'Hedge Fund Titan' Dalio Warns of U.S. Debt: "We Should Fear the Bond Market"

Accumulated Debt Reaches Critical Levels
Debt Surpasses What the Market Can Bear

Ray Dalio, founder of Bridgewater Associates, one of the world's largest hedge funds, has once again issued a warning about the soaring fiscal deficit and national debt in the United States. He argued that the current situation could trigger a serious crisis across the entire Treasury market.

On May 22 (local time), Dalio said at the 'Paley Media Council' event held in New York, "We should be afraid of the Treasury market."

He stated, "When I look at this situation as a doctor would diagnose a patient, I believe the accumulated debt has reached a very serious level," and warned, "Although I cannot specify the exact timing, the United States will face a critical juncture within the next three years or so."

Dalio has consistently voiced concerns about the deterioration of U.S. fiscal soundness. He has argued that the government must manage national debt and reduce the fiscal deficit to 3% of gross domestic product (GDP).

This year, due to decreased revenue, increased spending, and rising borrowing costs, the U.S. government’s annual fiscal deficit ratio is expected to reach 6.5% of GDP. The national debt has already surpassed $36 trillion.

Dalio said, "A deficit amounting to 6.5% of GDP has already exceeded what the market can bear," and assessed, "It is unrealistic to expect the political establishment to overcome the current ideological divisions and resolve the national debt issue."

On this day, the U.S. House of Representatives passed the 'One Big Beautiful Bill' to fulfill President Donald Trump's tax cut pledge. The Congressional Budget Office (CBO) projected that if the bill is finalized in the Senate, the federal fiscal deficit will increase by $3.8 trillion over the next ten years. As concerns over the expanding U.S. fiscal deficit grew, the 30-year Treasury yield reached 5.16%, the highest since October 2023. The 10-year Treasury yield also surpassed 4.6% at one point.

In particular, the bond market instability is intensifying as high-tariff policies to strengthen U.S. protectionism are coupled with mounting inflationary pressures.

Dalio criticized, "Although bipartisan agreement and cross-party solutions are needed, current politics ultimately lead to a logic of spending more," adding, "This inevitably results in the structural problem of expanding debt."

This content was produced with the assistance of AI translation services.