, making the economy more vulnerable in the event of a crisis, leading to inflation and burdens for future generations. Dalio warned that if political action is not taken to reduce the debt deficit, there could be an "economic heart attack" or a "bond market heart attack," and "it really could happen." "This is like me saying to you, 'Okay, you need to change your diet, you need to change your exercise habits, you need to do these things.'" Dalio emphasized that the US government needs to take responsibility, and leaders should commit to reducing the US budget deficit from 7.5% of GDP to 3%, or resign. When asked for a message to the Trump administration, Dalio replied, "They are already aware of this issue and taking appropriate action." His advice is to "know what you're doing, be realistic, and be conservative (not overly radical)." Last month, on his first day in office, Trump signed an executive order to establish a advisory council called the "Department of Government Efficiency (DOGE)" lead by Elon Musk. In October of last year, Musk stated at a campaign rally that he would "cut at least $2 trillion from the federal budget." Dalio said, "You need to know how much you can cut, what the consequences of each cut will be, so you need to be cautious." Musk has also admitted that "cutting $2 trillion in federal spending" is an overly idealistic goal. Dalio also warned of debt risks in the private credit sector, stating that the debt death spiral is part of the cycle, where debtors need to borrow new debt to pay off debt interest, accelerating the spiral. "When everyone sees this, debtors will not want to hold this debt. We are approaching that stage." This article was reprinted from CaiLianPress, GMTEight Editor: Chen Xiaoyi.