Ray Dalio warns that the U.S. faces a severe debt crisis, describing the situation as an impending "economic heart attack." With national debt nearing $37 trillion and rising deficits, he emphasizes the chronic issue of spending exceeding revenue by 40%. Dalio uses the analogy of plaque in arteries to illustrate how debt service payments hinder economic growth. He urges policymakers to adopt the fiscal discipline of the 1990s, proposing that adjusting spending and income by 4% could improve the financial situation through lower interest rates.
"We're spending 40% more than we're taking in and this is a chronic problem," he said in a recent appearance on Fox Business. "What you're seeing is the debt service payments ... well into squeezing away, so it's like plaque in the arteries squeezing away buying power."
Dalio warns the U.S. is near a tipping point where it must issue new debt merely to pay interest on existing obligations-a cycle he says could trigger not just a financial shock but a systemic breakdown reminiscent of cardiac arrest.
Dalio contends that there is still a way out-as long as the country acts with unity and resolve. [...] If we change spending and income (tax returns) by 4% while the economy is still good, the interest rate will go down as a result and we'll be in a much better situation.
He points to the '90s as a model for bipartisan problem-solving, fiscal restraint, and balanced economic growth.
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