Bridgewater founder Ray Dalio on Wednesday warned that a “very severe” supply-demand problem regarding U.S. debt.
“The first thing is the debt issue, we have a very severe supply-demand problem,” Dalio told CNBC’s Sara Eisen at CONVERGE LIVE in Singapore.
Dalio, who was speaking on the same panel as Salesforce CEO Marc Benioff, said this will require the White House to sell a quantity of debt the world is just not going to want to buy.
“That’s a set of circumstances that is imminent, OK? That is paramount importance,” he said, adding that most people don’t understand the mechanics of debt.
Dalio said the U.S. deficit needs to go from what he said was a projected level of 7.2% of gross domestic product to about 3% of GDP.
“That’s a big deal. You are going to see shocking developments in terms of how that’s going to be dealt with,” he added.
His comments come amid a tariff roller-coaster ride for markets in recent days. Trade policy uncertainty has added to a sense of unease on Wall Street, with investors concerned about the impact of a brewing trade war on the global economy.
Asked whether the U.S. debt problem could lead to a period of austerity, Dalio said the issue could result in a restructuring of the debt, the U.S. applying pressure on other countries to buy the debt, or even cutting off payments to some creditor countries.
“Just as we are seeing political and geopolitical shifts that seem unimaginable to most people, if you just look at history, you will see these things repeating over and over again,” Dalio said. “We will be surprised by some of the developments that will seem equally shocking as those developments that we have seen.”