Bridgewater Associates founder Ray Dalio: The U.S. could face a debt crisis within three years.

Ray Dalio, founder of Bridgewater Associates, warned in a Bloomberg interview that the U.S. could face a debt crisis within the next three years as debt interest payments increasingly crowd out other federal government budget items. Dalio noted that the U.S. government collects roughly $5.5 trillion in annual revenue and spends around $7.5 trillion, with a fiscal deficit approaching $2 trillion. Currently, the U.S. federal government’s annual interest expenditure is about $1 trillion; when including maturing debt that needs refinancing, the total annual debt servicing and refinancing requirement amounts to roughly $11 trillion. Meanwhile, U.S. Treasury yields have continued to rise: the 10-year Treasury yield closed at 5.31% on October 5, while the 30-year yield hit 5.66%, further increasing the government’s financing pressure. Dalio recommended cutting spending, boosting tax revenue, and lowering interest rates to reduce the fiscal deficit as a share of GDP from around 6% to 3%. On asset allocation, he previously advised allocating 10% to 15% of a portfolio to gold, with bitcoin making up only a small portion.