Billionaire Ray Dalio is one of the most successful hedge fund managers of our age, and nobody can afford to ignore his lessons on wealth management. The Bridgewater Associates founder is als
Billionaire Ray Dalio is one of the most successful hedge fund managers of our age, and nobody can afford to ignore his lessons on wealth management.
The Bridgewater Associates founder is also the author of two bestselling books, "Principles: Life & Work" (2017) and "Why Nations Succeed and Fail" (2021).
One look at his X account tells you that there is nothing on the face of the earth he isn't writing about, whether it's investing, the global economy, or the changing world order.
The state of the U.S. economy remains a topic he is deeply concerned about, and now, he has revealed a major deadline.
Related: Billionaire Ray Dalio recommends portfolio rebalancing to beat economic crisis
On Oct. 6, Dalio appeared for an interview with Bloomberg's Haslinda Amin in which he warned that the U.S. could face a debt crisis soon.
When Amin asked Dalio to address the federal debt exceeding $40 trillion, the billionaire said when a government borrows more than it earns, much of its spending consists of debt payments.
U.S. federal debt exceeds $40 trillion, Source: U.S. Treasury
When the debt accumulation grows faster, those payments account for a higher percentage of the spending, he explained.
But the trouble with sovereign countries is that they can print their currencies as much as they like. But the value of an asset depends on its scarcity. Money printing essentially devalues the currency, he warned.
The U.S. has been following this path for years now and its debt and debt service payments are accumulating, forcing the country to squeeze out its spending, he underlined. The U.S. government is spending 40% more than it's earning and the budget deficit is only soaring, he added.
"We're approaching our limits."
Dalio warned that the U.S. could see a debt crisis within three years. Housing and auto loans could be the first targets of cash squeeze, hitting the poor first, he added.
He also addressed the changing dynamics of who holds the U.S. debt. Foreign governments such as China and Japan have been among the largest buyers but China is now trimming its holdings, he added.
"When you have a debtor-creditor relationship and you have an adversary relationship, that's a very difficult dynamic."
Amin asked the hedge fund manager to address the massive selloff in the French bond market. In France, the bond market is selling off because investors fear that soaring debt and political gridlock make borrowing unsustainable.
Dalio said that France had also borrowed a lot and the country is nearing a limit. If France decides to raise taxes, people could leave, he warned. The same happens in the U.S., he added.
You can now donate to help U.S. offset national debt (2:19)When Amin asked Dalio if we are seeing a bubble in the artificial intelligence (AI) market, he went back to the 1920s.
This was the age of modernity where people were looking at new technologies like electricity, refrigeration, cars, airplanes, movies, and radio for the first time. People not only wanted to buy these products, but they were also willing to take loans for the same. This is a situation when a bubble bursts, the billionaire explained.
Note that Wall Street crashed in 1929 in what is till today considered the worst market crash in the U.S. history. Dalio thinks AI awaits a similar fate.
AI is a radical technology and people want to invest in it. Even though the technology has its uncertainties, nobody can afford to underinvest and is only going to overinvest in it, he argued.
"So that dynamic goes on to create a bubble."
Dalio has often recommended that investors need to put their money behind hedge assets like gold and Bitcoin (BTC) because of the incoming financial crisis.
As the U.S. dollar gets devalued due to incessant printing by the U.S. government, people could invest in gold and BTC because these hedge assets tend to offset potential losses during an adverse economy.
In August, Dalio published a long X post in which he recommended investors to allocate 10%-15% of their portfolio to gold and "a bit" to Bitcoin. The billionaire disclosed last year that he holds only a “small percentage” of Bitcoin.
During Q3 2026, Bitcoin delivered a 42.71% return to investors but gold delivered a 4% return during the same period.
Gold was trading at $4,163.36 per ounce at the time of writing.
BTC/USD, Source: DecibelAs per Decibel, Bitcoin was trading at $86,551.
Related: America's most taxed state pauses its plan to tax each crypto transaction
