Billionaire Ray Dalio reveals deadline for U.S. debt crisis

Billionaire Ray Dalio: The U.S. debt crisis is imminent, and the AI bubble may repeat itself.

Ray Dalio is one of the most successful hedge fund managers of our time, and his wealth management philosophy cannot be ignored. The founder of Bridgewater Associates is also the author of two best-selling books, Principles: Life and Work (2017) and Why Countries Succeed and Failed (2021).

A glance at his Platform X account and you will find that there seems to be no area on earth that he does not focus on, whether it is investment, the global economy or the changing world order. The state of the U.S. economy has always been a subject of deep concern to him, and now he has revealed an important deadline.

Dalio foresees the upcoming U.S. debt crisis

In an interview with Bloomberg reporter Haslinda Amin on October 6, Dalio warned that the United States may soon face a debt crisis. When Amin asked Dalio to comment on more than $40 trillion in federal debt, the billionaire said that when the government borrows more money than it earns, most of its spending will be used to pay interest on the debt.

U.S. federal debt has exceeded US$40 trillion, data source: U.S. Treasury Department

He explained that as debt accumulation accelerates, these interest payments will account for a higher proportion of expenditures. But the trouble with sovereign states is that they can print money at will. However, the value of an asset depends on its scarcity. He warned that printing money would essentially lead to currency devaluation.

He pointed out that the United States has been following this path for years, with the accumulation of debt and the cost of its services forcing the country to cut other spending. U.S. government spending is 40% higher than revenue, and the budget deficit is still soaring. "We are approaching the limit." Dalio warned that the United States could experience a debt crisis within three years. He added that home loans and car loans may be the first targets of the cash crunch, hitting the poor first.

He also talked about the dynamics of entities holding U.S. debt. Foreign governments such as China and Japan were once the largest buyers of U.S. Treasuries, but China is currently reducing its holdings. "When you have a debtor-creditor relationship and there is a hostile relationship at the same time, that creates a very complex dynamic," he said.

Amin asked the hedge fund manager to talk about the huge sell-off in the French bond market. In France, bond markets are selling off as investors worry that soaring debt and political gridlock make borrowing unsustainable. Dalio said France had also borrowed a lot of money and the country was close to its limit. If France decides to raise taxes, people may leave, he warned. This situation can also happen in the United States.

Dalio believes the artificial intelligence (AI) bubble is about to burst

When Amin asked Dalio if we had seen a bubble in the artificial intelligence market, he took his thoughts back to the 1920s. It was the era of modernity, when people first came into contact with new technologies such as electricity, refrigerators, cars, airplanes, movies and radios. People not only want to buy these products, they are also willing to borrow for them. This is what happens when the bubble bursts, the billionaire explains.

It should be noted that Wall Street collapsed in 1929, which remains the most serious market crash in U.S. history. Dalio believes that artificial intelligence will face a similar fate.

He believes that artificial intelligence is a radical technology and people want to invest in it. Despite the uncertainty of this technology, no one dares to underestimate its potential and will only over-invest, creating this dynamic and creating bubbles.

Dalio's advice to investors

Dalio often advises investors to put money into hedging assets such as gold and Bitcoin (BTC) to cope with the upcoming financial crisis. As the U.S. government's endless printing of money causes the dollar to depreciate, people can invest in gold and bitcoin, because these hedging assets can often offset potential losses in bad economic times.

In August this year, Dalio published a long article on platform X, advising investors to allocate 10%-15% of their investment portfolio to gold and "a small amount" to Bitcoin. The billionaire disclosed last year that he only owned a "small portion" of Bitcoin.

In the third quarter of 2026, Bitcoin brought investors a gain of 42.71%, while gold's yield was 4%. At the time of writing, gold was trading at $4,163.36 per ounce.

BTC/USD, source: Decibel. According to Decibel data, Bitcoin was trading at $86,551 at the time.