【By Observer Net, Wang Yi】Ray Dalio, founder of Bridgewater Associates, has once again warned about the U.S. debt crisis, stating that the rapid growth of U.S. government debt is fostering a dangerous situation "very similar to that before World War II."

"When debt continues to rise relative to income, it's like plaque building up in an artery, eventually compressing the economy's spending capacity," Dalio said in an interview with Bloomberg on October 9.

This billionaire investor has long been warning about the risks of uncontrolled U.S. debt. At a panel discussion at the "Future China Global Forum" held in Singapore on September 19, he pointed out that the spiraling U.S. debt poses a threat to the "global monetary system," and both political parties in the United States should be held responsible. He suggested that the U.S. government should adopt a combination of tax increases and spending cuts to address what he called the "deficit or debt bomb."

According to data from the U.S. Treasury, as of October, the U.S. national debt had exceeded $37.86 trillion. The Congressional Budget Office estimates that public-held debt in 2024 will amount to 99% of the country's GDP. It is expected to rise to 116% by 2034, higher than any period in U.S. history.

U.S. National Debt Growth Trend from 1925 to 2025 U.S. Treasury

As the debt burden grows heavier and interest costs spiral out of control, Dalio has become more outspoken about the U.S. debt crisis in recent weeks. In his view, the key issue is that debt growth exceeds income growth. When U.S. debt grows faster than the U.S. GDP, markets often lose confidence in the borrower.

Dalio frequently compares the U.S. to historical empires that declined, saying that over-reliance on borrowing to sustain fiscal operations ultimately leads to an unsustainable debt vortex. To repay the interest on existing debt, the government is forced to take on more debt. Since the government essentially funds its debt through money printing, the result is further inflation.

"When debt continues to rise relative to the income that supports it, balance becomes very difficult," Dalio wrote on social media in September, "In a typical debt cycle, there comes a stage where you have to borrow new debt to pay off old debt. This situation eventually turns into a debt spiral, leading to an 'heart attack' in the economy."

The U.S. magazine Fortune reported on September 2 that everyone from Jamie Dimon to Jerome Powell believes the U.S. debt crisis is imminent, they just don't know when it will strike. Dalio's timeline is that under the current Trump administration, the "heart attack" caused by debt will erupt within two or three years.

He warned that this would weaken the international standing of the U.S. dollar and cause a chain reaction in global markets. If international investors lose confidence in U.S. Treasury bonds, they may turn to countries like China, thereby strategically weakening America's global influence. The threat of the U.S. debt crisis to the global monetary system has already begun to show, "when combined with other factors, it will determine whether we are witnessing the end of the entire American empire."

Ray Dalio being interviewed by Bloomberg. Screenshot from video

However, Dalio told Bloomberg that the debt surge is only part of the problem. Increasing global conflicts and widening wealth gaps are also creating a "concerning situation."

When asked if he was worried about another world war breaking out, he replied that the U.S. and other parts of the world are brewing a "form of civil war," with "irreconcilable differences" between various factions.

"These conflicts will evolve into a contest of forces," he emphasized, stressing the need to confront this divided situation, "If we ignore these issues, the risks will only increase."

Dalio founded Bridgewater Associates in 1975 and is known for his "radical transparency" management philosophy. Since 2017, he has gradually stepped back from company affairs and recently sold his remaining shares and left the board of directors.

According to Bloomberg, Bridgewater Associates, headquartered in Westport, Connecticut, is expected to achieve its best performance since 2010 this year. In recent years, the company has been making strategic adjustments, with current CEO Nir Bar Dea leading team restructuring and asset reduction efforts to improve overall performance.

As of December 31 last year, Bridgewater managed about $92 billion in assets, a significant drop from nearly $140 billion at the beginning of 2023.

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