Ray Dalio, founder of Bridgewater Associates, emphasized that the U.S. national debt, exceeding $35 trillion, will continue to rise regardless of the election results. In an interview with Bloomberg at the Milken Institute Asia Summit 2024, Dalio pointed out that the upcoming November elections represent a critical juncture concerning taxation and the federal government’s role in the economy.
Critical Turning Point of Elections
Dalio noted that the November elections will be pivotal as parties attempt to attract voters with financial policy promises. However, he suggested that the current administration, particularly under Kamala Harris, faces challenges in addressing these issues effectively.
National Debt Overlooked
The billionaire investor believes that the national debt will be overlooked while the federal government employs inflationary policies to reduce its real burden. He stated, “We have a tremendous amount of debt on our backs, and it will continue to rise. One person’s debt is another’s liability… No one will care about debt policy. Over time, it will be resolved through printing money. That’s all they can do to solve the problem.” Dalio also emphasized the significance of candidates’ tax policies and their potential impact on capital markets. He stated, “Taxation issues will come up, and these taxation matters will have a significant effect on capital markets. Generally, post-tax returns are purchased. If you lower corporate income tax and raise income taxes, it will affect prices. Therefore, we will address these issues. There is much to discuss concerning the elections.”
Fragmentation of U.S. Structure
Regardless of the election outcome, Dalio believes the U.S. is heading toward a more fragmented structure, where some regions may turn to state governments for leadership due to “irreconcilable differences” with the federal government. He warns that rising national debt and political uncertainties will profoundly impact the country’s economic and social fabric, causing fluctuations in cryptocurrency markets as well.
Dalio’s insights shed light on the challenges facing the U.S. economy and the upcoming elections’ effects on these dynamics. Both the increase in national debt and potential changes in tax policies emerge as critical issues for investors and citizens alike to monitor closely.
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