Bridgewater Associates founder Ray Dalio has reiterated warnings that US government debt is rising too quickly, fueling a climate “that’s very much analogous” to the years before World War II.
When debt rises relative to income, “it’s like plaque in the arteries that then begins to squeeze out the spending”, Dalio, 76, said in an interview with Leaders with Francine Lacqua that aired Friday.
The billionaire investor has long cautioned of the risks of spiralling US debt, contending last month that it’s posing a “threat to the monetary order”. He blamed politicians on both sides of the aisle and has called for a mix of tax revenue increases and spending cuts to tackle what he calls the “deficit/debt bomb”.
Debt held by the public amounted to 99 per cent of US gross domestic product last year, according to estimates from the Congressional Budget Office. That number is projected to reach 116 per cent of GDP in 2034, higher than any point in US history.
Surging debt is just part of the problem, according to Dalio. Festering global conflicts and wealth inequality are also creating an environment with “plenty to worry about”, he said.
Asked if another World War is imminent, Dalio said a “civil war of some sort” is developing in the US and other parts of the world with “irreconcilable differences”.
“These conflicts will become tests of power by each side,” he said, contending that it’s crucial to address the strife. “If we don’t worry about these things, then we have greater risks.”
After founding Bridgewater in 1975, Dalio became known for demanding so-called radical transparency at the multibillion-dollar macro hedge fund. The outspoken investor began a gradual exit starting in 2017, culminating in the sale of his stake and decision to step off the board earlier this year.
The Westport, Connecticut-based firm is on track for its biggest gain this year since 2010. It has been in reboot mode with Bridgewater CEO Nir Bar Dea making personnel changes and cutting assets to boost performance.