Ray Dalio Warns of Rising Debt and an Imminent “Civil War” in the U.S.

The founder of Bridgewater Associates, Ray Dalio, reiterates warnings that U.S. government debt is rising too quickly, creating a climate “very much analogous” to the years before World War II.

“When debt rises relative to income, it’s like plaque in the arteries that begins to squeeze out spending,” says Dalio, 76, in an interview with Bloomberg Television’s Francine Lacqua aired on Friday.

The billionaire investor has long cautioned about the risks of spiraling U.S. debt, stating last month that it poses a “threat to the monetary order.” He blames politicians on both sides of the aisle and calls for a mix of increased tax revenues and spending cuts to address what he terms the “deficit/debt bomb.”

Debt held by the public amounts to 99% of U.S. gross domestic product (GDP) last year, according to estimates from the Congressional Budget Office. Projections show that this figure will reach 116% of GDP by 2034, higher than at any point in U.S. history.

According to Dalio, rising debt is only part of the problem. Escalating global conflicts and wealth inequality also create an environment with “plenty to worry about,” he says.

When asked if another world war is possible, Dalio replies that a “civil war of some sort” is developing in the U.S. and other parts of the world, with “irreconcilable differences.”

“These conflicts will become tests of power by each side,” he says, emphasizing that it is crucial to address these tensions. “If we don’t worry about these things, the risks grow larger.”

After founding Bridgewater in 1975, Dalio became known for demanding so-called radical transparency at the multi-billion-dollar macro hedge fund.

The outspoken investor begins a gradual exit from the firm in 2017, a process that culminates earlier this year with the sale of his remaining stake and his decision to step off the board.

The Westport, Connecticut-based firm is on track to achieve its biggest gain since 2010. In recent years, Bridgewater has been restructuring, with CEO Nir Bar Dea making personnel changes and reducing assets under management to improve performance.

As of December 31, Bridgewater manages $92 billion in assets, down from nearly $140 billion at the beginning of 2023.