The US government debt situation is “nearing the point of no return” and approaching a “death spiral” that could threaten the stability of the world’s largest economy, he writes in the book, “How Countries Go Broke: The Big Cycle,” published Tuesday.
Some economists and investors have been sounding the alarm about the deficit for years. But this year, Wall Street has begun to heed caution as President Donald Trump’s tariffs and tax bill agenda have stoked volatility in the bond market, which is the usually quiet bedrock of the US and global economies.
Investors are increasingly concerned about the potential for Trump’s “big, beautiful” tax bill to put pressure on the federal debt burden at a time when there is uncertainty about the outlook for the economy and the appeal of US assets.
In May, the rate the US government has to pay investors for a 30-year loan spiked to its highest level since 2023. That’s because investors either sold or refused to buy bonds and demanded higher compensation in exchange for what looked like a riskier loan to the US government.
Dalio is the latest billionaire to sound the alarm over the US debt and deficit, with worries that the vast government debt will crowd out spending on essential services to leave a hollowed-out economy that can’t work for its citizens and which spooks global investors.
There is a “very low imminent risk” of a US government debt crisis, but a “very high long-term risk,” Dalio writes in the book.
