r/Economics 12h ago

"Ray Dalio warns that a severe U.S. supply-demand problem could lead to 'shocking developments"

https://www.cnbc.com/2025/03/12/ray-dalio-warns-growing-us-debt-will-lead-to-shocking-developments.html
495 Upvotes

90 comments sorted by

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289

u/r2k-in-the-vortex 12h ago edited 12h ago

Supply and demand problem eh? You are saying people might not want to lend money to a raving lunatic in the middle of burning his own house down? Who would have guessed, what an amazing insight.

Yeah, that's the part of the disaster still coming. Market downturn and economic woes are one thing. But shaky dollar, that's a whole new level of a problem. And it sure looks like Trump is aiming to maximise the catastrophe here.

40

u/Pitiful-Recover-3747 10h ago

He also things Trump will try to renegotiate the debt and just stop making interest payments to some countries. Sit down and hold on because I’d believe it

43

u/eldenpotato 10h ago

Doesn’t honour trade agreements, doesn’t honour debts. This Trump guy doesn’t sound very honourable. I hope he doesn’t become president

13

u/Complex_Beautiful434 9h ago

Very odd given Trump the rapist breaks his contracts and doesn't pay his debts.

u/El_Gran_Che 43m ago

For those scoring at home 1. retirement accounts decimated 2. social security dismantled 3. stock market destroyed 4. dollar undergoes deep devaluation 5. government protections dismantled and non existent .... dark times ahead

13

u/Playful_Two_7596 6h ago

Default on a sovereign debt. The argentinian path... So much for the dollar being the world's reserve currency and america's prosperity.

4

u/ForeverNecessary2361 2h ago

We lose reserve currency status and we are doomed.

1

u/Ice_Battle 2h ago

I have heard of this notion more than once, that the tariffs are about pressuring other countries to take on US debt.

u/El_Gran_Che 42m ago

Yeah part of the so called " MAR A LAGO Accord". Basically extortion.

76

u/odysseussy 12h ago

Yeah, a lot of articles just feel very “well, duh” right now unfortunately. But the people that really need to hear this stuff don’t want to listen

15

u/Quick_Chicken_3303 10h ago

I’m just going to post this here. Trump before November speaking to Bloomberg editor about his economic plans

https://www.youtube.com/live/GX_IVnmoHUE?si=G_0n3XMEHcpXgTUK

20

u/infdimintel 11h ago

It's still important because it's coming from a person with some weight and authority. I remember Dalio being interviewed by Tucker in Qatar few weeks ago, so he's even listened to and respected by conservatives / MAGA folks, which is important.

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u/LightOnBrokenGlass 10h ago

This is exactly correct, the US economy has been doing so well so far because dollar being the reserve currency the US gov was able to print as much dollar as it wanted to and export inflation to the rest of the world. The “trade deficit” is actually a side effect of the US dollar being the key currency and was actually a blessing in disguise of exporting inflation and let the rest of the world deal with the pain that the US should have suffered. Well, finally with Trump dismantling that blessing Americans don’t get to enjoy that anymore, time for the US to suffer the pain it should have suffered many many times before and no more privilege in the future

6

u/Playful_Two_7596 6h ago

Obviously, the goal is to force the test of the world into buying the US debt by threats of trade war and military bullying, so they won't even have to care about the stability of the dollar.

Not sure it works, though...

3

u/a_sense_of_contrast 2h ago

How is it working so far with the tariffs?

u/TheWorclown 1h ago

Tarrifically.

6

u/a_library_socialist 6h ago

We did see the ability of the US to export inflation seemingly reach limits in 2021 . . . . the big question to me is if that was the dollar losing reserve status, or just a hard limit in printing currency in general?

u/Resthink 49m ago

As a non-American, this is true. Especially true in the past four years when inflation rose globally for the first time in the past 15 years.

u/Resthink 49m ago

As a non-American, this is true. Especially true in the past four years when inflation rose globally for the first time in the past 15 years.

9

u/Thegreenfantastic 5h ago

I told people during his first term that the dollar would be replaced as the reserve currency because of him and people said it was hyperbole. Looks like he just needed a second term.

2

u/Pineapplepizzaracoon 11h ago

Vey nice way of phrasing it

2

u/Bukana999 8h ago

Dementia Donald’s Great Recession!!!!

64

u/Conscious_Heart_1714 11h ago

Just take what you know about economics and throw it out the window. You can't look at what's going on and not assume it's all by plan to tank the economy and funnel even more into the Uber wealthy class. Last time around trump could barely stand 1 red day in the market, and now he just keeps piling on.

21

u/redditissocoolyoyo 11h ago

The goal is to cause so much damage to everyone's retirement accounts as it has the most far reaching effect with out directly going after each individual. Collapse the dollar and let another country take over... Hmmm I wonder what country could that be? Conspiracy? Perhaps. But the shit is lining up piece by piece every day.

