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Billionaire investor Ray Dalio says the US is at the start of a debt crisis - and worse times are ahead for the economy

Ray Dalio
Ray Dalio.YouTube / Rich Talk
  • Bridgewater founder Ray Dalio said the US is at the start of a "late, big cycle debt crisis."

  • The billionaire investor warned there's a shortage of buyers at a time when the US is selling so much debt.

  • He added the US economy faces tougher times ahead - and forecast a balance-sheet recession.

Billionaire investor Ray Dalio said the US is at the beginning of a debt crisis - and warned worse times are ahead for the economy.

"In my opinion, we are at the beginning of a very classic late, big cycle debt crisis, when the supply-demand gap, when you are producing too much debt and have a shortage of buyers," Dalio said during the Bloomberg Invest conference on Wednesday.

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"What's happening now, as we have to sell all this debt, do you have enough buyers?" he said. "When I look at the supply-demand issue for that debt, there's a lot of debt, it has to be bought and has to have a high enough interest rate," the Bridgewater founder added.

Dalio was building on the recent debt-ceiling bill passed by Congress, and President Joe Biden. In order to pad out its cash reserve, the Treasury department has already announced plans to issue $1.6 trillion in T-bills this year until the end of 2023.

"When one looks at the buyers, there appears to be a significant shortage of the buyers for that government debt. But we're now at the brink of being able to see what that supply-demand picture looks like as we go over the next year and two," Dalio said.

Dalio has previously commented on the US government's handling of the borrowing-limit standoff, giving the deal a D grade as it doesn't solve the key problem of an ever-increasing debt pile.

Looking ahead, Dalio was downbeat. While he noted interest rates are likely to stay at current levels, with little room for upside, that will result in a weaker US economy.

"Doesn't have to be a big downturn, because of the household sector, but it is a balance sheet recession. Things are going to get worse in the economy," he added.

Read the original article on Business Insider