Ray Dalio Warns US Faces Financial Crisis Without Deficit Cut

Ray Dalio, founder of Bridgewater Associates, warns that the United States is on a dangerous fiscal path due to its high deficit and national debt exceeding $36 trillion, predicting a potential financial crisis if corrective measures are not taken. He proposes the “3% solution,” which aims to reduce the deficit-to-GDP ratio from around 7% to 3% through a combination of spending cuts, increased tax revenues, and lower interest rates, a strategy he says has succeeded in the past. Dalio emphasizes the urgency of this approach, suggesting that a debt crisis may be the only catalyst powerful enough to prompt political action. He advises investors to adopt an “all-weather” portfolio strategy that balances risk across various assets, including gold and dividend-paying stocks, to mitigate potential downturns. While Dalio’s economic warnings carry weight due to his track record, some critics argue that his predictions of debt crises in previous years have not materialized, cautioning investors against overreacting to his forecasts. Nonetheless, Dalio’s fiscal recommendations are gaining attention among policymakers seeking to address America’s growing deficit and economic challenges.