Ray Dalio "US debt crisis deepens... gold and virtual assets will emerge as alternative currencies"

Ray Dalio, founder of hedge fund Bridgewater, said that the United States' accumulated debt and deteriorating finances are undermining confidence in the dollar, and that gold and virtual assets will emerge as alternative currencies.

On the 3rd (local time), Dalio wrote on his X (formerly Twitter), "The U.S. could suffer a debt-induced economic cardiac arrest in about three years," pointing to annual interest costs of $1 trillion and a $9 trillion refinancing burden. He explained that, in a situation where debt issuance exceeds demand, the Fed faces only two choices: a default crisis caused by raising interest rates, or printing money to buy debt and thereby damaging the dollar's value.

In this regard, he said, "If stablecoins are well regulated, exposure from holding government bonds is not a risk, but fiat currencies like the dollar will inevitably lose value due to large-scale debt." He added, "Hard currencies like gold and cryptocurrencies will take hold as attractive alternatives."

Dalio also defined cryptocurrencies as "alternative currencies with limited supply," and predicted that if the dollar supply increases or demand decreases, virtual assets such as Bitcoin could show relative strength. He assessed that now is a transition period, like the 1930s-40s and the 1970s-80s, when fiat currencies' value falls and hard currencies become prominent.