The debt crisis Ray Dalio warned of may already be happening as US borrowings surge by $1 trillion in just weeks
- Billionaire investor Ray Dalio's prediction of a US debt crisis may be coming true already.
- US national debt surged by $1 trillion in just one month since the borrowing ceiling was lifted by Congress.
Just last month, billionaire investor Ray Dalio warned the US is at the start of a debt crisis – and that may already be coming true.
The government's borrowings jumped by an eye-watering $1 trillion in just one month, following the early-June resolution of the protracted political standoff over the sovereign debt limit, Charlie Bilello, chief market strategist at Creative Planning, pointed out in a recent tweet. Total outstanding public debt has now climbed to $32.5 trillion.
Early in June, Congress passed a bill that would lift the US debt ceiling just when the nation was on the brink of a payment default. The decision came after months of squabble between Democrats and Republicans, and attracted a pool of critics in its wake, including Dalio and Berkshire Hathaway CEO Warren Buffett.
Bridgewater founder Dalio gave the deal a grade D at the time, saying it doesn't solve the problem of a deeply indebted US government and will only add to its increasing pile of borrowings.
"Dealing with the problem of adding too much to a pile of debt that is already too large: Grade D," Dalio said. "It won't make much difference," he added.
In a more dire warning, Dalio said last month that the US was at the start of a debt crisis – where there was an worsening shortage of buyers at a time when the government was selling so much debt.
"In my opinion, we are at the beginning of a very classic late, big cycle debt crisis, when the supply-demand gap, when you are producing too much debt and have a shortage of buyers," Dalio said.
He has also forecast the US will enter a balance-sheet recession, and that higher interest rates were set to weaken the economy.