Billionaire Ray Dalio is the founder and founder of one of the world's largest hedge funds, Bridgewater Associates. Whether he talks about the global economy or wealth management, investors c
Billionaire Ray Dalio is the founder and founder of one of the world's largest hedge funds, Bridgewater Associates.
Whether he talks about the global economy or wealth management, investors closely follow him.
Related: Analysts give investors harsh reality check as U.S. debt tops $40 trillion
On Aug. 21, he wrote a long X post in which he addressed the current condition of the U.S. economy and how investors can be prepared for it.
The U.S. Treasury's recent decision to increase the government debt buybacks is only a part of the broader pattern that can signal a forthcoming crisis in the American economy, he said.
The U.S. government is spending 40% more than it's earning and the budget deficit is only soaring, he further warned. To address the crisis, he advised the government to reduce expenditure, raise tax revenue, and gradually lower interest rates.
“All three need to happen concurrently so as to prevent any one from being too large,” he said. “If any one is too large, the adjustment will be traumatic.”
The U.S. could face a debt crisis as early as one year or as late as five years, he warned.
As Japan trims its U.S. bond exposure and the long-dated bond yields surge, Dalio asked investors to get ready to rebalance their portfolios in the face of more risks.
He recommend that investors underweight debt assets like bonds, and overweigh safe haven assets like Bitcoin (BTC) and gold. He recommended an allocation of "maybe 10-15%" to gold, in addition to "a bit" of Bitcoin.
This way, an investment portfolio's risk can reduce and its interest rise, he added.
Dalio said that most economies like the U.K., the EU, China, and Japan are also facing debt and deficit problems like the U.S. and he anticipated a currency devaluation in most economies.
As a result, he expected "non-government-produced monies like gold and Bitcoin to do relatively well."
Bitcoin rose above $79,000 on Aug. 21 following the latest Treasury announcement. The cryptocurrency was trading at $77,489.58 at the time of writing.
Related: Billionaire Ray Dalio reveals exact Bitcoin allocation
