Part 4/7:
Dalio underlines the urgency of addressing the burgeoning debt crisis, suggesting that decisive action must be taken within the next three years. Without intervention, the demand for debt may not meet the supply, leading to further interest rate hikes that could destabilize economies. Such a scenario threatens to depreciate money’s value and disrupt investment.
Government Responsibility and the Path Forward
Policymakers are faced with a complex balancing act: how to reduce national deficits while ensuring economic growth. Dalio points out that to attain a desirable deficit of around 3% of GDP, significant cuts must be enacted swiftly and responsibly. These cuts must be balanced with potential revenue increases, whether through taxes or enhanced productivity due to technology.