🇺🇸 RAY DALIO: FORECAST ON THE IMPACT OF PUBLIC DEBT AFTER THE U.S. BUDGET BILL IS PASSED

⭐ Now that the budget bill has been passed by Congress, we can clearly see the figures on the deficit, government debt, and debt service costs.

⭐ The bill will lead to approximately 7 trillion dollars in spending each year, while revenue is only about 5 trillion dollars.

⭐ Currently, the national debt is about 6 times the amount the government collects each year, equivalent to 100% of the size of the economy (GDP) and an average of about 230,000 dollars per American household. In the next 10 years, this figure is expected to rise to 7.5 times annual income, accounting for 130% of GDP and equivalent to 425,000 dollars of debt per household.

⭐ Interest and principal payments will increase from about 10 trillion dollars to approximately 18 trillion dollars, with interest alone being 2 trillion dollars (compared to about 1 trillion dollars currently).

⭐ This may force the government to:

1️⃣ make significant cuts in spending

2️⃣ raise taxes substantially

3️⃣ print more money, devaluing the dollar

4️⃣ push interest rates down to very low levels

⭐ Printing money and devaluing will harm bondholders, and when bonds and the U.S. credit market face difficulties, everyone is affected because U.S. Treasury bonds are the foundation of all capital markets.

⭐ If the current deficit, which is around 7% of GDP, is not reduced to near 3% by adjusting spending, taxes, and interest rates, the likelihood of experiencing significant painful disruptions is very high.