How America Goes Broke — ft. Ray Dalio ~ Prof G Markets
This week on Prof G Markets, Ed and Scott welcome Ray Dalio, founder of Bridgewater Associates and New York Times bestselling author. Starting at 9:45, Dalio joins the show to discuss how countries go broke, where America stands in the process, and what the future holds if the deficit is left unchecked. He also shares his views on tax policy and what he sees as the greatest threat to U.S. dominance.
Timeline
00:00 – Today’s episode
09:48 – How America Goes Broke — ft. Ray Dalio
10:04 – How do countries go broke?
13:27 – How has this cycle played out in the past?
15:04 – How far along in the cycle is America?
19:38 – Ad Break
20:59 – Would you support scrapping the estate tax cap and means-testing entitlements to raise taxes?
23:15 – What are some realistic things we can do on the tax side?
26:01 – How will this play out if we do nothing?
31:25 – What’s your level of frustration with Washington right now, and do you think they take the deficit seriously?
34:20 – Do you think the administration’s current strategy could actually work?
40:05 – What do you think is the biggest threat to America’s dominance in 2025?
42:54 – Ad Break
44:17 – Do you think comparing today’s U.S. to 1930s Germany is an overreaction?
47:29 – Do you think this cycle is inevitable and if so, what do we do about that?
52:05 – What’s your advice for young people who are starting their careers right now?
56:07 – What are you focused on in the next 24 months?
57:49 – Conclusion
Summary
Ray Dalio joins Scott to discuss his new book How Countries Go Broke: The Big Cycle. He explains that countries collapse financially when debt grows faster than income, eventually leading to crises where governments print money to cover deficits, eroding confidence in the currency. This cycle has played out many times in history, such as in 1933 and 1971 when the U.S. abandoned the gold standard.
Dalio highlights America’s current situation: $37 trillion in national debt, nearly $1 trillion a year in interest payments, and a government spending 40% more than it collects. He argues the U.S. is already deep into the cycle and near the edge. Stabilization would require cutting the deficit to ~3% of GDP, through both higher taxes and lower spending, but political promises not to raise taxes or cut benefits make that unlikely.
If nothing changes, he warns, the government will lean on foreign creditors, shorten debt maturities, impose capital controls, or have the Fed buy more debt—moves that weaken the dollar and echo past stagflationary periods.
He frames America’s challenges as part of five interacting forces:
- Debt and economic cycles
- Political conflict and polarization
- Geopolitical rivalry (especially with China)
- Acts of nature (pandemics, climate shocks)
- Technology (AI and innovation)
The biggest risk, in his view, is human nature—America tearing itself apart internally instead of finding compromise and building a strong middle. He stresses that education and effective policies are crucial to maintaining U.S. strength.
On investing, Dalio advises diversification, including some exposure to gold or alternative stores of value, while avoiding concentrated bets.
For young people, he emphasizes surrounding yourself with the most talented people, leveraging AI and new technologies, and pursuing meaningful work. Success, he says, comes from knowing how to handle what you don’t know as much as what you do.
Looking ahead, Dalio’s focus is on passing along his principles and lessons, managing his family office, and building platforms that help others understand debt mechanics, while prioritizing family and enjoying life.
