Ray Dalio said the United States has crossed a debt threshold from which it cannot return, and the Federal Reserve may soon be forced into a 1930s-style policy of holding interest rates artificially low.
Speaking at the Forbes Iconoclast Summit, the Bridgewater Associates founder told Bloomberg’s Dani Burger that $7 trillion in federal spending against $5 trillion in revenue is squeezing the economy “like plaque in the arteries.”
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The Bond Market Test
Dalio said long rates are already rising relative to short rates, a classic signal that bondholders are losing patience with low real returns. He pointed to a weakening dollar and rising gold prices as confirmation of the dynamic.
