Billionaire investor warns of rising debt and says ‘civil war’ is developing in US

Billionaire Ray Dalio has warned that high US government debt and “irreconcilable disputes” in the country are creating a worrying financial and political environment.

In an interview with Bloomberg Television broadcast on Friday, the founder of investment management firm Bridgewater Associates said that US government debt is rising very quickly, creating a period similar to the years leading up to World War II.

“There is a dynamic around debt,” Dalio said. “When debt and debt service rise relative to your income, it’s like plaque in your arteries that then starts to put pressure on spending.”

“One man’s debts are another man’s assets,” he said. “If they don’t offer a good real return, they will sell.”

According to Dalio, the US government is facing this dynamic.

According to US Treasury Department financial statements, the total national debt reached more than $37.8 trillion on Tuesday. Public debt — which refers to the portion of the federal government’s total debt borrowed from entities outside the U.S. government, such as corporations, banks and other entities — is more than $30 trillion, roughly even with the country’s gross domestic product.

The Congressional Budget Office expects the country’s debt to rise to more than $52 trillion by the end of fiscal year 2035.

The Government Accountability Office, an independent watchdog agency, found that the federal government’s debt accumulation is outpacing the growth of the U.S. economy, a trend it called “unsustainable over the long term.”

The agency also warned that higher government debt could lead to higher borrowing costs, higher costs of goods and services, and stagnant wages, impacting Americans’ personal finances.

Dalio also expressed concern about the country’s political situation during his interview, saying it has fought multiple “wars.”

He added: “We are in wars.” “There is financial war. There is technology war. There are geopolitical wars. There are more military wars.”

“So we have a civil war of sorts, which is developing in the United States and other places where there are irreconcilable differences,” he said.

Dalio said it was possible to “rise above that” but expressed doubts about whether that would actually happen.

“I think that’s a bit idealistic,” he said. “I have to be a practical person.”