Ray Dalio, founder of Bridgewater Associates, warned on July 23 that the US could face a full-blown debt crisis within three years if the federal deficit is not brought down to 3% of GDP. The US government is projected to spend approximately $7 trillion in fiscal 2026 while collecting between $5 trillion and $5.6 trillion in revenue, creating a gap of roughly 5.8% of GDP, nearly double the threshold Dalio considers sustainable. US government debt stands between $36 trillion and $38 trillion in 2025, with rising debt-service costs increasingly crowding out other spending priorities. Dalio identifies a critical political window between the 2026 midterm elections and the 2028 presidential race as a period when political incentives run counter to necessary fiscal adjustments. Treasury yields are already responding to these concerns, with investors notably shifting toward gold as a hedge against sovereign debt risk.
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