Bridgewater Ray Dalio: The era of high debt is coming, and gold will become a key safe-haven asset

Bridgewater (Bridgewater) founder Ray Dalio offers a series of observations in his latest interview regarding tariff policies, global supply chain restructuring, the US debt structure, and the role of gold in the monetary system. He points out that the world is transitioning from an era of efficiency-first globalization to a new stage centered on security and resilience, with tariffs, self-sufficiency, currency devaluation, and gold precisely connecting the key threads of this transformation.

Tariff Policy Positioning, The Key is in Implementation

Dalio notes that for a considerable period, tariffs were one of the main sources of revenue for governments, similar to income tax and capital gains tax, fundamentally as a form of taxation, each with different economic costs and side effects.

The real focus is not whether to adopt tariffs, but how policies are designed, including implementation methods, the scale of levies, and whether they cause excessive interference with economic operations. He also states that tariffs can indeed generate substantial revenue for governments, helping to reduce reliance on tax hikes or borrowing.

Globalization Receding or Gradually Retreating, Self-Sufficiency Becomes the Mainstream Trend

Dalio further explains that the current world is entering a phase of “approaching wartime state,” where countries are beginning to prioritize strategic security over pure efficiency in economic decision-making. He points out that the previous global division of labor—“who produces the cheapest and most efficient”—is becoming increasingly unsustainable amid rising geopolitical risks.

Dalio believes that governments now care more about whether supply chains might be interrupted, face sanctions and blockade risks, and the fragility of over-reliance on imports for critical supplies. Therefore, whether food, energy, and manufacturing capabilities can stay domestic is gradually becoming a policy priority.

Against this backdrop, the US is promoting manufacturing reshoring, which is not merely an industrial policy but driven by considerations of national security and economic resilience. Dalio also admits that from a global efficiency perspective, the ideal state remains production by the most competitive entities, but the current environment makes this model difficult to sustain.

Large and Beautiful Cannot Solve Debt Problems, Large Debts Must Be Diluted by Currency

Regarding the recent US “Big and Beautiful Act,” Dalio bluntly states that the legislation cannot fundamentally solve the US fiscal and debt issues. He points out that historical experience shows that when a country’s debt scale becomes unbearable, three phenomena often occur simultaneously:

Currency devaluation

Mass printing of money by the government

Deliberate suppression of real interest rates

This approach effectively shifts inflation erosion onto creditors, with the actual repayment being in depreciated purchasing power—using “thinner money” to settle old debts. Using Japan as an example, he notes that Japan has maintained its debt system over the years through ultra-low interest rates and loose monetary policy. The US may follow a similar path in the future, with debt burdens ultimately passed on to future generations, denominated in devalued dollars.

Lowering Interest Rates Comes at a Cost, Balance Still Depends on Fiscal Policy

Regarding whether artificially suppressing interest rates can reduce government interest expenses, Dalio remains cautious. He states:

“One person’s debt is another person’s asset.”

If interest rates are pushed too low, investors may lose the willingness to hold government bonds, and declining demand could trigger greater financial instability.

He believes that rather than unilateral interest rate interventions, a more feasible approach is to adjust fiscal structures, such as:

“Reducing about 4% of expenditures while increasing about 4% of taxes to gradually improve the budget imbalance.”

Over-reliance on low interest rate measures could harm bondholders’ interests and potentially create a new vicious cycle.

Gold’s Role Returns, Against Currency Risks

In terms of investment, Dalio emphasizes the importance of gold, describing it as essentially a form of “currency.” He points out that in recent years, many central banks worldwide have been increasing gold reserves precisely to reduce dependence on a single monetary system and diversify risks. Gold often moves inversely to other assets during market turmoil, and it does not belong to anyone as a liability, requiring no reliance on others for repayment to retain value. He suggests that a typical investment portfolio should allocate about 10% to 15% in gold.

Dalio also mentions that since 1750, about 80% of global currencies have either disappeared or experienced severe devaluation, which is one reason humans have trusted gold over the long term. With the US dollar depreciating about 10% against major currencies this year, coupled with high debt pressures in Europe, America, Japan, and China, he believes that simply switching to other currencies may not provide effective hedging. In a scenario where multiple currencies weaken simultaneously, gold could become the most stable and even the best “safe-haven asset.”

(Bridgewater founder Ray Dalio discusses risk mitigation, asset allocation, corporate management, and AI amid economic and political turmoil)

This article Bridgewater Ray Dalio: The Era of High Debt Has Arrived, Gold Will Become a Key Hedge Asset first appeared on Chain News ABMedia.