Billionaire Ray Dalio Predicts More Money Printing in US Amid Concerning National Debt Growth

According to billionaire investor Ray Dalio, the United States will likely resort to more money printing as national debt continues rising rapidly. Dalio believes the growing debt burden makes it probable the US will utilize monetary financing again in the future.

Speaking at the All-In Summit, billionaire Ray Dalio warned the United States will eventually struggle to service its mounting debt obligations. With rising national debt levels, Dalio predicts a recession could compel the government to reintroduce quantitative easing - a monetary policy aimed at increasing dollar supply.

"What happens is debt rises relative to incomes. Mechanistically, this means debt service payments rise compared to incomes, squeezing out consumption as debt compounds. What happens is there’s a realization they have to print money. I think you’re going to see in the next downturn another move to print money," stated Dalio.

According to the U.S. Treasury Department, the national debt currently stands at $33.044 trillion.

Dalio also sees a "big risk" for the United States. The billionaire notes U.S. bondholders may opt to liquidate their holdings if bond values decrease due to money printing.

When the government prints more dollars, currency value declines with increased supply. Dollar debasement typically lowers U.S. bond values as investors realize the interest generates diminished purchasing power.

"The big risk comes when they don't want to hold those bonds anymore because of the supply-demand...because [when a country] has a deficit, it has to borrow, so it sells bonds. Who buys the bonds? Why do they buy? Buyers want an attractive return. Not only are there those amounts of bonds, but when buyers realize they're not getting good returns, they can sell the bonds," explained Dalio.

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Sep 19, 2023