Ray Dalio has never been particularly optimistic when it comes to the subject of national debt. He has described America’s $38 trillion borrowing burden as an economic “heart attack” waiting to happen.
But there are options available to avert such a crisis, he believes, from increasing revenues in the form of taxes to lowering government spending. The only problem is, politicians on both sides of Capitol Hill would need to come to an agreement over the longer term to make that happen. This, the Bridgewater Associates founder fears, is not going to happen.
What has economists so worried isn’t necessarily the value of a nation’s debt, but rather its debt-to-GDP ratio, and how much of that debt is interest payments on existing borrowing. At the time of writing, America’s ratio is at approximately 120%, and the government is spending in excess of $10 billion a week to maintain this debt.
Speaking at the Oxford Union in an interview released Thursday, Dalio was asked whether he would advise fiscal restraint to rebalance budgets, or investment in growth to even out the ratio.
