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Hedge-fund billionaire Ray Dalio has a stark warning for America — one that centers on its mounting debt crisis, with national debt standing at $36.22 trillion.
In a recent interview with CNBC, Dalio painted a grim picture of the nation’s financial trajectory, saying it was on course to “a debt death spiral.”
“A debt death spiral is that part of the cycle when the debtor needs to borrow money in order to pay debt service and it accelerates,” he cautioned. “And then everybody sees that and they don’t want to hold the debt.”
Highlighting the dire situation, he notes that the U.S. federal government now spends almost $1 trillion a year in interest payments to service the national debt.
To make matters worse, the country continues to run deficits, spending more than it receives. The U.S. Department of the Treasury reports that the federal government ran a $1.83 trillion deficit in fiscal 2024 when it spent $6.75 trillion but only took in $4.92 trillion in revenue.
The Congressional Budget Office (CBO) projects that the federal budget deficit will grow to $1.9 trillion in 2025.
Debt and the risk of inflation
When a borrower carries an overwhelming amount of debt, lenders begin to worry about repayment, increasing the risk of default. But according to Dalio, the U.S. is unlikely to default. The bigger threat? Depreciation of our currency.
“There won’t be a default — the central bank will come in, and we’ll print the money and buy it,” he says. “And that’s where there’s the depreciation of money.” Americans are all too familiar with the central bank’s quantitative easing (printing money) during the pandemic — and the resulting loss of purchasing power.
Inflation surged to a 40-year high in June 2022, with the consumer price index (CPI) soaring 9.1% year over year. The cost of essentials like food and housing remains stubbornly high.
Dalio’s safe-haven pick for ‘bad times’
To recession-proof your investments, Dalio emphasized the power of diversification and the role of one time-tested asset.
“People don’t have, typically, an adequate amount of gold in their portfolio,” he noted. “When bad times come, gold is a very effective diversifier.”
Gold is considered a go-to safe haven. It can’t be printed out of thin air like fiat money, and because it’s not tied to any single currency or economy, investors flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.
So, how much of the precious metal should an investor own? Dalio advises that investors hold 10 to 15% of their portfolios in gold.
These days, you don’t even have to go to a bullion shop to buy precious metals. There are plenty of online platforms that offer a wide selection of gold and silver bars and coins and fair pricing.
Additionally, you can combine the recession-resistant nature of gold with the tax benefits of an IRA by opening a gold IRA.
If you’d like to convert an existing IRA into a gold IRA, companies typically offer 100% free rollover. Others might offer free gold, silver or other metals up to a certain amount when you make a qualifying purchase.
You can check out our top picks for industry-leading companies offering gold IRAs.
Compare offers instantly and request a free information guide to help you understand how this type of investment could fit in your portfolio.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