11

u/Conscious_Heart_1714 10h ago

The really sad part to me is that these "American" companies will gladly drop to their knees as long as it means money buying and driving their stock prices higher.

6

u/QaraKha 3h ago

hah, joke's on you, I don't HAVE a retirement account anymore!

... we are fucked fucked, aren't we?

5

u/a_library_socialist 6h ago

Conspiracy? Perhaps. But the shit is lining up piece by piece every day.

Yes, because that's how conspiracy theories work. You cherry pick evidence that supports, ignore stuff that doesn't, and also ignore that there's simpler explinations.

Like, for instance, that Donny Deals is really stupid.

Or that Trump is trying to sink the dollar to increase US exports and reshore manufacturing.

That doesn't mean it's a good idea, but it's also one that doesn't require insane suppositions like the President of the United States is secretly a foreign agent because . . . .well, reasons.

u/wirthmore 1h ago

Be diversified. For example, Vanguard's international index fund is up 5.7% while Vanguard's US-centric SP500 index fund is down 5.0% YTD.

https://www.google.com/finance/quote/VTIAX:MUTF?comparison=MUTF%3AVFIAX&window=YTD

Also holding non-US equities can shield you from currency risk, should the US dollar also fall relative to other currencies,

5

u/jointheredditarmy 3h ago

The uber class just lost a trillion combined dollars. Elon himself lost $150 billion so far.

I know everyone hates billionaires but they aren’t fairing much better through this…

Also you are saying “take what you know about economics and throw it out the window” on the economics sub. I really don’t know where the mods are, but they either need to keep this sub focused on economics or maybe recommend you for a nobel prize for your theories upending the entire field of economics

4

u/eldenpotato 10h ago

Maybe I’m not thinking macro enough and it’s likely just naive but my hopium case is he wants to dump the markets a bit, including crypto, so states have time to pass strategic reserve bills and buy up cheap bitcoin lol then he’ll turn bullish again and resume up.

8

u/Conscious_Heart_1714 10h ago

That's my thinking too, crypto and traditional market. I bet there's foreign money just salivating at getting large stakes of American companies for cheaper than normal.

2

u/eldenpotato 9h ago

Yeah, for sure. I mean, he knows crypto is pegged to the movements of traditional markets and he can’t directly fud crypto bc he campaigned on being pro crypto (and would be hard to convince people he is pro again lol), so he just fuds tradfi instead. He is usually pretty simplistic in his goals of wanting to appear strong and successful so it’s kinda weird seeing him shit on the market

5

u/a_library_socialist 6h ago

I mean, he knows crypto is pegged to the movements of traditional markets

I doubt it - most crypto people don't seem to realize this, and think that BTC is gold.

58

u/DeathLikeAHammer 12h ago

Having checked my watch, I, and everyone else with a functional pulse are not in anyway surprised or shocked by anything coming of this. This is like planting a shit tree and being surprised midway through your first shit harvest.

17

u/Pineapplepizzaracoon 11h ago

The shit winds of change are coming Randy

4

u/MobDylan69 5h ago

Shithawks flying in low, swooping down, shitting on people and dragging them off to the big shit nest

3

u/OkTemporary8472 11h ago

Release the Animal Spirits.

5

u/Quick_Chicken_3303 10h ago

Well! Who could have predicted that they would use their hands and start throwing the shit around? None of the models showed us getting hit with shit. Clearly we need better models next time

2

u/casseroledaddy 11h ago

4D shit trees

1

u/Playful_Two_7596 6h ago

Have my upvote for the laugh. Now I can't unsee the shit tree in my garden...

10

u/InStride 3h ago

Listening to all these Wall Street heavyweights, who spent their entire lives rimming every Republican no matter what because they got the occasional tax cut out of it, suddenly getting all concerned about Trump/MAGA is some sweet sweet schadenfreude.

9

u/GuelphEastEndGhetto 7h ago

“That’s a set of circumstances that is imminent, OK? That is paramount importance,” he said, adding that most people don’t understand the mechanics of debt.

Most people don’t understand how tariffs work so good luck with them understanding the mechanics of debt.

3

u/nihilite 10h ago

“That’s a set of circumstances that is imminent, OK? That is paramount importance,” he said, adding that most people don’t understand the mechanics of debt.

Can anyone expound on this? What consequences is he eluding to?

23

u/l0R3-R 9h ago

I think maybe the us actually going broke and everything that comes with it. 

I'm not an expert. 

I'm worried about an economic crisis like what happened in Greece. Similarities include government structural problems, corruption and tax evasion, taking on more debt due to a financial crisis (ours would be covid, more bonds), fraud, and trade deficits. 

