Ray Dalio Warns U.S. Debt Crisis, Urges Investors to Buy Gold and Bitcoin: how 11 outlets framed it

Dalio’s debt-crisis hedge

Dalio wrote in a LinkedIn post published Friday that "I am confident that the government's financial condition is at an inflection point," adding that if it is not dealt with now, "the debts will build up to levels where they can't be managed without great trauma."

Dalio told CNBC on Thursday that his team was going to "make a market" and that the purchases would likely top $4 billion, while Dalio said the Treasury Department has "only limited capacity" to buy back bonds.

Dalio recommended investors are underweight debt assets such as bonds, and said as much as 10% to 15% of a portfolio could land in gold, along with "a bit" of bitcoin, as the U.S. budget deficit topped $432 billion in July.

Timing and portfolio shift

Dalio warned that on the current trajectory the United States could enter a debt crisis in as early as one year or as late as five, and he added, "My guess, which I suppose will be a bad one, is that it will come in three years, give or take two."

To address the deficit, Dalio said the U.S. needs a three-part strategy to get the budget deficit down to 3% of gross domestic product by reducing spending, raising tax revenue, and lowering interest rates, while insisting "All three need to happen concurrently so as to prevent any one of them from being too large."