Billionaire Ray Dalio warns of ‘painful disruptions’ ahead for financial markets
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Billionaire investor Ray Dalio has warned that, after President Donald Trump signed the new tax bill into law, the United States is facing a significant debt burden, cautioning that the country could experience painful disruptions ahead. Dalio, founder of Bridgewater Associates, issued the warning while analyzing the fiscal impact of the bill. This package includes extensions of Trump-era tax cuts and billions in new spending on border security, military projects, and other priorities. According to Dalio, the numbers paint a concerning picture: the bill is expected to result in annual federal spending of approximately $7 trillion, while revenues are projected to be closer to $5 trillion. That persistent shortfall means federal debt, already roughly 100% of GDP, or around $230,000 per American household, will continue to climb. Over the next decade, Dalio projects it could hit 130% of GDP, translating to $425,000 in debt per family, he said in an X post on July 3. He warned this growing debt would sharply increase the government’s interest and principal payments, from about $10 trillion today (with $1 trillion in annual interest) to $18 trillion in the coming years, including $2 trillion in annual interest payments alone. “These trends will lead to either a big squeezing out (and cutting off) of spending and/or unimaginable tax increases, or a lot of printing and devaluing of money and pushing interest rates to unattractively low levels. <…> Unless this path is soon rectified to bring the budget deficit from roughly 7% of GDP to about 3% by making adjustments to spending, taxes, and interest rates, big, painful disruptions will likely occur. Concerns about impact on capital markets He added that such aggressive money-printing would undermine the value of U.S. bonds, which serve as the backbone of global credit markets. In this case, a loss of…
Filed under: News - @ July 5, 2025 2:23 pm