(0:00) Ray Dalio joins Friedberg! (0:50) The current US fiscal situation (6:23) Breaking down "The Big Debt Cycle," a potential US debt spiral, and the impact on real wealth (24:54) USD vs other currencies and assets, best hedges against the dollar (33:20) Portfolio construction, how China increases risk for US AI companies, why this market reminds Ray of 1998-1999 (41:45) How the US can avoid a debt crisis (53:29) DOGE, Trump, and AI's greatest risk (1:05:31) Chances of conflict between the US and China Follow the Besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow Ray Dalio: https://x.com/RayDalio Read Part 1 of "How Countries Go Broke": https://x.com/RayDalio/status/1878840018770210979 Pre-order "How Countries Go Broke": https://www.amazon.com/Principles-Investment-Economic-Ray-Dalio/dp/1501124064 Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://tradingeconomics.com/united-states/government-debt-to-gdp https://www.crfb.org/press-releases/treasury-confirms-calendar-year-2024-deficit-tops-20-trillion https://www.cbo.gov/publication/61172 https://www.institutionalinvestor.com/article/2bstne1l09npgdk1s5yww/corner-office/ray-dalio-makes-his-exit-from-bridgewater https://fred.stlouisfed.org/series/M2SL https://www.jpmorgan.com/insights/outlook/economic-outlook/fed-meeting-september-2024 https://www.forbes.com/sites/robertfarrington/2024/11/08/fed-cut-interest-rates-so-why-do-mortgage-rates-keep-climbing https://www.chathamfinancial.com/insights/fomc-recap-december-2024 https://www.cnbc.com/2025/01/14/a-global-bond-sell-off-is-deepening-as-hopes-for-multiple-fed-rate-cuts-fizzle.html
Full Episode
It was the government that was the big buyer. Then you get everybody leveraging up. Then you've got a problem. Do you own Bitcoin, Ray? Yeah, I have some. Not nearly as much as gold. The AI war, it's a war that no country can lose. If China or the US really lose this war, it's more important than profits. We're at a civil war internally and we're at an international war simultaneously.
Just have people behave logically. Maybe that's too much to ask. We hope.
All right, besties.
I think that was another epic discussion. People love the interviews. I could hear him talk for hours. Absolutely. We crushed your questions in a minute. We are giving people ground truth data to underwrite your own opinion. What do you guys think? That was fun. Ray, good morning. Good morning. I'm going to start off by sharing a couple stats. Today, the U.S.
has $36.4 trillion of federal government debt and GDP of $29.1 trillion, giving a debt to GDP ratio of 125%. And this ratio has climbed steadily since the pandemic began in 2020. when the federal government debt was 20 trillion and GDP was just 21 trillion. So since the pandemic, federal government debt has risen by 80% while GDP has climbed 38%.
And steady inflation from the large stimulus of money from both central banks and the U.S. government caused the Federal Reserve, which is the U.S. central bank, to raise interest rates, driving up the cost of borrowing. And despite recent efforts to cut interest rates again, markets have traded treasuries down, causing the long-term interest rates of U.S.
debt to spike up to levels that we have not felt since just before the 2008 global financial crisis. To keep the economy growing, the U.S. government's now running a nearly $2 trillion annual deficit, nearly 7% of GDP, while paying over $1 trillion per year in interest alone on just the existing outstanding debt.
The Congressional Budget Office, the CBO, projected last week annual budget deficits are expected to be equal to 6.1% of GDP through 2035, which the CBO noted is significantly more than the 3.8% that deficits have averaged over the past 50 years.
The national debt slated to rise by nearly $24 trillion over the next decade, a sum that does not even include the trillions of dollars in additional tax cuts that the current administration may put into place. Is the US headed for bankruptcy? What are the mechanics of the looming crisis ahead? And can we avoid it?
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