The U.S. Debt Spiral
Here comes dollar debasement inflation!
Serious as a heart attack!
That’s Ray Dalio’s diagnosis. He runs the world’s largest hedge fund. Dalio says as our debt crowds out other spending, it’s just like plaque in arteries… and has us headed for an economic heart attack!
What is Washington’s solution? IT HAS NONE!
Treasury Secretary Scott Bessent just said the quiet part out loud: “We’ll just grow our way out of $40 TRILLION in debt.”
Hold the phone!Washington’s big spenders have been tell us that forever.But we never grow our way out of it.Now the U.S. just passed the $40 trillion benchmark.
Ray Dalio speaks at the World Economic Forum
Now Dalio says that Treasury Secretary Scott Bessent’s debt buyback announcement last week may be a grim crisis signal.
“I am confident that the government’s financial condition is at an inflection point,” Dalio wrote recently. “If this is not dealt with now, the debts will build up to levels where they can’t be managed without great trauma.”
If you are seeking to protect yourself, your wealth, and your family you must face the facts.Washington has no plan to cut spending.It has no plan to bring the budget under control.It has no plan to stop the debt spiral.The world is beginning to realize this.It is losing confidence in the ability of Washinton to pay its bond holders with anything other than sharply depreciated dollars.That is driving U.S. interest rates higher.
Secretary Bessent is whistling past the graveyard when he says that we will grow our way out of it.He is speaking like a gambler who takes bread out of his children’s mouth to make one last bet that will make everything alright.
Not exactly a sound strategy!
Instead he is playing with fire. That’s the read of Robin Brooks, a senior fellow at the Brookings Institution The US government’s move is the “clearest sign yet” that the nation is following Japan toward debasing its currency.
That’s another way of saying inflation.
We agree with Dalio’s baseline observation, that “if you don’t own gold, you know neither history nor economics.”
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