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Largest hedge fund founder says US in ‘death spiral’ if debt not cut

According to Ray Dario, the world's largest hedge fund founder, the United States is currently in the “Spiral of Death,” if both parties do not cooperate to start a reduction immediately. It may lead to it.

During recent conversations “All -in pod cast” Dalio pointed out that the “Spiral of Death” is usually the case when the company or the government has too many debts and needs to serve it to serve it, using the joint host, David Friedberg. According to Dalio, investors are sharply aware of this, causing their credits to worsen and interest rates.

Dalio, the highest investor in BridgeWater Associates, says this is the worst thing that can occur in severe entities. He pointed out that the important issue is whether debt will generate enough income to reduce this problem.

“It's like you don't know eating vegetables or something, it's a healthy process, otherwise your credit starts to build this debt, which starts to be like a artery plaque. You can measure it in the artery, and you can see how it contracts the circulation system, “Dario told” all -in. “

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Ray Dario, founder of the world's largest hedge fund, warned that the All -in -Podcast and the serious economic results shared Host David Friedberg were not promptly dealt with national debt. (All -in podcast)

Dario claims that if interest and debt services continue to contract government money supply continuously, this could lead to “economic debt heart attack.”

A large amount of debt creates the need for someone to buy it. The risk of debt not only creates urgency in which new supply is provided, but also that the holder may sell those debt assets, which may lead to overwhelming supply than in demand. According to Dalio.

If the burden on the debt service rises, or if there is a large supply target, the government's central bank can print and purchase more money. Otherwise, the price of debt rises, borrowing, a snowball -type contraction of the unusual credit, weakening the economy, and causing a bad economic situation.

Dario says that the government can buy it, print money, and to monetize it. However, this causes inflation and reduces the value of debt.

“In either case, there is a debt service problem or depreciation, so I do not want to maintain the debt,” he says.

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National Debt Trump and Ray Dario

US government bonds exceed $ 36 trillion. (All -in -pod cast/Counted Gemar/Peter G. Peterson Foundation/Chip Somodevilla/Getty Image)

Today, the United States has $ 36.4 trillion Debt of the federal government 29.1 trillion gross domestic production (GDP) gives a debt ratio of 125 %. This ratio steadily rose after the pandemic began in 2020, with a federal debt of $ 20 trillion and only $ 21 trillion. Since the pandemic, federal debt has risen 80 % and GDP has risen 38 %.

Despite recent efforts to reduce interest rates, the market has reduced the Ministry of Finance, and has increased rapidly to a level where the long -term interest rates on US debt cannot be felt just before the global financial crisis in 2008. 。 To maintain the economic growth, the US government operates nearly $ 2 trillion in the deficit per year, nearly 7 % of GDP, but pays more than $ 1 trillion per year for existing unpaid debt.

Dario is inevitably inevitable to have an emergency in connection with the increase in debt, withstand the potential interests of government efficiency and the need to reduce costs. He has expressed how to emphasize.

In advertising his personal solution, Dario stated that the deficit equivalent to sales bonds would be reduced from 7.5 % of GDP to 3 %.

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meeting

Congress is competing to execute Trump's new DOGE committee recommendation. (Getty Image)

“Various people have different views on how to cut them. Forget it. I don't really care,” said Dario. “But you need to have a unified agreement. Everyone in Congress and President should swear it, and the problem is to do it, but they know the number. It should (equivalent to about 900 billion per year).

Dario is worried that the timeline to fill this gap may be too long. He is not just a DOGE problem, but also reduces regulations and productivity changes, and some may be derived from profits from the profits generated by artificial intelligence (AI) or tariffs.

Dario said in the context of the finance, “Yes, we believe,” when the United States was asked if he was better with President Donald Trump and Former President Biden.

“From the perspective of profitability and reduction, Republican members are probably more likely to move these movements than the Democratic Party, but you also consider the impact, social impact, and other impacts. This is the case, and we are participating in the International War.

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pie chart.

Picchart about government expenditure. (Fox News)

However, according to Dario, these cuts will be brutal. He pointed out that “how the pie is divided” in the government's budget is very political, and “the destructive impact will be enormous.”

“We all speculate how destructive these effects are. It's too many, but you're absolutely correct. A lot of work will be lost.” I did it. “There are many changes from the perspective of turbulence, and do we have a plan? Can we even agree on how to deal with it? In the remaining life, the agreement is easy. Will be.

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The Economic Policy Innovation Center (EPIC) released a new model in December. It stated that it is possible by the US government to eliminate the ability to pay debts by June 16, 2025.

“It is expected that the government will have a deficit of about $ 2 trillion next year, that is, the duty of expenditure between Congress and the government means much more than the tax revenue,” Matthew Dickerson. Matthew Dickerson told the EPIC budget policy director to Fox News Digital. “In order to be able to pay what the government can pay on time, we need to increase debt restrictions.”

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