Ray Dalio Warns US Budget Bill to Increase Household Debt by 85%

Billionaire Ray Dalio, the founder of Bridgewater Associates, has issued a stark warning about the economic and financial repercussions of the recently passed budget bill by the US Congress. Dalio, in a post on a social media platform, highlighted that the bill, dubbed "One Big Beautiful Bill" by President Trump, will significantly increase the US national debt. Over the next decade, the national debt per American household is projected to rise from approximately $230,000 to $425,000.

Dalio's analysis indicates that the budget bill will result in annual spending of about $7 trillion, with inflows of approximately $5 trillion. This disparity will cause the national debt to escalate from its current level of 6 times the money taken in, 100% of GDP, to 7.5 times the money taken in, 130% of GDP. The interest and principal payments on the debt are expected to surge from about $10 trillion to approximately $18 trillion, with $2 trillion of that being interest payments. This financial strain will necessitate either severe cuts in spending and tax increases or extensive money printing and devaluation, which could push interest rates to unattractively low levels.

Dalio emphasizes that the remedy to this looming fiscal crisis lies in cutting spending and raising taxes to reduce the annual deficit to GDP ratio. He warns that the current trajectory, if unaddressed, will lead to significant disruptions. The devaluation of money and the impact on bond markets, which are the backbone of all capital markets, will have far-reaching consequences for the economy and society. Dalio urges immediate action to rectify the budget deficit, bringing it from roughly 7% of GDP to about 3% through adjustments in spending, taxes, and interest rates. Failure to do so, he cautions, will likely result in big, painful disruptions.