Bloomberg Television · Oct 6, 2026 · 26m · 14m saved
With Ray Dalio, Founder of Bridgewater Associates
The US government spends about $7 trillion a year and takes in about $5 trillion, Ray Dalio said, and it has run that gap for years. Interest on the accumulated debt is now crowding out other spending.
Spending on the AI build-out has pushed some stock markets to record highs while 30-year Treasury yields climb toward 6%. Asked whether a US debt crisis is imminent, Dalio gave a time frame.
"Yes. I think within the next three years."
Ray Dalio, Founder of Bridgewater Associates, on Bloomberg Television's "Insight," started the firm in a two-bedroom apartment and built it into what he called the largest hedge fund in the world. He wrote "How Countries Go Broke" and said he has studied 500 years of history to understand debt cycles and bubbles.
The full interview is covered here so you can skip it. 26 minutes of video, 12 minutes of reading.
Here are the 13 calls that matter.
Key Takeaways
A US debt crisis within the next three years, Dalio said, as debt service squeezes out other spending
The government spends 40% more than it takes in, the way a household spending seven and earning five would
Rates rise until demand for credit is rationed, and auto loans get squeezed out before data centers
Foreign money funds almost a third of US borrowing, and China and Japan both want to hold less
Stocks have lost their cushion over bonds: expected returns on the two are now close, so stocks will react more to rates
Big tech companies building AI now have to borrow, where they used to raise equity
Bubbles burst when holders need cash, from loan repayments or a wealth tax
China is about six months behind on frontier AI models, depending on the model, and cheap open-source models mean wider use there
He would not pick a winner between the US and China; internal cohesion decides it
Concentration in AI is the main risk he would tell investors to watch
1. How Debt Squeezes Spending
The host noted US debt above $40 trillion and 30-year Treasury yields heading toward 6%, and asked how Dalio reads it.
Dalio said a country's debt works like an individual's, with one exception
"The way it works for countries is the same way it works for individuals, except countries can print money." — Ray Dalio
When debts pile up faster than they are paid back, debt service takes a growing share of cash flow and starts to squeeze out spending. The US spends about $7 trillion a year, he said, and asked listeners to think of it as a business or a household.
"They spend seven, take in five. Spending 40% more than they take in." — Ray Dalio
Rising rates also hurt the people who hold the debt
One party's debt is another's asset, he said. When rates rise because supply and demand for credit are out of balance, the holders take losses.
"And so, think about bonds. As an asset to hold. And how bad bonds have been. As interest rates rise." — Ray Dalio
The host pointed out that Dalio profited from holding government bonds for 50 years and asked whether he would invest differently now. Positions can be long or short depending on the cycle, he said, but the size of the debt and the pace at which it is growing are the issue.
"The market goes down because there's too much debt and we're adding to it at that rate." — Ray Dalio
The US is approaching its limits, he said, and because of geopolitical conflict, many of those who want to hold US debt already hold too much.
