Bridgewater Associates founder Ray Dalio has issued a stark warning that the United States could face a debt crisis within the next three years. In an article published on his personal website on August 21, titled "How Countries Go Broke: The Dynamic Behind What is Happening Now," Dalio suggested that a debt repurchase plan recently announced by US Treasury Secretary Bessent may signal the approaching crisis.

Dalio pointed out that the US government's total revenue this year is approximately $5.5 trillion, while total spending is around $7.5 trillion, creating a budget gap of roughly $2 trillion. Furthermore, due to the government's long-term reliance on borrowing, the current debt balance has reached approximately $32 trillion (excluding intergovernmental debt), equivalent to six times annual income, with annual interest payments exceeding $1 trillion.

"I am convinced that the US government's fiscal position is at a turning point," Dalio wrote. If not addressed now, the debt will accumulate to an unbearable level, causing enormous economic trauma. Crucially, any corrective action must be taken while the economic system remains relatively robust, rather than during a period of economic weakness.

In Dalio's view, America's debt problem is gradually shifting from a long-standing structural risk into a practical issue that requires direct handling by policymakers. Dalio predicts that if the US does not change its current trajectory, a debt crisis "could erupt within three years, give or take about two years."

To delay or even resolve the debt issue, Dalio argues that the US needs a "three-pronged approach" involving spending cuts, tax increases, and interest rate reductions to bring the current budget deficit from about 6% down to 3% of GDP. "All three need to be done simultaneously to prevent any one from being too large," Dalio stated, warning that excessive spending cuts, overtaxation, or artificially low interest rates could each trigger severe economic shocks.

Given that the US is not alone in facing debt challenges, Dalio expects most economies to undergo similar debt and currency depreciation adjustments. "This is also why I expect gold and non-government-issued currencies like bitcoin to perform relatively well."

On the investment front, Dalio advises investors to diversify into asset classes and countries with solid income profiles, healthy balance sheets, and limited internal political or external geopolitical conflicts, while reducing holdings of debt assets such as bonds and increasing allocations to gold and a small amount of bitcoin. "Allocating a small portion of total assets, around 10%-15%, to gold not only lowers the overall risk of an investment portfolio, but I believe it can also enhance returns," Dalio added.

Dalio's remarks come during a turbulent week for US financial markets. Rising Treasury yields have put pressure on equities, dragging down the S&P 500. Meanwhile, gold hit a three-month high on Friday, with spot gold climbing back above the $4,600 per ounce mark and posting a third consecutive weekly gain.