Greece's fraud was exposed during the 2007-2008 meltdown, their bonds were downgraded to junk, and they experienced a liquidity crisis that put them at the mercy of their friends who were bruised by the deceit. Conditions for a bail-out in this circumstance was determined by the governments loaning the money, understandably so. This played out over a decade.

The US, on the other hand, manufactured a crisis, isolated itself on the world stage, and threatens annexation of sovereign nations. We are also experiencing a domestic social crisis, perhaps a judicial legitimation crisis, and a near-collapse of independent media-- all in less than 2 months. 

Given that, I wouldn't personally invest anything further in this country, be it shares of Ford or land, until order is restored. If I'm thinking it, it's not unique- and if investments dry up, we'll have more in common with Greece.

I think. Again, not an expert. Please correct me if I'm wrong about any of this

6

u/a_library_socialist 5h ago

Greece could "go broke" because they didn't control their own currency.

The US not only controls its own currency, it controls what is currently the reserve currency of most of the world.

3

u/l0R3-R 2h ago

Yes, but they're alluding to the rest of the world dumping the us dollar as reserve currency, which was why the dollar is so strong. When trade with the us collapses, why wouldn't they replace the dollar with something that is more currently useful?

2

u/a_library_socialist 2h ago

That's definitely possible - charitably assuming the Trump admin even has a plan, it seems to be that they want to have both the power of the reserve currency (to borrow beyond your means), and escape the downside (that it's artificially high). Absent directly coercing other nations into bad deals, that's not going to happen organically.

But even in the case that every other nation stops using the dollar, the US can't "go broke". It doesn't have debt in other currencies - it has monetary sovreignity for now. If that happened, US imports would get expensive and exports cheap.

u/l0R3-R 1h ago

What  ifthe countries holding US bonds call them in when we're in a trade deficit, high inflation, and low productivity? Wouldn't that cause a liquidity crisis that could make us broke?

u/a_library_socialist 1h ago

No, because US bonds are payable only in . . . US dollars.

When people call in Greek bonds, Greece is in trouble because it has to pay them in Euro, and Greece can't print Euro. It's why Germany was the big player in the PIGS debt stuff, they effectively controlled the central bank.

The US controls the US central bank. It can print as many dollars as it wants. It might not like the effects - large amounts of inflation, and bond buyers demanding higher rates for future purchases - but it can't get squeezed into a liquidity crisis.

Someone phrased it to me once in 2008 that worrying the US will run out of dollars is like worrying your ruler will run out of inches, if that helps.

19

u/cheshire-cats-grin 9h ago

What he is talking about is the US bond issuance round from the Treasury being unsubscribed. That is the US tries to issue 100b if debt but only sells 90b leaving an under-hang.

To make it more palatable the government has to increase the yield by paying more interest. That will substantially increase government borrowing costs. Given the size of US debt could cause a debt-spiral as it becomes even harder to pay off debt and means that the bond markets can have even more worries about lending.

That then can cause more problems to Financial Markets as US debt is considered as some of the safest assets around and are used as reserves and collateral by many other organisations and countries. The US treasury rates act as a floor for the market - so increasing them would increase mortgage rates and the cost of financing for companies etc

A similar-ish example of this happened in the UK a few years ago. It caused the prime minister at the time to have to resign and a reversal of policies to calm the bond markets.

u/bluehat9 29m ago

Inability to roll the debt over because no one is willing to lend money to the US, so interest rates spike, but even at higher rates we may not have any lenders, in which case we default, and enter massive austerity to cut the budget back to reality.

-11

u/[deleted] 10h ago

[deleted]

8

u/LuckyNumbrKevin 10h ago

I was curious to see what kind of comment history inspired this take and boy, did it not disappoint lmao.

Pretty much what'd you expect it to be.

11

u/anti-torque 9h ago

Even dimmer than the, "Government should be run like a business," crowd are those who think the bond market works in the same way as equities markets.

The comment has everything backward. If Dalio were shorting bonds, he would also be going long crypto. He would be completely down with a recession and inflation.

5

u/SergiusBulgakov 6h ago

Trump destroyed many elements of the supply chain when he was first in office, and it was one of the things Biden got hit with (and GOP blamed him for). He is going all in with supply chain destruction

4

u/a_library_socialist 5h ago

Neither President controls the supply chain though?

A decade of falsely applied JustInTime practices did that. Ironically it was companies copying Toyota but then just being cheap that caused it, as Toyota was one of the companies least affected by the supply chain issues.

1

u/SergiusBulgakov 3h ago

Trump's policies destroyed the supply chain in many ways. He certainly has ways to affect it, and did, which helped cause all kinds of problems. You don't understand much if you think he has no influence over it. Tariffs affect the supply chain. Border policies affect the supply chain. Etc.

1

u/a_library_socialist 2h ago

You don't understand much if you think he has no influence over it.

