Ray Dalio: We think we're going to be in a period of greater-than-normal risk - CNBC interview

Ray Dalio: We think we're going to be in a period of greater-than-normal risk - CNBC interview

In a recent interview with CNBC, Ray Dalio, the founder of Bridgewater Associates, expressed concern about the increasing risk in the financial markets, particularly focusing on the U.S. debt situation. Dalio, known for his insights into global economic trends, has published a new book titled "How Countries Go Broke: The Big Cycle," which delves into the long-term risks of government debt.

According to Dalio, the U.S. is at a low risk of an imminent debt crisis but faces a high risk in the long term. He warns that the U.S. government debt situation is nearing a "point of no return" and approaching a "death spiral" that could threaten the stability of the world's largest economy. This situation arises from a combination of factors, including President Trump's tariffs and tax bill agenda, which have stoked volatility in the bond market [2].

The bond market, traditionally a quiet bedrock of the U.S. and global economies, has seen increased volatility. In May, the rate the U.S. government has to pay investors for a 30-year loan spiked to its highest level since 2023. This is due to investors either selling or refusing to buy bonds and demanding higher compensation for what appears to be a riskier loan to the U.S. government [2].

Dalio's concerns are echoed by other economists and investors who have been sounding the alarm about the deficit for years. The current U.S. deficit is on an unsustainable path, with the federal debt-to-GDP ratio soaring from 104% in 2017 to 123% in 2024 [2]. This increase in debt burden is a significant concern, as it could lead to higher interest rates, reduced government spending, and increased financial instability.

The book "How Countries Go Broke: The Big Cycle" comes out days after JPMorgan Chase CEO Jamie Dimon warned about a "crack" in the bond market. Dalio's insights highlight the need for U.S. policy makers to be more conservative in dealing with the government's finances, particularly during difficult times [2].

Despite the immediate low risk of a U.S. government debt crisis, the long-term risks are substantial. Dalio's warning underscores the importance of addressing the deficit and debt situation proactively to avoid a potential "death spiral" that could severely impact the U.S. economy and global financial markets.

References:
[1] https://thedefiant.io/news/markets/microstrategy-buys-705-bitcoin-75-1-million-holdings-rise-to-580955-btc-cd394ba2
[2] https://www.cnn.com/2025/06/03/business/ray-dalio-deficit-bond-market