A debt-induced fiscal crisis could occur within two to three years under current budget policies that expand deficits through large tax cuts and continued borrowing. Shrinking tax revenues combined with rising interest costs increase debt-service burdens and raise the risk of investor confidence erosion, potentially triggering a fiscal reckoning. Banking leaders and central bankers view a national debt crisis as looming, though timing remains uncertain. Policy choices that deliberately reduce revenue while sustaining borrowing amplify projected excesses. The Congressional Budget Office projects the bill will add roughly $3.4 trillion to the national debt. Without meaningful deficit reductions or revenue increases, debt dynamics could become unsustainable.
"The great excesses that are now projected as a result of the new budget will likely cause a debt-induced heart attack in the relatively near future," Dalio told the Financial Times. "I'd say three years, give or take a year or two."
Earlier this year he said economists who believe America can continue to build its debt burden without consequence don't "understand the mechanics" of the issue.
If an entity-public, private or individual-wants to reduce its debt it has two options: Borrow less or bring in more.
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