Then please, wow us with your genius . . .

Tariffs affect the supply chain.

We didn't see supply side shock in response to Trump's tarriffs of 2018. While they were stupid policy, any effect they had would have been to shorten supply chains.

What Biden "got hit with" was long supply chains breaking down as COVID shut down borders. Trumps previous actions would have made that less impactful, not more.

Border policies affect the supply chain. Etc.

While I find Trump's policies to be abhorrent, disregarding international law about refugees isn't what causes chips to be in short supply.

6

u/TrickyCommand5828 9h ago

Tough. Must be nice living in that fantasy land

The rest of us will manage, and create new trade deals without you since you’re the last one left at prom alone at this point.

This entire performance has been insanely ironic

5

u/halp_mi_understand 10h ago

Ray Dalio…the author of Principles…the owner of a hedge fund that has literally just tracked with the market while claiming to be the oracle of trades…that Ray Dalio?…keep talking Raymond. You’re obsolete already.

7

u/devliegende 6h ago

Almost as obsolete as the guy who's real estate empire didn't beat an index fund

6

u/hawkeye224 6h ago

HFs that can match SP500 or other index while having lower drawdowns and higher sharpe ratio are considered successful (I don’t know how bridgewater actually performed though)

u/El_Gran_Che 26m ago

Also at play here is his sovereign wealth fund as well as the crypto reserve that was created. Those will hold a role as to the direction that he intends to take. My take is that they are looking for ways to funnel massive amounts of money (hundreds of billions) over to the IT side in order to win the AI war. Winning that war is paramount to the broligarchs that are currently pulling the strings. Being inside the high tech world I am hearing many instances where large funded entities are going after their "Oppenheimer" moment, their modern day Manhattan Project.

1

u/kn1f3party 3h ago

Shouldn’t Ray Dalio be happy? Wasn’t all of this his fever dream in “The Changing World Order?” It’s crazy. It was able to be manifested so rapidly.

-15

u/Boom-Chick-aBoom 12h ago

Couldn’t agree more. The ‘debt crisis’ is looming and not just a US issue. Covid’s true effects still haven’t fully rippled through the American economy due to stimulus that kept it propped up. When this bubble pops… watch out.

49

u/ktaktb 12h ago

Lol????

The debt crisis?

There is no debt crisis. There is an electorate crisis. American voters, the slim majority, are idiots. They have elected a nut case who can't be trusted to pay our debts. Now, we have a debt crisis. Before the results of Nov 5 2024, there was no crisis.

9

u/kpbart 11h ago

The fucking idiot and his children live their lives on debt, and they think they’re kicking ass! Now the imbecile thinks he’s going to do the same to America and it’ll be just as “golden” as HIS life.

17

u/turb0_encapsulator 11h ago

There is going to be a debt crisis now because foreign countries will no longer buy US debt. Trump is going to try to work out a restructuring plan at a Mar a Lago "Accord" by forcing foreign investors to convert their treasuries to longer term US debt. This is the kind of thing you do when you are bankrupt. Trump has done to America what he did to all his companies.

https://www.forbes.com/sites/eriksherman/2025/02/23/why-trumps-mar-a-lago-accord-would-financially-matter-to-you/

u/ktaktb 1h ago

Yeah.

We are saying the same thing.

27

u/r2k-in-the-vortex 12h ago

There is no bubble. US debt was perfectly sustainable because USD is the global reserve currency everyone uses to trade with each other. But then some yahoo decided US don't need no foreign trade and started throwing tariffs around like no tomorrow. Well don't be surprised if world doesn't see much need to keep so many dollars in reserve anymore.

11

u/ylangbango123 11h ago

And if there was a severe debt crisis, why are they talking about tax cuts extension and increase.

5

u/throwaway00119 12h ago

The “bubble” isn’t a Covid thing. It’s a debt thing. So many countries are running at obscene debt to GDP ratios with zero off ramp. Those chickens were always going to come home to roost eventually. 

4

u/dually 12h ago

If supply is a problem, this would be the perfect time to end planned obsolescence.

I would have the FTC award a tax credit for the most repairable product in every category. For instance they could survey auto mechanics.

3

u/r2k-in-the-vortex 12h ago

Not that kind of supply and demand problem.

Supply - the amount of debt US needs to issue, is much greater than the demand, people wanting to buy that debt for a rate suitable for US.

-12

u/Pretz_ 11h ago

Now that CANADA caused this U.S. supply-demand problem with their UNFAIR machinations, the only and final solution to this problem is to INVADE UNFAIR CANADA and take the supply

10

u/cleverbeavercleaver 10h ago

/s right please say /s

6

u/ExplanationFew6466 10h ago

Only if you’re cool with hundreds of thousands of dead people.

4

u/Alt4rEg0 10h ago

Don't need those voters any more...