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Billionaire investor Ray Dalio cautioned that the United States is on the brink of an "economic heart attack" unless it significantly reduces its fiscal deficit from the projected 7.5% of GDP to 3% by the end of President Donald Trump's second term. Speaking at the World Governments Summit in Dubai, Dalio highlighted the concerning trend of growing national debt, currently at $36 trillion, which he likened to plaque in the arteries of the financial system. He warned that failure to address this issue could lead to a debt death spiral, where rising interest rates exacerbate the government's borrowing costs.
Dalio pointed out that the bond market may soon be unable to absorb the increasing supply of U.S. Treasuries, leading to a surge in interest rates. He called for urgent austerity measures, arguing that achieving a lower deficit should take precedence even if it disrupts economic growth. According to Dalio, it is crucial for the U.S. government to act swiftly, as time is running out to mitigate the potential fallout from continued fiscal irresponsibility.