A long-term burden for future generations
Ray Dalio, the billionaire founder of Bridgewater Associates, delivered a blunt warning about the United States’ growing debt problem during a recent interview. With national debt nearing $38 trillion, Dalio said the true cost will be pushed onto future generations through a steady erosion of the dollar’s value rather than direct repayment.
“My grandchildren and great grandchildren not yet born are going to be paying off this debt in devalued dollars,” Dalio said, describing the current fiscal path as unsustainable.
How debt crises usually unfold
Drawing on decades of studying economic history, Dalio explained that countries burdened with excessive debt rarely resolve the issue through spending cuts or outright defaults. Instead, governments typically resort to printing money, holding interest rates artificially low, and allowing their currencies to weaken over time.
This approach, he said, quietly penalizes savers and bondholders, since returns fail to keep pace with real inflation even when investments appear safe on the surface.
Echoes of the 1970s and the role of gold
Dalio compared today’s environment to the early 1970s, when the United States abandoned the gold standard. That shift, he argued, fundamentally changed how people understand money and value.
He reiterated his long-standing view that gold remains a critical store of value, calling it the only asset that is not someone else’s liability. Dalio again recommended holding roughly 10% to 15% of a portfolio in gold, noting that central banks continue to accumulate it amid rising geopolitical risks.
Why markets have not forced action yet
According to Dalio, Washington and the bond market are locked in a dangerous stalemate. Policymakers assume markets will stay calm, while investors assume lawmakers will act before a crisis becomes unavoidable. History, he warned, shows that debt crises tend to build slowly and then arrive all at once.
He expressed skepticism that tariffs or large legislative packages alone can resolve the underlying problem, even if they support domestic industry. In his view, currency devaluation remains the most likely outcome.
How investors can protect themselves
Dalio urged investors to stop thinking in nominal dollar terms and instead focus on inflation-adjusted value. In an environment marked by inflation and slower growth, he highlighted two key defensive tools.
Inflation-protected bonds were described as one of the safest options because they aim to preserve real purchasing power. Gold, he said, continues to serve as a hedge against monetary instability and policy uncertainty.
Beyond specific assets, Dalio emphasized diversification, recommending exposure to a wide range of uncorrelated investments to reduce overall risk. He cautioned everyday investors against short-term speculation, describing it as a zero-sum game where most participants ultimately lose.
A cautious note of optimism
Despite the severity of his warning, Dalio said the United States has the capacity to navigate the coming financial cycle. The final outcome, he suggested, will depend not only on economic policy but also on social cohesion.
“We will go through this and we will get to the other side,” he said, adding that how society responds together will play a decisive role.