Bridgewater founder Dalio: US debt scale reaches 36.4 trillion magnesium urgently needs reform, US-China AI competition affects the global Supply Chain

Renowned investor and founder of Bridgewater Associates, Ray Dalio, stated in an interview on 2/4 that the scale of the US national debt has reached $36.4 trillion, with debt-to-GDP ratio as high as 125%, and it continues to climb. Since the outbreak of the COVID-19 pandemic in 2020, government debt has increased by 80%, while economic growth has only reached 38%, leading to further deterioration of the US fiscal deficit.

It is also pointed out that the US government currently pays over $1 trillion in interest each year, which accounts for nearly one-quarter of the federal budget. Without taking measures to reduce spending or increase revenue, the US national debt could increase by another $24 trillion in the next decade, ultimately leading to the collapse of the economic system.

The government prints money to rescue the economy, and the risk of inflation is getting bigger and bigger.

In the past few years, the US government has issued a large amount of debt, while the Federal Reserve has been printing money through loose monetary policies to purchase government bonds, which has flooded the market with liquidity. This approach stimulates the economy in the short term, but in the long run, it exacerbates inflation problems and reduces the purchasing power of the US dollar.

Dalio said that this "printing money to rescue the economy" approach leads to inflation, making people's money increasingly worthless. He described this phenomenon as "wealth being eroded by inflation," where economic data may seem to show growth on the surface, but people's living burdens actually increase.

US debt risk soars, market sounds the alarm

Dalio emphasizes that when the government borrows excessively and begins to use debt to repay debt, the market will lose confidence in U.S. treasuries, leading to a debt crisis. Although the FED has recently attempted to lower interest rates, the market has sold off U.S. treasuries in the opposite direction, causing long-term interest rates to rise, similar to the situation before the 2008 financial crisis. In addition, the rising prices of safe-haven assets such as gold and Bitcoin also indicate weakening confidence in the U.S. dollar.

Reduce the deficit and cut government spending

Regarding how to avoid an economic collapse, Dalio proposed the '3% deficit solution.' That is, to reduce the US fiscal deficit from the current 7% to 3% to ensure the sustainability of the national finances. He believes that the US government should take the following measures immediately:

Reduce government spending and eliminate ineffective expenditures.

Increase tax revenue by improving the tax system in a reasonable manner.

Reduce interest rates to lower borrowing costs by boosting market confidence.

To avoid excessive printing of money, control currency supply, and reduce inflation risk.

Dalio emphasizes that the earlier the reform, the smaller the cost. Assuming the government does not take action, the future budget-cutting process will be more severe, which may lead to a more serious economic downturn.

The intensifying competition between the United States and China, with AI becoming a key area

In addition to the fiscal problems in the United States itself, Dalio also mentioned the intensification of US-China competition, and believes that AI will become the key battlefield of the global economy in the future. He pointed out that the development of AI technology will determine national competitiveness, and neither the United States nor China are willing to lose in this war, which will affect the global supply chain and trade pattern.

He further stated that although China is slightly behind in chip technology, it has a leading advantage in the field of AI applications. He predicts that in the future, China will mass produce low-cost AI chips and apply them in manufacturing, robotics, autonomous driving, and other fields to shape new competitiveness.

In addition to fiscal problems, Dalio also mentioned the current political division in the United States. He believes that it is difficult for the Democratic and Republican parties to reach consensus, making fiscal reform even more difficult. He is also concerned that the United States may not only experience internal conflicts, but also conflicts between state governments and the federal government, further exacerbating the national fiscal problems.

The internal division in the United States has deepened the difficulty of fiscal reform and is in urgent need of reform.

At the end of the interview, Dalio said that the United States still has a strong economic foundation, but if the government does not take immediate action to reduce the deficit and control debt growth, the U.S. economic situation will gradually deteriorate.

"The United States still has a chance to reverse the current situation, but this requires political leaders to make difficult decisions. The window of time for reform is closing rapidly. If this opportunity is missed, the US economy and global influence will decline significantly." Dalio emphasized.

Bridgewater Associates founder Ray Dalio proposes a 3% solution to address concerns around the US debt crisis (

This article Bridgewater founder Dalio: US debt scale reaches 36.4 trillion magnesium urgently needs reform, US-China AI competition affects global supply chain first appeared in Chain News ABMedia.