Investing legend Ray Dalio is raising concerns about the United States’ enormous debt, cautioning that the country is reaching a critical point. In an interview with CNBC, the billionaire highlights that the US is not generating adequate revenue to meet its financial obligations. He explains that the nation is at a stage where it’s borrowing money to pay off debt, a process aggravated by increasing debt growth outpacing income growth. This trend leads to higher debt service that encroaches on spending. Dalio warns that the country needs to sell more bonds to foreign nations to accumulate more debt, but political infighting and social issues could hinder other countries from buying US treasuries, creating a supply-demand problem.
The idea of economic strength is closely linked to the country’s financial health, which boils down to earning more than you spend and having a good balance sheet – more assets than liabilities. At the time of writing, the national debt stands at $33.746 trillion.
Hot Take
America’s growing debt is reaching a crisis point, and Dalio’s concerns underscore the urgent need for solutions to avoid potential economic collapse.
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