Billionaire Ray Dalio weighed in on Moody’s recent downgrade of the U.S. creditworthiness, claiming the move understates the risk of government debt.
Moody’s dropped the country from its triple-A category to a double-A rating on Friday, just ahead of the GOP’s spending bill — largely focused on President Trump’s legislative priorities — which would add nearly $4 trillion to the federal deficit.
“Re the U.S. debt downgrade, you should know that credit ratings understate credit risks because they only rate the risk of the government not paying its debt,” the Bridgewater co-founder wrote in a Monday post on social platform X.
“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),” the hedge fund manager added.
Moody’s said the lower rating reflects an increase “in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” in a Friday release.
The agency has not previously taken a downgrade rating action on U.S. sovereign debt, a representative for the agency told The Hill. The Dow Jones, S&P and Nasdaq have each seen losses as a result of the drop.
The Trump administration blamed former President Biden for the downgrade citing “reckless spending” as an influencing factor in Moody’s decision but added that they were now working to create the “best economy on Earth.”
“Make no mistake, the U.S. debt is the safest bet on Earth. There is no country’s debt that I’d rather have than the United States’s. And so, Moody’s can do what it wants to,” White House National Economic Council Director Kevin Hassett said during a recent interview on Fox Business Network.
Despite their confidence, Dalio said the country was “very close” to a recession in early April after Trump unveiled his sweeping tariff agenda. While most of the reciprocal tariffs are under a pause, the president’s 10 percent baseline tax is still in play on nearly all foreign imports.
In his post on Monday, the billionaire said, “the risks for U.S. government debt are greater than the rating agencies are conveying,” referring to the credit downgrade.