Ray Dalio warns that America is on track for a ‘debt death spiral.’ Are your assets safe?

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The aboriginal 1970s were a turbulent clip successful America — marked by soaring inflation, an lipid situation and a crisp driblet successful banal prices that near investors scrambling for harmless havens.

And, according to billionaire capitalist Ray Dalio, past whitethorn beryllium repeating itself. Surging prices and monolithic authorities spending could punctual investors to erstwhile again question the worth of fiat currencies and the insubstantial assets tied to them (1).

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“It’s precise overmuch similar the aboriginal ’70s … wherever bash you enactment your wealth in?” Dalio said astatine the Greenwich Economic Forum (2). “When you are holding money, and you enactment it successful a indebtedness instrument, and erstwhile there’s specified a proviso of indebtedness and indebtedness instruments, it’s not an effectual storehold of wealth.”

Dalio has agelong warned astir the sheer size of America’s nationalist debt, present hovering astir $37.86 trillion and climbing. He has described the concern arsenic a imaginable “debt decease spiral” — wherever the authorities indispensable get conscionable to wage the involvement connected existing debt. Over time, this process accelerates.

If that fig feels abstract, Dalio has a much idiosyncratic warning.

The plus he’s talking astir is thing astir everyone holds successful 1 mode oregon another, whether successful slope accounts oregon nether mattresses: the U.S. dollar.

In a caller station connected X, Dalio shared a Q&A with the Financial Times (3). When asked what would hap to bonds and the dollar if a politically weakened Federal Reserve lets ostentation tally hot, his reply was blunt:

“It would pb bonds and the dollar to spell down successful worth and if not rectified, would pb to them being an ineffective storehold of wealthiness and the breaking down of the monetary bid arsenic we cognize it.”

That remark couldn’t person travel astatine a much delicate clip for the Federal Reserve. President Donald Trump has repeatedly attacked Chair Jerome Powell and is searching for a replacement.

Treasury Secretary Scott Bessent told CNBC successful precocious November, "I deliberation there's a precise bully accidental that the president volition marque an announcement earlier Christmas … I deliberation it's clip for the Fed conscionable to determination backmost into the background, like, it utilized to do, calm things down and enactment for the American radical (4)."