Billionaire investor warns of surging debt, says ‘civil war’ developing in US

Billionaire Ray Dalio warned that the U.S. government’s surging debt and “irreconcilable differences” in the country are creating a worrying financial and political environment.

In a Bloomberg TV interview that aired Friday, the founder of investment management firm Bridgewater Associates said the U.S. government’s debt is rising too quickly, creating a period similar to the years preceding World War II.

“There’s a dynamic about debt,” Dalio said. “When debt and debt service rise relative to your income, it’s like plaque in the arteries that then begins to squeeze out the spending.” 

“One man’s debts are another man’s assets,” he said. “If those don’t give a good real return, they will sell.” 

According to Dalio, the U.S. government is facing this dynamic.

According to U.S. Treasury Department fiscal data, the total gross national debt reached more than $37.8 trillion Tuesday. Debt held by the public — which indicates the portion of the federal government’s total debt borrowed from actors outside the U.S. government, such as corporations, banks and other entities — stands at more than $30 trillion, almost even with the country’s gross domestic product. 

The Congressional Budget Office projects the nation’s debt will rise above $52 trillion by the end of fiscal 2035. 

The Government Accountability Office, an independent watchdog agency, found the federal government’s debt accretion exceeds the growth of the U.S. economy, a trend it called “unsustainable over the long term.”

The agency also warned that the government’s rising debt could lead to higher borrowing costs, higher costs for goods and services, and stagnant wages, impacting Americans’ personal finances. 

Dalio also expressed concern for the country’s political state during his interview, saying that it was in multiple “wars.”

“We’re in wars,” he said. “There is a financial money war. There is a technology war. There’s geopolitical wars. And there are more military wars.”

“And so we have a civil war of some sort, which is developing in the United States and elsewhere where there are irreconcilable differences,” he said. 

Dalio said it was possible to “rise above it” but expressed skepticism about whether it would actually happen. 

“I think that’s a little bit idealistic,” he said. “I have to be a practical person.”