{"id":289238,"date":"2025-07-25T00:29:18","date_gmt":"2025-07-25T00:29:18","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/289238\/"},"modified":"2025-07-25T00:29:18","modified_gmt":"2025-07-25T00:29:18","slug":"the-ballooning-37-trillion-deficit-will-trigger-an-economic-heart-attack","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/289238\/","title":{"rendered":"The ballooning $37 trillion deficit will trigger an \u2018economic heart attack\u2019"},"content":{"rendered":"\n

Hedge fund billionaire Ray Dalio is known for his dire warnings about the economy and the national debt, but he just issued one of his starkest warnings to date, likening the United States\u2019 mounting debt crisis to an impending \u201ceconomic heart attack\u201d and urging policymakers to revisit the fiscal discipline that characterized the 1990s boom years.\u00a0Dalio\u2019s alarm, sounded in a series of social media posts<\/a> and interviews, including with Fortune\u2018s Diane Brady,<\/a> comes as the national debt nears $37 trillion and the federal deficit continues to swell, fueling bipartisan anxieties about the country\u2019s financial health.<\/p>\n

Dalio, founder of the world\u2019s largest hedge fund, Bridgewater Associates, described America\u2019s deficit spiral in dramatic\u2014and visceral\u2014terms. \u201cWe\u2019re spending 40% more than we\u2019re taking in and this is a chronic problem,\u201d he said in a recent appearance on Fox Business<\/a>. \u201cWhat you\u2019re seeing is the debt service payments \u2026 well into squeezing away, so it\u2019s like plaque in the arteries squeezing away buying power.\u201d<\/p>\n

The analogy underscores a grim reality: debt service payments have ballooned<\/a> as a share of government spending, increasingly crowding out funds for other priorities. Dalio warns the U.S. is near a tipping point where it must issue new debt merely to pay interest on existing obligations\u2014a cycle he says could trigger not just a financial shock but a systemic breakdown reminiscent of cardiac arrest. We\u2019ve got to go back, he argues\u2014back to the \u201990s.<\/p>\n

Dalio contends that there is still a way out\u2014as long as the country acts with unity and resolve. He points to the \u201990s as a model for bipartisan problem-solving, fiscal restraint, and balanced economic growth. \u201cIf we change spending and income (tax returns) by 4% while the economy is still good,\u201d he wrote on Twitter<\/a>, \u201cthe interest rate will go down as a result and we\u2019ll be in a much better situation.\u201d He added that we know this kind of balance can happen because it happened before, from 1991 to 1998. Dalio wrote, referencing how both spending controls and targeted tax measures restored equilibrium in the 1990s.<\/p>\n

Dalio suggests that by trimming the federal deficit to 3% of GDP\u2014levels last sustained during the Clinton era\u2014the U.S. could stabilize markets, tame interest payments, and avoid crisis. In a CNBC appearance<\/a> in early July, Dalio put the odds at over 50% that a financial \u201ctrauma\u201d will result from the debt not being dealt with properly.<\/p>\n

This is far from the first dire warning to come from Dalio on the state of the U.S. economy. In the past five years, he has voiced concerns about the debt created to fight the financial effects of the pandemic, both inflation and stagflation, and even a looming recession. Although a recession has not set in since the COVID-related crash of 2020, Dalio warned that rising asset prices weren\u2019t creating real wealth, as inflation was eroding purchasing power.<\/p>\n

Story Continues <\/p>\n

A consistent theme of Dalio\u2019s warnings is that the disease may be worse than the cure, criticizing policymakers likely to act only when inflation became critical and the dollar\u2019s value had materially eroded. He has voiced variations of his \u201cheart attack\u201d and \u201cplaque\u201d critique since 2024.<\/p>\n

Despite offering a clear prescription, Dalio expresses skepticism that current political dynamics will allow for compromise or the hard choices required. \u201cMy fear is that we will probably not make these needed cuts due to political reasons,\u201d he wrote on Twitter, warning that absolutism in Washington could doom efforts to put the country\u2019s fiscal house in order.<\/p>\n

The consequences, Dalio argues, would be severe and far-reaching: sustained government overspending, rising debt service burdens, and a loss of confidence among buyers of U.S. Treasuries. This scenario, he says, could escalate into what he calls a \u201cserious supply-demand problem,\u201d where the market refuses to fund America\u2019s borrowing habits at sustainable rates, catalyzing a financial crisis with global shockwaves. The April fall in the 10-year Treasury bond market<\/a> was a tremor of just such a refusal from foreign investors, who seemed to balk at President Donald Trump\u2019s planned tariffs being much more aggressive than expected.<\/p>\n

Dalio\u2019s repeated invocations of the 1990s are more than nostalgia\u2014they are a call to bipartisan pragmatism and shared sacrifice. He warns that failure to act now, with the economy still on stable footing, will only raise the costs (and pain) of inevitable reforms. Although Dalio did not comment on it, the debt situation has actually worsened throughout 2025, with legislation passing through Congress that is set to expand the debt for years to come. Trump\u2019s One Big Beautiful Bill Act will add $3.4 trillion to deficits over the next decade, according to the Congressional Budget Office<\/a>.<\/p>\n

For this story,\u00a0Fortune\u00a0used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.\u00a0<\/p>\n

This story was originally featured on Fortune.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Hedge fund billionaire Ray Dalio is known for his dire warnings about the economy and the national debt,…\n","protected":false},"author":2,"featured_media":289239,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[20391,51,107859,107860,1700,22530,11547,12549,107858,16,15],"class_list":{"0":"post-289238","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bridgewater-associates","9":"tag-business","10":"tag-debt-service-payments","11":"tag-diane-brady","12":"tag-economy","13":"tag-financial-crisis","14":"tag-heart-attack","15":"tag-ray-dalio","16":"tag-the-national-debt","17":"tag-uk","18":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114911049437695551","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/289238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=289238"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/289238\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/289239"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=289238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=289238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=289238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}