Ray Dalio warns of severe U.S. supply-demand imbalance leading to shocking economic consequences

Bridgewater founder Ray Dalio on March 12 warned that a severe U.S. supply-demand imbalance regarding U.S. debt could lead to a disruptive global economy. The U.S. national debt currently stood at more than $36.2 trillion at the time of publication.

Ray Dalio told CNBC’s Sara Eisen at CONVERGE LIVE in Singapore that “the first thing is the debt issue; we have a very severe supply-demand problem.” The Bridgewater founder also noted that trade policy uncertainty had added to a sense of unease on Wall Street. He believes that investors were concerned about the impact of a brewing trade war on the global economy.

Ray Dalio warns of shocking developments in the U.S. economy

BREAKING: Ray Dalio warns that a severe US supply-demand problem may lead to "shocking developments," per CNBC.

He says the US will see "shocking developments" in terms of how the debt crisis will be "dealt with." pic.twitter.com/JTW8u7J0az

— The Kobeissi Letter (@KobeissiLetter) March 12, 2025

American investor Ray Dalio believes that a severe U.S. supply-demand problem regarding U.S. debt could have a disruptive impact on the global economy. It is the latest in a series of stern warnings about the nation’s mounting debt from the Bridgewater founder. 

The U.S. hedge fund billionaire argued that the U.S. has to sell a quantity of debt that the world is not going to want to buy. The state’s national debt was currently at above $36.2 trillion. 

Dalio also warned that it was imminent and of “paramount importance” to take note of the country’s supply-demand imbalance. He argued that the state’s deficit needed to go from a projected level of 7.2% of gross domestic product to about 3% of GDP.

He stated that it was a big deal and that “you are going to see shocking developments in terms of how that’s going to be dealt with.” Dalio made the comments on the same panel as Salesforce CEO Marc Benioff amid a tariff ride for markets in recent days. 

“Just as we are seeing political and geopolitical shifts that seem unimaginable to most people, if you just look at history, you will see these things repeating over and over again. We will be surprised by some of the developments that will seem equally shocking as those developments that we have seen.” – Ray Dalio, founder of Bridgewater.

Dalio was asked whether the U.S. debt problem could lead to a period of austerity and he said the issue could result in a restructuring of the debt. The American investor also believes that the debt problem could lead to the U.S. applying pressure on other countries to buy the debt, or even cutting off payments to some creditor countries.

Dalio warns of potential “economic heart attack” due to rising federal debt

Dalio had previously stated at the World Governments Summit in February that the federal debt had surged to $36.4 trillion against a GDP of $29.1 trillion. He warned of a potential “economic heart attack” if no immediate action was taken by the U.S. government. The country’s current debt-to-GDP ratio stood at roughly 125%, with federal debt having surged 80% since 2020 while GDP grew only 38%.

Data from the Congressional Budget Office revealed that the annual budget deficits were projected to average 6.1% of GDP through 2025, which was significantly higher than the 50-year average of 3.8%. CBO also believes that the deficit to GDP ratio will drop to 5.2% by 2027 as revenues rise faster than expenditures. The data also projected that national debt will rise by nearly $24 trillion over the next decade.

The American investor has been constantly advocating for his “3% solution,” which he said combined spending cuts, tax adjustments, and careful interest rate management. Dalio also supported the President’s proposal for interest rate deductions but emphasized that it must be accompanied by spending cuts to effectively address the deficit.

The American investor was asked if the wasteful expenditure cuts undertaken by the DOGE, handled by Tesla CEO Elon Musk, will help achieve the 3% deficit threshold. He answered, “I don’t see it.” Dialo argued that the department should also focus on the impact of the expenditure cuts and efficiency enhancement initiatives on interest rates if the deficit problem had to be addressed. The entrepreneur also maintained that the three-year time horizon was achievable if the focus was on increasing tax income, doing “tolerable” expenditure cuts, and focusing on interest rates.

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