"US Faces Economic ‘Heart Attack’ if Debt Isn’t Reduced Soon, DOGE Needs to Manage This"

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Ray Dalio: U.S. Faces Economic ‘Heart Attack’ if Debt Isn’t Reduced Soon, Says DOGE Needs to Manage This
by Publius
February 5, 2025

Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, has issued a stark warning about the U.S. economy, likening it to a “death spiral” due to its burgeoning national debt. Speaking on “The All-In Podcast” with co-host David Friedberg, Dalio highlighted the dire implications if both political parties fail to address the growing deficit.

Dalio described the current economic situation as one where the U.S. government is in a “death spiral,” a term typically used when a company or government has such high levels of debt that it must borrow just to service that debt. He pointed out that this scenario is driving credit quality down and pushing interest rates up. According to him, the crucial question is whether the debt generates enough income to manage these issues effectively.
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Despite efforts to lower interest rates, the markets have reacted by marking down U.S. Treasuries, causing long-term interest rates to spike to levels not seen since before the 2008 financial crisis. The U.S. operates with a nearly $2 trillion annual deficit, which is about 7% of GDP, while paying over $1 trillion yearly just in interest on existing debt.

Dalio emphasized the need for immediate action, suggesting that the deficit should be reduced from 7.5% to 3% of GDP to avoid further economic strain. He stressed that Department of Government Efficiency (DOGE) needs to manage this, acknowledging that such measures would likely intensify political divisions.
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Dalio’s warning serves as a wake-up call for policymakers to act decisively on reducing national debt. The metaphor of an economic “heart attack” vividly captures the potential severity of inaction, urging Democrats who oppose DOGE’s efforts to stand down.

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