Ray Dalio, who warned of 2008 market crash, says U.S. Treasury risk greater than what Moody’s downgrade suggests

Billionaire hedge fund titan Ray Dalio warned on Tuesday that the risks facing U.S. government debt are more severe than what Moody’s recent downgrade reflects, arguing that the real risks of holding American government debt are greater than they appear.

Dalio, the founder of Bridgewater Associates and one of the few to foresee the 2008 financial crisis, said in a post on microblogging site X (formerly Twitter) that credit ratings fail to capture the broader risks to holders of U.S. Treasurys.



“You should know that credit ratings understate credit risks because they only rate the risk of the government not paying its debt,” he wrote. “They don’t include the greater risk that the countries in debt will print money to pay their debts thus causing holders of the bonds to suffer losses from the decreased value of the money they’re getting (rather than from the decreased quantity of money they’re getting).”

“Said differently, for those who care about the value of their money, the risks for U.S. government debt are greater than the rating agencies are conveying,” Dalio added.


Moody’s cut the United States’ sovereign credit rating by one notch to Aa1 from Aaa last Friday, citing the federal government’s expanding fiscal deficit and elevated interest costs that are “significantly higher than similarly rated sovereigns.” The move made Moody’s the last of the three major rating agencies to strip the U.S. of its top rating.

Markets initially recoiled from the downgrade, with the 30-year Treasury yield jumping to 4.995% and the 10-year rising to 4.521% on Monday, while stocks slipped. But sentiment steadied by Tuesday, with the 10-year yield falling 3 basis points to 4.44%, and the 30-year easing to 4.91%. The U.S. dollar index also found some breathing room, while global equities edged up around 0.1%.

Dalio’s comments add to mounting concerns among investors about the sustainability of U.S. fiscal policy, as markets weigh the longer-term implications of persistent deficits, elevated borrowing costs, and renewed political wrangling over tax and spending plans.

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