Billionaire investor Ray Dalio says the US is at the start of a debt crisis – and worse times are ahead for the economy

  • Bridgewater founder Ray Dalio said the US is at the start of a “late, big cycle debt crisis.” 
  • The billionaire investor warned there’s a shortage of buyers at a time when the US is selling so much debt. 
  • He added the US economy faces tougher times ahead – and forecast a balance-sheet recession. 

Billionaire investor Ray Dalio said the US is at the beginning of a debt crisis – and warned worse times are ahead for the economy. 

“In my opinion, we are at the beginning of a very classic late, big cycle debt crisis, when the supply-demand gap, when you are producing too much debt and have a shortage of buyers,” Dalio said during the Bloomberg Invest conference on Wednesday. 

“What’s happening now, as we have to sell all this debt, do you have enough buyers?” he said. “When I look at the supply-demand issue for that debt, there’s a lot of debt, it has to be bought and has to have a high enough interest rate,” the Bridgewater founder added.

Dalio was building on the recent debt-ceiling bill passed by Congress, and President Joe Biden. In order to pad out its cash reserve, the Treasury department has already announced plans to issue $1.6 trillion in T-bills this year until the end of 2023. 

“When one looks at the buyers, there appears to be a significant shortage of the buyers for that government debt. But we’re now at the brink of being able to see what that supply-demand picture looks like as we go over the next year and two,” Dalio said. 

Dalio has previously commented on the US government’s handling of the borrowing-limit standoff, giving the deal a D grade as it doesn’t solve the key problem of an ever-increasing debt pile. 

Looking ahead, Dalio was downbeat. While he noted interest rates are likely to stay at current levels, with little room for upside, that will result in a weaker US economy. 

“Doesn’t have to be a big downturn, because of the household sector, but it is a balance sheet recession. Things are going to get worse in the economy,” he added.