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Ray Dalio warned that the US may face a debt-induced “heart-attack” inside three years as hovering debt weakens the greenback, and referred to as crypto an “engaging various foreign money.”
He in contrast the US’s monetary situation to the cumulative toll of years of excesses, like overeating fatty meals and smoking for a lifetime.
“The nice excesses projected underneath the brand new funds will most likely set off a debt-induced heart-attack within the comparatively close to future — I’d say three years, give or take a yr or two,’’ the billionaire investor and Bridgewater Associates founder mentioned in an interview with the Monetary Instances, later shared on X.
“Crypto is now an alternate foreign money that has its provide restricted,” Dalio mentioned. “So, all issues being equal, if the provision of greenback cash rises and/or the demand for it falls, that may seemingly make crypto a horny various foreign money.”
He added that the majority fiat currencies, particularly these with massive money owed, can have issues being efficient storeholds of wealth and can go down in worth relative to arduous currencies, noting that related conditions occurred between 1930 and 1940, and once more between 1970 and 1980.
Crypto Deregulation Not The Actual Risk To The Greenback’s Reserve Standing
Dalio mentioned that deregulation of crypto within the US underneath Donald Trump isn’t a menace to the dollar’s standing as a reserve foreign money.
The true threat to order foreign money governments’ is tinheritor spiralling debt, which diminishes their enchantment as a reserve foreign money and pushes traders to various choices, which is a key cause gold and crypto costs have soared, he mentioned.
Gold just lately reached a brand new all-time excessive (ATH) above $3,508 per ounce.
Month-to-month chart for the gold worth (Supply: TradingView)
In the meantime, crypto market leaders Bitcoin (BTC) and Ethereum (ETH) additionally each just lately achieved new file peaks. BTC achieved its new ATH of $124,457.12 on Aug. 14, whereas ETH reached a brand new excessive at $4,953.73 on Aug. 24.
The publicity that stablecoins need to US Treasuries additionally doesn’t pose a systemic threat, he mentioned, however a fall within the buying energy of Treasuries is ”an actual threat.”
US Nationwide Debt Spirals
Whereas gold, BTC and ETH all hit contemporary ATHs this yr, the US nationwide debt continues to soar and in addition just lately reached file ranges.
In August, the US nationwide debt topped $37 trillion for the primary time. In response to information from usdebtclock.org, the nationwide debt has since continued to rise and stands at greater than $37.31 trillion as of 5:11 a.m. EST.
Dalio mentioned through the interview that the “worsened situation is because of years of excesses.” He added that the brand new funds will seemingly result in “a debt-induced heart-attack” for the monetary system, estimating that it’ll occur in about three years “give or take a yr or two.”
“If the debt and debt service expenditures develop sooner than the incomes, they construct up like plaque that squeezes out different spending,” he mentioned.
He went on to say that it’s simple to see that occuring quickly, noting that the US authorities’s debt service funds are actually round $1 trillion a yr in curiosity and “are growing at a quick price.”
It’s not simply the US, international bonds are additionally underneath renewed strain attributable to inflation considerations and governments’ massive fiscal deficits.
Whereas US 30-year Treasuries are nearing 5%, UK 30-year bonds have soared to their highest ranges since 1998. In the meantime, Japan’s 20-year bonds have additionally surged to their highest ranges this century, and Australian 10-year yields have reached their highest ranges since July.
Mistaken.
Treasury yields are surging within the US right now with the 30Y Notice Yield again at 5%.
These are the identical ranges seen in 2008, amidst the largest monetary disaster in US historical past.
Rates of interest are actually rising because the market prepares for price cuts to start. pic.twitter.com/XoYm9k2U6I
— The Kobeissi Letter (@KobeissiLetter) September 2, 2025
The growing bond provide is correlated to an uptick in authorities borrowing, signaling that these governments are spending more cash than they acquire in taxes. To cowl this hole between tax revenue and spending, governments difficulty bonds, however traders are actually demanding greater yields to soak up the entire extra debt.
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