Ray Dalio warns that America is on track for a ‘debt death spiral.’ Are your assets safe?
Jing Pan
10 min read
Amal Alhasan / Getty Images
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
The early 1970s were a turbulent time in America — marked by soaring inflation, an oil crisis and a sharp drop in stock prices that left investors scrambling for safe havens.
And, according to billionaire investor Ray Dalio, history may be repeating itself. Surging prices and massive government spending could prompt investors to once again question the value of fiat currencies and the paper assets tied to them (1).
“It’s very much like the early ’70s … where do you put your money in?” Dalio said at the Greenwich Economic Forum (2). “When you are holding money, and you put it in a debt instrument, and when there’s such a supply of debt and debt instruments, it’s not an effective storehold of wealth.”
Dalio has long warned about the sheer size of America’s national debt, now hovering around $37.86 trillion and climbing. He has described the situation as a potential “debt death spiral” — where the government must borrow just to pay the interest on existing debt. Over time, this process accelerates.
If that number feels abstract, Dalio has a more personal warning.
The asset he’s talking about is something nearly everyone holds in one way or another, whether in bank accounts or under mattresses: the U.S. dollar.
The start of the spiral
In a recent post on X, Dalio shared a Q&A with the Financial Times (3). When asked what would happen to bonds and the dollar if a politically weakened Federal Reserve lets inflation run hot, his answer was blunt:
“It would lead bonds and the dollar to go down in value and if not rectified, would lead to them being an ineffective storehold of wealth and the breaking down of the monetary order as we know it.”
That comment couldn’t have come at a more sensitive time for the Federal Reserve. President Donald Trump has repeatedly attacked Chair Jerome Powell and is searching for a replacement.
Treasury Secretary Scott Bessent told CNBC in late November, "I think there's a very good chance that the president will make an announcement before Christmas … I think it's time for the Fed just to move back into the background, like, it used to do, calm things down and work for the American people (4)."
The President has also come under fire for attempting to oust Fed governor Lisa Cook, the first time a president has sought to remove a governor in the central bank’s 112-year history. Cook sued to keep her job, and it was ruled she could continue in her post (5).
In the midst of this turbulence, Dalio warned that if investors begin to believe the Fed will artificially hold rates too low, it could trigger “an unhealthy decline in the value of money.”
To be sure, that decline may already be underway. The U.S. Dollar Index, which tracks the dollar against a basket of major foreign currencies, tumbled 10.8% in the first half of 2025 — its worst performance since 1973, when Richard Nixon was president. (6)
Meanwhile, inflation continues to chip away at Americans’ purchasing power. According to the Federal Reserve Bank of Minneapolis, $100 in 2025 buys what just $12.05 could in 1970 — a sobering reminder that the dollar hasn’t been a very effective “storehold of wealth” for decades (7).
Experts are also warning of ‘stagflation,’ a term used to describe an era when GDP growth is moderate, inflation is high, and employment rates are taking a hit (8).
As Dailo notes, the late 70s and early 80s stand as a classic example of this stagnant economic trend. Today, economic measures are worrying: Inflation is still rising and outpacing the Fed’s predictions. The unemployment rate is rising, particularly for new grads. Perhaps most worrying of all, the national debt has just hit $38.4 trillion, and investors warn that the country may be headed into a spiral where the government borrows even more just to meet the interest on current payments.
The good news? Dalio revealed one asset he believes can help safeguard your wealth from what’s coming.
“Gold is a very excellent diversifier in the portfolio,” he said (9).
“If you look at it just from a strategic asset allocation perspective, you would probably have something like 15% of your portfolio in gold … because it is the one asset that does very well when the typical parts of the portfolio go down.”
Gold’s appeal is straightforward. Unlike fiat currencies, it can’t be printed at will by central banks. It’s also long been viewed as the ultimate safe haven — and has proven its mettle this year by hitting record high prices. Gold performance is not tied to any one country, currency or economy. When markets wobble, or geopolitical tensions flare, investors tend to flock to gold, driving prices higher.
Dalio isn’t alone in that view. Jeffrey Gundlach, founder of DoubleLine Capital and widely known as the “Bond King,” recently said that a 25% portfolio allocation to gold “is not excessive,” calling the metal “an insurance policy” that’s likely to remain “in a winning mode” amid ongoing dollar weakness.
Why gold is king
Over the past twelve months, gold prices have skyrocketed, and some investors predict even higher prices in 2026.
If you want to get in on the action, one way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Goldco.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
With a minimum purchase of $10,000, Goldco offers a 1-day IRA set-up, price match guarantee, highest buy-back guarantee, award-winning customer service and access to a library of retirement resources.
Gold isn’t the only asset investors turn to during inflationary times. Real estate has also proven to be a powerful hedge.
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.
Over the past five years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index has jumped by 49%, reflecting strong demand and limited housing supply (10).
Investing in real estate with limited resources
Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn’t exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns).
The good news? You don’t need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with just $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.
Another option is Homeshares, which gives accredited investors access to the $35 trillion U.S. home equity market — a space that’s historically been the exclusive playground of institutional investors.
Homeshares allows accredited investors to gain direct exposure to a portfolio of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the hassles of buying, owning or managing property.
The fund focuses on homes with substantial equity, using Home Equity Agreements (HEAs) to let homeowners access liquidity without taking on debt or interest payments. This creates an attractive, low-maintenance investment vehicle for retirement savers, with a minimum investment of $25,000.
With risk-adjusted target returns of 14% to 17%, the U.S. Home Equity Fund offers investors access to America’s largest store of household wealth.
It’s easy to see why great works of art tend to appreciate over time. Supply is limited, and many famous pieces have already been snatched up by museums and collectors. That scarcity also makes art an attractive option for investors looking to diversify and preserve wealth during periods of high inflation.
For example, in 2022 — shortly after U.S. inflation hit a 40-year high — a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York, making it the most valuable collection in auction history (11).
Historically, this alternative asset has been restricted to high rollers like Allen, but that’s quick. changing.
Bringing art into your portfolio
With Masterworks — a platform for investing in shares of blue-chip artwork by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy — you can get a start with art. It’s easy to use, and Masterworks has had 25 successful exits to date.
After signing up, all you have to do is browse their impressive portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, from purchase and procurement all the way to storage and sale.
Masterworks has distributed roughly $61 million back to investors, including the principal. New offerings have sold out in minutes, but you can skip their waitlist here.
Note that investing involves risk. See Reg A disclosures here: masterworks.com/cd.
