Ray Dalio issues say that the US government is close to “debt death” with the high interest payments

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The iconic investor Ray Dalio says that the United States government is heading towards a “vortex of debt death” due to the chronic large deficit.

In a new interview on the CNBC, the Bridgewateer Associats says that in health credit courses, all parties including the debtor, the creditor and the market can benefit from the flow of new funds in the system.

However, Dalio says that the United States government exports a lot of debts that are likely to overcome the demand for the purchase, which raises the capabilities that will need to start borrowing money to serve the current debt, which leads to a cycle of death.

It is similar to billionaire to the human circulation system.

“The credit system, I am thinking about being the circulatory system in your body, such as blood brings different parts of your body, it brings these nutrients and the purchase strength. If it is used well so that the income is produced, then everyone calls. The lender gets their salaries, and the person was the one Its borrowed is fruitful.

However, when the debt rises in relation to income on a chronic basis for a long time, it resembles a plaque in this accumulated system. Think about it this way: The more debt and debt service you have, the less money you can spend from your income. So with its height at the present time, for the United States government, nearly a trillion dollars annually goes to interest payments, so it is somewhat similar to the painting that narrows it and is a problem.

There is also a problem with supply/demand for credit, like every other market. Even when we manage a large deficit – and now the deficit is expected to be about 7.5 % of GDP – when you manage a large deficit, you must sell debts to do so, and the amount of debt sold for the number of buyers must come there.

And when I think, the amount of debt to be sold is much greater than the purchase strength or the tendency to buy …

Now in the credit markets on the private market, we are talking about “debt death cycle”.

The “debt death cycle” is that part of the course when the debtor needs to borrow money in order to pay the debt service, and it does so, then everyone sees this and does not want to keep the debts. This is what we are approaching. “

To avoid the cycle of death, Dalio says that the United States must move to reduce its deficit from 7.5 % to 3 % of GDP – which is called “3 % solution” – which can be largely achieved by lowering spending prices and lowering interest rates .

“If this is not done this time, I am really concerned. I think everyone is responsible for it, from the president to Congress, should realize … that if they do not get it, they are responsible for the consequences that you will follow.”

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