Ray Dalio

OK, so you may not feel secure about holding Treasury bonds, both for two reasons, because you could be sanctioned or you also because there's a supply demand problem.

So you start to see the movement in that direction.

And then, of course, it's also also in that situation.

Governments want to control their supply demand.

So they might establish foreign exchange controls.

They might do certain things like that.

But they also feel vulnerable.

The United States can feel vulnerable if they can't sell enough of those bonds to others, if the demand isn't, because then interest rates would have to rise because of the supply-demand, too much supply relative to the demand.

To make it more appealing to buyers.

Yes, and also to cut the demand for credit.

In other words, if the price rise, then people will borrow less and so on.

And that then has the effect of mechanically slowing down the economy that produces that result.

Then what happens is then the central bank comes in and it prints money and it buys the debt, which depreciates the currency.

That's the mechanics that's of the debt part of it that is related to the political and the geopolitical part of it.

May I just ask you something?

They're stuck.

They're stuck.

They're stuck because they have a deficit.

And the deficit will be there unless they raise taxes and cut spending or something.

And that's bad for the economy and it's politically bad.