Dalio warns of 38 billion dollars in debt: Future generations will pay the price of the dollar's collapse

When Debt Becomes a Time Bomb

Ray Dalio, a legend in hedge fund management and founder of Bridgewater Associates, recently issued a warning that is echoing through the financial world. The problem is not new, but its scale is terrifying — the United States carries the burden of a $38 trillion national debt. Dalio did not hold back: future generations, including his own grandchildren and those yet to be born, will be forced to pay off this debt in a currency that has already lost a significant part of its value.

What’s worse, the country’s fiscal policy cannot be changed without drastic measures. Referring to his thorough study of financial history, Dalio explained that countries in such a situation never solve the problem through real spending cuts. Instead, they take the easy route — printing money, weakening their currency, and artificially lowering interest rates.

The Proven Pattern of Countries in Crisis

Dalio compared the current situation to the transformation of the early 1970s. He specifically recalled 1971, when President Nixon severed the link between the dollar and gold. Back then, owning gold was a guarantee of value — today, investors seek the same security.

He also analyzed the scale of currency collapses over time. Since 1750, “80% of the world’s money has disappeared,” Dalio noted. The remaining currencies have lost a significant part of their purchasing power. Gold, however, remains exceptional — it is the only form of wealth that does not depend on the promises of another party.

Central banks are increasingly turning to gold. Sanctions on Russia have shown how fragile trust in paper currencies is. Countries are now strengthening their gold reserves as a safeguard against geopolitical chaos.

The New Global Architecture and Its Consequences

The world is shifting toward “war economy self-sufficiency,” as Dalio describes it. Countries want less dependence on imports and foreign financing. This explains why Dalio sees in the actions of the USA toward Venezuela or Greenland more than mere geopolitical gambits — it’s a system change.

The deadlock in Washington deepens the problem. Politicians believe that the bond market will remain stable. Investors believe Congress will act before a catastrophe occurs. Meanwhile, Dalio warns: debt crises develop slowly, until suddenly — echoing Hemingway’s famous words about bankruptcy.

What Can Taxes and Tariffs Propose?

Dalio expressed skepticism about current legislative proposals. Will tariffs solve the problem? Historically, they have been a primary source of US government revenue. They can support domestic industry. However, “every form of tax comes with its own costs,” he noted. No tax, whether tariffs or other levies, will solve the fundamental problem — debt will be paid through currency devaluation.

How to Defend Yourself? Dalio’s Practical Tips

For ordinary investors, Dalio proposed specific strategies. Don’t think in nominal wealth — think in inflation-adjusted value.

Two assets that work:

Inflation-indexed bonds, especially (Treasury Inflation-Protected Securities), are — according to Dalio — “the safest investment right now.” They guarantee returns above inflation.

Gold should constitute 10% to 15% of every portfolio. Dalio repeated: “It’s the only asset that is not a liability of another person.” You hold it directly, without an intermediary.

Besides specific assets, Dalio recommended an old, proven strategy — diversification. Look for “15 solid, uncorrelated income sources.” This can reduce portfolio risk by about 80% without sacrificing expected returns.

He also warned against short-term speculation. It’s “a zero-sum game,” where most lose.

Is It Worth Panicking?

Despite the dark clouds over monetary horizons, Dalio did not fall into complete pessimism. He softened his analysis by stating that nations will survive — “we will come out the other side.” Everything depends on how society copes in tough times and whether we can unite.

The current financial cycle is serious. But Dalio believes in the ability to overcome it. The future will be difficult — but possible.